New China lockdown hits iPhone production
British manufacturers face a new supply chain crisis after China locked down the vital city of Shenzhen, hitting iPhone production and driving Chinese stocks to their worst decline since the financial crisis.
Beijing locked down the city of 17.5m people and also banned residents from leaving the northeastern province of Jilin as nationwide daily Covid cases doubled to 3,400.
Foxconn, a crucial Apple supplier, halted its operations in Shenzhen, but said it would attempt to move manufacturing to other plants. Volkswagen temporarily suspended operations at three plants in Changchun, in Jilin.
Purpose-built as a manufacturing hub, Shenzhen is a global technology powerhouse. It accounts for 11pc of China’s gross domestic product by itself and also has the world’s fourth-largest port.
The lockdown is China’s largest since it isolated the city of Wuhan during the early weeks of the pandemic in 2020.
Simon Geale, from supply chain consultancy Proxima, said the lockdown would “send shockwaves through global supply chains”.
“A one-week delay means that roughly half a million containers are not starting their journey,” he said.
“We know that lead times are already long, and rates are historically high, but what are the other options? Alternate routes like air and rail are also at an all-time peak, and battling with their own availability issues, particularly into Europe.”
The shutdown piled pressure on Chinese stock markets amid rising concern about the country’s zero-Covid strategy.
An index of Chinese stocks listed in Hong Kong plunged by 7.2pc, its worst day of trading since the height of the financial crisis in 2008. The Hang Seng Tech Index of Chinese technology stocks plunged 11pc, its biggest fall since launching in July 2020.
Video gaming and social media giant Tencent fell almost 10pc, a decline compounded by reports that it faces a major fine over anti-money laundering failures.
Despite the pressure the lockdown will cause on supply chains, the shutdowns appeared to take some of the wind out of soaring commodity prices on Monday, amid expectations of reduced demand.
Iron ore prices fell 3pc and US oil dropped below $100 a barrel for the first time since March 1, with miners the worst performers on London’s FTSE 100.
It's time to wrap up the blog, thank you for following us! We shall see you again tomorrow morning. Before you go, have a look at the latest stories from our reporters:
Biggest rebuilding effort since Marshall Plan needed for Ukraine, warns IMF
Kremlin accuses West of staging 'artificial default' following Ukraine invasion
Heathrow, British Airways and Virgin Atlantic to drop mandatory mask use
As the UK prepares to drop all Covid-related requirements, Heathrow Airport, British Airways and Virgin Atlantic are ditching mandatory masks.
Masks will no longer be needed in Heathrow terminals, rail stations or office buildings from Wednesday, the airport said in a statement.
British Airways and Virgin Atlantic will also drop face-covering requirements on flights to destinations where their use is no longer mandated.
Russian fertiliser chief warns of global food crisis amid fears of rocketing potato costs
A Russian fertiliser tycoon has warned that soaring costs for farmers risks triggering a global food crisis as British suppliers predicted that potato prices will jump by more than 20pc. Andrew Quinn and Tom Rees write:
Andrey Melnichenko, founder of fertiliser giant EuroChem, said the soil nutrients are “no longer affordable to farmers” as he became the latest oligarch to speak out against Vladimir Putin’s war.
He said: “One of the victims of this crisis will be agriculture and food.
“Now it will lead to even higher food inflation in Europe and likely food shortages in the world’s poorest countries.”
Russia produces around 13pc of global fertiliser with EuroChem one of the world’s largest producers of the soil nutrients. Mr Putin has warned that sanctions on Russia risked causing fertiliser prices to climb amid record high food prices around the world.
UK to drop last Covid travel requirement
The UK will no longer require incoming travellers to fill in a passenger locator form from Friday, transport minister Grant Shapps has announced.
It marks the last Covid-related travel rule to be removed in Britain.
All remaining Covid travel measures, including the Passenger Locator Form and tests for all arrivals, will be stood down for travel to the UK from 4am on 18 March.
These changes are possible due to our vaccine rollout and mean greater freedom in time for Easter.
— Rt Hon Grant Shapps MP (@grantshapps) March 14, 2022
FTSE 100 closes in the green
Falling prices of natural resources ate into the performance of the FTSE 100, dampening in London what was a better day on other European markets.
The index closed up by 0.5pc to 7,193 driven by, among others, housebuilders - helped by new lower estimates of how much the post-Grenfell cladding scandal could cost.
