Summary: Global markets handled the official news of the default of China’s most indebted property company calmly overnight, knowing Chinese authorities are arranging a controlled implosion designed not to upset local and global markets.
Calm despite China defaults Stock and bond markets around the world were broadly calm and mostly flat this morning despite news overnight that Fitch had formally declared China’s Evergrande and Kaisa property development firms to be in default of their massive debts.
‘Team China has got this’ The relative lack of ructions, despite the effective collapse of China’s biggest apartment builder, is because China’s central bank, its government and regulators have intervened to arrange a ‘controlled implosion’ where the losses are effectively diluted and offset across a range of state-owned banks, funds and companies to avoid spooking either domestic savers or foreign bond holders more generally.
Good Pfizer news The US Food and Drug Administration approved the use of Pfizer’s booster doses for 16 and 17 year olds in the United States, adding to the proportion of the population more likely to be protected against omicron, and pushing the rest of the world’s drug regulators towards the same view.
Jobs strength US jobless claims fell more than expected in November to their lowest level since September 1969, emphasising the robustness of the jobs market and reinforcing expectations the Fed could hike as soon as May.
Slower inflation China’s annual consumer price inflation rate was weaker than expected at 2.3% in November because of an economic slowdown, which is raising expectations of further monetary policy easing in the world’s second largest economy and NZ’s largest trading partner.
Lithuania cut off China told multinationals to cut ties with Lithuania or face being shut out of the Chinese market, ramping up its punishment of the tiny Baltic nation for allowing Taiwan to set up an embassy there. China’s customs computer systems simply removed the entire country from its system, meaning importers could not accept goods from Lithuania.
Fresh on BusinessDesk this morning
Brent Melville reports an Infrastructure Commission study has found $1.29 billion of costs are incurred each year to get resource consents, due in large part to consultants and legal fees.
Paul McBeth wraps up a growing trend towards centralisation and thinking big, but cautions about overreach.
