Each week QFINANCE will endeavor to bring you some of the biggest news stories from the past five days in finance and business, as well as some of the most fascinating websites and links that have crossed our path. We hope you'll enjoy reading, we hope you'll have a great weekend and we hope that you'll come back each Friday to brush up on your finance and business knowledge.
Monday June 20
The French led the way in carving out an agreement to extend a substantial portion of the sovereign debt held by Greece for up to 30 years. Meeting in Rome, nearly 50 people from the French and German banking sectors discussed whether or not to accept a deal that would see half of the debt over the coming three years extended to become 30-year bonds. Said to be a version of the Brady bonds scheme that bailed out Latin America in 1989, the deal would be an interesting development in the saga of the Greek economy. Representatives from German banks questioned the length of time proposed, saying the original 30 years is “very very long”.
Read about the French version of Brady bonds in more depth here.
Tuesday June 21
Continuing the displays of political unrest in Greece, protestors took to the streets of Athens and riots spread through the city. These events coincided with a crucial budget debate in parliament, as MPs face the first of two votes regarding its latest austerity proposals, which several members have already claimed they will be voting against. Papers reported the chaos of the protests, saying that the police used tear gas and stun grenades against the crowd, who were said to have smashed shop windows, started car fires and used weapons such as stone projectiles. In order to receive its next bail-out installment of €12bn, at least €28bn worth of cuts and €50bn of state asset sales must be agreed upon by pBarliament.
Read about riots and political unrest in Athens in more depth here.
Since writing on Tuesday, Greece’s parliament has passed a second vote on its proposed austerity plan, with the Prime Minister George Papandreou claiming that the country has reached “a crucial step”. The programme will see the execution of a number of tax rises, pay cuts, privatizations and redundancies within the public sector.
Read about the passing of Greece's austerity plan in more depth here.
Wednesday June 22
Less than 24 hours before its proposed bid to merge with Canada’s TMX Group, the LSE was forced to abandon its global expansion plans after early results showed it would fail to garner the two-thirds majority vote required by Canadian law. The LSE claimed to have achieved a “majority” in a proxy vote cast beforehand, and Canadian reports said it was only 54 per cent, but this would not have been enough to seal the £4.3bn deal. This now leaves not only TMX open for purchase, with the most likely being Canadian rival bidder Maple Group, but also the LSE, who are being cited by many to be a target for takeover by Nasdaq. In anticipation of this suggested bid, traders bet on Nasdaq and its shares rocketed up four per cent.
Read about the LSE's abandoned attempt to merge with Canada's TMX Group in more depth here.
Thursday June 23
According to an official survey, China’s manufacturing sector saw its slowest expansion in 28 months, showing that government policies to prevent asset prices from overheating have been effective. The proof that growth has been slowed was in China’s purchasing manager’s index (PMI), which was 52 in May, but dropped to 50.9 in June. Exactly why Beijing has implemented these policies is unknown, but Sitao Xu of the Economist Intelligence Unit in the city stated his belief that “the primary reason is monetary tightening and a reduction of credit… Both central bank and the government are taking a hawkish stance to prohibit high credit growth.” Mr Sitao claimed this could be down to lessened demand from recovering European countries, but he stressed: “I don’t think it’s the end of the world, we are not seeing a hard landing or a recession”.
Read about the cooling of China's manufacturing sector in more depth here.
Friday June 24
It was announced today that Alex Weber will become the next chairman of UBS, removing wide speculation of intense succession issues within the Swiss banking group. In agreeing to this position the former Bundesbank president dismissed rumours that he may take a top executive role at Deutsche Bank, and now he will be due to receive a one-off “golden hello” of SFr2m ($2.4m) along with 200,000 UBS shares and a base SFr1.5m a year salary, which will rise to SFr2m upon his ascension to the position of chairman. It has been said that Weber was chosen for this academic reputation and status as a top bureaucrat with outstanding contacts “which could help the bank to find its way in the new regulatory environment.”
Read about Alex Weber's appointment to the position of chairman at UBS in more depth here.
Come back next Friday for another report on the world of business and finance.
Tags: Alex Weber , Athens , austerity plan , Beijing , Brady bond , Brady bonds , Bundesbank , Canada , China , Deutsche Bank , France , George Papandreou , Germany , Greece , Greek economy , LSE , Maple Group , Nasdaq , PMI , protest , protests , purchasing manager's index , riot , riots , Rome , Sitao Xu , TMX Group , UBS