Shine on Sustainable Bonds Wears Off, Especially for Riskiest Borrowers

Rising regulatory scrutiny is damping investor appetite for sustainable bonds, especially those issued by riskier companies. Bonds sold to fund environmentally friendly projects and companies generally fetch higher prices and lower yields than conventional bonds. This “greenium,” though, has been shrinking in recent weeks as global regulators forge ahead on new disclosure rules and investors start to look more closely at companies’ claims about sustainability.

The selloff is sharpest for high-yield sustainable bonds, whose price premium over comparable conventional bonds has nearly halved since early September, dropping to 0.17 percentage point from 0.30, according to ICE bond indexes. The yield on a broad index of sustainable junk-rated bonds has risen to 3.82% from 3.33% over the same period. Yields rise when prices fall.

The greenium for investment-grade bonds has shrunk, too, though more slowly, halving since April to 0.03 percentage point.

Sustainable investing—also known by the acronym ESG for its environmental, social and governance factors—has attracted hundreds of billions of dollars, but until recently there has been little consensus about what qualifies as a green asset. Money managers are increasingly worried about being duped by companies exaggerating their sustainability bona fides. They are also having to prove the claims they make to their investors about how they evaluate green investments.

In a bellwether case, the Securities and Exchange Commission is investigating whether Deutsche Bank AG’s asset-management arm lived up to claims it made about its ESG investing criteria. A whistleblower and internal emails say that only a fraction of its assets went through a sustainability assessment, contrary to the firm’s public statements. DWS has said it stands by its disclosures.

This new scrutiny is prompting some investors to be more careful when assessing sustainable bonds, particularly those sold by lower-rated issuers, which tend to be smaller and disclose less about their businesses, said Tatjana Greil Castro, a credit portfolio manager at Muzinich & Co.

“There is definitely an understanding that you cannot just slap on your tick-box approach,” she said. Market dynamics may be partly to blame, too. Inflows into sustainable-investment funds haven’t kept pace with a flood of new issuances.

Investors put $95 billion into ESG funds in the second quarter, down from $142 billion in the first, according to the latest available data from Morningstar. Meanwhile, issuance of sustainable bonds stayed relatively stable, with $295 billion in the second quarter and $299 billion in the first, according to Bloomberg New Energy Finance.

With less money earmarked for green assets spread across more deals, investors can be choosier about which to buy and can negotiate higher yields.

Sustainable debt sold by higher-rated issuers are still finding strong demand. The yield on the European Union’s first-ever common green bond has fallen from 0.45% when it was issued Oct. 12 to 0.37% as of Wednesday. Investors piled into the U.K.’s debut green bond last month, which priced at a yield of 0.87%.

But corporate borrowers, especially those with lower credit ratings, are finding less appetite for their debt in the secondary market. A green bond issued by Daimler AG was yielding 0.51% on Wednesday, compared with 0.52% for the German auto maker’s comparable conventional bond. In February, the green bond was yielding 0.16 percentage point less.

A green junk bond issued by Ardagh Metal Packaging SA was yielding 2.20% on Wednesday, up from 1.81% in mid-September.

By: Anna Hirtenstein

Anna Hirtenstein is a reporter at The Wall Street Journal in London, covering financial markets. She was previously a reporter at Bloomberg in London, an investment banker at Greentech Capital Advisors in Zurich and has also worked as a field correspondent with a focus on oil in Northern Iraq and West Africa.

Source: Shine on Sustainable Bonds Wears Off, Especially for Riskiest Borrowers – WSJ

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This Is What Long COVID Feels Like Fatigue Dizziness Brain Fog and Muscle Spasms

When the novel coronavirus began to spread across the world in February 2020, Freya Sawbridge was caught in a bind. The 27-year-old was living in Scotland, but when businesses and borders began to close she packed up and flew home to Auckland, New Zealand. On arrival, she felt feverish and couldn’t smell or taste food.

In those early months of COVID-19, every new symptom made global headlines. Freya got tested and the result came back positive. Panic began to set in.  “I was in the first wave,” she says.

“There weren’t many people that had had it by that stage, so I knew no-one could tell me anything about it, no-one could offer me any real guidance because it was a new disease.

“No-one can tell you anything about it or when it might end. You’re just existing in the unknown.”

Freya found herself on a vicious merry-go-round of symptoms — fever, sore throat, dizziness, muscle spasms, numbness, chest pains and fatigue. The symptoms kept coming around and around and around.

After 12 days, she stabilised, but four days later the pains returned with a vengeance. It would be a sign of things to come. Freya would relapse five more times over the next six months.

“Each relapse, the depth of it would last about 10 days and then I would take about four or five days emerging from it, have about two or three symptom-free days before another relapse would kick off,” Freya says. “The symptoms would come and then dissipate…

“I’d have a fever for an hour, a sore throat for four hours, then dizziness for two hours, then I was OK for an hour.

“…it was just a cycle like that.”

By April 2020, “long COVID” was being mentioned in Facebook support groups. It’s not an official medical term; it was coined out of necessity by the public. It’s sometimes also referred to as long-haul COVID, chronic COVID and post-acute sequelae of COVID-19 (PASC).

Exactly what constitutes long COVID remains extremely broad. Earlier this month, the World Health Organization released its clinical case definition of what it calls ‘post COVID-19 condition’, which affects people at least two months after a COVID-19 infection with symptoms that “cannot be explained by an alternative diagnosis”.

For Freya, symptoms like chest pain and a sore throat were manageable, but the dizziness and “brain pain” she experienced were debilitating. “It’s as if there was like a mini person in my brain and he was scraping my whole brain with a rake, it was just pain,” Freya says.

“And then it would feel like it would flip on itself continuously and so it makes it really hard to sleep because you’re lying there and it feels like your brain is doing somersaults and then it’s also spinning.”

The memory loss was especially unnerving. “Heaps of people say, ‘Oh, I get that and I’m young,’ but it just feels different… you’d be mid-sentence and then completely forget what you’re talking about.”

Doctors couldn’t give Freya any clarity about what was happening to her because the reality was no-one knew enough about COVID-19.

