Connect with us

Finance

Support Community Development Financial Institutions for Equitable Recovery | Healthiest Communities

Published

on

For America’s most vulnerable populations, substandard housing, environmental pollution, segregation, lack of opportunity and limited access to quality health care are everyday challenges. This pandemic is amplifying these challenges and threatening to further decimate their quality of life. As we prepare for the long recovery ahead, it is time to double down on investing in underserved communities to make sure we are creating equitable opportunities for all.

While federal stimulus funding is providing some immediate relief to a few, it is not going to address the inequities that have so clearly marked COVID-19’s tragic impact on people of color and low-income communities. In many states and communities, black Americans are getting sick and dying at rates far higher than their share of the population.

Low-wage and hourly workers are most likely to have suffered job losses as entire sectors have shut down. While people of all stripes have lost their jobs in recent weeks, data from April shows that the unemployment rates for blacks and Latinos were notably higher than for whites.

Photos: Feeding America

NEW YORK, April 24, 2020:  People pick up food at a food bank distribution site in the Brooklyn borough of New York, the United States, on April 24, 2020. More than 50,000 people have died of COVID-19 in the United States while debates are heightening over reopening the country's economy severely battered by the virus. A total of 870,468 cases have been reported in the United States with the death toll reaching 50,031 as of 11 a.m. Friday ,1500 GMT, according to the Center for Systems Science and Engineering ,CSSE, at Johns Hopkins University. (Photo by Michael Nagle/Xinhua via Getty) (Xinhua/ via Getty Images)

It is essential that we rethink how we invest in our nation’s community development finance system that builds and stabilizes critical assets communities need to thrive: health care centers, grocery stores, food banks, childcare providers and affordable housing.

For decades, community development financial institutions, or CDFIs, have pioneered new ways to spark and sustain growth in local economies. As social enterprises that combine business with purpose, CDFIs are dedicated financial partners for small businesses, health care centers and schools that contribute to a robust job market in struggling American communities. Now, they are the lifelines that will get these local economies up and running again.

Recently, the Small Business Administration opened a second round of its Paycheck Protection Program after Congress replenished the program with more than $300 billion. That amount included $30 billion for small banks and community lenders, including CDFIs. Despite limitations ranging from capacity to liquidity that have prevented many CDFIs from being able to offer PPP resources to their communities, a few (including my CDFI, Reinvestment Fund) worked with small businesses and nonprofits to submit loan applications in the second round.

What we learned from our experience is very telling of the wider, systemic inequity that manifested in favoring large banks and public companies in the first round of funding. For many smaller businesses, a fair chance at accessing the relief funds was marred by a lack of capacity and know-how. For some, language was also a barrier.

In one week alone, Reinvestment Fund helped 76 organizations access PPP funds. We intentionally limited our support to those that needed $200,000 or less to ensure a focus on smaller organizations – what the SBA was actually put in place to do. Building on the long legacy of community development finance, over 60% of organizations we assisted were businesses owned by women and/or people of color, and 1 in 4 were owned by a low-income individual. We provided millions in PPP loans to community development corporations and nonprofits to ensure they could continue to serve those who need them most, as well as childcare providers and small arts organizations that have been devastated by business closure. The average loan size was $65,000, and most businesses had about eight employees.

In this spirit, I urge Congress and investors across the country to step up their support of the CDFIs doing this critical work at this crucial time. We must ensure access to flexible and low-cost capital so that CDFIs have the tools needed to continue to build economic resilience in the face of recession.

Congress can and must increase funding to the Treasury Department’s CDFI Fund now. This agency is the most vital source of capital for CDFIs, providing equity that allows us to lend more to stabilize economies in this critical time.

The Community Reinvestment Act, a law that incentivizes banks to invest in the communities where their customers live and work, also must be strengthened to live up to its original intent. The very communities that are hardest hit by the pandemic are the ones that could stand to lose billions in critical funds based on current efforts to modernize the CRA. The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation must join the Federal Reserve and use the lessons we are learning to reimagine a CRA that does not widen the breach our communities are facing.

