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May 12 (Reuters) – Pilipinas Shell Petroleum Corp SHLPH.PS:
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QTRLY GROSS REVENUE 59.98 BILLION PESOS VERSUS 40.43 BILLION PESOS
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DELIVERS 3.5 BLN PESOS NET INCOME IN Q1
Source text for Eikon: ID:nPSX3yWKnc
Further company coverage: SHLPH.PS
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Chinese developer Sunac misses bond repayment
HONG KONG, May 12 (Reuters) – Sunac China 1918.HK did not make an interest payment on a $750 million offshore bond by the time a grace period expired, the company said in a statement on Thursday.
It had been due to pay $29.5 million in interest on the October 2023 bond that was required to be repaid last month.
(Reporting by Scott Murdoch; Editing by Tom Hogue)
UPDATE 3-Hong Kong c.bank props up currency, first intervention since Oct 2020
Adds details of second intervention
By Donny Kwok and Alun John
HONG KONG, May 12 (Reuters) – The Hong Kong Monetary Authority (HKMA) stepped into currency markets for the first time in 18 months, twice buying Hong Kong dollars to stop the local currency weakening and breaking its peg to the U.S. dollar.
The de facto central bank bought HK$1.586 billion ($202 million) from the market in U.S trading on Wednesday and a further HK$4.082 billion in Hong Kong trading on Thursday.
The Hong Kong dollar HKD=D3 is pegged to a tight band of between 7.75 and 7.85 versus the U.S. dollar. It has been softening as U.S. interest rates rise while a surfeit of cash in the local banking system keeps Hong Kong rates pinned down.
One-month U.S. dollar Libor USD1MFSR=X, a benchmark lending rate, is around 0.8% – its highest since April 2020 – while the Hong Kong equivalent, one-month Hibor HIHKD1MD=, is under 0.2% and barely above its COVID-19 pandemic lows.
HKMA’s Chief Executive Eddie Yue said last week that as it intervenes and funds flow out of Hong Kong’s system, local rates should rise, removing the incentive for market players to conduct “carry trades”, and hence keep the Hong Kong dollar trading within its band.
“All these are normal operations in accordance with the design of the Linked Exchange Rate System,” he said.
This arrangement was created in 1983 and has survived many crises over the years, including an attack from famed short-seller George Soros during the 1997-98 Asian financial crisis.
The HKMA last intervened in October 2020. That year it sold HK$383.5 billion worth to rein in the strengthening currency, according to HKMA data, while it last intervened at the weak end of the band in March 2019.
After both interventions, the aggregate balance aHKSETBAL – the key gauge of cash in the banking system – will decrease to HK$331.923 billion on May 16, an HKMA spokeswoman said on Thursday.
It dropped to around HK$50 billion in 2019 after the last series of HKMA interventions to stop the currency weakening.
In 2020, it surged to more than HK$450 billion as capital rushed into Hong Kong, drawn by higher interest rates locally than in the U.S. and a series of large initial public offerings.
(Reporting by Donny Kwok; Editing by Stephen Coates, Kenneth Maxwell and Bernadette Baum)
((donny.kwok@thomsonreuters.com; +852 3462 7745; Reuters Messaging: donny.kwok.reuters.com@reuters.net))
RPT-India’s cbank likely to raise inflation projection in June meeting, consider more rate hikes-source
Repeats story from late Wednesday with no changes to text
By Aftab Ahmed and Nupur Anand
NEW DELHI, May 11 (Reuters) – India’s central bank is likely to raise its inflation projection for the current fiscal year at its June monetary policy meeting and will consider more interest rate hikes, a source aware of the development said on Wednesday.
In its first rate move in two years and its first hike in nearly four, the Reserve Bank of India (RBI) raised the repo rate INREPO=ECI by 40 basis points (bps) to 4.40% following a emergency meeting earlier this month.
In April, RBI raised its inflation forecast for the current fiscal year to 5.7%, 120 bps above its forecast in February, while cutting its economic growth forecast to 7.2% for 2022/23 from 7.8%.
The RBI will “certainly” raise the forecast again in June, as it did not want to do it in the off-cycle emergency meeting in May, said the source, who did not want to be identified as the discussions are private.
The source did not detail how much the price forecast would be raised, but said that the RBI’s current view trails the International Monetary Fund’s inflation forecast of 6.1% for India.
The next meeting of the MPC is scheduled for June 6-8.
“The MPC did an off-cycle hike as it did not want to bunch off a big hike in just two meetings in June and August. They wanted to spread it (out),” the source said.
