Credit Suisse posts ‘unacceptable’ loss after Archegos collapse; markets await ECB decision – business live

Rolling coverage of the latest economic and financial news

  • Credit Suisse lost 757m Swiss francs in Q1
  • Bank will boost capital reserves
  • Swiss regulator starts enforcement proceedings

7.37am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

“Our results for the first quarter of 2021 have been significantly impacted by a CHF 4.4 bn charge related to a US-based hedge fund. The loss we report this quarter, because of this matter, is unacceptable.

Together with the Board of Directors, we have taken significant steps to address this situation as well as the supply chain finance funds matter.

Among other decisive actions, we have made changes in our senior business and control functions; we have enhanced our risk review across the bank; we have launched independent investigations into these matters by external advisors, supervised by a special committee of the Board; and we have taken several capital-related actions.

Related: Credit Suisse executives depart after Archegos and Greensill losses

Alongside announcing its earnings, the bank said it will issue mandatory convertible notes (MCN) convertible into 203 million shares, which should net the bank more than 1.8 billion Swiss francs. That would boost its core capital level to around 13% from 12.2%.

Thomas Gottstein, CEO, comments on the first quarter 2021 financial results. More details are available here:

“We believe that lockdowns increase the probability of prolonged dovish ECB policy. Restrictions put pressure on European economic activity, especially in the services sector, limiting the aggregate demand.

As long as economic activity remains subdued, the ECB will probably keep the key rate at historical lows and will continue to purchase bonds as they try to preserve favorable financing conditions. The ECB has already increased the pace of bond purchases at one of the latest meetings, so changes to the current monetary policy look very unlikely at the upcoming meeting. The economy will likely gather pace in the second half of 2021 amid a better epidemic situation, massive vaccination, and global economic recovery.

European Opening Calls:#FTSE 6930 +0.50%#DAX 15270 +0.49%#CAC 6243 +0.52%#AEX 714 +0.62%#MIB 24323 +0.67%#IBEX 8570 +0.59%#OMX 2240 +0.53%#STOXX 4000 +0.58%#IGOpeningCall

Related: Coronavirus live news: India hits global record of 314,835 new cases; US passes 200m vaccines

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China had ‘apparently known for years’ about pandemic risks of wet markets

China had “apparently known for years” about pandemic risks which came from places like wet markets, according to Sky News host Paul Murray.

It comes amid reports Chinese officials had identified Huanan market as a pandemic risk years before coronavirus emerged.

“But are you surprised,” Mr Murray said.

“These are the same people who, of course, as soon as the virus started to move around Wuhan locked domestic travel but kept international travel going because they didn’t want to lose face.”

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Fish Lane Markets

South Brisbane

Fish Lane Markets in South Brisbane are a new boutique indie laneway market happening once a month in Fish Lane’s leafy Town Square, with the next market scheduled for Sunday June 6.

Located under the railway bridge and surrounded by landscaped gardens, the markets are where you;ll find some of Brisbane’s best local designers, craftspeople and makers.

You can expect to find vendors selling ceramics, art, homewares, children’s toys, relaxation & skincare, pots, plants, eco and zero waste products, as well as locally made fashion.

You can expect to find vendors selling ceramics, art, homewares, children’s toys, relaxation & skincare, pots, plants, eco and zero waste products, as well as locally made fashion.

Fish Lane Markets

Fish Lane

South Brisbane

Jun 6 10-2

Free entry

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Asia’s largest ride-hailing companies appear headed for U.S. markets

Two of Asia’s largest and most prominent ride-hailing services are reportedly making moves to go public in the U.S.

Didi Chuxing filed confidentially for a U.S. IPO that would value it at $70 billion to $100 billion, Bloomberg News reported Friday. Didi, the largest ride-hailing business in China, is also considering a later listing in Hong Kong, Bloomberg reported, citing unnamed sources.

SoftBank Group Corp.
-backed Didi, which bought the China business of Uber Technologies Inc.
in 2016, had been expected to go public by the end of 2021 but was reported last month to have been speeding up its plans for an initial public offering as China recovers from the coronavirus pandemic.

See also: IPO market cools as sentiment moves from ‘wildly overoptimistic to optimistic’

Uber still owns a minority stake in Didi as well as in Grab, a Singapore-based ride-hailing company that is also said to be going public. The Financial Times reported this week that Grab, which also does food delivery and more, plans to go public in the U.S. via a merger with a special-purpose acquisition company, or SPAC, controlled by investment firm Altimeter Capital. Axios separately reported the news Friday morning, calling it “a matter of when, not if.”

Uber secured its interest in Grab in a similar transaction to Didi, selling its business in those two companies’ home markets while taking home a piece of their former competitors. Uber had a 15.4% stake in Didi and a 23.2% stake in Grab as of Sept. 30, 2018, and valued its stakes at $6.3 billion for Didi and $2.34 billion for Grab as of the end of 2020, according to filings with the Securities and Exchange Commission. Uber also disclosed that it was seeking to sell about $500 million worth of its Didi stake in the first half of this year.

