Tag: Approved

A CHINESE new-year message from the American embassy in Beijing looked innocuous. It welcomed the Year of the Dog on Weibo, a microblog, with photos of the embassy staff’s pooches and a video greeting from the ambassador and his wife, each with a dog in hand. But it soon attracted 10,000 angry responses. The post had become an unlikely lightning rod for public discontent about the stockmarket.

A plunge on February 9th had left Chinese shares down by 10% on the week, their steepest fall in two years. Some punters found solace in blaming the American embassy for the rout, which started on Wall Street. For others it was a matter of convenience, because their real target, the Chinese securities regulator, knew to disable comments on its Weibo account on such a grim day for stocks.

Even so, their protests seem to have been heard. Before the market reopened this week, Chinese officials urged big shareholders to buy stocks to restore confidence. The Shanghai Stock Exchange warned…Continue reading

BARS and pubs have not usually been the non-drinker’s friend. Knocking back pint after pint of juice or fizzy drink quickly gets boring. But beverage manufacturers are now showing more sympathy for their plight. Many companies regard non-alcoholic drinks as the “biggest opportunity in the market”, says Frank Lampen, who runs Distill Ventures, which helps small producers with investment and advice, and is backed by Diageo, a British drinks giant.

One of the fund’s recent investments, for example, is in Seedlip, a British firm that makes distilled, non-alcoholic “spirits” flavoured with botanicals, and which last year launched in America. Low-alcohol beer, once maligned for its paucity of flavour, is also in fashion. Technological advances mean alcohol can be filtered out of the beer without ruining its taste; other breweries use “lazy” yeast, which produces less alcohol to start with. Over the past couple of years, non-alcoholic craft breweries, such as Nirvana Brewery in London, or…Continue reading

Spot the $1.8bn

OF LATE Indian bankers have felt an unfamiliar sensation: optimism. A 1.3trn-rupees ($21bn) bail-out from the government seemed to have cleaned up the bad lending decisions of years gone by. A new bankruptcy law gave them an edge in long-standing battles with recalcitrant borrowers. It seemed a few Indian companies, having for years eschewed fresh investment, might even start borrowing again.

This week woes linked to mismanagement at India’s three biggest partially state-owned lenders plunged the bankers back to their habitual gloom. On February 14th Punjab National Bank (PNB) announced it was investigating a fraud worth 114bn rupees, equivalent to about a third of its market capitalisation. A few days earlier the State Bank of India (SBI) unveiled its first quarterly loss since 1999. And Bank of Baroda has hastily announced the closure of its South African operation, accused of having shady business associations there.

The Punjab heist is…Continue reading

MEN may hail from Mars and women from Venus. But economists, surely, inhabit planet Earth, surveying it dispassionately. Alas, a new paper suggests that even dismal scientists divide on gender lines. Ann Mari May and Mary McGarvey of the University of Nebraska-Lincoln and David Kucera of the International Labour Organisation surveyed economists from 18 European countries, and found that differences in the wider population can survive even an economics education. Male economists are more likely than female ones to prefer market solutions to government intervention, are more sceptical of environmental protection, and are (slightly) less keen on redistribution (see chart).

A similar study of American economists by Ms May and others also found men more sceptical of government regulation, more comfortable with drilling in the Arctic National Wildlife Refuge, and more likely to believe that a higher minimum wage would cause unemployment. Women were 14 percentage points less likely to agree that Walmart…Continue reading

IN THE political cacophony surrounding America’s new tax law, the voice of the private-equity industry has been muted. This is perhaps unsurprising. The industry has managed in large measure to retain its favourable tax treatment, despite a threat from President Donald Trump to close the “carried interest” loophole on which it had grown fat.

So few expected the announcement on February 8th from KKR, a big private-equity firm, that the new law was prompting it to consider converting its status from that of a partnership to a “C corporation” (a corporate-tax-paying firm). As The Economist went to press, a competitor, Ares Management, was expected to make a similar announcement. The new law may have a lasting impact on private equity after all.