The hardest was month four, when Freya ended up in hospital from her long COVID symptoms. In a journal entry dated August 24, 2020, she wrote: “Must stay hopeful. Must believe I will get better.” After so many relapses, she had fallen into a depression filled with grief, for her healthy body and her old life.

To this day, we still know very little about long COVID, including just how many people it affects.

Various studies over the past 18 months estimate long COVID can affect anywhere from 2.3 per cent to 76 per cent of COVID-19 cases. It’s important to remember these studies vary in method, with some tracking only hospitalised cases and some relying on self-reported surveys.

A comprehensive study by the University of NSW places the figure at around 5 per cent. Researchers tracked 94 per cent of all COVID-19 cases in NSW from January to May 2020. Of the 3,000 people surveyed, 4.8 per cent still had symptoms after three months.

The uncertainty doesn’t end there. We also have no idea why long COVID hits certain people, but not others. It’s been likened to a kind of “Russian roulette”.

Studies have consistently found long COVID to be more prevalent in women, older people and those with underlying conditions, but there’s evidence to indicate children are capable of developing long COVID too.

Being young and fit is no guarantee you’re safe either, and nor is having a minor initial COVID case. The longer-term symptoms can strike even those who had few initial symptoms.

Those with long COVID report a constellation of symptoms including fatigue, dizziness, shortness of breath, brain fog, memory loss, loss of taste and smell, numbness, muscle spasms and irritable bowels.

One of Australia’s leading researchers in the area, Professor Gail Matthews, says long COVID is likely a spectrum of different pathologies.

Dr Matthews is the Head of Infectious Diseases at St Vincent’s Hospital and Head of the Therapeutic Vaccine and Research Program at the Kirby Institute at UNSW. She says the issue of long COVID will be huge on a global scale and it’s crucial to understand it better.

One theory is that COVID-19 can trigger the immune system to behave in an abnormal way, releasing cytokines that can make you feel unwell with fatigue and other symptoms.

Another is that there could be some elements of the virus — called antigen persistence — somewhere in the body that continues to trigger an ongoing activation in the immune system.

There’s also early evidence that vaccination might help reduce or even prevent long-term symptoms. Freya stopped relapsing around month seven, although her senses of taste and smell still haven’t fully recovered. She says rest was a big part of her recovery.

“Other people, if they don’t have parental support, or they have to work because they’ve got no savings, or they can’t rely on their parents, or they have young kids — I have no idea how they got through it, because it would have been impossible in my eyes,” Freya says.

Judy Li is in an impossible situation. An all-encompassing fatigue has taken hold of her mind and body, stripping away her ability to work, parent or plan for the future.

The 37-year-old got COVID-19 in March 2020 while an inpatient at a Melbourne hospital. She had been struggling after giving birth to her second child and was getting the help she needed.

Despite her anxieties, Judy’s case was very mild and it wasn’t until three months later when her three-year-old brought a bug home from day care that she realised something was wrong.

As day-care bugs so often do, it ripped through the young family. “It felt like I hit a brick wall, I was a lot worse than everyone else,” Judy says.

“It wasn’t the usual symptoms… I was just really lethargic, really fatigued and I remember at about the three-week mark of having those symptoms, that kind of fatigue, I thought, ‘this isn’t right, this is a bit odd.’”

Her fatigue is not like being tired, it’s a different kind of exhaustion, a severe lack of energy that doesn’t replenish after sleep.

“This is like something you feel in your limbs; you feel like they’re really heavy, they’ve got this kind of, I wouldn’t say ouch-kind of pain, but it’s sort of an achiness to your limbs,” she says.

The fatigue comes and goes, but Judy has noticed it can flare up when she gets sick or when she expends herself physically or mentally.

One of the worst episodes came after an eight-hour trip to Canberra for Christmas to visit her in-laws. “I woke up and I was completely paralysed,” Judy says. Distressed, in tears, she could only call out to her partner for help.

“I just did not have the strength to move my limbs and I kept trying and trying and trying and eventually he helped me up. “I sort of dragged my arm up, I could barely hold a glass of water and he’d help me to drink out of it. If I had to go to the toilet, he had to basically carry me.”

This fatigue has derailed Judy’s life because when it sets in, she never knows how long it’s going to last or whether it will go away.  It makes work and parenting impossible. Judy’s two young children don’t understand what’s wrong with mum or why she can’t get out of bed.

“When the kids are crying at home, I can’t go and soothe them,” she says.

“This is not a lack of motivation, it’s like I want to get up and I want to go to my children.

“I want to get up, I’ve got work I need to do. I want to get up and even go get something to eat, I’m hungry, but I can’t actually tell my body to move in that way.”

Fatigue or post-exertional malaise is one of the most common symptoms of long COVID, but it’s also a very common symptom in myalgic encephalomyelitis or chronic fatigue syndrome (ME/CFS), a biological disease affecting an estimated 250,000 Australians.

There are striking similarities between long COVID and ME/CFS. Both can cause symptoms such as fatigue, dizziness, memory loss or ‘brain fog’, and irritable bowel, and both are likely to encompass a range of different pathologies.

ME/CFS is usually triggered by a viral infection — ebola, dengue fever, glandular fever, epstein barr, ross river virus, SARS and even the more common influenza have all left trails of chronically ill people in their wake.

Experts have even questioned whether long COVID could be ME/CFS by another name, although the jury is still out on that theory. ME/CFS has been around for decades but we still don’t know much about it.

Australian advocacy groups desperately want to see more research and support to help people with this chronic illness navigate medical, financial and accommodation services. They also say doctors need better education to diagnose and treat the condition early on.

Bronwyn Caldwell knows what it’s like to live with a condition that no-one understands or knows how to treat. She’s lived with ME/CFS for 20 years, ever since a suspected case of glandular fever in her 20s.

The 46-year-old from South Australia is adamant the early advice from her doctor to rest was the reason her condition didn’t immediately worsen. She was able to work part-time as a brewer up until 2013 but a relapse has left her mostly bed-bound.

Bronwyn considers herself lucky — her illness was validated by doctors and family, she doesn’t have cognitive difficulties and isn’t in pain. But her voice begins to break when mentioning that most people with ME/CFS face stigma that they’re being lazy or faking their illness.

