World Street | China holds rates, HSBC’s $2B buyback, Pentagon’s budget shuffle, KKR’s Thames Water bid, and more

World Street offers a sneak peek into the world of business and economy.

China maintains key lending rates to prioritize financial stability, while HSBC announces a $2 billion share buyback amid rising profits. The Pentagon plans $50 billion in budget cuts to align with Trump’s defense priorities, and KKR makes a bold bid for Thames Water. Meanwhile, legal battles over Musk’s government reforms continue. All this and more on World Street.

Staying the Course

China has kept its key lending rates unchanged, aligning with market expectations as Beijing prioritizes financial stability over interest rate cuts to support the economy.

The People’s Bank of China maintained the one-year loan prime rate at 3.1% and the five-year LPR at 3.6%. These benchmark lending rates—typically offered to top-tier borrowers—are calculated monthly based on submissions from designated commercial banks. The one-year LPR influences corporate and household loans, while the five-year LPR serves as a reference for mortgage rates.

A Payback Move

HSBC, Europe’s largest lender, announced a share buyback of up to $2 billion after reporting a 6.5% rise in annual pre-tax profit, aided by the sale of its Canadian banking business.

While the profit figure narrowly missed LSEG estimates, it surpassed the $31.67 billion consensus compiled by the bank. HSBC’s fourth-quarter pre-tax profit nearly doubled year-over-year to $2.3 billion, following a $3 billion impairment charge in the same period last year. However, quarterly revenue dropped 11% to $2.3 billion. The bank expects to complete the buyback by the end of Q1 2025.

Defence Budget Shuffle

The Pentagon has directed the military to identify $50 billion in potential budget cuts for fiscal year 2026, aiming to redirect funds toward President Donald Trump’s national defence priorities.

“The Department will develop a list of potential offsets to fund these priorities and refocus on its core mission of deterring and winning wars,” said Robert Salesses, acting deputy defence secretary.

These offsets represent about 8% of the Biden administration’s proposed FY26 budget and will be reallocated in line with Trump’s defence agenda.

A Billion-Pound Bid

US private equity giant KKR has made an offer of nearly 4 billion pounds ($5 billion) for a majority stake in Britain’s Thames Water, Bloomberg News reported, citing sources familiar with the matter.

Legal Battles & Wins

While parts of US President Donald Trump’s agenda face legal roadblocks, Elon Musk’s Department of Government Efficiency (DOGE) is seeing courtroom victories.

Labor unions, Democrats, and federal employees have filed lawsuits arguing that DOGE oversteps privacy protections and encroaches on other government branches. However, judges appointed by both Democratic and Republican presidents have not always agreed.

Most notably, attempts to secure temporary restraining orders preventing DOGE from accessing sensitive government databases have failed.

“It is not the job of the federal courts to police the security of the information systems in the executive branch,” wrote US District Judge Randolph Moss, an Obama appointee, in a case involving the Office of Personnel Management.