Year: 2023

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© Reuters. A worker wearing a face mask works on a production line manufacturing bicycle steel rim at a factory, as the country is hit by the novel coronavirus outbreak, in Hangzhou, Zhejiang province, China March 2, 2020. China Daily via REUTERS/File Photo
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By Liangping Gao and Kevin Yao

BEIJING (Reuters) -China’s manufacturing activity shrank for a third straight month in December and weakened more than expected, clouding the outlook for the country’s economic recovery and raising the case for fresh stimulus measures in the new year.

The government has in recent months introduced a series of policies to shore up a feeble post-pandemic recovery, which is being held back by a severe property slump, local government debt risks and soft global demand. But the world’s second-largest economy is still struggling to gain traction.

The official purchasing managers’ index (PMI) fell to 49.0 in December from 49.4 the previous month, an official factory survey showed on Sunday, below the 50-mark separating growth from contraction and weaker than a median forecast of 49.5 in a Reuters poll.

“We must step up policy support, otherwise the trend of slowing growth will continue,” said Nie Wen, an economist at Hwabao Trust. Nie expects the central bank to cut interest rates and banks’ reserve requirement ratios (RRR) in the coming weeks.

“Falling prices have greatly affected companies’ profits and further affected people’s employment and incomes. We may see a vicious cycle,” he said.

China’s central bank said on Thursday it would step up policy adjustments to support the economy and promote a rebound in prices, amid signs of rising deflationary pressures.

Earlier this month, top Chinese leaders at a key meeting to chart the economic course for 2024 pledged to take more steps to support the recovery next year.

Five of China’s largest state banks lowered interest rates on some deposits on Dec. 22, the third round of such cuts this year, which could help the central bank move toward easing monetary policy.

The government, which in October unveiled plans to issue 1 trillion yuan ($140.89 billion) in sovereign bonds to fund investment projects, is likely to focus on more fiscal steps to support growth next year, analysts said.

WEAK DEMAND

China’s consumer prices fell the fastest in three years in November while factory-gate deflation deepened, weighed by weak domestic demand.

“The current external environment is increasingly complex, severe, and uncertain,” the statistical bureau said.

“Some companies in the survey reported that reduced overseas orders and insufficient domestic effective demand are the main difficulties faced by the companies.”

The new orders sub-index was at 48.7, contracting for the third month, according to the PMI survey released by the National Bureau of Statistics.

Weak external demand also remained a major drag on factory activity, with new export orders index registering 45.8 in December, contracting for the ninth straight month.

The sub-index of factory gate prices was at 47.7, contracting for a third straight month, adding to signs of deflation and pressure on business profits.

The official non-manufacturing purchasing managers’ index (PMI), which includes services and construction, rose to 50.4 from 50.2 in November, supported by a recovery in the vast services sector.

China’s economic growth is seen on track to hit the official target of around 5% this year and Beijing is expected to maintain the target next year.

($1 = 7.0978 Chinese yuan renminbi)

© Reuters. FILE PHOTO: A North Korean flag flutters at the propaganda village of Gijungdong in North Korea, in this picture taken near the truce village of Panmunjom inside the demilitarized zone (DMZ) separating the two Koreas, South Korea, July 19, 2022. REUTER

By Cynthia Kim, Josh Smith and Jack Kim

SEOUL (Reuters) -North Korea vowed to launch three new spy satellites, build military drones, and boost its nuclear arsenal in 2024 as leader Kim Jong Un said U.S. policy is making war inevitable, state media reported on Sunday.

Kim lashed out at Washington in lengthy remarks wrapping up five days of ruling party meetings that set economic, military and foreign policy goals for the coming year.

“Because of reckless moves by the enemies to invade us, it is a fait accompli that a war can break out at any time on the Korean peninsula,” he said, according to state news agency KCNA.

He ordered the military to prepare to “pacify the entire territory of South Korea,” including with nuclear bombs if necessary, in response to any attack.