We cannot let privilege, wealth or skin color continue to determine a person’s health and well-being. Institutional investors from banks to philanthropies must dig deeper to support solutions that address inequities and strengthen our communities.

We must be bold in our actions and work together toward racial equity, economic recovery and healing. We must deliver on the promise of this great nation – of an America that works for all.

Source link

Finance

Summa Silver Corp. Closes Oversubscribed $5 Million Financing and Welcomes Eric Sprott as Investor

Published

on

By

VANCOUVER, May 28, 2020 /CNW/ – Summa Silver Corp. (“Summa Silver” or the “Company”) (CSE:SSVR) (Frankfurt:48X) is pleased to announce that it has closed the oversubscribed non-brokered private placement (the “Offering”) for gross proceeds of $5,000,000. Participation in the Offering included Mr. Eric Sprott, through 2176423 Ontario Ltd., a corporation beneficially owned by Mr. Sprott.

“Attracting investments from Mr. Eric Sprott and high-quality institutional investors in the Company’s first financing is an important development in our short history,” stated Galen McNamara, CEO of the Company. “With this financing now closed we are pleased to welcome a very strong group of new shareholders as we drive towards an aggressive summer drill program in Nevada which is now entering the final stages of preparation.”

The Company issued 20,000,000 common shares at a price of $0.25 per share pursuant to the Offering. Net proceeds of the Offering will be used for exploration, corporate development, and general working capital purposes. Securities issued pursuant to the Offering are subject to a four month and one-day statutory hold period. The offering is subject to the receipt and final approval of the CSE. 

In connection with the Offering, the Company paid total finder’s fees of $40,600 in cash and issued 1,026,550 finder’s shares and 1,188,950 finder’s warrants (the “Finder’s Warrants”) to eligible finders.  Each Finder’s Warrant is exercisable into one common share of the Company at a price of $0.25 for a period of one year. Eventus Capital Corp. acted as a finder in connection with a portion of the Offering.

Officers and Directors of the Company subscribed for a total of 460,000 shares in the Offering. As a result, the Offering is a related party transaction (as defined under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”)).  The Company relied upon exemptions from the formal valuation and minority shareholder approval requirements under MI 61-101.

About Summa Silver Corp
Summa Silver Corp is a Canadian junior mineral exploration company. The Company’s assets consist of the Hughes property located in central Nevada, and the Donna property located in central British Columbia. Both projects are prospective for precious metal mineralization.

ON BEHALF OF THE BOARD OF DIRECTORS
“Galen McNamara”
Galen McNamara, Chief Executive Officer

The CSE has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.

This news release contains certain statements that may be deemed “forward-looking statements” with respect to the Company within the meaning of applicable securities laws. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur. Although Summa believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance, are subject to risks and uncertainties, and actual results or realities may differ materially from those in the forward-looking statements. Such material risks and uncertainties include, but are not limited to, the Company’s ability to raise sufficient capital to fund its obligations under its property agreements going forward, to maintain its mineral tenures and concessions in good standing, to explore and develop the Hughes or Donna project or its other projects, and for general working capital purposes; changes in economic conditions or financial markets; the inherent hazards associated with mineral exploration and mining operations, future prices of silver and other metals, changes in general economic conditions, accuracy of mineral resource and reserve estimates, the ability of the Company to obtain the necessary permits and consents required to explore, drill and develop the Hughes and Donna projects and if obtained, to obtain such permits and consents in a timely fashion relative to the Company’s plans and business objectives for the projects; the general ability of the Company to monetize its mineral resources; changes in environmental and other laws or regulations that could have an impact on the Company’s operations, compliance with environmental laws and regulations, aboriginal title claims and rights to consultation and accommodation; dependence on key management personnel; general competition in the mining industry; and uncertainties surrounding the COVID 19 pandemic. Forward-looking statements are based on the reasonable beliefs, estimates and opinions of the Company’s management on the date the statements are made. Except as required by law, the Company undertakes no obligation to update these forward-looking statements in the event that management’s beliefs, estimates or opinions, or other factors, should change.

