The Chinese securities regulator has acted on its pledge to prevent abnormal market fluctuations as it put a slew of restrictions on domestic and offshore investors. After years of maintaining its ultra-loose monetary policy, the Bank of Japan is also gearing up for an era of change as it look towards ending negative interest rates. All this and much more on World Street.
Restrictions in place
China is placing new trading restrictions on domestic institutional investors as well as some offshore units in an attempt to keep off a deepening stock market rout.
Officials this week imposed caps on some brokerages’ cross-border total return swaps with clients, limiting a channel that can be used by China-based investors to short Hong Kong stocks.
The tightened restrictions restrictions were implemented following a rout in China's CSI-300 index, which hit a five-year low on February 3. In response to these irregular movements, China's market regulator had previously committed to implementing measures to curb short-selling by unscrupulous actors and promoting long-term investments.
Changing gears
The Bank of Japan is laying the groundwork to end its negative interest rates and revamp other aspects of its ultra-loose monetary framework. However, the central bank is still expected to proceed cautiously with any subsequent policy tightening due to lingering risks.
The clearest hint of a change has come from a summary of debate at the BOJ's January meeting released last week. Some policymakers advocated for an immediate policy change, with one suggesting that the current situation presented a "golden opportunity" to phase out stimulus measures.
Governor Kazuo Ueda emphasized the intention to navigate the transition without significant disruptions upon ending negative rates. Ueda, while not committing to a specific timing for the exit, conveyed a measured approach, leading many investors to speculate on the termination of negative rates, possibly in March or April.
Shut shop
The Softbank backed, generic test maker Invitae is preparing to file for bankruptcy within weeks, the Wall Street Journal reported citing sources.
The company is working with FTI Consulting and law firm Kirkland & Ellis to explore strategic options, including bankruptcy, to address $1.5 billion of debt on its balance sheet, the report stated. Invitae had also flagged concerns about its ability to stay afloat in November, stating that it needed to raise funds to aid its operations and address debt obligations.
Bidding Wars
Drug maker Novartis is reportedly in advanced talks to acquire MorphoSys which develops cancer treatment and has a market value of $1.7 billion, Reuters reported citing sources.
So far, Novartis is the frontrunner in the race to acquire MorphoSys with rival drugmaker Incyte Corp also eyeing the acquisition.
Solo Ride
Stellantis Chairman John Elkann on Monday denied media reports about a possible French-led tie-up with rival Renault.
Elkann said that the Peugeot owner, the world's third largest carmaker by sales, was focused on the execution of its long-term business plan.
Hard Times
Prolonged factory deflation is threatening the survival of smaller Chinese exporters who are locked in relentless price wars for shrinking business as higher interest rates abroad and rising trade protectionism squeeze demand, reports Reuters.
Producer prices have been falling for 15 straight months, crushing profit margins to the point where industrial output and jobs are now at risk and compounding China's economic woes, which include a property crisis and debt crunch.
Logging Out
Nasdaq-listed technology company Yandex NV on Monday said it had agreed a 475-billion-rouble ($5.21 billion) cash and shares deal to sell its Russian assets to a consortium of Russian investors.
Often referred to as "Russia's Google", Yandex developed leading online services, including search, advertising and ride-hailing.
Job Cuts
Estee Lauder will cut about 3 percent to 5 percent of its workforce, the cosmetics giant said, expanding its efforts to shore up profit margins as a rebound in its China business takes longer than expected.
The MAC lipstick maker in an attempt to counter a hit to margins due to weakening demand for its products, had initiated a profit recovery plan last quarter.
AI Wars
Meta's Oversight Board has determined a Facebook video wrongfully suggesting that U.S. President Joe Biden is a paedophile does not violate the company's current rules while deeming those rules "incoherent" and too narrowly focused on AI-generated content, as per Reuters.
The board, which is funded by Meta but run independently, took on the Biden video case in October in response to a user complaint about an altered seven-second video of the president posted on Meta's flagship social network.
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