Quoteworthy: "You can commit fraud in shorts and T-shirts in the sun." — Damian Williams, US attorney for the Southern District of New York. Sam Bankman-Fried of defunct Bahama-based crypto exchange FTX has been charged with “one of the biggest financial frauds in American history”.
Fed still has ‘some ways to go’
Chair Jerome Powell said the US Federal Reserve (Fed) is still working toward ending its anti-inflation campaign of interest-rate increases as officials signalled borrowing costs would head higher than investors expect next year.
“We still have some ways to go,” he told a press conference on Dec 14 in Washington after the Federal Open Market Committee (FOMC) raised its benchmark rate by 50 basis points (bps) to a 4.25% to 4.5% target range. According to their median forecast, policymakers projected rates would end next year at 5.1% before being cut to 4.1% in 2024 — a higher level than previously indicated.
Powell said that the size of the rate increase delivered on Feb 1, 2023, at the Fed’s next meeting would depend on incoming data — leaving the door open to another half-percentage point move or a step down to a quarter point — and he pushed back against bets that the Fed would reverse course next year.
“I wouldn’t see us considering rate cuts until the committee is confident that inflation is moving down to 2% in a sustained way,” he said. “Restoring price stability will likely require maintaining a restrictive policy stance for some time.”
See also: ECB delivers half-point hike but gives no signs on next move
The S&P 500 index dropped as investors digested the news. “The committee anticipates that ongoing increases in the target range will be appropriate to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time,” the FOMC said in its statement, repeating language it has used in previous communications.
Investors had speculated that the Fed would soon pause its hikes after financial conditions eased. Until Dec 14, stocks had risen, while mortgage rates and the dollar had fallen since Powell last month suggested a policy shift was coming. They would also bet rates would reach about 4.8% in May, followed by cuts totalling 50 bps in the year’s second half.
The vote was unanimous. “It is our judgment today that we are not at a sufficiently restrictive policy stance yet,” the Fed chief said. “We will stay the course until the job is done.”
See also: 'Early indicators' of earnings correction already visible, but look to China: Fidelity
Powell had previously signalled plans to moderate hikes while emphasising that the pace of tightening is less significant than the peak and the duration of rates at a high level. The decision follows four consecutive 75 bps hikes that have boosted rates at the fastest pace since Paul Volcker led the central bank in the 1980s.
Policymakers got some good news on Dec 13 when government data showed consumer prices rose 7.1% in the year ending November, the lowest rate this year. Even so, Powell has repeatedly said he was willing for the economy to suffer some pain to lower inflation and avoid the mistakes of the 1970s when the Fed prematurely loosened monetary policy. He repeated that message on Dec 14, adding that “we will stay the course until the job is done.” — Bloomberg
Japfa’s AustAsia to launch IPO on Dec 15
The listing committee of the Stock Exchange of Hong Kong (SEHK) has granted its approval in-principle for the proposed listing of Japfa’s China-focused milk business, AustAsia Investment Holdings (AIH), on Dec 14.
In a filing dated Dec 15, Japfa announced that AIH intends to register its prospectus for the listing on Dec 15, with the Hong Kong public offering of AIH’s shares commencing on Dec 16.
The Hong Kong public offering is expected to close on Dec 21. The shares will list on the SEKH at 9am on Dec 30.
On March 29, Japfa announced that AIH had applied to the Hong Kong bourse list. The listing of the latter will result in two separately run entities. As part of the initial public offering (IPO), existing Japfa shareholders will receive a distribution of AIH shares, of which the number was yet to be determined.
The expected notice of record date for the distribution is on Dec 20, with the expected last date of “cum” trading of the shares on the Singapore Exchange Securities Trading Limited (SGX-ST) on Dec 27. Accordingly, the “ex” trading of the shares on the SGX-ST will happen at 9am on Dec 28, with the expected record date at 5pm on Dec 29. — Felicia Tan