In the news this week

Author: Amélie Labbé | Published: 14 Dec 2018
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Americas: not calming down

Even financial markets need some rest. But in the US, it’s nearly business as usual. US President Donald Trump has nominated a candidate for a senior role at the Commodity Futures Trading Commission. He has chosen Heath Tarbert, a senior Treasury Department official, to be the next chairman of the financial regulator. Tarbert would replace Christopher Giancarlo, whose term ends is set to end in April 2019. The Senate still needs to vote on the nomination. Trump has also put forward Mark Calabria, currently chief economist for vice president Mike Pence, as the new director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac. 

Former Federal Reserve chair Janet Yellen told delegates at a Women in Housing and Finance holiday event in Washington DC this week that she is concerned about the next financial crisis, She said that the current deregulation drive is a real threat. 'We are in a deregulatory mode and I see a lot of pressures building in the system to go further to really weaken fundamental safeguards that were created in Dodd-Frank," she warned. 

The arrest of Huawei’s chief financial officer in Canada is believed to have increased concerns around a US trade war with China. Markets haven’t been too stable recently and this kind of report could add further fuel to the fire. US markets have been slowly stabilising after markets dropped significantly. In London, the FTSE recently fell at its lowest level in two years.

Asia Pacific: hawks and doves

The Hong Kong Stock Exchange has come to an agreement with its counterparts in Shanghai and Shenzhen to include dual-class shares on the southbound trading of Stock Connect. The aim is to enable PRC investors to have access by mid-2019. Back in July, China’s stock exchanges indicated that the Stock Connect would not be expanded to include companies with different voting right structures.

The Hong Kong Monetary Authority (HKMA) will begin granting virtual banking licences in the first quarter of 2019. The HKMA indicated that while 30 applications had been received as of the end of August 2018, one-third of the applicants did not provide sufficient information on certain critical aspects of authorisation criteria. 

Urjit Patel has resigned from his position as governor of the Reserve Bank of India. Tensions between the Reserve Bank of India and India’s finance ministry have been increasing in recent months as the government wants to see more aid towards the country’s state-owned banks that are struggling with bad loans and an increase in liquidity whereas the central bank has taken a more hawkish stance. 

EMEA: trouble and turmoil

EU economy commissioner Pierre Moscovici has called changes to Italy’s budget insufficient. Though he conceded that the revised plan, which includes a reduction in the deficit target for next year 'a step in the right direction,’ he warned more work is needed. Concerns have been growing over Italy’s economic situation for a few months now. The EU member state welcomed a new government in June, headed by prime minister, Giuseppe Conte. His administration is driven by the leaders of the two political parties that received the most votes in the election: the right-wing League party and the anti-establishment Five Star Movement.

Another week, another Brexit development. London’s derivatives clearinghouses could continue trading with major EU banks for up to a year after a no-deal Brexit, if a new plan is formally approved by the EU Commission. The plan has been welcomed by the head of derivatives group FIA, Walt Lukken, who said the market was 'highly encouraged by the action of the European Commission to grant temporary and conditional equivalence status that will not disrupt these essential markets’.

The European Central Bank will end its quantitative easing programme at the end of the month, after nearly four years. asset-purchase stimulus scheme, despite signs that the eurozone is slowing. It has bought nearly €3 trillion worth of bonds since 2014, when asset-purchasing scheme started, in spite of growth rates in the EU slowing down.

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