Kim’s speech comes ahead of a year that will see pivotal elections in both South Korea and the United States.

Experts predict North Korea will maintain a campaign of military pressure for leverage around the U.S. presidential elections in November, which could see the return of former President Donald Trump, who traded in both threats and historic diplomacy with Kim.

“Pyongyang might be waiting out the U.S. presidential election to see what its provocations can buy it with the next administration,” said Leif-Eric Easley, professor of international studies at Ewha Womans University in Seoul.

The administration of U.S. President Joe Biden says it is open to talks, but it imposed new sanctions as North Korea pushed ahead with more missile tests banned under United Nations’ sanctions.

The U.S. also increased drills and deployed more military assets, including nuclear-armed submarines and large aircraft carriers, near the Korean peninsula.

“Further provocation is always possible to highlight North Korea’s presence ahead of the U.S. presidential election,” South Korea’s Unification Ministry said in a statement analyzing the KCNA report.

“(North Korea) could maintain its hard line stance against the U.S. and anti-American, anti-imperialist solidarity, and also seek opportunities to turn the situation around at the same time.”

PRESSING FORWARD

Kim said the return of such weapons had completely transformed South Korea into a “forward military base and nuclear arsenal” of the United States.

“If we look closely at the confrontational military actions by the enemy forces… the word ‘war’ has become a realistic reality and not an abstract concept,” Kim said.

Kim said he has no choice but to press forward with his nuclear ambitions and forge deeper relations with other countries that oppose the United States. North Korea has deep ties with both China and Russia.

“North Korea is preparing for further escalation of tension with Washington and Seoul, for at least a year or more, and its hard line policies are likely to be accompanied by efforts for dialogue as well ahead of the U.S. election,” Yang Uk, an analyst at the Asan Institute for Policy Studies, said.

“Kim is building on his success of the spy satellite to do three more because he knows satellite capabilities are powerful targeting tool for better nuclear command and control.”

South Korea holds a parliamentary election in April that could impact the domestic and foreign agenda for conservative President Yoon Suk Yeol, who has maintained a hawkish stance toward Pyongyang.

South Korea’s National Intelligence Service (NIS) warned on Thursday that “there is a high possibility that North Korea could unexpectedly conduct military provocations or stage a cyberattack in 2024, when fluid political situations are expected with the elections.”

Pyongyang has now ruled out the possibility of unifying with South Korea, and the country must fundamentally change its principle and direction toward South Korea, Kim said.

“North-South relations are no longer a kinship or homogeneous relationship but have completely become a relationship between two hostile countries, two belligerents at war,” he said, calling the South a colonised state completely dependent on the United States for national defense and security.

Both Yoon’s ruling party and the opposition democratic party slammed the Sunday report and urged North Korea to return to dialogue for peace talks.

“If North Korea repeats hostile acts, we will respond strongly using all means and methods … If the Kim Jong-un regime misjudges the situation and makes a wrong decision, the Republic of Korea will definitely correct it based on its overwhelming power,” the ruling People Power Party said in a commentary.

Kim also promised to develop the economy, including the metals, chemicals, power, machinery and railway sectors, while modernising wheat facilities to boost production.

One key policy goal is to invest in science and technological research at schools, he said.

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© Reuters. 14-year old Palestinian Abdelrahman Zaghal sits next to his mother Najah as she talks, after a hostages-prisoners swap deal between Hamas and Israel, in their house in Jerusalem, December 6, 2023. REUTERS/Sinan Abu Mayzer
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By Henriette Chacar

JERUSALEM (Reuters) – Fourteen-year-old Abdelrahman al-Zaghal was one of the youngest Palestinians released by Israel in exchange for hostages seized during the Oct. 7 Hamas-led raid on Israel.

Weeks later, his life still bears little resemblance to that of a normal teenager – he is recovering from serious injuries sustained the day of his arrest, and said his school is still awaiting Israel’s permission for him to attend.