But the index was weak compared to its European counterparts. Germany's Dax closed up 2.2pc, while the Cac 40 in Paris rose 1.8pc.
"European markets have continued to build on their gains from last week, with the Dax leading the way and the FTSE 100 lagging, on optimism over the progress in ceasefire talks currently taking place between Ukraine and Russia, and which are due to resume tomorrow," said CMC Markets analyst Michael Hewson.
Guy Hands files legal claim to block renationalisation of military housing portfolio
Guy Hands, the private equity tycoon, has launched a legal battle against the Government as he fights to block the renationalisation of its portfolio of thousands of military homes. Helen Cahill reports:
Annington Homes, which is owned by Mr Hands, has kickstarted legal action in two courts after talks with the Ministry of Defence broke down. Annington offered to contribute £105m to maintain the homes but was rebuffed by the MoD.
Annington has now launched a judicial review as well as a High Court claim challenging the MoD’s plans. Defence chiefs are trying to use leasehold rights to reclaim homes that were first sold off by John Major’s government in 1996.
Mr Hands brokered the privatisation deal while he was head of the Principal Financial Group at Nomura. He later purchased the properties through his private equity firm Terra Firma. The portfolio is now valued at £7.6bn.
Shell and Eni declare force majeure on key oil flows from Nigeria
Shell and Eni have both declared force majeure on key oil flows from Nigeria, threatening to disrupt supplies in a market that’s already fretting about the impact of Russia’s invasion of Ukraine.
Shell’s measure has been in place since March 3 and applies to its Bonny export program. Eni’s relates to Brass crude cargoes and follows a pipeline blast in the Bayelsa state. Force majeure is a legal step that allows companies not to meet contractual obligations for reasons that are out of their control.
A force majeure doesn’t necessarily mean the entirety of supply will be lost for a given period of time, as stored cargoes could still be shipped and repairs would allow shipments to resume.
That’s all from me – time to hand over to my colleague Giulia Bottaro, who will steer the blog onwards today! Thanks for following along.
FTSE steady, Europe hot as close approaches
Not long now until the close of cash trading in Europe. The FTSE 100 has made a steady gain of about 0.6pc so far, but is being held down by miners, which appear to be stumbling on expectations lockdowns in China could hit demand.
Meanwhile, European stocks are performing very strongly, with Germany’s Dax up 2.4pc on hopes over talks between Russia and Ukraine.
JP Morgan to lift ban on unvaccinated workers
JP Morgan, Wall Street’s biggest bank, has announced it will lift a ban on hiring unvaccinated workers next month.
In a memo, the lender said:
Across the US, as we continue to see cases decline, restrictions lifted and more flexibility with daily activities, we are learning to live with Covid as part of our new normal.
It said masking in its offices would become voluntary for both masked and unmasked staff.
JP Morgan noted that New York City has its own vaccination rules that staff would have to meet independent of the bank’s decisions.
Bloomberg has drawn up the big picture:
With Covid concerns ebbing, this month stands to be a key one for corporate America’s efforts to fill up offices. Wells Fargo is planning to bring employees back to the office from Monday after its plans were repeatedly upended due to the surging virus. Citigroup is calling vaccinated staff in the US back to the office for at least two days a week starting the week of March 21.
Aeroflot boss forced off IATA board
The chief executive of Aeroflot has been forced off the board of IATA, the global trade body for airlines, after being sanctioned by the West.
My colleague Oliver Gill reports:
IATA, which is headed by former British Airways chief Willie Walsh, ordered Mikhail Poluboyarinov to quit in the wake of sanctions imposed on 14 business figures last week.
Aeroflot, as well as 11 other Russian and one Belarussian airlines, remain members of the Montreal-based lobby group, however.
As a member of the IATA board, Mr Poluboyarinov - an important ally of Vladimir Putin - had the power to influence any motion for the expulsion of member airlines.
Read more: Willie Walsh kicks Aeroflot boss out of IATA
WTI drops below $100
US West Texas Intermediate crude oil has fallen below $100 a barrel for the first time since March 1, amid expectations Chinese lockdowns may curb demand.
Futures trading in New York has traded in an ultra-wide, $35 range so far this month amid volatility caused by the invasion of Ukraine.
Polymetal: Removal from equity indexes doesn’t affect our London listing
Miner Polymetal has just popped up with an RNS announcement, following FTSE Russell’s decision to exclude it from equity indexes.
