HONG KONG - HSBC on Monday said profits for the first half of 2020 plunged by 69 percent on year as the banking giant was hammered by the coronavirus pandemic and spiralling China-US tensions.
The lender reported post-tax profits of $3.1 billion while pre-tax profit was $4.3 billion, a 64 percent drop on the same period last year. Reported revenue was down nine percent at $26.7 billion.
Chief executive Noel Quinn described the first six months of the year as "some of the most challenging in living memory".
"Our first-half performance was impacted by the COVID-19 pandemic, falling interest rates, increased geopolitical risk and heightened levels of market volatility," he said in a statement to the Hong Kong stock exchange,
Even by the standards of the current economic maelstrom engulfing global banks, HSBC has had a torrid year.
Before the coronavirus crisis it was beset by disappointing profit growth, ground down by US-China trade war uncertainties and Britain's departure from the European Union.
The Asia-focused lender embarked on a huge cost-cutting initiative at the start of the year, including plans to slash some 35,000 jobs as well as trimming fat from less profitable divisions, primarily in the United States and Europe.
The coronavirus upended some of that cost-cutting drive with banks hammered by market volatility and the economic slowdown caused by the pandemic.
But HSBC has a further headache -- geopolitical tensions via its status as a major business conduit between China and the West.
HSBC makes 90 percent of its profit in Asia, with China and Hong Kong being the major drivers of growth.
Caught in crossfire
As a result it has found itself more vulnerable than most to the crossfire caused by the increasingly bellicose relationship between Beijing and Washington.
The bank has tried to stay in Beijing's good graces.
It vocally backed a draconian national security law that Beijing imposed on Hong Kong in June to end a year of unrest and pro-democracy protests.
The move sparked criticism in Washington and London but analysts saw it as an attempt to protect its access to China, which has a track record of punishing businesses that do not toe Beijing's line.
But that has not shielded it from Beijing's wrath.
Last month the bank was a subject of multiple reports in China's state-run media claiming that it had helped to provide the evidence that led to the arrest in Canada of Huawei executive Meng Wanzhou on a US arrest warrant.
HSBC released a statement on its Chinese Weibo accounts saying it had not "framed" telecom giant Huawei or "fabricated evidence" that led to the arrest of Meng.
China's internet censors blocked access to HSBC's statement within hours of publication, without offering an explanation.
Quinn referenced the bank's growing political vulnerability in Monday's statement.
"Current tensions between China and the US inevitably create challenging situations for an organization with HSBC's footprint," he said.
"However, the need for a bank capable of bridging the economies of East and West is acute, and we are well placed to fulfil this role," he added.
The bank's Asia operations continued to show "good resilience", Quinn said, with profit before tax of $7.4 billion.
Earlier this year Quinn put some of the job cuts on hold as the pandemic struck.
But in Monday's statement he vowed to press ahead with the cost-cutting.
"As we seek to accelerate our transformation in the second half of the year, I am mindful of the impact it will have for some of our people, particularly those leaving us," he said.
Agence France-Presse
BEIJING - China is expected to report on Monday that economic growth slowed to its weakest pace in at least 27 years in the second quarter, reinforcing the case for more stimulus as a bruising trade war with the United States drags on.
Policymakers are likely to ratchet up support measures to prevent mass job losses that could pose a threat to social stability, but analysts say the room for aggressive stimulus is limited by fears of adding to already high debt levels and structural risks.
"The gloom hanging over China's economy is unlikely to go away soon due to challenges on both domestic and external fronts," analysts at ANZ said in a note.
Analysts polled by Reuters expect China to report gross domestic product (GDP) grew 6.2 percent in the April-June quarter from a year earlier, the slowest pace since the first quarter of 1992, the earliest quarterly data on record.
That would mark a further loss of momentum from the previous quarter's 6.4 percent, which could bring the full-year economic growth to a near 30-year low of 6.2 percent.
The government has been leaning more on fiscal stimulus to underpin growth this year, announcing massive tax cuts worth nearly 2 trillion yuan ($291 billion) and a quota of 2.15 trillion yuan for special bond issuance by local governments aim at boosting infrastructure construction.