“I can’t imagine what it’s really like to have everyone in your life say you’re just being lazy, because the reality is all of us beat ourselves up to that all the time,” she says.

A 2018 study published in the Journal of Health Psychology looking at links between people with chronic illness and suicidal ideation found stigma, misunderstanding and unwarranted advice exacerbates patients’ feelings of overall hopelessness.

Long COVID is creating a cohort of people vulnerable to the same thing, and Judy herself has sometimes wondered whether her family would be better off without her (which, of course, it wouldn’t).

“I honestly go through periods where I wish COVID had killed me instead of just left me with this, this big burden,” she says. With no sick leave left, Judy has had to take unpaid time off work.

It’s a big blow for the high-earning, career-driven project manager who took pride in handling stressful situations and juggling multiple tasks. These days, her mind doesn’t work like it used to.

“It’s just little things like struggling to find the word that I just knew… I would know… sorry… like being able to construct sentences,” she says with an ironic laugh.

“I can try to read something but it just seems like I have to read it over and over and over again. “I frequently walk into a room and can’t remember why, when I would put something down, seriously, two minutes later I have no idea where it is. “I just feel like I’m losing my mind.”

In the COVID-ravaged UK, daily cases peaked at more than 68,000 and daily deaths at more than 1,300. It’s a situation few in Australia — where we have enjoyed long periods of little-to-no community transmission — can fully appreciate.

Adam Attia was living in London through most of 2020 and says it was almost rare if you hadn’t had COVID-19. “I’ve known of people that had given it to their parents and it killed their parents,” the 30-year-old Australian says. “People that we knew on our street had passed away.”

So one day around August, when Adam couldn’t taste the wasabi on his sushi, he immediately knew what was wrong. “I just started to go through the kitchen for things like garlic — I had a whole garlic, I couldn’t taste anything. I ate a lemon like an apple and couldn’t taste a thing.

“I ate ginger like a cannibal, like I ate it with all of the bumps and things on it and couldn’t taste a thing.”

But Adam’s infection was mild and he spent his 10-day isolation staying active. Life went on as normal until three months later, after a trip to Croatia. On the flight back to London, somewhere above Germany, Adam felt an excruciating pain in his stomach. He felt like he was going to vomit, he couldn’t breathe and his head began to spin.

The flight crew didn’t know what to do, contemplating an emergency landing in Berlin while Adam desperately sucked air from a vent they’d given to help him breathe.

The flight managed to land in London and Adam was escorted off the plane. At the hospital, doctors ran tests for internal bleeding and signs of reflux or gastritis but they all turned up empty.

In the weeks and months after that flight, as little as two hours of work would leave Adam shattered and disorientated.

His symptoms are like dominoes. Exhaustion leads to stomach pain, which leads to nausea, faintness and breathlessness.

Adam has learned to manage his symptoms and as soon as he feels the exhaustion creeping in he takes an anti-nausea pill, uses the asthma puffer he now has to carry with him and finds somewhere to lie down.

He ended up moving back to Australia to sort out his health issues, but it wasn’t until a doctor at St George Hospital in Sydney mentioned Adam’s symptoms could be an effect of COVID-19 that he twigged.

“Is it from COVID? Look, I could be shooting in the dark, I don’t actually know,” Adam says. “But what I do know is I didn’t have these [symptoms] before COVID, so I guess it’s more of an educated guess.”

Much about long COVID remains exactly that. More research is needed to really know what’s going on.

The US and UK have allocated billions of dollars into research and set up long COVID clinics to help patients find the right treatment. The Australian government has provided $15 million for research grants into the long-term health effects of COVID-19 and the nation’s vaccination efforts through the Medical Research Future Fund.

As Australia moves beyond lockdowns towards a future where most Australians are vaccinated, borders are open and COVID-19 is actively spreading through communities, this research will be crucial in our understanding of the long-term health issues and the impact on individuals, families, workplaces and the economy.

For now, Dr Matthews says the biggest take-home is that we don’t know who is or isn’t susceptible to long COVID.

“One of the biggest messages is that it’s very hard to know who this will strike.”

Health officials in Victoria have already highlighted the plight of long COVID patients as part of their drive to encourage more people to get vaccinated, as experts say it probably can prevent long COVID.

Dr Matthews says it’s important Australia recognises long COVID as a real issue and makes sure there is appropriate support to help people.

“Even if it’s just an understanding that this condition exists, and recognition that it exists, as opposed to expecting these people to return to full health,” she says.

But until we know more, those like Freya, Judy and Adam won’t have the closure of knowing exactly what’s happened to them.

“It’s hard to wrap your head around,” Judy says, “to say this is potentially a life sentence”. “There’s no defining this is as bad as it gets, you know?  “This is just the big mystery question mark.”

By:  Emily Sakzewski, Georgina Piper, and Colin Gourlay

Source: This is what long COVID feels like — fatigue, dizziness, brain fog and muscle spasms – ABC News

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IMF Cuts Global Growth Forecast Amid Supply Chain Disruptions, Pandemic Pressures

The IMF, a grouping made up of 190 member states, promotes international financial stability and monetary cooperation. It also acts as a lender of last resort for countries in financial crisis.

In the IMF’s latest World Economic Outlook report released on Tuesday, the group’s economists say the most important policy priority is to vaccinate sufficient numbers of people in every country to prevent dangerous mutations of the virus. He stressed the importance of meeting major economies’ pledges to provide vaccines and financial support for international vaccination efforts before new versions derail. “Policy choices have become more difficult … with limited scope,” IMF economists said in the report.

The IMF in its July report cut its global growth forecast for 2021 from 6% to 5.9%, a result of a reduction in its projection for advanced economies from 5.6% to 5.2%. The shortage mostly reflects problems with the global supply chain that causes a mismatch between supply and demand.

For emerging markets and developing economies, the outlook improved. Growth in these economies is pegged at 6.4% for 2021, higher than the 6.3% estimate in July. The strong performance of some commodity-exporting countries accelerated amid rising energy prices.

The group maintained its view that the global growth rate would be 4.9% in 2022.

