Headlines

When other acquisitive Chinese groups were insisting they were not an arm of the state, China Energy Reserve and Chemicals Group was making the opposite case: trying to convince bankers and investors it belonged to the government. But the company’s recent default on a payment for a $350m bond, and its withdrawal from a $5.2bn property deal earlier in the year, was a sign that its state backing was not as strong as advertised, the Financial Times reported. The matter is sensitive for investors in Chinese bonds.

Orders for German manufactured goods pulled back sharply in April amid a decline in domestic and eurozone demand, in a gloomy sign for the economy’s performance in the second quarter after a disappointing start to 2018, the Financial Times reported. New orders in manufacturing fell 2.5 per cent in April from March on a seasonally and calendar adjusted basis, according to the Federal Statistics Office (Destatis). It marked the fourth month in a row in which orders have fallen, FactSet data show. Economists polled by Reuters had forecast a 0.8 per cent rise.

Aston Villa have reached an agreement with British tax authorities (HM Revenue & Customs) over a tax bill and are currently not working with administration advisors or insolvency practitioners, the Championship club said on Thursday. The BBC reported that Villa owe 4 million pounds ($5.36 million) and have already paid HMRC 500,000 pounds on Wednesday, the International New York Times reported on a Reuters story. They will pay another 1.2 million pounds this week.

This Sunday Swiss voters will decide whether to try what may be the boldest financial experiment ever contemplated — dismantling their orthodox banking system and building a new one based on so-called sovereign money, or Vollgeld. The proposal is probably far too radical to have much chance of success, a Bloomberg View reported. Yet that’s a pity. The idea of sovereign money isn’t crazy. It has a long and distinguished academic pedigree and, as a practical matter, there’s a lot to recommend it. Switzerland would do the world a favor by giving the plan a try.

For all the talk of China’s mountain of debt, defaults and deleveraging, there’s a chasm nobody is talking about, a Bloomberg View reported. Here’s an alarming and frequently cited statistic: Chinese industrial companies have at least $124 billion of debt maturing over the next two years. Actually, it’s worse. They have another $34 billion of bonds with put options – giving creditors the right to sell back their securities or get a higher coupon – that can be exercised within the next two years. Lenders could be asking for their money back much sooner than companies and investors expect.

Franklin Templeton Investments has cut back its debt holdings in Bahrain, citing the “very serious” threat that the cash-strapped nation will experience an economic crisis in the next 12 months if financial aid from neighbors doesn’t come through, Bloomberg News reported. Templeton’s exposure is “much reduced today” because the government seems to lack a credible reform plan, according to Mohieddine Kronfol, the firm’s chief investment officer for global sukuk and Middle East and North Africa fixed income.

Mario Draghi is on the verge of a watershed moment in the European Central Bank’s efforts to leave behind its crisis-fighting monetary policy, Bloomberg News reported. Chief Economist Peter Praet on Wednesday signaled the bank’s first formal round of talks on when to stop buying bonds is imminent. That would start the process of bringing down the curtain on stimulus efforts that have resulted in almost 2.5 trillion euros ($2.9 trillion) of bond purchases since 2015.

Italian bonds slid as the country’s new government continued to unnerve investors and European Central Bank policy makers flagged the prospect of talks to end its debt-buying program, Bloomberg News reported. The declines were led by two-year bonds, which have swung wildly over the past week. Italy’s new Prime Minister Giuseppe Conte passed a confidence vote in the Senate Tuesday following his maiden speech that stuck to a spending platform outlined by the Five Star Movement-League coalition.

The liquidation of collapsed British outsourcer Carillion will cost UK taxpayers at least £148m, according to a report from the government’s auditor, of which an estimated £50m will be paid to auditor PwC for its work in the process, the Financial Times reported. PwC is the “special manager” appointed to the windup process by the Insolvency Service, causing anger among politicians, given its former role also as an adviser to Carillion.

Investors have pulled nearly $11bn out of European equity exchange traded funds in the past three months, with financials bearing the brunt of withdrawals, the Financial Times reported. During May, more than $3.7bn worth of investment left Europe equity ETFs on a net basis, with vehicles that track German, Italian and Spanish stocks seeing significant net outflows in particular. It marks the most money flowing out of European companies’ shares via tracker funds since data-gathering began in 2008, according to Citi, leaving the asset class with negative outflows year to date.