Slowing growth in China’s service sector is another sign of a slow recovery
Assembling an aircraft at the Airbus factory in Tianjin. Services in China have recovered faster than manufacturing since the end of pandemic restrictions © Qilai Shen / Bloomberg
China’s service sector activity expanded more slowly than expected in June, highlighting the challenges facing the economy as the post-pandemic recovery fizzles.
The Caixin Services Purchasing Managers’ Index came in at 53.9 on Wednesday, down from 57.1 for May and below the consensus estimate of 56.2. Readings above 50 indicate expansions in activity.
The index has been closely watched in recent months as services have recovered faster than manufacturing. The manufacturing index fell to 50.5 in June from 50.9 in May, in line with expectations of 50.2.
China’s economic recovery has faltered amid a slower recovery in spending, while stimulus measures have so far been limited to small interest rate cuts.
South Korea allows for the first new banks in three decades
South Korea will allow new entrants into its banking sector for the first time in three decades to spur competition in an oligopolistic system, after heavy criticism over large bonuses paid to employees amid higher interest rates.
The country’s banking sector is dominated by five major lenders, who were criticized by President Yoon Sok-yul earlier this year for what he called a “money feast” with profits easily made through the interest rate gap between deposits and loans.
The government will allow existing financial firms licenses to become commercial banks nationwide, allow more online banking and relax loan-to-deposit rules for local branches of foreign banks.
Asian stocks fall as traders await the PMI data
Currency traders at KEB Hana Bank in Seoul work amid screens displaying Kospi. Most Asian stocks fell on Wednesday. © Ahn Young-joon / AP
Asian stocks fell on Wednesday in quiet trading after the Independence Day break in the United States and ahead of the release of a series of indicators on economic activity across the region.
The Hang Seng index in Hong Kong fell 0.3 percent in early trading, and the Kospi index in South Korea lost 0.4 percent. The Japanese Topix and the Chinese CSI 300 were flat.
European stocks rose in quiet trading on Tuesday while US markets were closed. Investors will look forward to the release of PMIs for Australia, China, Hong Kong, Japan and India later on Wednesday.
What do you see in Asia today
Events: Bank Negara Malaysia kicks off the two-day Monetary Policy Committee meeting. The Central Bank of Kazakhstan announces its decision on the interest rate. Foreign Minister of Uzbekistan Bakhtiar Saidov arrived in Azerbaijan.
economic data: In China, Caixin released the June Services PMI as well as the Composite Index. The monthly services PMI is released in Australia, as are the AIG construction and manufacturing indices for June, the ANZ commodity price index and the latest retail sales data. Japan publishes services PMI for June while Hong Kong releases manufacturing PMI. The Nikkei India Services Index was announced. Singapore also releases retail sales figures for May, while Taiwan, Thailand and the Philippines report inflation figures.
Markets: Futures in Hong Kong and Tokyo pointed lower. European stocks rose the day before while US markets were closed for the July 4th holiday.
Zelensky claims that Russia mined the Zaporizhia nuclear power plant
Ukrainian soldiers cover their ears in a bunker as Russian tanks shell their positions near Zaporizhia, in southern Ukraine, on Sunday. © Libkos via AP
Ukrainian President Volodymyr Zelensky warned on Tuesday that Russia may be preparing to launch an attack on the Zaporizhia nuclear power plant, the largest facility of its kind in Europe.
“The Russian military placed explosive-like objects on the roof of several power units at the Zaporizhia Nuclear Power Plant,” he said, citing Ukrainian intelligence agencies. “Maybe to simulate an attack on the factory. Maybe they have another scenario.”
Russian forces have controlled the factory since the early days of the invasion last year. Rockets and mortar bombs landed near the factory and gun battles broke out around it.
A judge limits US officials’ connections to social media groups
A US judge has barred federal government officials from contacting social media companies about removing certain communications from their platforms, in a politically charged case that addresses tensions between freedom of expression and efforts to curb misinformation online.
Judge Terry Doty, in the Western District of Louisiana, on Tuesday issued a preliminary injunction banning agencies such as the US Department of Justice and the FBI as well as officials including senior White House staff from meeting with social media companies to urge them to remove or reduce content “that contains protected freedom of speech” from their platforms.
Read more about the injunction here.
The Bank of England is considering forcing foreign banks to replace branches with their own
Tourists gather outside the Bank of England. The central bank may force foreign financial institutions to set up subsidiaries © Hollie Adams / Bloomberg
People familiar with the situation said the Bank of England is looking into controversial plans to force more international banks to set up subsidiaries in the UK.
The move could lower the thresholds that require foreign banks doing business in the country to set up subsidiaries with their own capital and liquidity. People said the Bank of England is considering this as part of a review of the Silicon Valley bank meltdown.
Affiliates – such as SVB – enable local regulators to take control of failing banks rather than leave their fate to the discretion of their parent supervisors.
Read more about the Bank of England’s plans here.
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