In key economics, the growth outlook for the US was lowered by 0.1 percentage point to 6% this year, while the forecast for China was also cut by 0.1 percentage point to 8%. Several other major economies saw their outlook cut, including Germany, whose economy is now projected to grow 3.1% this year, down 0.5 percent from its July forecast. Japan’s outlook was down 0.4 per cent to 2.4%.

While the IMF believes that inflation will return to pre-pandemic levels by the middle of 2022, it also warns that the negative effects of inflation could be exacerbated if the pandemic-related supply-chain disruptions become more damaging and prolonged. become permanent over time. This may result in earlier tightening of monetary policy by central banks, leading to recovery back.

The IMF says that supply constraints, combined with stimulus-based consumer appetite for goods, have caused a sharp rise in consumer prices in the US, Germany and many other countries.

Food-price hikes have placed a particularly severe burden on households in poor countries. The IMF’s Food and Beverage Price Index rose 11.1% between February and August, with meat and coffee prices rising 30% and 29%, respectively.

The IMF now expects consumer-price inflation in advanced economies to reach 2.8% in 2021 and 2.3% in 2022, up from 2.4% and 2.1%, respectively, in its July report. Inflationary pressures are even greater in emerging and developing economies, with consumer prices rising 5.5% this year and 4.9% the following year.

Gita Gopinath, economic advisor and research director at the IMF, wrote, “While monetary policy can generally see through a temporary increase in inflation, central banks should be prepared to act swiftly if the risks to rising inflation expectations are high. become more important in this unchanged recovery.” Report.

While rising commodity prices have fueled some emerging and developing economies, many of the world’s poorest countries have been left behind, as they struggle to gain access to the vaccines needed to open their economies. More than 95% of people in low-income countries have not been vaccinated, in contrast to immunization rates of about 60% in wealthy countries.

IMF economists urged major economies to provide adequate liquidity and debt relief for poor countries with limited policy resources. “The alarming divergence in economic prospects remains a major concern across the country,” said Ms. Gopinath.

By: Yuka Hayashi

Yuka Hayashi covers trade and international economy from The Wall Street Journal’s Washington bureau. Previously, she wrote about financial regulation and elder protection. Before her move to Washington in 2015, she was a Journal correspondent in Japan covering regional security, economy and culture. She has also worked for Dow Jones Newswires and Reuters in New York and Tokyo. Follow her on Twitter @tokyowoods

Source: IMF Cuts Global Growth Forecast Amid Supply-Chain Disruptions, Pandemic Pressures – WSJ

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5G Technology Begins To Expand Beyond Smartphones

Proponents of 5G technology have long said it will remake much of day-to-day life. The deployment of superfast 5G networks is believed to herald a new era for much more than smartphones – everything from advanced virtual-reality video games to remote heart surgery. The vision has been slow to come to mind, but the first wave of 5G-enabled gadgets is emerging.

Last among the first uses of 5G to enter the consumer market is the delivery of home broadband Internet service to cord-cutters: those who want to not only drop their cable-TV bills but also give up internet access via wires altogether. give. For example, Samsung Electronics Co. has partnered with Verizon Communications Inc. to offer a wireless 5G router. Which promises to provide broadband access at home. The router takes a 5G signal just like a smartphone.

Other consumer devices that are starting to hit the market include 5G-compatible laptops from several manufacturers, all of which are faster than other laptops and offer high-quality video viewing when connected to a 5G network. (The laptop requires a 5G chip to make that connection.)

In the latest: Lenovo Group Ltd., in association with AT&T Inc., in August released a 5G laptop, the ThinkPad X13 5G. The device, which started shipping last month, comes with a 13.3-inch screen and retails for around $1,500. Samsung also introduced a new laptop in June that offers 5G connectivity. The Galaxy Book Go 5G has a 14-inch screen, and retails for around $800.

OK, but what if you want a 5G connection on your yacht, miles offshore? You have good luck. Meridian 5G, a Monaco-based provider of internet services for superyachts – the really big ones – advertises 5G Dome Routers, a combination of antennas and modems that are within about 60 miles of the coast to access 5G connectivity. Allows sailing. Hardware costs about $17,000 for an average-sized Superyacht.

America is ready for China’s Huawei, and it just happened

Of course, all of these gadgets are only useful where 5G networks are available, which still doesn’t cover a lot of locations, onshore or off. The same holds true for new drone technology unveiled by Qualcomm Inc in August with 5G and artificial-intelligence capabilities. The company says the technology called Qualcomm Flight RB5 5G Platform enables high-quality photo and video collection.

Drones equipped with 5G technology can be used in a variety of industries, including filming, mapping and emergency services like firefighting, Qualcomm notes. For example, due to new camera technology enabled by 5G, drones can be used for mapping large areas of land and for rapidly transferring data for analysis and processing.

Proponents of 5G technology have long said it will remake much of day-to-day life, bringing the so-called Internet of Things to a point where you can name any number of devices—home and office appliances, Industrial equipment, hospital equipment, vehicles, etc.—will be connected to the Internet and exchange data with the cloud at a speed that will allow for new capabilities.

“The goal of 5G, when we have a mature 5G network globally, is to make sure everything is connected to the cloud 100% of the time,” Qualcomm CEO Cristiano Amon said at a conference in Germany last month.

But it will take years for 5G devices to become widespread, analysts say, as network coverage expands and markets develop for all those advanced new products.

By: Meghan Bobrowsky

Meghan Bobrowsky is reporter with the tech team. She is a graduate of Scripps College. She previously interned for The Wall Street Journal, the San Francisco Chronicle, the Philadelphia Inquirer and the Sacramento Bee. As an intern at the Miami Herald, she spent the summer of 2020 investigating COVID-19 outbreaks in nursing homes and federal Paycheck Protection Program fraud. She previously served as editor in chief of her school newspaper, the Student Life.

Source: 5G technology begins to expand beyond smartphones

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Source: Biggest U.S. Retailers Charter Private Cargo Ships to Sail Around Port Delays – WSJ

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Corporate Taxes Poised to Rise After 136-Country Deal

 
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Nearly 140 countries agreed Friday to the most sweeping overhaul of global tax rules in a century, a move that aims to curtail tax avoidance by multinational corporations and raise additional tax revenue of as much as $150 billion annually.