Inflation in March shot up to 7%, a 17-month high, on the back of rising food prices. It has now been above the upper limit of RBI’s 2%-6% tolerance band for three straight months and is likely to remain so in April.
The RBI cut the repo rate by a total of 115 bps in 2020 to cushion the impact of the COVID-19 pandemic and anti-virus measures. It is now looking to reverse those cuts at a faster pace than it wanted to earlier, the source said.
Before the crisis in Ukraine erupted, the RBI expected retail headline inflation to peak by March and then ease back towards 4% in the second quarter of 2022/23 that started on April 1. nL1N2UP0RV
‘KILLING DEMAND’
India’s economic recovery could be hurt by rising borrowing costs, as the central bank is likely to fully focus on fighting inflation.
“The RBI had said in the past that inflation was on account of supply concerns. The same narrative remains but now the supply side constrains have worsened. Now, RBI is forced to act,” the source said.
In the next 6-8 months, all central banks including RBI will be “killing whatever demand” there was in the economy in their fight to contain inflation, the source said.
“The risk of stagflation remains high and the world’s most powerful central banks do not have a weapon against it. Let’s wish that does not happen,” the source said.
The European Central Bank has already warned that Russia’s invasion of Ukraine could lead to a combination of low growth and high inflation, known as stagflation.
The official also said that the RBI will help the government to bring down bond yields using various instruments, though the degree of help would not be as much as that in the last two years.
On Monday, Reuters reported the government has asked the central bank to either buy back government bonds or conduct open market operations to cool yields that have hit their highest levels since 2019. nL2N2X11GS
The RBI has sold dollars to prop up the rupee, which fell to a record low on Monday and closed at 77.47 against the dollar. It intervened in the market in the last three days and will do so again if volatility persists.
The official said that the central bank was not targeting any particular levels but does not like “jerky” movements of over 0.50 Indian rupees against the dollar in one day.
(Reporting by Aftab Ahmed in New Delhi and Nupur Anand in Mumbai; Editing by Kim Coghill)
((Aftab.Ahmed@thomsonreuters.com; +91 99109 33884; Reuters Messaging: twitter: @aftabahmed00))
Investors cut valuations of Latam startups -Creditas founder
By Tatiana Bautzer
NEW YORK, May 11 (Reuters) – Investors have been reducing valuations of Latin American startups during the global stock market rout and in an environment of higher interest rates, said Sergio Furio, founder of unicorn fintech Creditas.
“Startups that raised cash at peak valuation, for example last July last year, will have to accept a reduction if they need more money this year”, said Furio. Following the public markets, multiples attributed to private companies fell. Shares of Latam’s largest fintech, digital bank Nubank NU.N, sank 60.6% this year.
So startups are trying to conserve cash, Furio added. Creditas’ latest funding was in January, a $260 million round in which the valuation reached $4.8 billion. The fintech will not raise capital this year, Furio said in an interview with Reuters before meeting with investors in New York.
The startup expects to moderate credit growth, as its consumers deal with higher inflation and lower disposable income. It also intends to present progress in the operation of Voltz, an electric motorbike maker in which Creditas invested 100 million reais.
The investment banking unit of Latin America’s largest bank, Itau BBA, is hosting its first conference in New York with Latin American CEOs since the start of the pandemic, with around 150 companies headquartered in Brazil, Mexico, Colombia and Argentina.
Emerging market investors have been more interested in Latin America since the Ukraine war, as the region is relatively insulated from the higher geopolitical risks. They also have become more demanding.
Alex Ibrahim, head of international markets at the New York Stock Exchange (NYSE), expects markets to reopen for new equity offerings from Latin America by September.
“Investors are more selective, demanding a clear path to profitability from startups”, Ibrahim said. Investors are more cautious about companies that burn cash. While the market is closed, the NYSE has been working to prepare candidates, including tech and industrial companies, to come to markets when there is a window.
(Reporting by Tatiana Bautzer; Editing by David Gregorio)
((tatiana.bautzer@tr.com; Tel: +55-11-5644-7756; Mob: +55-119-4210-4173; Reuters Messaging: tatiana.bautzer.thomsonreuters.com@reuters.net))
Vietnam leader interested in Biden economic framework, but needs to study details
WASHINGTON, May 11 (Reuters) – Vietnamese Prime Minister Pham Minh Chinh said on Wednesday that Hanoi was interested in helping the United States realize the aims of its proposed economic framework for the Indo-Pacific, but needed time to study the details.
Chinh, in Washington for a two-day summit between President Joe Biden and Southeast Asian leaders starting on Thursday, said he had had discussions on Biden’s Indo-Pacific Economic Framework (IPEF) with U.S. officials earlier on Wednesday.
