RBS asunder
Split mooted
Speculation has emerged ahead of the publication of a report by the Parliamentary Commission on Banking Standards, set up in the wake of the Libor scandal. A draft copy of the report has been doing the rounds ahead of its formal ratification next week, and is said to contain a recommendation that the Royal Bank of Scotland (RBS) should be fully nationalised and separated into the so-called 'good' and 'bad' banks. Chancellor George Osborne has been hoping to return RBS, which is 81 per cent-owned by the taxpayer, to the private sector prior to the next election, so any explicit recommendation linked to the division of RBS will not play well in 11 Downing Street, particularly as Mr Osborne has already told the Commission that any such move would cost the taxpayer another £10bn.
Of London bondage
Helical raises £75m
UK property developer Helical Bar (HLCL) has launched a seven-year retail bond with an annual coupon of 6 per cent. Helical Bar, which invests in high-yield retail property investments, in addition to refurbishment and development projects in the capital, plans on raising £75m through the bond to pay off existing debt. It is open for subscription until 18 June and will be listed on the London Stock Exchange on 24 June. Interest payments will be made twice a year on 24 June and 24 December, with the first payment in December this year.
Wages of Sino
Paid in China
A trade intelligence report just published by the US-based PIERS (Port Import/Export Reporting Service) confirmed what many have been suspected for a while. Namely, that China is rapidly losing its competitive edge in manufacturing. Factory wages have been rising at a double-digit pace as labour shortages intensify, while improved conditions and restrictions on working hours are increasingly important factors. The findings of the report highlight why China desperately needs to expand its internal consumer market, but if you're looking at setting up a sweat-shop somewhere, you're probably best advised to take a look at Vietnam, Bangladesh, Thailand, Pakistan or Cambodia.
US trade imbalance
Crude deficit falls
The US trade deficit ballooned to $40.3bn during April, representing an 8.5 per cent rise on a seasonally-adjusted basis. The increase was due to resurgent Chinese imports. During the previous month, shipments from the People's Republic were stymied because of the Lunar New Year holidays. As a result, the US trade gap with China hit a three-year low of $17.9bn in March, but the figure widened to $24.1bn a month later. One might be notionally inclined to believe that a widening trade balance invariably drags on growth, but in this case it simply masks ongoing recovery across the Atlantic. US exports actually rose in April on the back of record automotive sales, in addition to rising shipments of US petroleum. Revealingly, the trade deficit linked to petroleum fell for the third straight month - surely the shape of things to come.
Oliphant in the room
Miner skirmishes
In an interesting take on collective bargaining, South Africa's labour minister Mildred Oliphant confirmed that the ANC is considering deploying a peace-keeping force to quell any disputes in the nation's mining sector as it moves into its annual strike season. Thousands of workers in the country's platinum belt have already been laid off this year, with many more to come, so there are plenty of disgruntled ex-miners with time on their hands. Obviously, ideal fodder for the two unions (AMCU & NUM) whose bitter battle for supremacy was a major factor in last year's deadly wildcat strikes. With union wage negotiations pending, the minister might have taken onboard Al Capone's adage that "you can get more with a kind word and a gun, then with a kind word alone".
Let's get physical
Gilt complex
The World Gold Council reports that recent price declines have prompted unprecedented levels of demand for physical gold in both India and China. Though prices for gold futures have been held in check by the high number of short positions linked to speculative traders, buyers throughout Asia have been willingly paying large premiums to secure supply, thereby prompting Delhi to try and curb imports in order to reduce India's trade deficit. The strong Asian demand has reinforced the bullish outlook of commercial gold traders, despite the fact that prices have struggled to hold at $1,400 an ounce over the past fortnight.
