Moody'scuts China credit outlook, warns of lower growth, property crisis

Published

12 months ago

December 6, 2023

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Ratings agencyMoody’sslapped a downgrade warningon China’s credit rating on Tuesday,saying costs to bail out localgovernmentsand state firmsandcontrol itsproperty crisiswould weigh on the world’s No. 2 economy.

The downgrade reflects growing evidence that authorities will have to provide more financial support for debt-laden local governments and state firms, posing broad risks to China’s fiscal, economic and institutional strength,Moody’ssaid in a statement.

Historically, about one-third of issuers have been downgraded within 18 months of the assignment of a negative rating outlook.

“The outlook change also reflects the increased risks related to structurally and persistently lower medium-term economic growth and the ongoing downsizing of the property sector,” Moody’s said.

China’s blue-chip stocks slumped to nearly five-year lows on Tuesday amid worries about the country’s growth, with talk of a possible cut by Moody’s denting sentiment during the session, while Hong Kong stocks extended losses.

China’s major state-owned banks, which had been seen supporting the yuan currency all day, stepped up US dollar selling very forcefully after the Moody’s statement, one source with knowledge of the matter said.

The yuan was little changed by late afternoon.

The cost of insuring China’s sovereign debt against a default rose to its highest since mid-November.

“Now the markets are more concerned with the property crisis and weak growth, rather than the immediate sovereign debt risk,” said Ken Cheung, chief Asian FX strategist at Mizuho Bank in Hong Kong.

US-listed shares of Chinese companies fell, with Baidu off 0.5%, Alibaba Group Holding down 1.1%, and JD.com Jdropping 1.9%.

The move by Moody’s was the first change on its China view since it cut its rating by one notch to A1 in 2017, also citing expectations of slowing growth and rising debt.

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WhileMoody’saffirmedChina’s A1 long-term local and foreign-currency issuer ratings on Tuesday — saying the economy still has a high shock-absorption capacity — it said it expects the country’s annual GDP growth to slow to 4.0% in 2024 and 2025, and to average 3.8% from 2026 to 2030.

Moody’s main peer, S&P Global, said later in a long-scheduled global outlook call that its big concern was that “spillovers” from any worsening in the property crisis could push China’s gross domestic product growth “below 3%” next year.

Moody’s outlook downgrade comes ahead of the annual agenda-setting Central Economic Work Conference, which is expected around mid-December, with government advisers calling for a steady growth target for 2024 and more stimulus.

Analysts say the A1 rating is high enough in investment-grade territory that a downgrade is unlikely to trigger forced selling by global funds.

S&P and Fitch, the other major global rating agency, both rate China A+, the equivalent of Moody’s A1, and have stable outlooks.

China’s Finance Ministry said it was disappointed by Moody’s decision, adding that the economy will maintain its rebound and positive trend.

It also said property and local government risks are controllable.

“Moody’s concerns about China’s economic growth prospects, fiscal sustainability and other aspects are unnecessary,” the ministry said.

Most analysts believe China’s growth is on track to hit the government’s target of around 5% this year, but that compares with a COVID-weakened 2022 and activity is highly uneven.

The economy has struggled to mount a strong post-pandemic recovery as the deepening crisis in the housing market, local government debt concerns, slowing global growth and geopolitical tensions have dented momentum.

A flurry of policy support measures have proven only modestly beneficial, raising pressure on authorities to roll out more stimulus.

“We spent the better part of three years watching China have this sort of off-and-on reopening from the pandemic, and this was the year they finally sort of officially reopened,” said Art Hogan, chief market strategist at B Riley Wealth in New York. “But the pace at which the economy has recovered from that has been disappointing.”

Analysts widely agree that China’s growth is downshifting from breakneck expansion in the past few decades.

Many believe Beijing needs to transform its economic model from an over-reliance on debt-fueled investment to one driven more by consumer demand.

Last week, China’s central bank head Pan Gongsheng pledged to keep monetary policy accommodative to support the economy, but also urged structural reforms to reduce a reliance on infrastructure and property for growth.

After years of over-investment, plummeting returns from land sales, and soaring costs to battle COVID, economists say debt-laden municipalities now represent a major risk to the economy.

Local government debt reached 92 trillion yuan ($12.6 trillion), or 76% of China’s economic output in 2022, up from 62.2% in 2019, according to the latest data from the International Monetary Fund.

In October, China unveiled a plan to issue 1 trillion yuan ($139.84 billion) in sovereign bonds by the end of the year to help kick-start activity, raising the 2023 budget deficit target to 3.8% of gross domestic product from the original 3%.

