Brief: Secretary of State Mike Pompeo said he certified to Congress Wednesday that Hong Kongno longer enjoys a high degree of autonomy from China -- a decision that could result in the loss of Hong Kong's special trading status with the US and threaten the autonomous region's standing as an international financial hub… His decision comes after Beijing introduced controversialnational security legislationfor Hong Kong -- legislation that Pompeo again denounced in Wednesday's statement as a "disastrous decision." Last week, the top US diplomat warned that the passage of the legislation would be a "death knell" for Hong Kong's autonomy. The proposed law hasprompted protestsin Hong Kong and has been denounced internationally, with observers warning it could curtail many of the fundamental political freedoms and civil liberties guaranteed in the agreement handing the city over from British to Chinese rule in 1997.
Brief:One of Australia’s largest investment firms expects to see more demand for assets in its home market in the coming year as the coronavirus pandemic slows the recent wave of money flowing out of the country. IFM Investors Pty., a A$156 billion fund ($104 billion) owned by 27 of Australia’s largest not-for-profit retirement firms, is seeing appetite among its clients for local infrastructure projects, Chief Executive Officer David Neal said. The firm is considering raising new capital to lend to struggling companies and will consider being a cornerstone investor in future capital raisings by Australian-listed companies… Favoring local assets would mark a shift in strategy for the nation’s A$2.7 trillion pension pool -- the world’s fourth largest -- that’s been sending more money offshore in recent years as it outgrew the local market and investment opportunities dried up. It’s an opportune time as the government weighs new spending, with the economy on the brink of its first recession in almost 30 years.
Brief: BlackRock Inc. Chief Executive Officer Larry Fink said it’s still worth betting on equities in the long run even though the coronavirus convulsed global stock markets this year and troubles may still lie ahead. “Even today, a strong ownership in the new economies over long horizons is going to be a great asset class,” Fink said on a Deutsche Bank AG webcast on Wednesday. “The only asset class over a long horizon that you can rest assured, over long horizons, that you’re going to be safe, will be global equities.” That doesn’t mean the near-term picture looks rosy. Fink’s remarks come weeks after he delivered a grim message on a private call with clients of a wealth advisory firm. Bankers he’s spoken to expect the coronavirus pandemic will hit American companies hard, with cascades of bankruptcies to follow, Bloomberg News reported at the time. Fink, whose firm is the world’s biggest asset manager, acknowledged Wednesday that near-term pain probably lies ahead.
Brief: Wall Street is heading back to work. Goldman Sachs is planning on having some of its traders and other markets personnel return to offices in the U.S. and London in the next few weeks, executive John Waldron said Wednesday in an investor conference. “We are beginning the process of returning to our offices around the world,” said Waldron, who is Goldman’s president and chief operating officer. “We are planning for a core group of people in our markets-facing businesses to return in the US and London over the next several weeks.” Goldman, a top player in global trading and capital markets businesses, sent New York-area employees home in March as lockdowns began in the U.S. The bank’s Wall Street-centric businesses performed well in the first quarter, exceeding analysts’ expectations amid record volatility. Now, some of the 98% of bank employees working from home will begin to return to the bank’s offices in Manhattan, New Jersey and Connecticut.
Brief: British property funds are set to remain frozen for months as the market is impossible to value due to the coronavirus crisis, and some may need to change structure to survive, industry sources say. Ten big open-ended property funds tracked by Morningstar, with a total of 6.5 billion pounds ($8 billion) under management, stopped investors from getting their money out in mid March, saying valuers could not accurately assess real estate assets in a plunging economy.With question marks over the future of office working, the retail industry in crisis and the housing market only just reopening, the price of property is set for a major readjustment, but a dearth of transactions means the scale of change is still unclear.“This is a crisis unlike any other,” said Ben Sanderson, a director at Hermes Real Estate Investment Management. “In the short term, it’s going to be hugely challenging.”
Brief: Nearly three-quarters of investment professionals believe the U.S. Federal Reserve’s corporate credit buying programs have stabilized markets since their lows in March. But this week’s II Fear Index reveals investors are also worried about new risk introduced by the initiatives — including a dangerous assumption of credit risk by the public. For six weeks, Institutional Investor has been polling investment professionals about everything from government initiatives to the rationality of equity investors for the weekly II Fear Index. This week’s survey had 168 respondents, the highest yet for the poll. About 74 percent of the surveyed investment professionals said the move by the Fed to purchase corporate bond ETFs, a first for the central bank, provides necessary liquidity to credit markets. But 70 percent said the Fed’s ETF buying also “raises concern about careless risk taking.” Sixty-seven percent of respondents said the initiative “unreasonably encouraged shifting credit risks from the private sector to the public sector.”