Growth in China’s services sector has slowed in a further sign of a sluggish rebound
An aircraft is assembled at the Airbus plant in Tianjin. China’s services have recovered faster than manufacturing since the end of pandemic restrictions © Qilai Shen/Bloomberg
Activity in China’s service sector expanded more slowly than expected in June, underscoring the challenges facing the economy as the post-pandemic rebound fizzles.
Caixin’s 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. A reading above 50 indicates an expansion 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 the consensus estimate of 50.2.
China’s economic recovery has slowed amid a slow rebound in spending, while stimulus measures have so far been limited to small interest rate cuts.
South Korea to allow first new banks in three decades
South Korea will encourage new entrants in its banking sector to compete in an oligopolistic system for the first time in three decades, following heavy criticism over large bonuses paid to employees amid high interest rates.
The country’s banking sector is dominated by five major lenders, which were criticized by President Eun Suk Yeol earlier this year for what he called a “money fist” with profits made easily by the difference in rates between deposits and loans.
The government will allow existing financial companies to be licensed to become commercial banks nationwide, allow more online banks and ease loan-to-deposit rules for local branches of foreign banks.
Asian shares are lower as traders await buying managers data
Currency traders at KEB Hana Bank in Seoul work between screens showing the Kospi. Most Asian equities fell on Wednesday © Ahn Young-jun/AP
Asian equities were lower on Wednesday in quiet trading after the Independence Day break in the US and ahead of the release of a series of indicators on economic activity across the region.
Hong Kong’s Hang Seng index fell 0.3 percent and South Korea’s Kospi fell 0.4 percent in early trade. Japan’s Topix and China’s CSI 300 were flat.
European shares were higher in muted trading on Tuesday while US markets were closed. Investors will await the release of Purchasing Managers’ Indices in Australia, China, Hong Kong, Japan and India later on Wednesday.
What to see in Asia today
Events: Bank Negara Malaysia begins two-day monetary policy committee meeting. The Central Bank of Kazakhstan announced its interest rate decision. Foreign Minister of Uzbekistan Bakhtior Saidov arrived in Azerbaijan.
Economic Data: In China, Caixin releases its June Purchasing Managers’ Index for services as well as a composite index. Australia’s monthly services PMI is released, as are the AIG construction and manufacturing indices for June, the ANZ commodity price index and the latest retail sales data. Japan publishes its June Services PMI while Hong Kong issues the Manufacturing PMI. Nikkei Services PMI is released in India. Singapore also releases May retail sales figures, while Taiwan, Thailand and the Philippines report inflation figures.
Markets: Futures in Hong Kong and Tokyo pointed lower. European stocks were higher the day before while US markets were closed for the July 4 holiday.
Zelensky claims that Russia mined the Zaporizhia nuclear power plant
Ukrainian soldiers cover their ears in a shelter as Russian tanks shelled their positions near Zaporizhia in southern Ukraine on Sunday © AP via Libkos
Ukrainian President Volodymyr Zelensky warned on Tuesday that Russia may be preparing to attack the Zaporizhia nuclear power plant, the largest such facility in Europe.
“The Russian military placed explosive-like substances on the roofs of several power units of the Zaporizhia nuclear power plant,” he said, citing Ukrainian intelligence agencies. “Probably to simulate an attack on the plant. Maybe they have another view. “
Russian forces have controlled the plant since the early days of the invasion last year. Rocket and mortar rounds hit near the plant and gunfire erupted around it.
A judge has curbed US officials’ ties to social media groups
A US judge has barred federal government officials from contacting social media companies over the removal of certain communications from their platforms, in a politically charged case that addresses the tension between free speech and efforts to curb online misinformation.
Judge Terry Doughty in the Western District of Louisiana issued a preliminary injunction on Tuesday that bars officials from agencies such as the US Department of Justice and the FBI, as well as senior White House staffers, from meeting with social media companies. Removes “protected free speech” content from their platforms.
Read more about injunctions here.
The BoE is considering forcing foreign banks to replace branches with subsidiaries
Tourists gather outside the Bank of England. Central banks may force foreign financial institutions to set up subsidiaries © Holly Adams/Bloomberg
The Bank of England is looking at controversial plans to force more international banks to set up subsidiaries in the UK, people familiar with the situation said.
The move could lower the threshold required for foreign banks with corporate business in the country to set up subsidiaries with their own capital and liquidity. The BoE is considering it as part of a review of the collapse of Silicon Valley banks, the people said.
Subsidiaries – such as SVB – enable local regulators to take control of failed banks rather than leaving their fate to the discretion of their parent’s supervisors.
Read more about the Bank of England’s plans here.