The recent exclusion of Polymetal shares from the series of FTSE equity indices does not impact the Сompany's listing on the London Stock Exchange (LSE). Trading of POLY shares on LSE and Astana International Exchange (AIX) continues.
The removal is still likely to hurt, however, as some investors will only track Polymetal because it is part oft he top index.
In another sign that markets seem to seeing some signs for bullishness today, gold has fallen, down about 1.6pc at the moment.
It’s been unwinding gains for most of the past week.
Uber to increase UK prices up to a fifth
Uber will raise its prices by up to a fifth on Tuesday in a fresh blow to commuters already facing higher fares for public transport.
My colleague Helen Cahill reports:
The company is increasing charges after a High Court ruling which has forced it to start applying VAT. The move will add further pressure to household budgets in the midst of a cost-of-living crisis, and will likely erode the company's position as a more affordable option for transport than black cabs.
Uber has not yet confirmed its new pricing structure, but the increase could be as high as 20pc if the company tries to recoup the total VAT bill. It has said the details are commercially sensitive and that price rises will vary between cities.
Wall Street mixed at open
US stocks have made a mixed open, with the benchmark S&P 500 up 0.3pc while the tech-heavy Nasdaq is 0.3pc down.
Citi plots bigger retreat from Russia
Citigroup, which is bigger in Russia than any other Wall Street bank, has stepped up its plans to disengage from the country – going beyond the consumer pullout it already announced.
In a statement, its executive vice-president Edward Skyler said:
We have now decided to expand the scope of that exit process to include other lines of business and continue to reduce our remaining operations and exposure… Due to the nature of banking and financial services operations, this decision will take time to execute.
Citi has around 3,000 employees in Russia, and around $9.8bn of exposure to Russia via loans, assets and other means.
Protestors claim to have occupied Barclaycard headquarters
More occupations! This time it’s Extinction Rebellion at the Barclays building in the Brackmills Industrial Estate near Northampton.
The group say they are protesting against the bank’s funding of fossil fuel projects.
I am currently at Barclays in the Brackmills Industrial Estate where Extinction Rebellion have splashed fake oil over the interior and exterior of the building to protest of Barclay’s funding of fossil fuels. pic.twitter.com/i8XZFtPGBK
— Megan Hillery (@MeganHillery) March 14, 2022
Johnson meets with North Sea firms over energy security
Boris Johnson has been meeting with North Sea oil and gas companies today, his spokesperson told reporters.
Number 10 says that a windfall tax is being ruled out, saying the companies are already taxed “far more” than energy sector competitors and adding: “a windfall tax could deter investment opportunities, put jobs at risk and risk the security of our energy supply”.
The spokesperson also said the PM plans to speak to Saudi Arabia, which is the clearest confirmation of a planned meeting we’ve had so far.
Meta bans threats against heads of state after backlash
Facebook’s owner Meta has reversed a decision allowing its users to call for the death of Vladimir Putin, with Sir Nick Clegg saying its guidance was under “constant review”.
My colleague James Titcomb reports:
Meta said it has banned threats against a head of state just days after it was labelled an “extremist organisation” by the Kremlin, saying it had illegally called for violence against Russians.
It had said last week that users in Ukraine could call for violence against Russian soldiers with posts such as “death to the invaders”, but clarified over the weekend that this did not include heads of state.
Sir Nick, Meta’s head of global affairs told staff: “We are now narrowing the focus to make it explicitly clear in the guidance that it is never to be interpreted as condoning violence against Russians in general.
“We also do not permit calls to assassinate a head of state... So, in order to remove any ambiguity about our stance, we are further narrowing our guidance to make explicit that we are not allowing calls for the death of a head of state on our platforms.”
Russia says West setting it up for ‘artificial default’ on sovereign debt
Moscow has admitted for the first time that it risks defaulting on its sovereign debt as it accused the West of artificially creating a situation where it cannot repay creditors.
My colleague Tom Rees reports:
Russian finance minister Anton Siluanov insisted the country has enough money to meet its debt obligations but said it would need to repay creditors in roubles because of sanctions on the country’s central bank.
Credit ratings agencies have warned the country is on the brink of default as it faces a $117m (£90m) crunch payment on dollar-denominated debt on Wednesday.
Mr Siluanov said: “The freezing of the central bank and government's foreign currency accounts can be seen as a desire from several Western countries to organise an artificial default.