SOURCE Summa Silver Corp.

For further information: [email protected]

Source link

Continue Reading

Finance

The Finance 202: The Fed has bracing news for anyone expecting a sharp economic rebound

Published

on

By

with Brent D. Griffiths

The Federal Reserve just tossed a glass of cold water in the face of anyone predicting a swift economic recovery.

The ongoing crisis brought on by the pandemic shutdowns has caused “steep” job losses, with activity “falling sharply” across the map, the central bank’s latest survey of economic conditions on the ground finds.

And business owners report their outlook for the recovery remains “highly uncertain” and most are pessimistic about the trajectory of the rebound, according to the Fed’s new beige book, which collects anecdotal information from a wide swath of business owners around the country.

The report, covering six weeks of activity through May 18, offers a snapshot of an economy in the teeth of a shock whose scale and duration remain unknown. It is a bracing reminder that as some Americans take advantage of easing restrictions to resume working and spending — and the stock market continues to rally — the economic wound remains open.

The ongoing muddiness of the picture compounds the challenge for policymakers.

As job losses pile up, the Paycheck Protection Program, a cornerstone of the federal relief effort, largely missed the neediest businesses it aimed to save with its first round, a new report from S&P Global finds. Per the study, 63 percent of the PPP’s initial $350 billion in forgivable loans went to sectors less effected by the shutdowns. The loans also skewed toward larger businesses, meaning there were fewer to go around.

“The industries that were hit so hard are still feeling the pain,” S&P Global chief U.S. economist Beth Ann Bovino tells me.

And while the second tranche of the program appears to be doing a better job reaching the most at-risk businesses — so far, it has doled out roughly 2.6 million loans, a million more than the first round, and it still has 39 percent of its cash remaining — it is too soon to evaluate how many jobs the program has salvaged.

“We’re not going to know that until we do a post-mortem on the PPP,” Bovino says. “The first question is, ‘Did PPP keep small businesses alive?’ Once we learn how many of these businesses survive, we can find out how many workers they need.” 

House lawmakers are poised to vote today on a revamp of the program’s rules to give businesses more time and flexibility with the loans. And the question of its efficacy will take on renewed urgency this morning when the Labor Department releases the latest weekly jobless claims number. Economists expect 2.1 million more people filed for unemployment benefits, bringing the ten-week total to over 40 million.

The Fed’s survey suggests a significant number of those job losses will be permanent.

The PPP “has helped many businesses to limit or avoid layoffs, although employment continued to fall sharply in retail and in leisure and hospitality sectors,” the beige book found.

And expectations for a swift bounce back in some regions remain grim. In the Cleveland area, for example, the survey finds only a third of business owners who cut workers expect to rehire close to the full number of them when they reopen. And among the firms closed in the St. Louis area, only a third expect to reopen in the next three weeks; less than a fifth expect demand for their offerings to pick up in the next five weeks.

“There was little in the report to suggest the economy was on the verge of a ‘V’-shaped recovery as of mid-May,” Evercore ISI analysts Krishna Guha and Ernie Tedeschi write in a note.

The macroeconomists’ view from on high offers little more clarity. 

As business owners fumble forward, those trained to understand the nature of major economic shocks appear just as stumped about what’s happening. “Is this a demand shock or a supply shock? Yes. And no,” Paul Krugman, the Nobel Prize-winning economist and liberal New York Times columnist, tells Bloomberg’s Noah Smith. “What’s happening now is that we’ve shut down both supply and demand for part of the economy because we think high-contact activities spread the coronavirus. This means we can’t just use standard macro models off the shelf.”