The central bank has also implemented modest interest rate cuts and pumped more cash into the economy in recent months.

Nevertheless, foreign investors have been sour on China almost all year.

Capital outflows from China rose sharply to $75 billion in September, the biggest monthly figure since 2016, according to Goldman Sachs.

US

Matt Gaetz: Speaker Mike Johnson will request report into Trump’s attorney general pick is kept secret

Published

2 hours ago

November 16, 2024

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Matt Gaetz: Speaker Mike Johnson will request report into Trump's attorney general pick is kept secret

US House Speaker Mike Johnson has said he will “strongly request” a report into allegations of sex trafficking against Matt Gaetz, who is the president-elect’s choice of attorney general, should not be released.

Mr Johnson said he was against publishing the House Ethics Committee report on Mr Gaetz, 42, who if approved by the Senate will become the nation’s top prosecutor once Donald Trump is sworn in as president on 20 January.

That’s despite Mr Gaetz having previously faced a nearly three-year Justice Department investigation into sex trafficking allegations involving a 17-year-old girl. He denies the allegations and has not faced criminal charges.

Mr Gaetz has also never worked as a prosecutor and has only worked in law for a few years at a local level.

He stepped down from Congress after Mr Trump announced him as his attorney general pick.

His resignation brought the investigation by the House Ethics Committee to an end – two days before it had been expected to release its report into the trafficking claims.

House Speaker Mr Johnson, a Louisiana Republican, said of the probe: “I’m going to strongly request that the Ethics Committee not issue the report, because that is not the way we do things in the House.”

Politicians of both parties on the Senate Judiciary Committee have said they want to see the report on Mr Gaetz, as part of a Senate confirmation process for cabinet nominees that would start next year with public hearings.

Democrats have described the MAGA loyalist as “a gonzo agent of chaos” and his appointment a “red alert moment for our democracy”, while some Republican senators have also raised doubts about his suitability for the role.

Mr Johnson said he planned to urge House Ethics Committee chairman Michael Guest not to provide the report to the Senate Judiciary Committee.

“The rules of the House have always been that a former member is beyond the jurisdiction of the Ethics Committee,” said Mr Johnson, who returned on Friday morning from meeting Mr Trump at the president-elect’s Mar-a-Lago resort in Florida.

“I think it’s a terrible breach of protocol and tradition and the spirit of the rule,” he added. “I think that would be a terrible precedent to set.”

Mr Johnson had said on Wednesday that as Speaker he could not be involved in deciding whether or not to release the report.

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Jake Paul v Mike Tyson: How to watch, undercard and event details

Published

2 hours ago

November 16, 2024

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Jake Paul v Mike Tyson: How to watch, undercard and event details

YouTuber-turned-boxer Jake Paul is taking on one of boxing’s greatest-ever fighters tonight in former undisputed world champion Mike Tyson.

The heavyweight bout is being labelled by some as Paul’s toughest test yet, despite the 30-year age gap between him and Tyson.

The fight was originally scheduled for 20 July, but was delayed after Tyson fell ill on a flight due to an ulcer flare up in May.

It’s going to be a co-main event alongside a highly-anticipated rematch between undisputed super lightweight champion Katie Taylor and unified featherweight champion Amanda Serrano.

Here’s everything you need to know about the hotly anticipated fight and how to watch.

Who are the fighters?

Jake Paul, 27, is an American YouTube star who made a name for himself on social media platform Vine. He made his professional boxing debut in 2020.

His most high-profile fight so far was his clash with Tyson Fury’s brother Tommy Fury last year, which he lost by split decision.

“The Problem Child” has since defeated former UFC contender Nate Diaz, professional boxer Andre August, former Gold Gloves champion Ryan Bourland and most recently MMA fighter Mike Perry to earn himself a boxing record of 10-1.

“Iron Mike” Tyson, 58, retired from professional boxing in 2005 with a 50-6 record and as a former undisputed heavyweight champion.

The legendary fighter, who knocked out 44 opponents during his career, returned to the ring after 15 years in 2020 for a bout against fellow boxing icon Roy Jones, which ended in an unofficial draw.

Tyson’s fighting skills place him among the best heavyweight boxers of all time, but the age gap between him and Paul along with some potential ring rust are expected to level the playing field.

When is the fight and where will it be?

The bout is due to take place at the AT&T Stadium in Arlington, Texas, on Friday 15 November. The 80,000-seat capacity stadium is home of the Dallas Cowboys and is the biggest NFL stadium in the US.

The event is set to begin at 1am GMT on 16 November, with Taylor v Serrano scheduled for 3am GMT and Tyson v Paul at 4am GMT.