But the economy has been slow to respond, and business confidence remains shaky, weighing on investment. Investors fear a longer and costlier trade war between the world's two largest economies could trigger a global recession.
The government will publish the second-quarter GDP data on Monday (0200 GMT), along with activity data for June which could point to continued weakness.
Data on Friday showed exports fell in June after the US sharply hiked tariffs on Chinese goods, while imports shrank more than expected, highlighting sluggish domestic demand. Bank lending and credit data were largely solid, however.
A recent official factory gauge for June showed Chinese manufacturers were shedding jobs at the fastest pace since the global financial crisis a decade ago.
WILL PBOC FOLLOW FED?
Premier Li Keqiang said this month that China will make timely use of cuts in banks' reserve requirement ratio (RRR) and other financing tools to support smaller firms, while repeating a vow not to use "flood-like" stimulus.
Investors are eagerly waiting to see whether the People's Bank of China (PBOC) will follow the US Federal Reserve in easing policy.
Federal Reserve Chair Jerome Powell indicated again on Thursday that an interest rate cut from the US central bank is likely at its next meeting later this month as businesses scale back investments due to trade disputes and a global growth slowdown.
Most analysts believe the PBOC is most likely to lower its newly developed market-based interest rates, or continue to cut the RRR, especially for small banks, if it opts to follow the Fed.
Economists in the latest Reuters poll forecast two more RRR cuts of 50 basis points each in this quarter and the fourth quarter, but did not expect the PBOC to cut its benchmark lending rate, as it did in past downturns.
ANZ expects the central bank to cut the 7-day reverse repo rate by 5 basis points (bps), and cut the RRR by another 100 bps over the rest of the year.
The PBOC has slashed the amount of cash banks must hold in reserve six times since early 2018 to spur credit growth. It has also quietly guided short-term rates lower.
China does not need "big" stimulus unless the trade war worsens, a central bank adviser said early this month.
Leaders of the United States and China agreed in late June to try to get trade talks back on track after negotiations broke down in May, and Washington said it would hold off on additional tariffs.
But existing levies imposed by both sides remain in place, weighing on profits and supply chains, and the two sides remain at odds over significant issues needed for an agreement.
source: news.abs-cbn.com
President Donald Trump said on Saturday that US companies could sell equipment to Chinese telecom giant Huawei, indicating a potentially softer position on a key sticking point in the US-China trade war.
"US companies can sell their equipment to Huawei," Trump told reporters in Osaka hours after sealing a tariff truce with Chinese President Xi Jinping.
"We're talking about equipment where there's no great national security problem with it."
It was not immediately clear whether Trump's comment marked a material change in the stance toward Huawei, which has essentially been barred on national security grounds from accessing crucial American technology or operating in the US market.
The US fears that systems built by Huawei -- the world leader in telecom network equipment and number two smartphone supplier -- could be used by China's government for espionage via built-in secret security "back doors".
Huawei vigorously denies that and says the US has never provided proof to substantiate it.
Last month the US government added Huawei to an "entity list" of companies barred from receiving US-made components without permission from Washington.
Trump's comment on its face does not mark a change from current practice.
But it could be read by financial markets as a positive signal that his administration may be open to negotiating on Huawei when bilateral trade talks resume.
However, any softening on Huawei could meet resistance from a bipartisan US congressional movement that is calling for a hardline on the firm.
A Huawei spokesperson told AFP the company had no inital comment.
Trump has imposed tariffs on $200 billion of Chinese imports in an effort to force Beijing into intellectual property protection and other reforms of a trading system that Washington says gives China huge unfair advantages.
But Trump and Xi struck a ceasefire deal on Saturday, with Washington vowing to hold off on further tariffs and the two sides agreeing to restart trade negotiations.
The Wall Street Journal reported earlier this week that Xi planned to ask Trump in Osaka to ease up on Huawei as a precondition for signing a possible trade deal.
Asked by reporters in Osaka what was discussed regarding Huawei, a Chinese foreign ministry official said he did not know, but that China would welcome lifting the US ban.
"Putting restrictions on technology will lead to a situation where all sides lose. So if the US lifts the sanctions, we would welcome that," said the official, Wang Xiaolong.
