This content is from: Portfolio

Daily Agenda: Chinese Industrial Data Weak but Consumption Rises

Major Chinese cement company becomes latest to default on renminbi-denominated bonds; Anheuser-Busch InBev and SABMiller make merger official; employment data for U.K. improves.

Fresh economic data today generally supported the thesis of slowing growth in China with a shift towards internal consumption. While the pace of industrial production and fixed-investment levels for October cooled more than forecasted, retail-sales data for the month provided a silver lining, increasing 11 percent year-over-year. To date, the magnitude of rising demand by Chinese consumers has been unable to fully offset the slowing pace of export-driven industrial activity and investment, a fact that Beijing has increasingly acknowledged by downplaying the importance of gross-domestic-product targets. While the continuing weakness exhibited by primary indicators appears likely to spur more easing measures by the People’s Bank of China, the announcement that China Shanshui Cement Group will default on yuan-denominated debt totaling more than $300 million due on Thursday is a sobering reminder that stimulus alone will not save firms that overinvested in the prior cycle. Shanshui is the sixth major default suffered by the local bond market in China so far in 2015, forcing investors there to reassess risk.

Beer giants confirm Megabrew. A regulatory filing today finalized the intention by the boards of Anheuser-Busch InBev and SABMiller to move ahead with a merger valued at more than $100 billion in total. The deal is expected to be heavily scrutinized by antitrust authorities in multiple nations given the large overlap of the two companies’ brands.

U.K. employment situation improves. Third-quarter employment data released today by the Office for National Statistics included a headline jobless rate of 5.3 percent, the lowest the figure has reached in seven years. Potential pressure on the Bank of England to consider reining in easing due to an improving job market was offset by a still-sluggish pace of earnings growth at 2.5 percent for the period.

Shares locked up by regulators. Today the Shanghai Stock Exchange announced that insider-held shares of Deluxe Family Co. will be restricted from sale as part of an ongoing investigation into insider trading. The locked-up shares, which have a notional value of roughly $1 billion, will remain unsaleable for two years as authorities continue to investigate trading by hedge funds overseen by Xu Xiang.

Kashkari to head Minneapolis Fed. Yesterday the Federal Reserve Bank of Minneapolis announced that Neel Kashkari will succeed succeed Narayana Kocherlakota as president and CEO. Kashkari, who has held investment positions at both Goldman Sachs and PIMCO, is best known for his stint at Treasury during the finacial crisis when he managed the Troubled Asset Relief Program, or TARP.

Charges against J.P. Morgan hackers unveiled. Yesterday Preet Bharara, the U.S. attorney for the Southern District of New York, unsealed indictments against three defendants accused of stealing the personal information of over 100 million people, the largest such cybercrime believed to have yet been committed. The data breach, which included clients of J.P. Morgan Chase & Co., was “breathtaking” in scope, Bharara said.

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