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☆ Auditor exodus at embattled China property firms triggers governance concerns
▼ + stars: | 2022-11-01 | by ( Clare Jim | ) www.reuters.com time to read: +4 min

HONG KONG, Nov 2 (Reuters) - Auditors of at least 14 Hong Kong-listed Chinese property firms have exited this year, securities filings showed, raising governance concerns about the debt-ridden developers several of whom are yet to publish long-pending financial results. Embattled developers including Sunac China (1918.HK), Shimao Group (0813.HK) and Kaisa Group (1638.HK) are among those whose auditors have parted ways in recent months. In many cases, firms outside the Big-Four accounting firms have been roped in as replacements. The trend, which accelerated earlier this year, has seen auditors, including the world's top auditing firms PricewaterhouseCoopers (PwC) and Deloitte, resigning from their roles. Deloitte in Hong Kong declined to comment on the reasons for ending their auditing mandates for some Chinese property developers.

☆ Western economies rediscover meaning of scarcity
▼ + stars: | 2022-10-27 | by ( Edward Chancellor | ) www.reuters.com time to read: +8 min

Western companies, which outsourced production to China and other emerging markets, found themselves less constrained by their domestic workforces. China’s rising exports lowered the prices of traded goods, dampening inflationary pressures and allowing Western central banks to cut interest rates to their lowest levels in history. In the 1970s, economists worried that fiscal deficits would lead to higher interest rates and lower investment. Western governments now face constraints that are common in developing countries, relating to fiscal policy, inflation and financial stability. To reduce the burden of their war debts, governments in Europe and the United States held interest rates below inflation.

☆ The urgent search for the perfect inflation hedge
▼ + stars: | 2022-10-20 | by ( Edward Chancellor | ) www.reuters.com time to read: +7 min

But when inflation takes off, stocks and bonds become positively correlated, rising and falling together. The failure of bonds and stocks to deliver protection when inflation spikes has forced investors to seek other hedges. “Each attempted inflation hedge has its particular attractions, risks, and shortcomings,” wrote the journalist Henry Hazlitt in 1978. Hazlitt wrote that the only reliable inflation hedge is to end inflation. If the Fed loses its battle against rising prices, more people will come to appreciate the insurance they provide.

☆ Central banks get sucked into financial black hole
▼ + stars: | 2022-10-14 | by ( Edward Chancellor | ) www.reuters.com time to read: +7 min

Central bankers around the world want to bring inflation down by returning interest rates to “normal” levels. As a result, the average UK mortgage has grown to 3.4 times average income, up from 1.5 times in the early 1980s, according to housing analyst Neal Hudson. But it’s left many homeowners extremely vulnerable to higher interest rates. As a result, the government’s fiscal position is more exposed to interest rate fluctuations. As a financial black hole opens up, central banks will be forced to stop tightening.

☆ Interest rate delusion may be biggest error of all
▼ + stars: | 2022-10-06 | by ( Edward Chancellor | ) www.reuters.com time to read: +7 min

The false idea exposed by the current bear market is that interest rates would remain low indefinitely. The belief that interest rates would remain at permanently low levels could prove the most costly error of all. The lowest-ever interest rates gave us the “Everything Bubble”. Now that interest rates are rising, everything is at risk. The pension funds faced margin calls on their loans, and the bond market seized up as they scrambled to raise cash.

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