But the accord, which is a decade in the making, now must be implemented by the signatories, a path that is likely to be far from smooth, including in a closely divided U.S. Congress.

The reform sets out a global minimum corporate tax of 15%, targeted at preventing companies from exploiting low-tax jurisdictions.

Treasury Secretary Janet Yellen said the floor set by the global minimum tax was a victory for the U.S. and its ability to raise money from companies. She urged Congress to move swiftly to enact the international tax proposals it has been debating, which would help pay for extending the expanded child tax credit and climate-change initiatives, among other policies.

“International tax policy making is a complex issue, but the arcane language of today’s agreement belies how simple and sweeping the stakes are: when this deal is enacted, Americans will find the global economy a much easier place to land a job, earn a living, or scale a business,” Ms. Yellen said.

The agreement among 136 countries also seeks to address the challenges posed by companies, particularly technology giants, that register the intellectual property that drives their profits anywhere in the world. As a result, many of those countries established operations in low-tax countries such as Ireland to reduce their tax bills.

The final deal gained the backing of Ireland, Estonia and Hungary, three members of the European Union that withheld their support for a preliminary agreement in July. But Nigeria, Kenya, Sri Lanka and Pakistan continued to reject the deal.

The new agreement, if implemented, would divide existing tax revenues in a way that favors countries where customers are based. The biggest countries, as well as the low-tax jurisdictions, must implement the agreement in order for it to meaningfully reduce tax avoidance.

Overall, the OECD estimates the new rules could give governments around the world additional revenue of $150 billion annually.

The final deal is expected to receive the backing of leaders from the Group of 20 leading economies when they meet in Rome at the end of this month. Thereafter, the signatories will have to change their national laws and amend international treaties to put the overhaul into practice.

The signatories set 2023 as a target for implementation, which tax experts said was an ambitious goal. And while the agreement would likely survive the failure of a small economy to pass new laws, it would be greatly weakened if a large economy—such as the U.S.—were to fail.

“We are all relying on all the bigger countries being able to move at roughly the same pace together,” said Irish Finance Minister Paschal Donohoe. “Were any big economy not to find itself in a position to implement the agreement,  that would matter for the other countries. But that might not become apparent for a while.”

 

Congress’ work on the deal will be divided into two phases. The first, this year, will be to change the minimum tax on U.S. companies’ foreign income that the U.S. approved in 2017. To comply with the agreement, Democrats intend to raise the rate—the House plan calls for 16.6%—and implement it on a country-by-country basis. Democrats can advance this on their own and they are trying to do so as part of President Biden’s broader policy agenda.

The second phase will be trickier, and the timing is less certain. That is where the U.S. would have to agree to the international deal changing the rules for where income is taxed. Many analysts say that would require a treaty, which would need a two-thirds vote in the Senate and thus some support from Republicans. Ms. Yellen has been more circumspect about the schedule and procedural details of the second phase.

Friction between European countries and the U.S. over the taxation of U.S. tech giants has threatened to trigger a trade war.

In long-running talks about new international tax rules, European officials have argued U.S. tech giants should pay more tax in Europe, and they fought for a system that would reallocate taxing rights on some digital products from countries where the product is produced to where it is consumed.

The U.S., however, resisted. A number of European governments introduced their own taxes on digital services. The U.S. then threatened to respond with new tariffs on imports from Europe.

The compromise was to reallocate taxing rights on all big companies that are above a certain profit threshold.

Under the agreement reached Friday, governments pledged not to introduce any new levies and said they would ultimately withdraw any that are in place. But the timetable for doing that has yet to be settled through bilateral discussions between the U.S. and those countries that have introduced the new levies.

Even though they will likely have to pay more tax after the overhaul, technology companies have long backed efforts to secure an international agreement, which they see as a way to avoid a chaotic network of national levies that threatened to tax the same profit multiple times.

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The Organization for Economic Cooperation and Development, which has been guiding the tax talks, estimates that some $125 billion in existing tax revenues would be divided among countries in a new way.

Those new rules would be applied to companies with global turnover of €20 billion (about $23 billion) or more, and with a profit margin of 10% or more. That group is likely to include around 100 companies. Governments have agreed to reallocate the taxing rights to a quarter of the profits of each of those companies above 10%.

The agreement announced Friday specifies that its revenue and profitability thresholds for reallocating taxing rights could also apply to a part of a larger company if that segment is reported in its financial accounts. Such a provision would apply to Amazon.com Inc.’s cloud division, Amazon Web Services, even though Amazon as a whole isn’t profitable enough to qualify because of its low-margin e-commerce business.

The other part of the agreement sets a minimum tax rate of 15% on the profits made by large companies. Smaller companies, with revenues of less than $750 million, are exempted because they don’t typically have international operations and can’t therefore take advantage of the loopholes that big multinational companies have benefited from.

Low-tax countries such as Ireland will see an overall decline in revenues. Developing countries are least happy with the final deal, having pushed for both a higher minimum tax rate and the reallocation of a greater share of the profits of the largest companies.

 
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quintex-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1Related Contents:

 

 

 
 
 
 

U.S.-Listed Chinese Stocks Have Lost Another $150 Billion In Market Value This Week As Beijing Targets ‘Excessive’ Wealth

Shares of Chinese tech giants trading in the United States struggled to pare losses Friday amid intensifying concerns over China’s efforts to impose sweeping new regulations on its publicly traded companies over the next several years, yielding market value losses of more than $150 billion for the 10 largest U.S.-listed Chinese stocks this week alone.

Key Facts

As of 2:45 p.m. EDT, shares of e-commerce juggernaut Alibaba, the largest Chinese company listed in the U.S., were among the hardest hit, down more than 15% on the New York Stock Exchange over the past week to $157, deflating its market capitalization to $424 billion.

Fellow online retailers JD.com and Pinduoduo, posted similarly staggering losses, wiping out about $20 billion and $10 billion in market value this week, respectively, despite ticking up about 2% Friday.