“We would we would like to work with the U.S. to realize the four pillars of that initiative,” he told a question-and-answer session after delivering a speech at Washington’s Center for Strategic and International Studies.
He said the pillars were supply-chain stability, digital economy, the fight against climate change and a fourth related to labor, tax and combating corruption.
“These are very important to the U.S., to Vietnam and other countries alike,” he said, speaking through a translator.
However, Chinh said the “concrete elements” of the initiative had yet to be clarified.
“We are ready to engage in discussion with the U.S. to clarify what these four pillars will entail and when that is clarified, we would have something to discuss,” he added. “We need more time to study this initiative and see what it entails.”
Asian countries have been frustrated by a U.S. delay in detailing plans for economic engagement with the region since former President Donald Trump quit a regional trade pact in 2017, leaving the field open to U.S. rival China.
At a virtual summit with ASEAN last October, Biden said Washington would start talks about developing what has become known as IPEF, which aims to set regional standards for cooperation, but diplomats say this is likely to feature only peripherally this week. nL2N2X31PW
Japan’s Washington ambassador said this week IPEF is likely to be formally launched when Biden visits Japan later this month, but its details were still under discussion. nL2N2X10Z7
Analysts and diplomats say only two of the 10 ASEAN countries – Singapore and the Philippines – were expected to be among the initial group of states to sign up for negotiations under IPEF, which does not currently offer the expanded market access Asian nations crave given Biden’s concern for American jobs.
Chinh hailed the blossoming of Hanoi’s relations with the United States in recent decades and the explosion of bilateral trade to almost $112 billion annually, although he said the two sides should further advance cooperation to deal with the legacy of their hostility in the Vietnam War.
(Reporting by David Brunnstrom, Simon Lewis and Rami Ayyub
Editing by Alistair Bell)
((david.brunnstrom@thomsonreuters.com; +1-202 354 5835; Twitter: @davidbrunnstrom;))
Nasdaq falls more than 3% on inflation data
NEW YORK, May 11 (Reuters) – US stocks ended sharply lower on Wednesday, with the Nasdaq dropping more than 3% and the Dow falling for a fifth straight day after US inflation data did little to ease investor worries over the outlook for interest rates and the economy.
The benchmark S&P 500 lost 1.7% and is now down 18% from its Jan. 3 record closing high.
The Labor Department’s monthly consumer price index (CPI) report suggested inflation may have peaked in April but is likely to stay strong enough to keep the Federal Reserve’s foot on the brakes to cool demand.
The CPI increased 0.3% last month, the smallest gain since last August, while economists polled by Reuters had forecast consumer prices gaining 0.2% in April.
“It did not dispel the notion that there’s more to go in terms of reining in inflation,” said Quincy Krosby, chief equity strategist at LPL Financial in Charlotte, North Carolina.
“The market is trying to make sense of whether we’re also going to see growth pullback more than expected” as the Fed raises rates, she said.
Apple (AAPL) shares dropped 5.2% and were the biggest weight on the Nasdaq and S&P 500 indexes.
“There is much focus right now on Apple,” Krosby said. “Given its weighting, Apple is the bellwether for the market from many perspectives.”
Investor concerns about whether the Fed will continue to hike interest rates aggressively have hit growth stocks especially hard. The consumer discretionary and technology sectors fell about 3% each, leading S&P 500 sector declines.
The Dow Jones Industrial Average fell 326.63 points, or 1.02%, to 31,834.11, the S&P 500 lost 65.87 points, or 1.65%, to 3,935.18 and the Nasdaq Composite dropped 373.44 points, or 3.18%, to 11,364.24.
The Dow’s five-day decline was its longest losing streak since mid-February.
Energy shares ended higher and helped to limit some of the declines in the S&P 500 and Dow. Exxon Mobil Corp. (XOM) shares were up 2.1%.
Value outperformed growth shares in general. The S&P growth index was down 2.8% on the day versus a 0.5% decline in the S&P value index.
Investors are anxious to see more data on inflation Thursday, when US producer price index data is due.
Stocks have fallen this year following the rate concerns, as well as the Ukraine war and the latest coronavirus lockdowns in China.
Coinbase Global Inc. (COIN) slid 26.4% after its first-quarter revenue missed estimates amid turmoil in global markets that has curbed investor appetite for risk assets.
Volume on US exchanges was 15.38 billion shares, compared with the 12.75 billion average for the full session over the last 20 trading days.
Declining issues outnumbered advancing ones on the NYSE by a 2.16-to-1 ratio; on Nasdaq, a 3.70-to-1 ratio favored decliners.