Tax has always been central to private-equity business models. The industry uses large amounts of debt, interest on which is tax-deductible, to acquire companies. So it has long been adept at minimising tax, both by…Continue reading

EVERYONE knows that interest rates are rising—except, perhaps, one group: American savers who have put $12trn in bank accounts. They have seen the government’s deposit guarantee, purportedly designed to protect them, become a ticket for banks to receive free money. For evidence, look no further than the ubiquitous bank branches dotting America’s high streets.

Those seeking a home for their money find that, unlike petrol stations or grocers, banks are not required to post their most important price, the interest rate. Ask and you will be referred to a specialised member of staff. After a wait, numbers are typed into a computer, followed by pauses for thought, a bit of throat clearing and, often, comments that the current rates on offer may not exceed inflation. Then come hints, doubtless filtered through a compliance department, of the higher returns available on the bank’s investment offerings, which, of course, carry risks (and fees).

Only then is the diligent customer told the…Continue reading

“DEFICITS don’t matter,” said Dick Cheney, then the vice-president, in 2004. He may have meant what he said, yet the administration he belonged to showed a decided lack of conviction when it came to borrowing, with the federal deficit never rising above 3.4% of GDP. Not so the current Republican government. In 2019 and 2020 the deficit is likely to rise to nearly 6% of GDP, the largest, outside of times of economic crisis, since the second world war. In his first term, Donald Trump’s deficits will be nearly as large, on average, as those run by Barack Obama during his presidency, according to analysis by JPMorgan. That is impressive given that Mr Obama faced the worst economic downturn since the Depression. In budgeting, as in so many areas, America is wandering into uncharted territory. What might it find there?

Orthodox economics suggests two ways in which things could go wrong. When an economy is running at close to full tilt, so that firms are borrowing and investing as much as banks are…Continue reading

CHRIS MATTHEWS joined Monzo last May. “A friend mentioned it over a curry. Everyone signed up at once. Nine or ten of us.” Mr Matthews, a structural engineer living in London, transfers money monthly from the big bank where his salary lands to the online upstart, for everyday expenses. Monzo’s smartphone app lets him track his spending precisely. He has found big banks’ security procedures frustrating, but he can block and reactivate his Monzo debit card with a tap on the app.

For some British millennials, Monzo is as close to a cult as a bank can be. Its coral-pink cards are hard to miss. “People in bars will get very excited if they see you are a fellow Monzo user,” says Mr Matthews, who is 29. Founded in 2015, it has had a full banking licence since April. It launched current accounts in the autumn; more than 370,000 have been opened, mainly by customers converting pre-paid cards, with which Monzo began. Tom Blomfield, the chief executive, says its marketing budget has been…Continue reading

NORTH KOREAN athletes will not be the only unusual participants at the winter Olympics in Pyeongchang in South Korea, which begin on February 9th. Anyone can take part, at least virtually. Many contestants will be watched by 360-degree video cameras, able to stream footage via a wireless network. At certain venues around the country sports fans will be able to don virtual-reality, head-mounted displays to get right into the action. Flying alongside a ski jumper, for instance, will offer an adrenalin rush without any risk of a hard landing.

These virtual experiences will be offered by KT, South Korea’s largest telecoms firm. They are meant to showcase the latest generation of wireless technology, known as “5G”. But just as ski jumpers never know exactly how far they will leap after leaving the ramp, it is unclear where 5G will land.

On paper, the new technology should go far. The International Telecommunication Union (ITU), a UN body which helps develop technical standards, has…Continue reading

ROBERT Friedland, the boss of Ivanhoe Mines, a large Canadian firm that digs out copper and zinc in Africa, is not one for pessimism. In his speech to an annual mining industry jamboree, Mining Indaba, in Cape Town, his promises about the potential of the business were as copious as the ore bodies his firm mines. But amid the hyperbole about electric cars, Chinese consumers and the “most disruptive copper discovery in the world” there was a note of panic. Money, he warned, is “a coward”, and may be about to flee.

The cause of fear is a new mining code that was passed by parliament in the Democratic Republic of Congo on January 24th. Congo is Africa’s biggest copper producer; its reserves, mostly in the southern copper belt, are among the world’s richest. As important, it has emerged recently as the world’s leading producer of cobalt, a by-product of copper smelting that is used in batteries for electric cars. It also produces gold, zinc, tin and diamonds.

The new law, which has yet to be signed by Joseph Kabila, the…Continue reading