📌JPMorgan has increased its global emerging markets corporate high-yield default prediction due to heightened concerns over contagion stemming from potential default by China’s Country Garden. In its August 15 note, the US-based bank raised its 2023 global forecast from 6% to 9.7%, alongside a rise in the Asia high-yield default rate forecast from 4.1% to 10%. Excluding China’s property sector, this rate drops to only 1%.

📌JPMorgan anticipates that China’s property defaults will contribute around 40% of all defaults in 2023, followed by 35% from Russian entities and 12% from Brazilian issuers. The bank’s increased risk assessment underscores fears that a Country Garden default could have a widespread impact on China’s property market and the broader economy.

📌China’s property sector has been grappling with a debt crisis since 2020 due to the «three red lines» policy that constrains developers’ debt levels. This has hampered growth as the sector is a significant contributor to China’s economy. A potential Country Garden default could add around $9.9 billion to the global emerging markets high-yield corporate default in 2023.

Source: CNBC

📌 As widely anticipated, the Federal Reserve carried out another interest rate increase of 25bps on Wednesday, marking its 11th rate hike in the last 12 meetings. The move brought the benchmark overnight interest rate to a range between 5.25% and 5.50%, with the decision being attributed to persistent inflation levels.

📌 Moreover, the European Central Bank (ECB) has announced another hike for the ninth consecutive time, implementing a 25-bp increase to 3.75%. This decision comes as the bank faces the challenge of fighting off a historic surge in prices due to stubborn inflation and a growing risk of recession. The ECB is concerned that the surge in inflation could be perpetuated by wage increases in a tight job market.

📌 Since July 2022, the ECB has raised borrowing costs by 425bps, with interest rates reaching their peak since 2000. Despite the series of rate hikes, the central bank is not ruling out the possibility of further tightening in the future.

Source: Investing

📌 British inflation fell by more than expected in June and was at its lowest in more than a year at 7.9%, according to official data that will ease some of the pressure on the Bank of England to keep on raising interest rates sharply. Economists had predicted that the Consumer Price Index (CPI) for the 12 months to June would decrease to 8.2% from May’s 8.7%, but the actual figure of 7.9% exceeded their expectations.

📌 Investors adjusted their expectations for further interest rate hikes from the Bank of England. Markets now suggest that a 25-basis point increase in rates is more likely next month than the previously expected 50-basis point hike.

📌 Food and non-alcoholic drink price inflation also slowed down, providing some relief for households. However, the Bank of England remains concerned about strong wage growth and expects inflation to stay elevated until early 2025.

📌 Overall, the data indicates a positive development for the British economy, with inflation easing, but the central bank remains cautious about future price levels and their potential impact on monetary policy.

Source: Investing

AMTD Digital, a little-know fintech company based in Hong Kong, has recently become the latest meme stock in the market. It went public in mid-July on the NYSE with an IPO price equal to $7.80 per share and, after two weeks, it hit the incredible value of $1,679 per share. As a consequence, AMTD’s market cap reached $310 billion, making it bigger than companies like Coca-Cola and Bank of America.

This crazy move surprised the Company itself that issued a “thank you” note to its investors on Tuesday, also specifying that, to their knowledge, there were no material circumstances directly related to the Company’s business that could justify this market movement. AMTD’s main sources of revenues are fees and commissions from digital financial services and its revenues were equal to $25 million at the end of 2021.

As it happened to GameStop in 2021, this wild increase was pushed by retail investors on Reddit, with AMTD’s ticker being the most popular on WallStreetBets chat room on Tuesday.

Source: CNBC