And when it comes to crafting a federal response, the disease itself “remains the wild card in all this,” Bloomberg’s Timothy O’Brien and Nir Kaissar note. “If the coronavirus stops savaging lives and the economy soon, then the bailout’s scope and duration will come into focus. If the virus remains deadly — particularly if a second surge appears later in the year — then government lifelines will need to lengthen and the bailout’s playbook may need to be rewritten.”

Trump tracker

White House will break decades of precedent by not releasing updated economic projections.

Outlooks this summer would almost certainly predict a downturn: “White House officials have decided not to release updated economic projections this summer, opting against publishing forecasts that would almost certainly codify an administration assessment that the pandemic has led to a severe economic downturn,” Jeff Stein and Josh Dawsey report.

“The White House is supposed to unveil a federal budget proposal every February and then provides a ‘mid-session review’ in July or August with updated projections on economic trends such as unemployment, inflation and economic growth. Budget experts said they were not aware of any previous White House opting against providing forecasts in this ‘mid-session review’ document in any other year since at least the 1970s.”

  • There’s bipartisan consternation over the decision: “Both liberal and conservative critics said the White House should publish its economic projections in line with the precedent set by prior administrations, regardless of the uncertainty caused by the pandemic. The White House under President Barack Obama continued to release these numbers during the Great Recession, although they were unflattering.”

When superpowers collide

China moves forward on Hong Kong crackdown.

Communist Party officials made the decision even as other countries ready potential punishments: “China’s rubber-stamp parliament approved a plan to impose a new national security law on Hong Kong that will dramatically increase Beijing’s power over the city and could bring about an end to its status as an international financial capital,” Anna Fifield reports.

“The National People’s Congress, wrapping up its annual meeting [today], voted to forward the plan to its standing committee for drafting, but the outlines have already been well telegraphed. The law is Beijing’s boldest move yet to undercut Hong Kong’s autonomy and is a direct response to the pro-democracy protests that broke out in the former British colony last year.”

Pompeo declares Hong Kong is no longer autonomous from China.

The decision could have major trade implications: “It will be up to [Trump] to decide the next steps, which could include sanctions on Chinese officials, higher tariffs and visa restrictions. David Stilwell, the assistant secretary of state for East Asia Pacific Affairs, said the administration has a ‘very long list’ of options, but refused to be more specific. But Stilwell said efforts will be made to target the pain on officials in Beijing while mitigating the impact on the people of Hong Kong and the United States,” Carol Morello reports.

“Tensions between Washington and Beijing have been growing steadily over the past year, with belligerent disputes over trade, press freedoms and China’s early reluctance to alert the world to the coronavirus that became a global pandemic. Then last week, China announced a proposed law in which the Chinese Communist Party can deploy ‘relevant national security organs’ to Hong Kong, giving legal cover for the mainland security services to operate in the previously autonomous financial center. Pompeo has called it a ‘death knell’ for Hong Kong.”

House sends different China sanctions bill to Trump: Lawmakerspassed legislation calling for sanctions against Chinese officials for the detention and torture of Uighur Muslims in the country’s western region of Xinjiang,” CNBC’s Tucker Higgins reports. “The legislation was approved by a vote of 413-1 after passing overwhelmingly in the Senate earlier this month.”

Huawei CFO loses court fight against extradition to the U.S.: Huawei Technologies Co’s Chief Financial Officer Meng Wanzhou was dealt a setback by a Canadian court,” Reuters’s Tessa Vikander and Moira Warburton report.

“The ruling, which could further deteriorate relations between Ottawa and Beijing, elicited immediate strong reaction from China’s embassy in Canada, which said Canada is ‘accomplice to United States efforts to bring down Huawei and Chinese high-tech companies’ … The ruling paves the way for the extradition hearing to proceed to the second phase starting June, examining whether Canadian officials followed the law while arresting Meng.”

U.S. seizure of Chinese-built transformer in Houston may foreshadow the future: “Federal officials commandeered the electrical transformer, built by closely held Jiangsu Huapeng Transformer Company, at the port and had it trucked under federal escort to Sandia National Laboratories in Albuquerque, N.M., according to people with knowledge of the matter,” WSJ’s Rebecca Smith reports of equipment that was headed to Colorado.