FTSE flat as Europe rises
Almost halfway through the session, and the FTSE 100 is flat as a pancake, having given up earlier gains.
The rest of Europe is doing better, with the pan-continental Stoxx 600 adding 1.2pc as Germany’s Dax climbs 1.8pc.
Over-50s most likely to leave work during pandemic
Britain’s over-50s were the most likely to exit the workforce during the pandemic – which indicates the half-a-million people who left employment won’t be easy to replace.
Research from the ONS, published today, says:
Those aged 50 years and over saw the largest increase of inactive people among all age groups since the start of the pandemic, following a historical downward trend since records began in 1971.
Deal dry up in wake of Ukraine invasion
City dealmaking has ground to a halt as investment bankers advise clients to put listings and acquisitions on hold as Russia’s invasion of Ukraine unsettles markets.
My colleague Simon Foy reports:
Senior investment bankers have urged companies they are advising to hold off on finalising deals while the uncertainty triggered by the crisis lingers.
One banker said holding fire on getting deals over the line was the “right thing to do” while they continue to assess the impact the war will have on market sentiment.
In the first week of March, just nine M&A deals were signed off in the City worth less than £600m. The previous week 36 deals worth more than £4bn were agreed.
Meanwhile, just £41m was raised through London’s debt and equity markets in the same week – a significant reduction on previous weeks.
EU ‘agrees to freeze Abramovich assets’
The European Union has agreed to add Chelsea owner Roman Abramovich to its list of sanctioned Russian billionaires, Reuters reports.
The news service says:
The informal greenlight to Abramovich's listing came in a meeting on Sunday, one source said, and the EU envoys will reconvene at 11:00am on Monday to adopt the measure and a further set of economic sanctions against Russia.
Sanctions will be effective only after publication on the EU's official journal, which usually happens within hours or the day following formal approval.
China plots coal production boost
China is plotting a major increase in coal mining to reduce its reliance on imports, casting a shadow over its climate ambitions.
Beijing told officials from the country’s top mining regions that it aims to increase production of the heavily polluting fuel by around 300m tons a year.
The increase would be split, with one half from increased capacity from new or upgraded operations, and the other from re-opening mines that were previously closed. The NRDC said it would bring daily output to an average of 12.6m tons, which would be a record-breaking pace.
The National Development and Reform Commission said it would also aim to build a 620m ton stockpile of coal.
RAC: Fuel hit new records at the week
Petrol and diesel prices continued their climb, hitting new records at the weekend, according to the RAC.
Petrol rose to 163.46 pence per litre, while diesel reached 173.44p.
Spokesperson Simon Williams said:
While there will almost certainly be more rises this week, drivers should soon get some respite from pump prices jumping by several pence a litre every day as oil and wholesale prices appear to have settled.
The price hikes seen over the weekend are still a result of the oil price rise which began at the start of the month and peaked early last week at $137 a barrel.
Banks close in on backstop deal for nickel tycoon
Efforts to shore up the nickel market by providing a loan facility to a Chinese tycoon who was caught flat-footed by last week’s price surge are reportedly nearing fruition.
Banks led by JPMorgan Chase & Co. are in advanced talks for a loan facility to backstop Xiang Guangda’s short position in nickel, in an attempt to restore stability to the market after an unprecedented squeeze.
The deal would allow Xiang to maintain his short position, which has roiled the nickel market after he struggled to pay massive margin calls to banks and brokers last week. If it goes ahead, the loan could give the London Metal Exchange the certainty it needs to reopen the nickel market, which has been suspended since last Tuesday morning.
It is also likely to be highly controversial: several traders have accused the LME of foul play and favouritism by intervening to shield Mr Xiang, also known as ‘Big Shot’, after his position blew up.
Protestors occupy Deripaska’s London house
Protestors have launched an occupation of sanctioned Russian oligarch Oleg Deripaska’s house in London.
The Big Issue’s Greg Barradale has some videos:
Someone now getting a telling-off from police after trying to throw a bag of food up to the occupiers, and landing it on top of a police van pic.twitter.com/vdxIovqsHV
— Greg Barradale (@GregBarradale) March 14, 2022
India mulling Russia’s offer of discount fuel and commodities
India is considering an offer from Moscow of discount fuel and commodities, as Russian companies struggle to find buyers for their goods, Reuters reports.