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Markets Live, Wednesday 31 March, 2020

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Priced-out city first-home buyers turn to ‘rentvesting’ in regional markets

Desperate first-home hopefuls locked out of expensive capital cities are renting in the city and investing in more affordable regional property markets rather than leaving their cash in the bank, buyer’s agents said.

Stunning major-city price growth has caught out many buyers, quickly leaving them behind since the market began to bounce back last year.

The recovery has continued this year with the strongest pace of growth for years. Sydney property values jumped 2.5 per cent and Melbourne rose 2.1 per cent in February alone, on CoreLogic data.

As a result, many potential first-home buyers have been priced out of their dream suburbs despite reasonable borrowing power and good deposits – which, in an ultra-low interest rate environment, are all but collecting dust in the bank.

It has prompted many first-home buyers in the past six months to reconsider “rentvesting”, BFP Property Buyers founder and principal Ben Plohl said – parking their money in an investment property while they continue to rent in their desired location.

In one instance, a first-home buyer with a $1 million budget struggled to find a suitable two-bedroom apartment on Sydney’s lower north shore.

“Unfortunately, given the market has run away from some people, we’ve said unfortunately you can’t get into the suburb or pocket where you rent now,” Mr Plohl said.

The auction of 10 Dorritt Street Lane Cove.
Dozens of buyers are turning up at auctions, squeezing many out of the market. Photo: Peter Rae

That buyer has since split their $1 million budget into two regional markets with plans to buy a property in Albury-Wodonga and another in Bendigo.

While it is unlikely they will cash out of those markets anytime soon, the plan is to build a property portfolio in locations with strong rental yields and capital growth potential to eventually buy back into Sydney, Mr Plohl said.

Another first-home buyer on the Central Coast with a budget of $550,000 decided to rentvest in Newcastle after being priced out of the one-bedroom apartment market in Sydney’s inner west.

Instead they purchased a three-bedroom house on a 600-square-metre block in Maryland, 14 kilometres west of Newcastle’s CBD, which Mr Plohl said had already seen some price growth.

These buyers are not alone, with a third of Gen Zs wanting the ability to work and rent in the city while still owning an investment property in a holiday town, according to ING Australia research that surveyed more than 1000 Australians.

The survey also highlighted top reasons to invest in property, with 40 per cent of Australians wanting to safeguard their future or their family’s future, while 37 per cent were motivated by low interest rates and a similar number wanted extra income.

Melbourne first-home buyers are also turning to rentvesting after struggling to get onto the property ladder in the city, with Victoria’s housing market taking off since restrictions eased both in the capital and surrounding regional markets.

“Through COVID [regional markets] have outperformed metro cities so a lot of people are getting their cake and eating it too,” said Cate Bakos, president of the Real Estate Buyers Agents Association of Australia.

Auction of 3 Wilgah Street St Kilda East. Saturday 5 December, 2020.
Pent-up demand in Melbourne has also seen the auction market make a remarkable come-back. Photo: Stephen McKenzie

In a low-interest-rate environment many buyers are able to yield a strong rental return that will cover mortgage repayments or even deliver some positive income, Ms Bakos said.

One Melburnian bought a house in Grovedale, Geelong, for $451,000 as an investment property after being priced out of Boronia, which had a median house price of $700,000 over the 12 months to December 2020 on Domain data.

“They’re hoping to improve the property with a bit of elbow grease, get the rent up and work on the property to pay itself down,” Ms Bakos said. “When they have a bit of equity they will tap into that and buy a home in Melbourne.”

Buyers were cautioned not to expect short-term gains in regional markets, Ms Bakos said, despite recent performance, because rentvesting was better suited to buying and holding for a longer period.

Streamline Property Buyers managing director Melinda Jennison said she had received dozens of inquiries from first-home buyers in Sydney and Melbourne hoping to buy in Brisbane.

“We get about 10 to 15 inquiries every week because they’re priced out of Sydney and Melbourne,” Ms Jennison said.

One Sydney buyer was hoping to purchase an entry-level three-bedroom house in Brisbane along a transport line for about $600,000 with a predicted growth of 20 to 30 per cent in the next five years in Brisbane, Ms Jennison said, yet was facing strong competition.

“That’s over $150,000 of equity growth … that’s more than the client can save themselves. At least their money is working harder for them by parking their money in property while they continue to save.”

ANZ has revised its forecast expecting Brisbane house prices to rise by 16 per cent by year’s end but Finder’s senior editor for home loans Sarah Megginson said buyers needed to be wary of the fluctuating property cycle.

“The goal of rentvesting is to buy an asset that appreciates in value over time, so you can use the profits to one day buy your own home. But, there is the risk that you’ll buy an investment property that doesn’t grow in value,” Ms Megginson said.

“We’re not out of the water with COVID-19 just yet, and there is still potential for future market volatility – all it would take is another outbreak and extended lockdown or economic slump to see market conditions shift really sharply.”