The event “raises questions about whether more interventions could be ahead as the federal government begins to enforce an executive order [Trump] signed on May 1 that gives federal officials authority to block utilities from using gear sourced from companies deemed influenced or controlled by ‘foreign adversaries’ of the U.S. While the order didn’t identify these adversaries, it was widely seen as targeting primarily Russia and China.”

Coronavirus fallout

The Post’s front page:

The U.S. death toll has reached 100,000.

This has happened in less than four months: “Nearly three months into the brunt of the epidemic, 14 percent of Americans say they know someone who has succumbed to the virus,” Marc Fisher reports.

“These 100,000 are not nameless numbers, nor are they mostly famous people. They are, overwhelmingly, elderly — in some states, nearly two-thirds of the dead were 80 or older. They are disproportionately poor and black and Latino. Among the younger victims, many did work that allowed others to stay at home, out of the virus’s reach. For the most part, they have died alone, leaving parents and siblings and lovers and friends with final memories not of hugs and whispered devotion, but of miniature images on a computer screen, tinny voices on the phone, hands pressed against a window.”

Record unemployment leaves Americans vying for “safe” jobs.

There are signs the pandemic is transforming the labor market: “The scramble for remote, socially distant employment reflects lingering fears on the part of U.S. workers about their physical and financial security as the pandemic stretches into its third month. There have been roughly 40 million applications for jobless benefits since March, and the Trump administration is expected to announce Thursday that even more have joined their ranks,” Tony Romm reports

“For Americans seeking new gigs, or aspiring to return to the workplace, the market may prove daunting, according to a snapshot compiled by ZipRecruiter, a job-posting website. There is a growing number of openings in warehouses as major retailers such as Amazon expand their footprints. But some of the greatest demand is for harder-to-get, ‘safe’ jobs requiring little to no face-to-face contact, including data entry, customer service and other human-resource tasks, said Julia Pollak, the company’s labor economist.” (Amazon CEO Jeff Bezos owns The Washington Post)

More from the U.S.:
  • Americans who kept their jobs are finding their salaries slashed: The hard numbers won’t be in for months, but anecdotal evidence is piling up. On earnings calls, big businesses including The Container Store Group and Lyft have cited what they say are temporary salary reductions. Federal Reserve officials also have found plenty of supporting evidence,” Bloomberg’s Matthew Boesler and Reade Pickert report.
  • Fauci warns about hydroxychloroquine: “Anthony Fauci, the government’s top infectious-disease expert, said hydroxychloroquine isn’t an effective treatment for covid-19 and urged caution as Republicans and Democrats plan their conventions for later this summer,” WSJ’s Andrew Restuccia reports.
  • Cuomo renews push for state aid: New York Governor Andrew Cuomo said … he has a message for ‘our friends’ in Congress: ‘Stop abusing New York. Stop abusing New Jersey. Stop abusing Massachusetts and Illinois and Michigan and Pennsylvania,’” CBS News reports.
The corporate front: 
  • Boeing cutting more than 12,000 U.S. jobs and resumes production of 737 Max: “The company had said it would cut 10 percent of a workforce that numbered about 160,000. A Boeing spokesperson said Wednesday’s actions represent the largest number of job cuts, but several thousand additional jobs will be eliminated in the next few months,” the Associated Press’s David Koenig reports.
  • Disney says its Florida theme parks will re-open in mid-July: “A number of social-distancing measures will be imposed at the parks, said Jim MacPhee, senior vice president of operations for Walt Disney World Resort. Customers will be required to wear masks and undergo temperature checks,” Steven Zeitchik reports. “And MacPhee said parades and fireworks displays will remain temporarily suspended because of the crowds those events attract.”
  • American Airlines plans to cut 30 percent of management and administrative staff: That’s a reduction of about 5,000 jobs, CNBC’s Leslie Josephs reports. “The airline also started offering buyouts to these employees and said it plans to offer new voluntary leave and buyouts for frontline staff, such as flight attendants, next month.”
Around the world:
  • E.U. proposes $825 billion rescue plan: “Proponents are calling it Europe’s ‘Hamiltonian moment,’ after the 1790 agreement, engineered by Treasury Secretary Alexander Hamilton, that transformed the United States from a loose confederation of former colonies into a true federation with a central government. If approved, the E.U. plan could bind the bloc together at a moment when it seemed at risk of spinning apart under the pressure of the pandemic,” Michael Birnbaum and Loveday Morris report from Brussels.
  • Lufthansa rejects E.U.’s $10 billion bailout: The airline’s supervisory board balked at the conditions attached to the funds, Reuters’s Arno Schuetze and Ilona Wissenbach report. “The board, which had been expected to sign off on the aid, instead refused EU requirements that Lufthansa permanently give up take-off and landing slots at Frankfurt and Munich airports, where it commands a two-thirds market share.”
  • Johnson continues to defend embattled aid: “Prime Minister Boris Johnson faced a tough round of angry queries, serious skepticism and even mockery from British lawmakers over his continued support for his top political strategist, Dominic Cummings, who left his London home when he and his wife were stricken by the novel coronavirus to travel 260 miles to a family home,” William Booth and Karla Adam report from London.