“China remains a huge source of global concern,” market analyst Adam Crisafulli of Vital Knowledge Media wrote in a Friday email, pointing to the nation’s strengthening regulatory campaign against corporations and actions that last month included demanding online education companies end their for-profit business models.

This week, shares of Chinese stocks have crashed steadily since Tuesday, when President Xi Jinping vowed to redistribute wealth in the nation by regulating “excessively high incomes”—spurring a sell-off that crushed shares of European luxury companies that do big business in China, like LVMH and Gucci-parent Kering.

U.S.-listed shares of online-gaming company NetEase, electric carmaker NIO and Internet firm Baidu plunged 11%, 10% and 10%, respectively, this week.

All told, the 10 largest Chinese companies trading in the United States have lost about $153 billion in market value since last week—more than 15% of their combined market value of roughly $940 billion.

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Key Background

In a matter of weeks, China has introduced harsh regulations targeting wide swaths of its economy and showing investors how risky investing in its market can be, Tom Essaye, author of the Sevens Report, wrote in a recent note. “Yes, there’s a huge market and lots of growth potential, but obviously there are regulatory risks that seem to be growing larger with every passing month,” said Essaye.

Last week, officials released a sweeping five-year blueprint for the crackdown, covering virtually every sector in its market. Then on Wednesday, China’s market regulators published a long list of draft rules targeting tech companies, barring them from using data to influence consumer choices and “traffic hijacking activities,” among other things.

Crucial Quote

“This is all a stark reminder that the current regulatory crackdown from Beijing is not going to let up,” Wedbush analyst Dan Ives said in a Thursday note, forecasting U.S. tech stocks, which are outperforming the broader market Friday, should benefit from the tech-focused crackdown in China over the next year. “The fear with more regulation in China around the corner is a major worry that is hard for investors to digest, and it will ultimately cause more of a rotation from the China tech sector to U.S. tech.”

Surprising Fact

The Nasdaq Golden Dragon China index, which tracks Chinese businesses trading in the United States, is down 9% this week and has crashed 51% from a February all-time high.

Further Reading

U.S., European Investment Banks May Have Lost Some $12 Billion As Chinese Education Firms Crashed (Forbes)

China’s Internet Tycoons Suffer $13.6 Billion Wealth Drop As Regulatory Crackdown Triggers Market Sell-Off (Forbes)

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I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism

Source: U.S.-Listed Chinese Stocks Have Lost Another $150 Billion In Market Value This Week As Beijing Targets ‘Excessive’ Wealth

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Market News

1h Does the US economy need another $480 billion in stimulus? – CNN Business
2h Top Wall Street analysts say these stocks are long-term buys – CNBC
22h Gold fails at $1,800, another selloff might be on its way – Kitco
1d Fed To Taper This Year – What Are the Odds? – Benzinga
1d Half a trillion dollars erased from China markets in a week – New York Post
1d US Indexes Close Higher Friday – GuruFocus
1d Taking Stock of Small-Cap Earnings – Zacks Investment Research
1d Fed’s Jackson Hole symposium to take place virtually due to Covid risk – CNBC
1d Fed’s Jackson Hole conference to take place virtually – Reuters
1d U.S. dollar net long bets slip in latest week -CFTC, Reuters data – Reuters
1d China Evergrande’s Bailout Hopes Continue to Fade – GuruFocus
1d Fed ‘actively working’ on US digital currency, official says – New York Post
1d Fed Minutes, Retail Data Weighed on Wall Street This Week – Schaeffers Research
1d Wall Street Week Ahead: Investors stick to stocks, but gear up for bumpier ride – Reuters
1d Looking to Cash In on a Stronger U.S. Dollar? – ETF Trends
1d U.S.-Listed Chinese Stocks Have Lost Another $150 Billion In Market Value This W… – Forbes
1d Biden Freezes Student Loan Interest Rates For 47,000 Service Members – Forbes
1d Read This Before Your Next Trade – Zacks Investment Research
1d Fed officials will seek to avoid a tantrum as they keep ‘taper talk’ going at Ja… – CNBC
1d ‘Flash recession’ could hit markets by the fall – Fox Business

SEC Reportedly Halts Chinese Firm IPOs After Ride-Hailer DiDi Global’s $50 Billion Crash

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The Securities and Exchange Commission has stopped accepting registrations for the issuance of securities by China-based companies until it outlines the risks posed by such investments, Reuters reported Friday, marking the agency’s first set of action after mounting government interference in China this month erased billions of dollars in market value from recently listed DiDi Global and other China-based companies.

Key Facts

The SEC has said it won’t accept new registrations until it has released specific guidance on how companies should disclose the risks posed by China-based investments, unnamed sources familiar with the matter told Reuters. There are reportedly no such IPOs in the works, but it’s unclear how long the guidance may take to develop.

The reported decision comes after SEC commissioner Allison Lee on Tuesday said Chinese companies listed in the U.S. should disclose the risks of Chinese government interference to investors as part of their required reporting disclosures.

Similarly, a group of five GOP Senators on Wednesday urged SEC Chair Gary Gensler to “demand immediate and robust action” addressing a recent crackdown by Beijing officials on Chinese companies listed on U.S. stock exchanges. The SEC did not immediately respond to Forbes’ request for comment.

Key Background

In a matter of days, China introduced regulatory actions targeting both ride-hailing app DiDi and the nation’s education companies—harsh measures showing investors how risky investing in the market can be, Tom Essaye, author of the Sevens Report wrote in a Tuesday note. Days after DiDi’s massive U.S. IPO, the Cyberspace Administration of China ordered app stores to remove the ride-hailer from their platforms, claiming it “severely violat[ed] regulations around the collection of personal data.

” DiDi stock has plunged nearly 50% since the action, wiping out nearly $50 billion in market value in less than one month. Then, in a weekend order earlier this month, China’s education ministry barred “capitalized operations” among “online training institutions,” saying such companies can no longer turn a profit or raise money in the public markets and triggering a selloff in the space that erased nearly half the market value of many education firms.

Crucial Quote

“Yes, there’s a huge market and lots of growth potential, but obviously there are regulatory risks that seem to be growing larger with every passing month,” notes Essaye.