He was shot in August, when he said he left home to buy bread, only to wake up cuffed to a hospital bed, flanked by two police officers and with bullet wounds to the head and pelvis.

Israel charged Zaghal with hurling a petrol bomb, which he denies. His mother Najah said he was shot by a man guarding a Jewish settlement near their home in East Jerusalem.

A police statement released the night Zaghal was shot said Border Police officers shot at and critically wounded an unnamed teen after they sensed their lives were in danger.

As a Jerusalem resident, Zaghal’s case went to an Israeli civil court. The judge ordered him placed under house arrest, but outside his neighbourhood, until the end of his trial.

The day of his release, Zaghal said he jumped for joy. But the celebrations were muted as he was about to undergo surgery for brain damage caused by the shooting, his mother said.   

Among the 240 Palestinians released by Israel during a November pause in the Gaza war, Zaghal is one of 104 under the age of 18. In exchange, Hamas released 110 women, children and foreigners abducted on Oct. 7.

More than half the Palestinians released as part of the deal were detained without charge, Israel’s records showed.

Since 2000, the Israeli military has detained some 13,000 Palestinian children, almost all boys between the ages of 12 and 17, said Defense for Children International-Palestine (DCIP).

“Everywhere a Palestinian child turns, there is the Israeli military to exert some kind of control over their life,” said DCIP advocacy officer Miranda Cleland.

Israel says it arrests Palestinians on suspicion of attacking or planning attacks against its citizens. Its military said enforcement agencies in the occupied West Bank “work to protect the rights of minors throughout all administrative and criminal proceedings”.

In the West Bank, Palestinians and Israelis are subjected to different legal systems. Palestinians, including minors, are prosecuted in a military court.

Based on collected affidavits from 766 children detained between 2016 and 2022, DCIP found about 59% were abducted by soldiers at night.

Some 75% of children were subjected to physical violence and 97% were interrogated without a family member or lawyer present. One in four are placed in solitary confinement for two or more days even before the beginning of a trial, said Cleland.

Lawyers work on getting children plea deals, she said, because the conviction rate is above 95%.

One of the challenges in post-release counselling is that teens expect to be re-arrested – and many are, said Dr. Samah Jabr, a psychiatrist who heads the Palestinian Health Ministry’s mental health unit.

Zaghal said he had been detained by Israeli forces twice before. The first time, at 12, he said soldiers beat him with their rifles while he was playing with his cousin in Jericho. He said they accused him of hurling rocks, which he denied.

Throwing stones is the most common charge against Palestinian minors detained in the West Bank, punishable by up to 20 years in prison under Israeli military law, said Palestinian rights group Addameer.

Zaghal remembers going to swim at a Tel Aviv pool with his late father on the weekends, and wants to become a lifeguard. He said he loved school and was eager to go back.

Israel’s Education Ministry said Palestinians released from Israeli detention would not attend its schools until January 2024 and would instead be visited by assigned officers.

It did not respond to Reuters questions on the reason for this decision.

(Aditional reporting by Latifa Abdellatif and Sinan Abu Mayzer; Writing by Henriette Chacar; Editing by Tom Perry and Jan Harvey)

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© Reuters. FILE PHOTO: AR-15 style rifles are displayed for sale at Firearms Unknown, a gun store in Oceanside, California, U.S., April 12, 2021. REUTERS/Bing Guan/File Photo
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By Nate Raymond

(Reuters) -A federal appeals court on Saturday cleared the way for a California law that bans the carrying of guns in most public places to take effect at the start of 2024, as the panel put on hold a judge’s ruling declaring the measure unconstitutional.

The 9th U.S. Circuit Court of Appeals suspended a Dec. 20 injunction issued by a judge who concluded the Democratic-led state’s law violated the right of citizens to keep and bear arms under the U.S. Constitution’s Second Amendment.

The three-judge panel issued an administrative stay that put the injunction on hold until a different 9th Circuit panel can consider whether to issue an even longer pause while the litigation plays out.