Citing two officials, the news wire says:
India, which imports 80pc of its oil needs, usually buys about 2pc to 3pc of its supplies from Russia. But with oil prices up 40% so far this year, the government is looking at increasing this if it can help reduce its rising energy bill.
“Russia is offering oil and other commodities at a heavy discount. We will be happy to take that. We have some issues like tanker, insurance cover and oil blends to be resolved. Once we have that we will take the discount offer,” one of the Indian government officials said.
Some international traders have been avoiding Russian oil to avoid becoming entangled in sanctions, but the Indian official said sanctions did not prevent India importing the fuel.
Such a move would likely draw ire from the West, but would follow a pattern on India tending to support Russia during the country’s military actions.
A coalition of enablers begins to emerge https://t.co/EAlPcCSPyh
— Henry Foy (@HenryJFoy) March 14, 2022
Morningstar: Global damage from Russian default may be limited
Fund research platform Morningstar has a helpful note out this morning rounding up some of their recent report on Russia.
Analysts warn cost increases pose the biggest risk.
Here are its key takeaways:
Alex Morozov, its EMEA head of equity research, said:
For now, it appears the greatest risk to the markets is determining how high inflation will rise and how long it will remain before it subsides. Persistent inflation could depress global economic growth as well as pressure individual companies’ operating margins.
China disputes claims Russia has asked for military assistance
Beijing has come out swinging against reports weighing on markets this morning, which said Russia had asked for Chinese aid in the invasion of Ukraine.
China’s foreign ministry spokesperson Zhao Lijian said the reports were “disinformation”.
Oil continues to decline after wild week
The price of oil is continuing to come down after some frankly wildly movements last week. Brent’s trading at around $108.5 per barrel, while futures for WTI US crude in New York have fallen below $106 per barrel.
The decline is being spurred by optimism over the prospects for a diplomatic solution to the Ukraine conflict.
Suits booted as ONS tweak inflation basket
Men’s suits, individual doughnuts and coal have all been cut as the Office for National Statistics shakes up the basket of goods used to measure inflation.
The stats body says the list of items used to determine the rate of price changes will now include pet collars, antibacterial wipes and sports bras, reflecting changing consumer habits.
Here’s are the key changes (per the ONS):
OUT Men’s suit – The rise in homeworking has seen the demise of the suit from the consumer basket. A new men's formal jacket/blazer item is being introduced to ensure men's formal/business wear is still represented in the basket.
OUT Doughnut – The increase in home working has seen sales of individual cakes decline in favour of multipacks, so our representative sweet treat, the single doughnut is leaving the basket this year.
IN Antibacterial surface wipes – Demand for antibacterial products is still high, and the convenience and ease of use of the surface wipe sees it sweeping into the basket.
IN Collars – Pet ownership has increased during the pandemic, so dog and cat collars have been added to reflect the growth in pet accessories.
IN Canned pulses/Meat free sausages – Canned beans, chickpeas and lentils enter the basket for the first time alongside meat free sausages. The growth in vegetarianism and veganism, driven by both greater health and environmental consciousness, see these items make their debut into the basket.
IN Sports bra/crop top – The pandemic has helped to increase our awareness of fitness, with many people working out at home during lockdown periods. With this has come a rise in expenditure on sports clothing, so the sports bra/crop top extends the sportswear items in the basket.
OUT Coal – This item already had a very low weight, but with sales of domestic coal being banned in 2023 as part of the government's actions to combat climate change, this item drops out of the basket in anticipation of this.
We’ve released the annual changes to the inflation basket of goods for 2022.
The “virtual basket” represents the good and services consumers typically spend their money on 🧺 https://t.co/pUEADZWm8N pic.twitter.com/0ccMYEAz3x
— Office for National Statistics (ONS) (@ONS) March 14, 2022
Sam Beckett, the ONS’s head of economic statistics, said:
The 2022 basket of goods sees some really interesting changes, with the impact of the pandemic still evident in our shopping habits. With many people still working from home, demand for more formal clothing has continued to decrease. So, men’s suits disappear from the basket and are replaced with a formal jacket or blazer.
Here are some of the day’s top stories from the Telegraph Money team:
Rents cool as cost of living crisis brings record squeeze for tenants: Tenants are at breaking point as the cost of living crisis brings a record squeeze on incomes, new data show.
Buy these bargain investment trusts while you can: DIY investors can buy investment trusts at much lower prices than usual as market falls widen discounts.