Huawei founder and CEO Ren Zhengfei said earlier this month that its overseas smartphone sales had fallen by up to 40 percent as a result of the ban.
source: news.abs-cbn.com
NEW YORK -- Global equity markets traded mostly flat on Monday as investors awaited US-China trade talks the end of this week at the G20 summit, and the dollar fell to three-month lows on bets the Federal Reserve may cut interest rates more than once this year.
European stocks stumbled on fears of an escalation in Iran tensions, which also kept gold prices near a six-year high. US President Donald Trump targeted Iranian Supreme Leader Ayatollah Ali Khamenei and other Iranian senior officials with new sanctions on Monday.
Earlier in China, shares closed higher on hopes of a thaw in the US-China trade dispute, which has been blamed for slowing global growth. The blue-chip CSI300 index rose 0.2 percent, and the Shanghai Composite Index also gained 0.2 percent.
Chinese state media said on Sunday that President Xi Jinping will attend the G20 summit in Osaka, Japan, in the first official confirmation of his attendance at a gathering where he is expected to meet with Trump.
On Wall Street, the S&P 500 closed slightly lower as healthcare companies lost ground. The technology-rich Nasdaq also fell while the Dow industrials edged higher.
Stocks are unlikely to push much higher without progress on US-China trade or a Fed rate cut, said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.
"Until we get that G20 meeting and start to get some feedback from the (Trump) administration, it's going to be tough to go higher," he said.
MSCI's gauge of equity performance around the globe gained 0.05 percent. In Europe, the FTSEurofirst 300 index of leading regional shares closed down 0.25 percent on weak German economic data and a profit warning from Mercedes-Benz maker Daimler.
German business morale fell in June to its lowest level since November 2014, an Ifo institute survey showed, adding weight to expectations that Europe's largest economy contracted in the second quarter. Germany's DAX index fell 0.53 percent.
On Wall Street, the Dow Jones Industrial Average rose 8.41 points, or 0.03 percent, to 26,727.54. The S&P 500 lost 5.11 points, or 0.17 percent, to 2,945.35, and the Nasdaq Composite dropped 26.01 points, or 0.32 percent, to 8,005.70.
The dollar softened against a basket of currencies on bets the Fed may lower rates more than once this year, while US-Iranian tensions provided safe-haven support for the yen.
The dollar index fell 0.22 percent and the euro rose 0.25 percent to $1.1394. The Japanese yen rose 0.04 percent versus the greenback at 107.34 per dollar.
Interest rate futures implied traders have priced in a 100 percent chance the Fed will cut rates at its next policy meeting at the end of July, with a high probability for two additional rate cuts, according to CME Group's FedWatch program.
US Treasury yields fell, holding just above almost three-year lows. The benchmark 10-year US Treasury note rose 13/32 in price to push yields down to 2.0211 percent.
The glum German data pushed down bond yields across the euro zone and reinforced expectations for an ECB rate cut.
In developing markets, the Turkish lira strengthened as much as 2 percent after Turkey's main opposition won a re-run election in Istanbul for mayor on Sunday, a blow to President Tayyip Erdogan. The lira later pared gains.
Bitcoin pulled back from 15-month highs after jumping more than 10% over the weekend. Analysts said the gains came amid growing optimism over the adoption of cryptocurrencies after Facebook announced its Libra digital coin.
Brent crude, the international benchmark, fell on concerns about the possibility of weakening demand after large gains last week caused tensions between the United States and Iran.
Benchmark Brent crude fell 34 cents to settle at $64.86 a barrel, while US crude futures rose 47 cents to settle at $57.90 a barrel.
Gold prices rose more than 1 percent to a near six-year peak as the dollar fell, with safe-haven bullion also boosted by Trump's announcement of fresh sanctions on Iran. U.S. gold futures settled up 1.3% at $1,418.20 an ounce.
source: news.abs-cbn.com
NEW YORK -- Wall Street stocks jumped Tuesday as President Donald Trump downplayed the chance of another government shutdown and said he could delay new tariffs on Chinese imports.
The Dow Jones Industrial Average snapped a 4-day losing streak, soaring more than 370 points to close up 1.5 percent at 25,425.76.