Surprising Fact

The Nasdaq Golden Dragon China index, which tracks Chinese companies trading in the United States, is down 12% this week and nearly 34% over the past six months.

Big Number

$12.8 billion. That’s how much Chinese listings in the United States have raised so far this year, according to Refinitiv data cited by Reuters. Genser said that he was concerned U.S. investors frequently don’t understand the structure of the companies whose shares they are buying.

In cases where China forbids foreign ownership, “many China-based operating companies are structured as Variable Interest Entities (VIEs). In such an arrangement, a China-based operating company typically establishes an offshore shell company in another jurisdiction, such as the Cayman Islands,” Gensler said.

The Chinese government has taken action against U.S.-listed Alibaba  (BABA) – Get Report and Didi Global  (DIDI) – Get Report in recent months. Days after Didi executed its IPO earlier in July, China forbade the ride-hailing titan from signing up new users.

Further Reading

Exclusive-U.S. regulator freezes Chinese company IPOs over risk disclosures -sources (Reuters)

US-Listed Chinese Tech Stocks Erase Nearly $150 Billion In Market Value This Week As China Stokes Regulatory Fears (Forbes)

The move comes as the SEC works on new guidelines for disclosing to investors the risk of continued regulatory crackdowns by China’s government, knowledgeable sources told Reuters. In a statement Friday, SEC Chairman Gary Gensler said “I have asked staff to seek certain disclosures from offshore issuers associated with China-based operating companies before their registration statements will be declared effective.”

Follow me on Twitter. Send me a secure tip.

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com. And follow me on Twitter @Jon_Ponciano

Source: SEC Reportedly Halts Chinese Firm IPOs After Ride-Hailer DiDi Global’s $50 Billion Crash

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Critics:

The Wall Street Journal reported Thursday that Didi is contemplating going private to soothe Chinese regulators and make whole investors who have suffered losses as Didi’s shares declined since the IPO. Didi called The Journal’s report “not true.”

In any case, SEC commissioner Allison Lee said Tuesday that as part of their reporting chores, U.S.-listed Chinese companies must tell investors the risks of Chinese government interference in their activity, according to Reuters.

U.S. listings of Chinese stocks have jumped to a record $12.8 billion so far this year, according to Refinitiv. The market’s repeated surges to record highs have attracted Chinese companies. But the move against Didi has slowed things down.

Shares of Chinese companies listed in the U.S. tumbled late last week and early this week amid fears about the government crackdowns.Didi fell 30% from July 21 to July 27. It recently traded at $10.14, up 3%, but has dropped 28% since its IPO. Alibaba recently traded at $194.31, down 2%, and has slumped 15% in the last month.

Employers Need To Tread Carefully On The Road Back To Office Working

Open plan office

In some ways the coming weeks and months are likely to be more difficult for organizations and employees than the past year or so has been. With governments increasingly intent on opening up economies effectively closed down by the pandemic, uncertainty is rife.

Employers and staff alike are caught between wanting to go back to something like normal and not wishing to take too many risks, especially since the Delta variant of the coronavirus is pushing spikes in new cases even in countries such as the U.S. and the U.K. where significant proportions of the population have been at least partially vaccinated.

One factor that could be behind the unease about rushing back to normal working habits is a feeling that, just as governments made mistakes in the handling of the crisis, so too did organizations. According to a survey just out from the finance comparison platform NerdWallet, a third of the U.K.’s business leaders are dissatisfied with the way that staff have been managed through the pandemic.

A similar proportion said that financial stability and business productivity was put ahead of staff safety. Unsurprisingly perhaps, more than half of the nearly 1,000 decision-makers questioned said they planned to carry out a review of how they had handled things. However, nearly half have already invested in new equipment designed to improve health and safety and to facilitate social distancing, while more than half have introduced greater flexibility to working hours.

Employers’ definitions of flexibility appear to be, well, flexible. An insight into the current situation is provided by the consultancy Mercer in its latest survey of working policies and practices among nearly 600 employers in the U.S.. The key findings were:

  • Hybrid working — a blend of in-person and remote working — was favoured by vast majority.
  • Predominantly office-based working was the preference of a fifth of employers.
  • Fully remote or virtual-first working was the choice of just 6% of employers
  • A distributed model making increased use of satellite campuses was likely to be adopted by just 4%.

Mercer’s research and analysis suggests that, across all industries, the proportion of the workforce working on-site full-time is likely to be about 40%. The hybrid category will probably be split, with about 29% of the workforce working remotely one or two days a week and approximately 17% doing so three or four days a week. About 14% of workers are expected to work remotely full-time.

The challenge for employers will be deciding how they can retain the employee experience and hang on to talent. Lauren Mason, principal in Mercer’s career business, and Ravin Jesuthasan, global leader of Mercer’s transformation business, suggest five principles to consider:

  1. Empower teams but set guidelines:  Nearly all employers plan to bring in changes to working policies as a result of the pandemic. Nearly half are already actively developing a strategy, while nearly a quarter of employers are in the process of implementing or have already implemented plans. Employers can and should empower teams to continue to work flexibly but they should also establish guidelines to maximize business outcomes and ensure a consistent employee experience.
  2. Keep a pulse on the market and your competition: Flexibility will likely have a high impact on an organization’s ability to retain talent. If employees are unhappy about employers’ flexible working plans, they will be likely to consider other workplaces that might better meet their needs.
  3. Don’t rush to get employees to the office: Employers should focus on returning employees in a way where co-working benefits can be maximized immediately. They should concentrate on making workers feel energized, empowered and engaged to be back together with their colleagues. This may entail phased transitions, where employees may only initially come in one or two days a week, planned team meetings or on-site social events and celebrations to make those early office days more purposeful.
  4. Stay agile: Workers do not want or need a standardized solution. Employers can demonstrate a continued trust and sense of partnership that was so valued during the pandemic by providing options that are appropriate for the work being performed. The key is to give employees some control and flexibility.
  5. Don’t limit flexibility to remote work: Flexible working is about more than remote working. Inclusive flexibility ensures that all jobs can be flexible when needed. Given the massive challenges employers are facing in attracting and retaining workers, options such as flexible schedules or compressed workweeks can be a huge differentiator. Progressive companies are not just challenging “when” and “where” work is done but also how the it is done, who does it and what the work is.
Check out my website.