Market movers

Dow tops 25,000 for the first time since March.

Markets are surging: “Financial stocks and beaten-up industrials helped power the blue chips — a comeback signaling confidence in the recovery — to a close of 25,548.27. Goldman Sachs, JPMorgan Chase and American Express all had big days,” Thomas Heath reports.

“This comes on top of Tuesday’s 530-point gain and leaves the Dow about 14 percent shy of the all-time high it set in February. It’s now off 10 percent for the year. The Standard & Poor’s 500-stock index advanced 1.5 percent to close above 3,000 points for the first time since March 5. At 3,036.13, the index is now 10 percent off its all-time high and down 6 percent for 2020. All 11 S&P sectors were positive, led by financials and industrials. The S&P technology sector was down most of the day but notched a slim gain at the close.”

Pocket change

SpaceX’s historic launch scrubbed due to weather.

Elon Musk’s moment will have to wait just a little bit longer: “Space officials Wednesday postponed the launch of a manned SpaceX rocket en route to the International Space Station because of problematic weather around Kennedy Space Center in Merritt Island, Fla., and a tropical storm brewing off the coast of the Carolinas,” Jacob Bogage and Christian Davenport report.

“The mission’s next launch window is scheduled for Saturday at 3:22 p.m., from historic launch pad 39A, the same facility that launched the first astronauts to the moon aboard Apollo 11 in 1969. The flight would have culminated years of work and the fulfillment of a risky bet by NASA under the Obama administration to entrust the private sector to fly astronauts. For SpaceX, it was the crescendo of an improbable odyssey that began in 2002 when founder and chief executive Elon Musk set out to start a space company.”

Daybook

Today:

  • The Labor Department reports weekly jobless claims
  • Costco Wholesale, Nordstrom, Dollar General, Ulta Beauty, Abercrombie & Fitch and Burlington stores are among the notable companies reporting their earnings
  • Jet Blue CEO Robin Hayes speaks during a Post live event on the future of travel

Friday:

The funnies

Bull session

The contretemps on CNBC

I don’t think that’s what the opening bell means: “CNBC’s ‘Squawk Box’ hosts Andrew Ross Sorkin and Joe Kernen got into a shouting match in a segment about the road to economic recovery,” Taylor Telford reports.

“Sorkin accused his co-host of downplaying the dangers of the pandemic, including the loss of 100,000 American lives. Kernen retorted that Sorkin was being an alarmist and sparking undue concern, and maintained that his goal was to help investors keep a cool head. The exchange highlights the deep divide in how to respond to what is both a public health and financial crisis. Business and social activity was suspended in much of the country to contain the spread of the deadly virus to devastating results for the economy. Some say the economic damage is worse than the pandemic itself.”

