Every week we round up the biggest stories in business, finance and currency. This week: a record stock high in Hong Kong, Toyota pulls out of Ontario, Switzerland offers negative-yield bonds and more.
France increases stake in Renault
The French government upped its stake in automaker Renault from 15% to 19.7%. The move allowed the government to influence the company to adopt a rule giving double voting rights to investors who have held shares in the company for at least two years. Many are concerned by what they perceive as the persistent meddling of the French government in the private sector.
Hong Kong Highs
Hong Kong’s Hang Seng stock market index briefly skyrocketed to over 27 000 – the highest mark it has reached since 2008. The increase is thanks in no small part to a recent decision by the Chinese government to allow mainland mutual funds access to the Shanghai-Hong Kong Stock Connect scheme, which links markets in Hong Kong with those in China.
Get used to Slow Growth
The International Monetary Fund (IMF) has warned that many countries are facing a reduced growth potential and must begin to adapt to the reality of stagnating living standards. Ageing populations in many developed countries will necessitate a greater and greater portion of public expenditure and lead to much slower growth than what was seen in previous decades. Meanwhile in developing countries, slowing productivity will curtail growth potential. China, once home to double-digit growth figures has been slowing over the last few years which is indicative of this trend.
Kim Backs the AIIB
China’s proposed Asian Infrastructure Investment Bank has gained the backing of Jim Yong Kim, president of the World Bank. The United States has taken a skeptical position on the proposed bank despite growing international support.
Switzerland’s negative-yield bonds
Switzerland has unveiled ten year sovereign negative-yield bonds, becoming the first country in history to do so. Other, more short term negative-yield bonds have been issued by other countries in the past, but never for such a long period of time. Buying ten year swiss bonds will, rather than return a profit to the buyer, result in the peculiar situation of actually oweing the Swiss government money. The bonds yield an annual -0.055%, but this isn’t as terrible of a deal as it may seem considering Swiss banks are offering interest rates of -0.75%. The negative interest rates and negative-yield bonds are designed to devalue the currency and promote investment and spending – why pay to keep your money in the bank when you could invest or spend it.
Samsung stock up 35%
Samsung announced that will make a profit of $5.4bn in the first quarter of 2015, far less than the first quarter of 2014 but much higher than the two quarters which followed. After the company’s stock price was hammered last year the price has now risen by 35% since October and this week will see the highly anticipated release of the Galaxy S6 smartphone.
Ay, Corolla Trades Ontario for Mexico
Toyota has announced that it will be moving Corolla production from Woodstock and Cambridge Ontario to Mexico. Over 3 million Corollas have rolled off production lines in Ontario plants since the late 1980’s. The cost-cutting measures has concerned auto-workers despite reassurance from the company that Ontario plants will be upgraded to produce more “high-value” vehicles.
Canadian rates hold, Loonie stays low
As was expected the Bank of Canada has held interest rates steady at 0.75%. Tumbling oil prices have hit the Canadian economy hard and delayed any thoughts of raising interest rates in order to bolster the struggling loonie. Interest rates, and the value of the loonie will likely remain low for the foreseeable future, or until the price of oil and the economy recovers.
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