‘The energy crisis forced me to move supplier seven times’: A billpayer in Dorset was forced to switch energy provider seven times in less than a year as soaring wholesale prices claimed the scalps of dozens of suppliers.
Snap wrap: Chinese stocks in Hong Kong have worst day since financial crisis
With trading in Hong Kong now closed, here’s a quick assessment of the damage:
Chinese stocks listed in Hong Kong suffered their biggest one-day rout since the financial crisis, dropping 7.2pc
Beijing has put Shenzhen, a major economic hub, into lockdown following a rise in Covid cases
There are also reports that Russia has asked for Chinese military assistance in Ukraine, which could prompt a Western backlash against China
The Hang Seng Tech Index fell 11pc, its biggest fall since launching in July 2020, with $2.1 trillion now wiped off valuations since its peak a year ago
Tech giant Tencent slumped almost 10pc on reports it will face a hefty fine over failings in its anti-money laundering controls
JP Morgan: We don’t expect a European earnings recession
There’s been growing talk that soaring inflation and uncertainty will knock the eurozone into a recession in the coming months.
Not so fast, say strategists at JP Morgan, America’s biggest bank. who say they disagree with “many” that foresee a slowdown in corporate profits as a result.
Here’s what is underpinning their thinking:
GDP growth is still expected to be solid, although it could be heavily contingent on movements in oil prices
Fiscal stimulus could be greater than expected, shielding businesses and consumer from eye-watering cost increases
Markets don’t yet indicate a recession is coming, with only a 20pc drop so far (versus the 40pc fall they say would typically indicate a recession)
Shenzhen: economic heavyweight
Charlie Robertson, chief economist at Renaissance Capital, has another way of looking at the Shenzhen shutdown that really drives home how important the city is:
Shenzhen in China is the world's 30th largest economy - at about $475bn in 2021 - bigger than Israel ($468bn) and just behind Nigeria ($480bn) or Austria ($481bn).
Omicron still problematic where mRNA (eg Pfizer type) vaccines have been limited https://t.co/IwiOGIEnTW
— Charlie Robertson (@RencapMan) March 14, 2022
It’s worth nothing that such a list should probably also include other cities, which would make Shenzhen somewhat lower than 30th… but let’s not get too hung up – the important takeaway is that it’s big and important.
Zero marques: EU mulls export ban on luxury cars
The European Union is discussing a plan to ban exports of luxury vehicles worth more than €50,000 to Russia as part of new sanctions.
The proposed ban, which is set to be approved as early as Monday and could still change, would apply to models from several European car brands, including Audi, BMW, Mercedes, Ferrari and Porsche. The EU measure would also include boats and planes, as well as chairlifts and motorbikes worth more than €5,000.
It may be a moot point for some car makers that have already suspended sales to Russia – but potentially bad news if you’re an oligarch who has been diligently saving up for a nice new Ferrari.
Petrol surge pain
Bert Colijn, from Dutch bank ING, has one way of looking at Europe’s soaring petrol prices (I think this is a ‘laugh-or-you’ll-cry moment):
In the eurozone, a liter of Euro 95 now costs... a euro ninety five. pic.twitter.com/HTsU9ByVQZ
— Bert Colijn (@BertColijn) March 14, 2022
Round-up: Our top business stories right now
If you’re just joining us, here are some of the business news stories you should be reading:
Ofgem urged to prepare for Gazprom sanctions: The energy regulator has been urged to take action to secure power supplies if Gazprom, the Russian state-owned operator, is hit by western sanctions.
Rishi Sunak told to avoid ‘damaging’ tax rises: Businesses have called for Rishi Sunak to avoid “damaging tax hikes” amid warnings the UK faces a brutal second wave of inflation in the summer.
Pubs and hotels join business push to help Ukrainian refugees: Britain’s pubs, hotels and restaurants are gearing up to help Ukrainian refugees as businesses scramble to support those fleeing the Russian invasion.
Grant Shapps takes aim at Russian aviation and shipping: Grant Shapps is vowing to “cripple Russia’s aviation and shipping sectors” as the Kremlin faces a $1.7bn (£1.3bn) hit to the economy from closing its airspace to foreign airlines.
Here are some key reads on Ukraine:
Bloomberg’s Joe Weisenthal has a chart that puts Tencent’s slump today in perspective: shares are the lowest since March 2020, amid a combination of risk-off sentiment towards China and reports the company faces a fine over anti-money laundering failings.