How can I watch it?

It will be aired on Netflix in what will be the first live fight ever on the streaming platform.

Jake Paul, who co-founded Most Valuable Promotions (MVP) in 2021, said his company signed with Netflix because it is “the biggest streaming platform in the world”.

Fellow MVP co-founder Nakisa Bidarian added: “Partnering with Netflix for this deal presents an unparalleled opportunity to bring Jake Paul v Mike Tyson to the world on an unprecedented scale.”

Do I need to pay for the fight?

Some good news for Netflix users; there is no additional cost for the streaming platform’s subscribers.

It’s not a pay-per-view event, but you won’t be able to watch it unless you have a Netflix account, which costs between £4.99 and £17.99 depending on what sort of plan you subscribe to.

Can I buy tickets?

Tickets are still available throughout the stadium via SeatGeek, with prices for regular seats ranging from $60 (£47.32) to about $7,400 (£5,914).

What are the rules?

The Texas Athletic Commission has sanctioned it as a professional fight which will count on the pair’s boxing records, but it has put some sanctions in place due to Tyson’s age.

There will be eight rounds lasting a maximum of two minutes rather than three, and both boxers will wear 14-ounce gloves, heavier than the usual 10-ounce.

What you need to know about Taylor v Serrano

Taylor and Serrano produced an epic when they became the first ever women fighters to headline at Madison Square Garden back in 2022, with the former edging a split decision that could have arguably fallen either way after 10 rounds.

Now over two years on from one of the greatest fights in the history of female boxing, undisputed super-lightweight world champion Taylor, 38, will put her belts on the line against unified featherweight champion Serrano, 36.

The contest will mark a step in three weight classes from Serrano’s usual featherweight division as she seeks the biggest win of her glittering career.

Taylor will enter 23-1 having avenged her loss to Chantelle Cameron in May last year by winning November’s rematch via majority decision to become undisputed super-lightweight champion and a two-weight undisputed champion.

Serrano is meanwhile 46-2-1 having won all four of her fights since losing to Taylor, most recently beating Danila Ramos via unanimous decision after their 12-rounder in October.

Who is on the undercard?

There are five other fights on the bill besides the two co-main events – and two of them will see titles on the line. Here’s how it looks:

Mario Barrios v Abel Ramos – WBC welterweight title
Shadasia Green v Melinda Watpool – WBO super-middleweight title
Lucas Bahdi v Corey Marksman – lightweight
Bruce Carrington v Dana Coolwell – featherweight
Neeraj Goyat v Whindersson Nunes – middleweight

‘The fight of a lifetime’

Paul is not typically known for showing respect to his opponents. In the lead-up to his last fight against Tommy Fury, which he lost on points, Paul said Tyson Fury’s brother “boxes because he was told to do so by his dad”.

“He doesn’t have that real heart, that real fighter inside of him,” he added.

Few, however, would question Mike Tyson’s credentials, with Paul having adopted a more respectful approach to promoting the fight so far.

“My sights are set on becoming a world champion, and now I have a chance to prove myself against the greatest heavyweight champion ever – the baddest man on the planet and the most dangerous boxer of all time,” he said, adding: “This will be the fight of a lifetime.”

In a face-to-face posted on his YouTube channel on 10 November, Paul said winning would be “bittersweet” due to the respect he has for Tyson, but said it was “my time to shine”.

‘I plan to finish him’

Critics of the fight have said there is simply too big of an age gap between the two, with Tyson falling ill in May stoking talks over the fight being a mistake for the 58-year-old.

But the veteran has insisted he still has fuel left in the tank, claiming his body is “in better overall shape than it has been since the 1990s”.

“I’m very much looking forward to stepping into the ring with Jake Paul,” Tyson said – promising to “finish him” and his boxing career.

During the face-to-face, Tyson warned: “I’m not going to lose. I can’t even fathom losing.

“I think he thinks this is going to be a very easy night. It’s not going to be an easy night.”

Sports

Low and inside: O’s will again alter LF dimensions

Published

2 hours ago

November 15, 2024

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Low and inside: O's will again alter LF dimensions

Associated Press

Nov 15, 2024, 06:30 PM ET

BALTIMORE — The Orioles are ready to adjust their wall in left field again.

The team moved the wall at Camden Yards back and made it significantly taller before the 2022 season. General manager Mike Elias said Friday the team “overcorrected” and will try to find a “happier medium” before the 2025 season.

The team sent out a rendering of changes showing the wall moved farther in — particularly in left-center field near the bullpens — and reduced in height.