The S&P 500 posted 1 new 52-week highs and 67 new lows; the Nasdaq Composite recorded 10 new highs and 1,221 new lows.
(Reporting by Caroline Valetkevitch; additional reporting by Amruta Khandekar, Devik Jain in Bengaluru and Sinéad Carew in New York; Editing by Arun Koyyur and Aurora Ellis)
April inflation ‘hot’ but does not see 75 bps Fed rate increase ‘for now’
May 11 (Reuters) – US April inflation at 8.3% remained “hot” but does not yet require the Federal Reserve to switch to three-quarter point rate increases, St. Louis Fed President James Bullard said on Wednesday.
The Fed’s current plan for half point increases is “a good benchmark for now,” Bullard said on Yahoo Finance. Large increases are “not my base case … I think we have a good plan in place,” Bullard said.
The comments from one of the Fed’s most vocal advocates of faster rate hikes show how tightly US central bankers have coalesced around the plan outlined by Fed Chair Jerome Powell last week to raise rates by half a point at the next two Fed meetings, and take stock along the way of how inflation is behaving and what more might need to be done.
Bullard, however, repeated on Wednesday that he feels the Fed will need to keep moving in those half-point increments for the remainder of 2022, pushing the federal funds rate to a range of between 3.25% and 3.5% by the end of the year.
That’s higher than the level many other Fed officials have projected so far.
But Bullard said data could push the Fed in either direction still.
“I think it is more state contingent … We want to take it one meeting at a time. It is possible inflation could moderate a lot,” he said. It is possible the real economy could take twists and turns … We don’t want to be promising today what we will do in December.”
(Reporting by Howard Schneider; Editing by Chris Reese and Sandra Maler)
Colombia to perform internal public debt swap
BOGOTA, May 11 (Reuters) – Colombia will perform an internal public debt swap to improve its debt profile, the finance ministry said on Wednesday.
The government will collect TES UVR domestic public debt securities – which have yields that are tied to inflation – in exchange for other UVR securities maturing in May 2025 and April 2035, as well as others securities denominated in pesos maturing in May 2044.
The operation will take place on Thursday, the ministry said.
The size of the exchange will depend on how many offers are received.
“The exchange will be carried out in accordance with the provisions (…) with regard to not increasing the net indebtedness of the nation and contributing to improving the profile of public debt,” the finance ministry said in a statement.
In April Colombia exchanged internal public debt for 2.6 trillion pesos ($336.2 million dollars).
($1 = 4,086.71 Colombian pesos)
(Reporting by Nelson Bocanegra
Writing by Oliver Griffin; Editing by David Gregorio)
((Oliver.Griffin@thomsonreuters.com; +57 304-583-8931;))
CANADA FX DEBT-C$ rebounds but gains capped by global economic uncertainty
Adds dealer quotes and details throughout; updates prices
By Fergal Smith
TORONTO, May 11 (Reuters) – The Canadian dollar strengthened against its U.S. counterpart on Wednesday as oil prices rallied, but gains for the currency were limited by investor nervousness about the global economic outlook.
The loonie CAD= was trading 0.3% higher at 1.2988 to the greenback, or 76.99 U.S. cents, after trading in a range of 1.2922 to 1.3039. On Tuesday, the currency touched its weakest level in 18 months at 1.3052.
Higher oil prices gave the Canadian dollar some support but the major focus for investors is the potential for interest rate hikes to slow global economic activity, said Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc, adding that “fear-based trading” is dominating the market.
Wall Street fell after U.S. consumer price index data indicated that inflation is likely to stay hot for a while and keep the Federal Reserve’s foot on the brakes to cool demand.
USD-CAD gyrated around the 1.2963 level that marked a peak for the pair in December.
“If the market can close above that number at the end of the week that would probably indicate further strength in the U.S. dollar,” Richardson said.
The price of oil, one of Canada’s major exports, rebounded after plunging nearly 10% in the previous two sessions, buoyed by supply concerns as flows of Russian gas to Europe fell. U.S. crude oil futures CLc1 settled nearly 6% higher at $105.71 a barrel. nL2N2X302U
Bank of Canada Deputy Governor Toni Gravelle is due to speak on Thursday on commodities, growth and inflation, which could offer clues on the outlook for interest rates. BOCWATCH
Canadian government bond yields were lower across the curve, tracking the move in U.S. Treasuries. The 10-year CA10YT=RR eased 2.7 basis points to 2.983%, after touching on Monday its highest in 11 years at 3.173%.
(Reporting by Fergal Smith; Editing by Will Dunham and Sandra Maler)
((fergal.smith@thomsonreuters.com; +1 647 480 7446;))