Incredible, shares of Tencent are getting close to their actual lows from March 2020 https://t.co/I2TZR4BPsP pic.twitter.com/2Wu0VAH0q4
— Joe Weisenthal (@TheStalwart) March 14, 2022
European gas prices fall on talk hopes
European gas prices have fallen sharply today amid growing hopes that talks over stopping the war in Ukraine may actually get somewhere.
Talks will take place over video link today.
Here’s a chart of the Dutch gas futures benchmark, which has fallen as much as 16pc today.
It’s a similar story in the UK, where gas futures have fallen as much as 12.1pc this morning.
Musk: I’m keeping my crypto
Tesla boss Elon Musk, the world’s richest man, has said this morning that he doesn’t plan to sell his crypto holdings, so that’s that.
As a general principle, for those looking for advice from this thread, it is generally better to own physical things like a home or stock in companies you think make good products, than dollars when inflation is high.
I still own & won’t sell my Bitcoin, Ethereum or Doge fwiw.
— Elon Musk (@elonmusk) March 14, 2022
Javid: Johnson is trying to convince Saudis to raise oil output
Boris Johnson is trying to convince Saudi Arabia to raise its oil output, health secretary Sajid Javid has said in an interview this morning.
The Prime Minister is reportedly travelling to meet with Saudi officials this week – although Downing Street has so far declined to confirm plans.
Speaking to Times Radio, Mr Javid said:
At a time of a major global energy crisis that has been caused by this war in Europe, it is right for the prime minister and other world leaders to engage with Saudi Arabia and try to work together where that makes sense.
Pressed on whether it is right to seek to do more business with Saudi Arabia – which executed 81 men just days ago – the health secretary said: it is “important to recognise, whether we like it or not, that Saudi Arabia is one of the world's largest oil producers”.
Why Shenzhen matters
The lockdown of Shenzhen is a big deal: the city is a major producer of electronic and automotive components, so prolonged disruption could mean a fresh wave of disruptions to global supply.
It’s the country’s largest lockdown since Wuhan, in the early days of the pandemic.
In the past hour, Beijing has also announced a lockdown across Jilin province, in the country’s north-east.
China placed the 17.5 million residents of the southern city of Shenzhen into a lockdown -- this is one of the world's most important manufacturing exports hubs, particularly for electronics (and the city is the 4th world's largest container port). https://t.co/kDMoxTAgJm
— Javier Blas (@JavierBlas) March 14, 2022
Hang Seng China drop worst since 2008
The pain is only getting worse: the Hang Seng China stock index – a Hong Kong-listed gauge of mainland stocks – is now off 7.2pc, its biggest fall since November 2008.
Tencent drop passes 10pc
The rout across Chinese stocks is showing few signs of abating, with video gaming giant Tencent falling more than 10pc.
Adding to the company’s headaches, the Wall Street Journal is reporting that Tencent faces a record fine after China’s central bank found its popular WeChat app has violated anti-money laundering rules.
In Hong Kong, the Hang Seng index is now off 5.3pc:
More broadly, today’s drop builds on a wider crash that has taken the total losses on Chinese tech stocks to around 72pc since their peak last year – a dotcom crash-scale wipeout.
The shock of Shenzhen going into lockdown is compounding growing concern that Beijing is damaging its international standing by continuing to align itself with Russia despite recent events.
FTSE 100 poised to open higher
London’s top stock index is poised to start the week on the front foot, with equity futures trading indicating a rise of about 0.6pc at the open in a minute’s time.
Rio Tinto makes $2.7bn bid for Turquoise Hill
London-listed miner Rio Tinto has tabled a $2.7bn to by Turquoise Hill, which is developing a giant gold mine in Mongolia.
Rio already owns 51pc of the company, which had a two-thirds stakes in Oyu Tolgoi project.
It’s a flagship project for Rio – and a key growth hope – but has been plagued by disputes with Turquoise and the Mongolian government.
The all-cash offer price is $26.60 per share, a 32pc premium to Friday’s close. There are several hurdles facing the takeover, including the requirement of support from two-thirds of Turquoise shareholders.
Rio chief executive Jakob Stausholm said:
Rio Tinto strongly believes in the long-term success of Oyu Tolgoi and Mongolia, and delivering for all stakeholders over the long-term. That is why we want to increase our interest in Oyu Tolgoi, simplify the ownership structure, and further strengthen Rio Tinto’s copper portfolio. We believe the terms of proposal are compelling for Turquoise Hill shareholders.
