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Get up to date with what’s moving global markets this morning.
(Bloomberg) --
Goldman Sachs is negotiating a settlement in the 1MDB scandal, Nancy Pelosi and Mitch McConnell draw out their standoff over Trump’s impeachment, and China’s real estate empire in Hong Kong attracts increasing scrutiny. Here are some of the things people in markets are talking about today.
Goldman Sachs Group is negotiating a settlement of the 1MDB scandal that would include an admission of guilt by one of its subsidiaries instead of the parent company, according to people familiar with the matter. The guilty plea would come from a unit in Asia, the people said, asking not to be identified because the talks are confidential. The agreement would also include a fine of almost $2 billion, the people said. Federal agencies have been seeking penalties between $1.5 billion and $2 billion in recent weeks, less than what some analysts had previously predicted, Bloomberg reported earlier this month. Banks often push for subsidiaries to plead guilty to wrongdoing in order to avoid the impact on business that would come from a parent company’s admission of guilt. The deal could include an independent monitor to oversee compliance, Dow Jones reported earlier Thursday.
Part political boss, part publisher and part landlord, the Liaison Office has been a presence in Hong Kong for almost two decades. It’s the Chinese Communist Party leadership’s main presence in Hong Kong and a primary target of protesters who have accused the institution of operating a “shadow government.” It’s also behind a rapidly expanding real estate empire that’s attracting increased scrutiny from pro-democracy lawmakers, who say that Hong Kong’s administration should explain why it’s granting the office millions of dollars in tax exemptions that might be used for political ends. Since its formal establishment in 2000, the office has played a largely behind-the-scenes role in trying to shape the political landscape in Hong Kong, which China has pledged to give a “high degree of autonomy” under an arrangement known as “one country, two systems.” In recent years, though, the office has used subsidiary companies to steadily grow an array of businesses that includes media holdings and most of Hong Kong’s bookstores—provocative moves in a city where the 2015 jailing of booksellers triggered public outrage.
Asian stocks look set to open marginally lower as trading winds down heading into year-end. The dollar and Treasury yields were little changed while oil extended recent gains. Futures slipped in Japan and Australia while rising in Hong Kong. The S&P 500 index pushed past 3,200 for the first time, taking its gain to more than 7% in the fourth quarter and 28% so far this year. Markets ignored the impeachment of President Donald Trump. The dollar steadied against its major peers. China said it was in close contact with the U.S. to sign the initial trade deal announced last Friday. With few new catalysts on the horizon to add significantly to the equity rally and details of the trade deal remaining vague, stock traders appear to be in a holding pattern.
House Speaker Nancy Pelosi extended her standoff with Senate Majority Leader Mitch McConnell, insisting she won't name who will prosecute the Democrats' case against the president until it's clear the chamber will agree to a "fair" process. Pelosi surprised many House Democrats Wednesday night after the House impeached Trump when she said she would delay naming impeachment managers — who would argue the House case in the Senate — until the Senate lays out its procedures for the trial. Pelosi cast it as a procedural matter and cited the Senate’s ability to come up with a bipartisan trial plan after President Bill Clinton was impeached. Meanwhile, McConnell, Trump and their Republican allies taunted Pelosi over the delay. Still, it's not quite clear how much leverage she has.
Chinese visitors seeking a blue-sky break in Sydney’s summer haven’t been quite so lucky this year. Instead, they've encountered wildfire-induced smog choking the city, and tour operators have been forced to divert guests to other parts of Australia. But what's one city out of a whole country? The thing is, Sydney accounts for one-quarter of Australia’s gross domestic product, consultancy SGS Economics and Planning estimates, and aside from the direct financial impact, the haze is hurting the harbor city’s global brand. “Sydney is a renowned ‘lung-cleansing’ destination for Chinese people,” said Lili Stephanie, general manager at AJ Travel, which organizes trips and cruises in Australia. While it’s still too early to quantify the economic impact of the wildfires engulfing Australia’s drought-stricken east coast, six weeks of ferocious blazes and intermittent thick haze are likely to take a chunk out of already weak household spending, at the very least.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- Bankers predict more big Asia IPOs after best quarter since 2010.
- Japan’s $6.3 trillion stock market revamp may spark an M&A wave.
- There’s a growth “oasis” in small and mid-cap stocks, top Aussie fund says.
- It’s crunch time for Indian states’ finances as economy slows.
- Nike earnings disappoint investors after stock hits record.
- Xi prepares to address Macau amid unrest in nearby Hong Kong.
- A Chinese hacking group resumes its global attacks.
To contact the editor responsible for this story: Alyssa McDonald at amcdonald61@bloomberg.net
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