I am a U.K.-based journalist with a longstanding interest in management. In a career dating back to the days before newsroom computers I have covered everything from popular music to local politics. I was for many years an editor and writer at the “Independent” and “Independent on Sunday” and have written three books, the most recent of which is “What you need to know about business.”

Source: Employers Need To Tread Carefully On The Road Back To Office Working

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More on Work & Jobs

Hunger is Rising, COVID-19 Will Make it Worse

The economic crisis and food system disruptions from the Covid-19 pandemic will worsen the lack of nutrition in women and children, with the potential to cost the world almost $30 billion in future productivity losses. As many as 3 billion people may be unable to afford a healthy diet due to the pandemic, according to a study published in Nature Food journal. This will exacerbate maternal and child under-nutrition in low- and middle-income countries, causing stunting, wasting, mortality and maternal anemia.

Nearly 690 million people were undernourished in 2019, up by almost 60 million since 2014. Nearly half of all deaths in children under age five are attributable to undernutrition and, regrettably, stunting and wasting still have strong impacts worldwide.

In 2019, 21 per cent of all children under age five (144 million) were stunted and 49.5 million children experienced wasting.The effects of the pandemic will increase child hunger, and an additional 6.7 million children are predicted to be wasted by the end of 2020 due to the pandemic’s impact.

The situation continues to be most alarming in Africa: 19 per cent of its population is under-nourished (more than 250 million people), with the highest prevalence of undernourishment among all global regions. Africa is the only region where the number of stunted children has risen since 2000.

Women and girls represent more than 70 per cent of people facing chronic hunger. They are more likely to reduce their meal intake in times of food scarcity and may be pushed to engage in negative coping mechanisms, such as transactional sex and child, early and forced marriage.

Extreme climatic events drove almost 34 million people into food crisis in 25 countries in 2019, 77 per cent of them in Africa. The number of people pushed into food crisis by economic shocks more than doubled to 24 million in eight countries in 2019 (compared to 10 million people in six countries the previous year).

Food insecurity is set to get much worse unless unsustainable global food systems are addressed. Soils around the world are heading for exhaustion and depletion. An estimated 33 per cent of global soils are already degraded, endangering food production and the provision of vital ecosystem services.

Evidence from food security assessments and analysis shows that COVID-19 has had a compounding effect on pre-existing vulnerabilities and stressors in countries with pre-existing food crises. In Sudan, an estimated 9.6 million people (21 per cent of the population) were experiencing crisis or worse levels of food insecurity (IPC/CH Phase 3 or above) in the third quarter of 2020 and needed urgent action. This is the highest figure ever recorded for Sudan.

Food security needs are set to increase dramatically in 2021 as the pandemic and global response measures seriously affect food systems worldwide. Entire food supply chains have been disrupted, and the cost of a basic food basket increased by more than 10 per cent in 20 countries in the second quarter of 2020.

Delays in the farming season due to disruptions in supply chains and restrictions on labour movement are resulting in below-average harvests across many countries and regions.  This is magnified by pre-existing or seasonal threats and vulnerabilities, such as conflict and violence, looming hurricane and monsoon seasons, and locust infestations. Further climatic changes are expected from La Niña.

Forecasters predict a 55 per cent change in climate conditions through the first quarter of 2021, impacting sea temperatures, rainfall patterns and hurricane activity. The ensuing floods and droughts that could result from La Niña will affect farming seasons worldwide, potentially decreasing crop yields and increasing food insecurity levels.

The devastating impact of COVID-19 is still playing out in terms of rising unemployment, shattered livelihoods and increasing hunger. Families are finding it harder to put healthy food on a plate, child malnutrition is threatening millions. The risk of famine is real in places like Burkina Faso, north-eastern Nigeria, South Sudan and Yemen.

COVID-19 has ushered hunger into the lives of more urban communities while placing the vulnerable, such as IDPs, refugees, migrants, older persons, women and girls, people caught in conflict, and those living at the sharp end of climate change at higher risk of starvation. The pandemic hit at a time when the number of acutely food-insecure people in the world had already risen since 2014, largely due to conflict, climate change and economic shocks.

Acute food-insecurity is projected to increase by more than 80 percent – from 149 million pre-COVID-19, to 270 million by the end of 2020 – in 79 of the countries where WFP works. The number of people in crisis or worse (IPC/CH Phase 3 or above) almost tripled in Burkina Faso compared to the 2019 peak of the food insecurity situation, with 11,000 people facing catastrophic hunger (IPC/CH Phase 5) in mid-2020.

For populations in IPC3 and above, urgent and sustained humanitarian assistance is required to prevent a deterioration in the hunger situation. It is alarming that in 2020, insufficient funds left food security partners unable to deliver the assistance required. For example, sustained food ration reductions in Yemen have directly contributed to reduced food consumption since March. Today, Yemen is one of four countries at real risk of famine.

Source: https://gho.unocha.org/

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Critics:

During the COVID-19 pandemic, food security has been a global concern – in the second quarter of 2020 there were multiple warnings of famine later in the year. According to early predictions, hundreds of thousands of people would likely die and millions more experience hunger without concerted efforts to address issues of food security.

As of October 2020, these efforts were reducing the risk of widespread starvation due to the COVID-19 pandemic. Famines were feared as a result of the COVID-19 recession and some of the measures taken to prevent the spread of COVID-19. Additionally, the 2019–2021 locust infestation, ongoing wars and political turmoil in some nations were also viewed as local causes of hunger.

In September 2020, David Beasley, Executive Director of the World Food Programme, addressed the United Nations Security Council, stating that measures taken by donor countries over the course of the preceding five months, including the provision of $17 trillion in fiscal stimulus and central bank support, the suspension of debt repayments instituted by the IMF and G20 countries for the benefit of poorer countries, and donor support for WFP programmes, had averted impending famine, helping 270 million people at risk of starvation.

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