FTSE to delete Russian groups including Evraz from indexes
FTSE Russell, the subsidiary of the London Stock Exchange that puts together the UK’s top stock indexes, plans to delete a slew of Russian companies from its lists.
The deletions are:
Evraz, the FTSE 100 mining company in which Roman Abramovich holds a 29pc stake
Polymetal, the FTSE 100 Anglo-Russian miner
Petropavlosk, the FTSE 250 gold miner
Raven Property, a small-cap property investment group focused on Russia
In a statement, FTSE Russell said:
FTSE Russell has received feedback from FTSE Russell’s External Advisory Committees and a range of market participants that the ability to buy or sell shares of the index constituents below is severely restricted due to major international brokerage firms no longer supporting trading of these securities and therefore there is insufficient institutional liquidity and market depth. Consequently, this will prevent index trackers from replicating the ongoing inclusion of these names within the FTSE Russell indices.
As a result, it continued, the members will be removed to ensure the index calculations can be “readily understood and followed by index users”.
Evraz’s shares were suspended last week after Mr Abramovich was sanctioned.
FCA tells banks to open up about oligarchs – FT
In the UK, the City watchdog has told banks they need to help out with the crackdown on Russian oligarchs by sharing information on how Vladimir Putin’s allies move money around the world.
The Financial Conduct Authority has instructed lenders that it is not enough to just sever ties – they have to offer information as well, the Financial Times reports.
Here’s more on some of the most high-profile sanctions: Shares in Evraz suspended after Roman Abramovich sanctions
Bond drop ‘worst since financial crisis’
The drawdown on global bonds is now the worst since the height of the financial crisis in 2008, in a sign of the damage being done across markets.
A aggregate index of government and corporate debt compiled by Bloomberg is off about 9.9pc from highs at the start of this year, with Asian bonds suffering especially.
The fall reflects growing inflationary pressures and rising geopolitical tensions.
Agenda: Chinese stocks plunge
Good morning. Chinese stocks have dropped sharply overnight after Beijing placed the 17.5m residents of tech hub Shenzhen into a lockdown.
The Hang Seng Tech Index, in Hong Kong, fell more than 9pc, while the city’s broader gauge fell 4.7pc.
The lockdown comes after virus cases in China doubled to 3,400, and shows the long tail of the country’s strict zero-Covid policy.
Elsewhere, the German subsidiary of the Russian energy company Rosneft has reported a hacker attack, according to Die Welt newspaper, which said there has not been any impact on Rosneft’s business. Businesses around the world have been on high alert for cyber assaults ever since Russia invaded Ukraine.
5 things to start your day
1) More guided munitions and fighter jets: what higher spending will mean for Britain's armed forces: Expanding armoured cavalry and artillery will need to be matched with logistical support in the form of supplies, ammunition and engineers
2) Grant Shapps takes aim at Russian aviation and shipping: Vladimir Putin's decision to shut out foreign airlines costs Kremlin billions in lost fees
3) End of Russian wood pellets mean soaring bills for biomass boiler owners: Suppliers are scrambling to find alternative supplies for homes and businesses that depend on the fuel for heating
4) Don’t blame every Russian for Putin’s barbaric invasion: Companies are right to boycott Russia – now they must ensure their penalties don’t validate anger at a nation.
5) Ofgem urged to prepare for Gazprom sanctions: Existing regulations do not allow for measures against licenced operators, energy regulator is warned
What happened overnight
Asian stocks fell Monday on a rout in Chinese technology shares, while Treasuries slid as elevated commodity prices stoke concerns that the U.S. may need aggressive monetary-policy tightening to tame inflation.
The 8pc plunge in a gauge of Chinese tech firms reverberated around the region, leaving an Asia-Pacific equity index in the red for a second session. A Covid lockdown in Shenzhen, a tech hub, added to the geopolitical and regulatory risks facing the sector in part from strained ties between the US and China.
A climb in Japanese shares amid a weaker yen and gains for S&P 500, Nasdaq 100 and European futures eased some of the gloom. Investors were parsing efforts at diplomacy as Russia continues its war in Ukraine, as well as comments from a U.S. official that Moscow asked China for military assistance.
Coming up today
Corporate: Bodycote, Phoenix Group (full year results)
Economics: Foreign direct investment (China)