The measure, which was set to take effect Jan. 1 after being signed into law in September by Democratic California Governor Gavin Newsom, was enacted after a landmark ruling in June 2022 by the conservative-majority U.S. Supreme Court that expanded gun rights nationwide.

The Supreme Court in that case struck down New York’s strict gun permit regime and declared for the first time that the right to keep and bear arms under the Second Amendment protects a person’s right to carry a handgun in public for self-defense.

The ruling, New York State Rifle & Pistol Association v Bruen, also set out a new test to assess the constitutionality of gun laws by holding they must be “consistent with the nation’s historical tradition of firearm regulation.”

California, which has some of the strictest gun control laws in the United States, was among a group of states with similar laws as New York, and following the U.S. Supreme Court’s decision moved to revamp its firearms regulations.

Under California’s new law, people could not carry concealed guns in 26 categories of “sensitive places” including hospitals, playgrounds, stadiums, zoos and places of worship, regardless of whether they had permits to carry concealed weapons.

The law, Senate Bill 2, also barred people from having concealed guns at privately owned commercial establishments that are open to the public, unless the business’s operator posts a sign allowing license holders to carry guns on their property.

A group of concealed carry permit holders and gun rights groups including the Second Amendment Foundation, Gun Owners of America and the California Rifle & Pistol Association sued, arguing the new law was unconstitutional.

U.S. District Judge Cormac Carney, an appointee of Republican former President George W. Bush, on Dec. 20 agreed and blocked the law pending the outcome of the case.

The law “turns nearly every public place in California into a ‘sensitive place,’ effectively abolishing the Second Amendment rights of law-abiding and exceptionally qualified citizens to be armed and to defend themselves in public,” Carney wrote.

California Attorney General Rob Bonta quickly asked the 9th Circuit to put that injunction on hold pending an appeal, saying that leaving the law blocked would mean that “tens of millions of Californians will face a heightened risk of gun violence.”

Similar laws adopted by other states have faced litigation as well. A federal appeals court on Dec. 8 ruled that New York state could bar gun owners from carrying weapons in many “sensitive locations” including parks, zoos, bars and theaters.

© Reuters. Major Shift at Ant Group as PBOC Confirms End of Jack Ma’s Control

Quiver Quantitative – Ant Group Co., the Chinese finance giant, has successfully completed the process to remove controlling stakeholders, a significant shift nearly a year after its co-founder, Jack Ma, pledged to relinquish his dominance over the company. This development, as acknowledged by the People’s Bank of China (PBOC), effectively removes any actual controller from Ant’s flagship payment platform, Alipay. The PBOC’s official statement confirms this new status, signifying a notable change in the company’s corporate governance.

Jack Ma, who is also the co-founder of Alibaba Group (NYSE:BABA), initiated this withdrawal as part of broader efforts to align with Chinese regulatory expectations. Earlier in the year, Ant Group had announced that 10 individuals, encompassing management and staff members, would be endowed with voting rights. This strategic move was designed to dismantle Ma’s controlling influence without altering the economic interests of any shareholders in the company.

Market Overview:
-Ant Group, the Chinese fintech giant, finalizes the process of eliminating controlling shareholders, fulfilling Jack Ma’s pledge to relinquish dominance.
-People’s Bank of China delists Ant’s Alipay from its registry of companies with controlling entities, marking a regulatory milestone.
-Move follows years of scrutiny from Chinese authorities concerned about Ant’s market power and Ma’s influence.

Key Points:
-The central bank’s action confirms the implementation of Ant’s restructuring plan unveiled earlier this year, which will grant voting rights to a group of executives and employees, effectively diluting Ma’s control.
-This shift comes after a period of intense regulatory pressure towards Ant, as authorities sought to curb its sprawling financial empire and address concerns about systemic risks.
-Ma’s retreat signifies a major concession to regulators, aimed at placating anxieties and paving the way for potential relisting plans for Ant, which were put on hold in 2020.