Video of the exchange:



Source link

Continue Reading

Finance

European stocks march higher on hope of economic recovery

Published

on

By

European stocks continued to climb on Thursday as optimism about the reopening and quick recovery of economies outweighed fears of a second wave of coronavirus infections and further escalation in US-China tensions.

London’s FTSE 100 rose 0.7 per cent while and Frankfurt’s Xetra Dax pushed 1 per cent higher in early trading on Thursday, while the continent-wide Stoxx 600 index was also up 1 per cent.

Brussels’ proposal on Wednesday to borrow €750bn for its recovery fund continued to raise hopes of a quicker economic rebound in Europe, as governments gradually lift restrictions on activity across the continent.

Economists at Goldman Sachs said that the EU recovery fund, together with the purchasing of riskier assets by the European Central Bank, will contain sovereign risk in the eurozone in the short term.

“We believe global economic activity has now bottomed, and expect a strong sequential recovery in advanced economies in the second half of 2020, assuming infection rates don’t reaccelerate sharply as economies continue to reopen,” they said.

They added that they expect global gross domestic product to contract by 4 per cent this year, worse than the year following the financial crisis in 2008, but the worst is likely to be over.

Investors continue to watch closely for any fresh clusters of Covid-19 outbreaks. South Korea reported 79 new coronavirus cases on Thursday — the largest rise in daily cases for more than two months — leading the government to strengthen quarantine measures for two weeks in the metropolitan area surrounding capital Seoul.

However, the rally of stock markets in Europe and the US has so far defied fears of a second wave of infections, a slow recovery and the deterioration in relations between Washington and Beijing.

On Wednesday, the benchmark S&P 500 index closed 1.5 per cent higher, building on the rally that has now been running for two months. Futures markets pointed to gains of 0.3 per cent when Wall Street opens later in the day.

Hong Kong’s Hang Seng index bucked the trend, dropping 0.8 per cent on Thursday as Washington took initial steps towards potentially removing the city’s special trade status.

Overnight, US secretary of state Mike Pompeo said the US no longer viewed Hong Kong as autonomous from mainland China. The statement was the most serious response from the Trump administration yet to Beijing’s decision to impose a new national security law on Hong Kong, in a move that has raised concern about the territory’s future as a financial centre.

“No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground,” Mr Pompeo said.

China’s National People’s Congress is expected to pass a motion to begin drafting the security law on Thursday. The legislation had prompted a flare up in street protests in the semi-autonomous territory.

“The moves from Washington, if and when they are actually enacted, will obviously be negative [for Hong Kong] in the short term,” said Andy Maynard, a trader at Hong Kong-based China Renaissance.

Elsewhere in the region on Thursday, China’s CSI 300 index of Shanghai and Shenzhen-listed stocks edged down 0.3 per cent. The renminbi steadied after China’s central bank set the currency’s trading band against the dollar at a stronger rate than expected by analysts.

Japan’s benchmark Topix index rose 1.8 per cent, while Australia’s S&P/ASX 200 climbed 1.3 per cent.

Analysts have cautioned that it may only be matter of time until rising US-China trade tensions are felt even more keenly in markets.

“It is hard not to see the remarks by Mike Pompeo on Hong Kong overnight as anything but a gloves-off restart of US political hostilities towards China which will probably see trade tensions worsen and tit-for-tat retaliation commence,” said Robert Carnell, head of Asia-Pacific research at ING. “Personally, I struggle with the markets’ calm in the face of this.”

Oil prices fell after reports that Russia is considering easing its supply cuts from July. Brent crude, the international benchmark, fell 2.1 per cent to $34.01 per barrel and West Texas Intermediate, the US marker, dropped almost 3 per cent to $31.85 a barrel.

Source link

Continue Reading

Trending