- Russia and China wrestle over gas deal
Russia and China are coming to the end of a state visit by Russian President Vladimir Putin. Seen as a symbolic move, the Russian President is extremely keen to cement a deal on a line planned pipeline that will see up to 38bn cubic metres of gas exported to China. The deal would represent a strengthening of the strategic partnership that Russia is trying to build with China. Russia is pushing them in order to offset the recent damage in relations between the USA and Russia over international issues such as Syria and Crimea. Russia and China has also been holding joint military exercises during the visit. The author believes that whilst it is billed as a partnership, Russia’s reckless action over Crimea means that Russia is more dependent on China than China on Russia. Whilst China badly wants the Russia gas, it knows that it is in a strong position and will likely use that leverage to squeeze Putin.
- Germany finds evidence of forex rate-fixing
In yet another scandal for the investment banking industry, German regulators have revealed that is has evidence of banks attempting to manipulate the foreign exchange (FOREX) markets. These markets are worth 5.3trn Euro per day. The attempt to manipulate the market has echoes of the LIBOR scandal, which involved institutions attempting to control the inter-banking lending rate. In the past few weeks, there seems to be a series of concerted legal maneuvers by government across the globe in order to bring the financial services industry into line. The guilty plea of Credit Suisse yesterday is a prime example of increased assertiveness.
- Nigeria bombs blasts leaves 100 dead
Nigeria continues to stay in the headlines with a deadly attack in the religiously divided town of Jos. Situated north east of the capital city Abuja, the city has been relatively quiet of religious tension in the past two years but has underlying tensions between the Christian and Muslim populations. Whilst no claim of responsibility has been made for the attack as yet, suspicion has inevitably turned to the Islamic group Boko Haram, responsible for stealing 200 Christian schoolgirls 6 weeks ago. An international effort has been ongoing to secure their safe return. The two bombs went off at different times, the first targeting a crowded marketplace, and the second targeting a hospital a short period afterwards that was attempting to treat some of the victims of the first attack.
- Dougan says no plan to quit Credit Suisse
With Credit Suisse looking to put behind them the admission of guilt to US authorities over accepting untaxed money, the company CEO Brady Dougan has said that he has no intention of stepping down from his role. The share price of Credit Suisse actually increased after the announcement that a deal had been made with the US over the charges, indicating that investors were pleased the affair was dealt with. The fine of $2.6bn however puts the financial strength of the Swiss bank under scrutiny, and they will have to sell some of their assets in order to regain a good level of capital. Shareholders seem prepared to give the management of Credit Suisse some time as there was no evidence of personal responsibility, however they will be under fierce scrutiny.
- Vietnam riots hit global supply chain
The increasing political instability in Asia seems likely to have an impact of global supply chain. With China and Vietnam in dispute over China’s decision to drill for oil in disputed waters, Vietnamese protestors have fairly effectively halted production in many Chinese owned factories in Vietnam. The declaration of martial law in Thailand is also a concern. Foxcoon and Yue Yuen, companies that produce goods for Apple, Nike and Adidas have all temporarily halted production in Vietnam after attacks. It is thought that the Vietnamese protestors could not differentiate between Taiwanese and Chinese companies. The affect on global supply chains is further evidence of the fragility of globalisation, after the disruptions of the Tsunami in Japan two years ago and the flooding that has hit Thailand in recent years. With rising wages in China, the options for companies to supply their products in decreasing, as other states that have traditionally been turned to in the past are now less attractive. The fire in Bangladesh that killed over 1000 workers and increasingly frequent strikes by Cambodian workers mean that those two alternatives are less viable than before.