The broader S&P 500 rose 1.3 percent, closing at 2,744.73, while the tech-rich Nasdaq Composite Index also added 1.5 percent, closing at 7,414.62
The US president, while not ruling anything out, suggested his latest funding fight with congressional Democrats over border security would not result in another shutdown.
Trump told reporters he was not pleased with a deal by bipartisan lawmakers to offer nearly $1.4 billion for a barrier along the southern US frontier -- far less than the $5.7 billion he initially sought.
"I can't say I'm happy, I can't say I'm thrilled," Trump said. But he also told a Cabinet meeting in the White House: "I don't think you're going to see a shutdown."
During a back-and-forth with reporters at the same meeting, Trump also said he would consider extending the deadline for a trade deal with China beyond March 1.
"If we're close to a deal, where we think we can make a real deal... I could see myself letting that slide for a little while," Trump said.
The comments came as the third round of trade negotiations were set to resume in Beijing to avert more than doubling tariffs on $200 billion in Chinese imports.
Stocks were in positive territory prior to Trump's remarks, but added to gains.
"We got good news on two hot-button issues," said Jack Ablin, chief investment officer at Cresset Capital Management.
Tuesday's gains were fairly broad-based, with Caterpillar, DowDuPont, Intel, 3M and UnitedHealth Group among the Dow members rising more than two percent.
Cosmetics company Coty shot up 12.5 percent after JAB Holding Company proposed buying up to 150 million shares, raising its stake to about 60 percent of the company.
JAB manages the fortune of Germany's Reimann family.
Gilead Sciences fell 3.3 percent after reporting disappointing clinical results of a treatment for cirrhosis.
source: news.abs-cbn.com
NEW YORK, United States -- Wall Street stocks climbed for a third straight session on Thursday following a report the US could lift sanctions on China while leading bourses in Europe and Asia retreated.
US stocks were little changed through early afternoon but suddenly jumped higher after The Wall Street Journal reported Treasury Secretary Steven Mnuchin had proposed lifting some or all tariffs on China as a way to reassure markets and bolster the odds of a bigger trade deal.
But the article described the idea as part of a policy debate between Mnuchin and US Trade Representative Robert Lighthizer, who is more hawkish on China.
The Treasury Department told AFP on Thursday that no formal recommendation had been made by either Mnuchin or Lighthizer in the talks, which were "nowhere near completion."
Among those shares that got a boost, Boeing, Caterpillar and General Motors gained at least one percent. All three depend on China for a significant portion of sales.
Worries about the US-China trade war had been a headwind earlier in the US session and a factor in down sessions across major European and Asian markets following reports that US officials were carrying out a criminal probe into Chinese tech giant Huawei and could soon bring indictments over allegations of theft of trade secrets from its American business partners.
US lawmakers have also introduced a bill to ban the export of American parts and components to Chinese telecom companies that are in violation of US export control or sanctions laws -- with Huawei and fellow Chinese firm ZTE the likely targets.
POUND RISES
Meanwhile, in Britain, Prime Minister Theresa May scrambled to put together a new Brexit strategy with cross-party talks after MPs sparked political turmoil by rejecting her previous agreement with the EU.
May reached out to rival parties shortly after surviving a no-confidence vote on Wednesday, hoping to hammer out a Brexit fix that she could present to parliament next week.
Despite the impasse, the pound rose again against both the dollar and the euro.
"The market assumes that at very least the status quo will prevail and at minimum Article 50 will be delayed until a more palatable solution is found," said BK Asset Management's Boris Schlossberg.
"But the state of uncertainty is taking its toll on UK business and there is little doubt that any and all investment planning has come to a grinding halt," he added.
source: news.abs-cbn.com
MONTREAL, Canada -- The arrest of a top Chinese tech executive at the request of the US has snared Canada in the middle of a major international dispute involving Beijing and Washington.
Ottawa confirmed on Thursday that China had detained two Canadian nationals under what Beijing has said is suspicion of threatening its national security.
That came nearly two weeks after the arrest in Vancouver of Meng Wanzhou, the chief financial officer of telecoms giant Huawei, a move that infuriated Beijing.