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ACCC calls for major overhaul of ‘outdated’ Murray-Darling Basin water markets

Australia’s $2 billion water market needs a major overhaul, according to the Australian Competition and Consumer Commission.

An 18-month study by the competition watchdog found it was not illegal to manipulate the Murray-Darling Basin’s water markets, but recommended water deals be subjected to greater scrutiny and transparency.

The ACCC said the market had evolved as a by-product of decades of reform aimed at recovering water from the environment and was now in desperate need of its own dedicated set of reforms.

It found a lack of attention by federal and state governments had led to widespread mistrust in the market and a belief that it was rife with manipulation and corruption.

The anger and suspicion boiled over during the recent drought, prompting Prime Minister Scott Morrison to commit to the ACCC inquiry ahead of the 2019 federal election.

“It is not surprising that the requirements of a well-functioning market have not been front and centre [over the last two decades],” ACCC deputy chair Mick Keogh said upon the release of the 700-page report.

“So what we are saying is that if you want people to be confident in the market, to invest appropriately, to maximise water efficiency, then you really need people confident in the fairness of the market, and that will require some work.”

At the heart of the ACCC’s 29 recommendations was the establishment of a new “Water Markets Agency”, which would function in a similar – though scaled back – manner to the Australian Energy Market.

Through Basin-wide legislation, the new agency would have the power to oversee and regulate the market, as well as the traders, brokers and other intermediaries that operate in it.

It would impose a mandatory code of conduct for brokers and intermediaries — at the moment only a voluntary code exists.

“It would be a single source of truth, so all the information on water trades would be reported to the agency,” Mr Keogh said.

In addition, the report said, the quality of that data would be improved to “enable trades to be traced and traders to be identified across regions and multiple accounts”.

The ACCC report was deeply critical about the state of data availability across the water market.

It found that data on water prices and trades was currently spread across multiple Basin state registers and the Bureau of Meteorology.

The complexity made it nearly impossible for irrigators to make confident decisions about when to buy or sell water.

“We analysed eight million transactions between 2012 and 2019 and we found them incredibly difficult to string together in a way that gave you a clear picture of what was happening in the market,” Mr Keogh said.

“Forty per cent of them did not have a price associated with them, a lot of them don’t have a date associated with them, and many occurred across multiple jurisdictions.”

Attempts made between 2010 and 2014 to address the problem and harmonise the collection of data failed, but the ACCC believed there were a number of low cost technologies available that could to fix the problem.

“I cite the example of the single-touch payroll system, where businesses can use a range of accounting software systems that can each report the required information to the Australian Tax Office,” Mr Keogh said.

“We see a similar model applying here, where all the existing registers and irrigation infrastructure operators would continue as they are now, and the only additional requirement would be to regularly report that information to a central repository.”

The report also recommends state governments work together the rules and processes they use to announce water allocations for irrigators.

Mr Keogh said it was untenable for the market to continue without major reform.

“It will just destroy the confidence of the participants and all the benefits that it brings will be quickly eroded,” he said.

The lack of clear, digestible market information led many to suspect that large corporate agribusinesses and non-farming investors were manipulating the market during the drought.

The ACCC found that in 2018-19, “institutional investors” accounted for about 11 per cent of the water allocations purchased and 21 per cent of the allocations sold.

A single big investor was the largest trader of water in that period.

But ultimately the ACCC found no evidence of market manipulation and said large movements in price were not the result of trader misconduct.

“There is no law against market manipulation in the Murray-Darling Basin water markets,” Mr Keogh said.

Water Minister Keith Pitt would not commit to a timeline for implementing the ACCC’s reforms.

But he said the government was concious that Basin communities were “exhausted” by the slow pace of reform.

Constitutional responsibility for water management rests with state governments and implementing 90 per cent of the recommendations would require them to cooperate with the federal government.

“The report took two years to complete,” Mr Pitt said.

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Murrumbateman Village Markets on Saturday morning

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Murrumbateman Village Markets on Saturday morning
“. This story was presented by MyLocalPages Australia as part of our local and national events & what’s on news services.

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Nature, markets kind to cattlemen. Crime, officialdom are not.

By ERWIN CHLANDA It’s a room full of smiles as cattlemen are gathering for their annual meeting after record rains and beef prices in the clouds. The problems retiring president of their association, Chris Nott, referred to in his speech were not of their making, nor nature’s: He started his farewell address reflecting on crime […]

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#Nature #markets #kind #cattlemen #Crime #officialdom

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ASX ends 0.66pc up, energy and health top

Australia’s share market has closed higher and ended a run of three consecutive days of losses.

The S&P/ASX200 benchmark index closed up by 44.3 points, or 0.66 per cent, to 6752.5 on Monday.

The All Ordinaries closed higher by 35.4 points, or 0.51 per cent, at 6995.

The results were the market’s biggest gain in more than a week.

There were gains of more than two per cent in the energy, utilities and health sectors.

The Australian dollar was buying 77.24 US cents at 1619 AEDT, lower from 77.44 US cents at Friday’s close.

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