Daily Agenda: China Yuan Falls for Second Day

GE selling health care lending unit; SEC investigators focus on hackers; Alibaba unveils share buybacks.


Xaume Olleros

The yuan fell by nearly 2 percent further against the U.S. dollar in trading today before the People’s Bank of China stepped in late in the session to intervene. By selling dollars in the final 15 minutes of the session, the PBOC cut the yuan’s loss for the day to 1 percent. As Société Générale strategist Albert Edwards describes it, the possibility of a “tidal wave of deflation” rushing from China into the global economy has begun to weigh heavily on investors. More pressure caused by a lower yuan on commodity markets already under siege could bring significant pain to emerging economies. Equity markets also sold off in early trading in Asia as Asian currencies in aggregate weakened against the dollar by the largest single-day margin since the 1997–’98 financial crisis on the continent. Perhaps the only investors welcoming the news were gold bugs, as the yellow metal rose sharply on a renminbi-denominated basis.

European stocks retreat. European equities sold off sharply in trading today as concerns over a devaluation by China’s central bank reverberated. The benchmark Stoxx Europe 600 index fell by over 2 percent during the first half of the day while commodity giant Glencore declined by almost 7 percent. Yields on two-year German Bunds dipped to a record low –0.29 percent at one point during the trading session.

GE to sell health care finance division. General Electric Co. announced yesterday that it has agreed to sell its health care finance unit for roughly $9 billion to Capital One Financial. The sale will include a book of loans worth in excess of $8.5 billion as the conglomerate continues to reduce its portfolio of financial assets,

SEC targets hackers of press releases. U.S. federal agents acting on behalf of the Securities and Exchange Commission made a series of early-morning arrests yesterday as part of a crackdown on insider trading. The SEC alleges that a team of Ukraine–based hackers were able to access nonpublic data held by press release platforms Business Wire, Marketwired and PRNewswire to allow co-conspirators in the U.S. to front-run news.

Alibaba announces buybacks. Chinese e-commerce giant Alibaba Group Holding today announced a $4 billion dollar buyback to investors. The news came after the firm revealed that fiscal first-quarter revenues, at $23.27 billion, had fallen short of consensus forecasts.

U.K. unemployment rises. A data release from the Office for National Statistics this morning revealed an increase in the unemployment rate in the U.K., matched with a deceleration for wage growth. The headline unemployment rate rose to 5.6 percent for the second quarter while wages grew by an annual 2.4 percent, well below consensus forecasts.

Dr Pepper buys into BodyArmor. Reports surfaced today that Plano, Texas–based soft drink manufacturer Dr Pepper Snapple Group is acquiring an 11.7 percent stake in sports drink company BodyArmor for $20 million. BodyArmor was co-founded by Mike Repole, who is also the co-founder of Energy Brands, the producer of Vitaminwater and Smartwater. Initial investors in the sports drink start-up include NBA star Kobe Bryant and NFL quarterback Andrew Luck.