The resulting crisis is to blame on "a trade war between China and the United States," Fred Bild, a former Canadian diplomat and Asian studies professor at the University of Montreal, told AFP.
"Washington is using Canada in its trade battle with China," he said.
The detention of the two Canadian nationals have fueled suspicions that China is retaliating against Canada's arrest of Meng.
She was released on US$7.5 million bail by a court in Vancouver on Tuesday pending a US extradition hearing.
Beijing had warned of "grave consequences" if she was not immediately freed.
Bild points to the exceptional circumstances of her arrest, saying Washington has been content in the past to impose fines on foreign companies found guilty of violating US sanctions on Iran.
Meng faces up to 30 years in prison if convicted.
But US President Donald Trump said he could intervene in the US case against her if it helps seal a trade deal with China -- statements that displeased Canada.
'A pawn'
Trump's comments have "really complicated" the situation for Canada, according to Bild.
"It's sometimes difficult to persuade the Chinese that we are not acting on behalf of the United States. And this has reinforced notions that Canada is just a pawn."
Canadian Foreign Minister Chrystia Freeland on Wednesday indirectly criticized the statements by the US president.
"Our extradition partners should not seek to politicize the extradition process or use it for ends other than the pursuit of justice and following the rule of law," she told a press conference.
"Canada is caught in the middle of a China-US tech war," said Paul Evans, a global affairs professor at the University of British Columbia in Vancouver.
The United States has been pressuring Canada for several months to ban Huawei equipment from its future 5G cellular networks over security concerns.
Washington fears that Beijing may use the technology to disrupt US military communications.
And the Trump administration sees Huawei as a potential Trojan horse, a mistrust fueled by the fact that the group's founder, Ren Zhengfei, is a former Chinese army officer. He is also Meng's father.
Canada is the only member of the US-led Five Eyes intelligence alliance, which also includes Australia, Britain and New Zealand, that has not shut out Huawei from 5G rollouts, noted Bild.
The crisis comes as Canada's holding of the rotating presidency of the Group of Seven industrialized nations comes to a close and as Ottawa looked to China to diversify its trade, which is now heavily reliant on the US market.
Instead of formally starting free trade talk with Beijing, Canada now faces threats of "trade sanctions," according to state-run Chinese media.
Experts quoted by the Chinese tabloid Global Times, a mouthpiece of China's communist government, also raised the prospects of a decline in the number of visits by Chinese tourists and businessmen to Canada.
Since Beijing approved Canada as a tourist destination for its citizens in 2010, the number of Chinese tourists has risen by 20 percent per year to almost 700,000 in 2017, and Ottawa hoped to double the figure by 2021.
"But for now, Canadians are standing alone at the edge of an abyss, with a Chinese noose around our necks and American shivs sticking out of our backs," said an editorial in Canada's National Post.
source: news.abs-cbn.com
President Donald Trump said Friday that he expects a budding US-China trade war to end with "a very good deal."
"I think we will make a deal with China," he told journalists at the White House. "I think a very good deal will be made with China."
Markets have soared on reports that the two sides are closing in on a deal that would avoid Washington piling on still more tariffs against Chinese imports.
"We are getting much closer to doing something," Trump said. "A lot of progress has been made."
Asian markets enjoyed another rally earlier after Trump hailed positive talks with Chinese President Xi Jinping and a report said he had asked officials to draw up a draft bill ahead of a potential trade deal.
The comments came days after Trump warned he would impose tariffs on all China's shipments to the US before saying he thought he could "make a great deal with China" but it was not yet ready.
Bloomberg News, citing unnamed sources, reported that the president has requested key cabinet secretaries put together an outline deal to call a ceasefire in the painful row.
It said several agencies had been called in to help with putting the plan together.
Hong Kong enjoyed its best percentage gain since December 2011.
Washington and Beijing are in an increasingly high-stakes standoff over Trump's aggressive move to end what he says have been years of unfair trade practices by China, including rampant intellectual property theft, forced technology transfers and market access barriers.
Trump imposed new tariffs on roughly half of Chinese imports this summer, while Beijing fired back with tariffs on most US products.
source: news.abs-cbn.com