Looking Ahead:
-The restructuring is unlikely to impact Ant’s day-to-day operations, but it marks a significant change in governance and power dynamics within the company.
-The move underscores the Chinese government’s growing influence over major technology firms, setting a precedent for potential further regulation in the sector.
-Ant’s future remains uncertain, as its path to potential relisting may hinge on continued regulatory approval and its ability to demonstrate compliance with financial control measures.

The PBOC’s endorsement of this restructuring marks a crucial milestone for Ant Group, symbolizing a potential easing of regulatory pressures that have weighed heavily on the company. Despite these significant corporate governance changes, an Ant spokesperson assured that this transition would not impact the firm’s daily business operations. This assurance suggests a smooth continuation of Ant Group’s services and business activities despite the major changes at the top.

This restructuring at Ant Group represents a pivotal moment in the Chinese financial sector, reflecting the ongoing evolution of corporate governance in response to regulatory scrutiny. It also underscores the shifting dynamics in China’s tech and finance industries, where companies are increasingly adapting to new regulatory landscapes.

This article was originally published on Quiver Quantitative

© Reuters. JER Investors Trust Inc. Files for Bankruptcy Amid Commercial Real Estate Crisis

Quiver Quantitative – JER Investors Trust Inc., a mortgage real estate investment trust (REIT), has filed for Chapter 11 bankruptcy protection, underscoring the ongoing distress in the commercial real estate sector. This move, detailed in a petition filed in Wilmington, Delaware, reflects the company’s struggle with substantial debt exceeding $100 million, contrasted against assets valued at less than $50 million. JER Investors Trust’s bankruptcy filing follows the recent trend of real estate firms facing financial challenges, particularly in the wake of rising interest rates and the impacts of the COVID-19 pandemic.

The REIT, partially owned by private equity firm C-III Capital Partners, specializes in managing mortgage-backed securities and various debt instruments linked to commercial real estate. The sector has been particularly hit hard by the pandemic, which saw a reduction in physical office space usage and a shift towards remote work. The increase in interest rates has further exacerbated these challenges, putting additional pressure on firms like JER Investors.

Market Overview:
-JER Investors Trust, a mortgage real estate investment trust (REIT), succumbs to rising interest rates and files for bankruptcy.
-The company joins a growing list of struggling real estate firms grappling with financial distress in the changing market landscape.
-With over $100 million in debts and significantly less in assets, JER seeks Chapter 11 protection to restructure its finances and potentially stay afloat.

Key Points:
-JER’s portfolio of mortgage-backed securities and commercial real estate debt faced intense pressure as interest rates surged throughout 2023.
-The pandemic exodus from offices further squeezed commercial property values, adding another layer of vulnerability to JER’s holdings.
-This filing follows similar collapses in the sector, including mall owner Pennsylvania REIT and coworking giant WeWork, highlighting a broader malaise in the commercial real estate market.

Looking Ahead:
-JER’s bankruptcy casts a shadow over the future of other debt-laden real estate companies, potentially triggering more distressed filings in the sector.
-Rising interest rates are expected to continue impacting property values and financing arrangements, requiring strategic adjustments and potential consolidation within the industry.

This bankruptcy filing is not an isolated incident but part of a broader trend affecting the real estate industry. Notably, Pennsylvania Real Estate Investment (NYSE:PEI) Trust, a mall owner, also sought bankruptcy protection earlier this month, marking its second filing in three years. Similarly, WeWork Inc., a major player in coworking spaces, declared bankruptcy in November with intentions to downsize its extensive global real estate portfolio.

Among JER Investors Trust’s significant creditors, C-III Capital Partners stands out with an 8.4% ownership stake and an outstanding debt of nearly $20 million owed to it. The largest creditor is The Bank of New York Mellon (NYSE:BK) Trust, to which JER owes approximately $93.9 million. This bankruptcy case, filed under the case number 23-12109, is being processed in the US Bankruptcy Court for the District of Delaware in Wilmington.

This article was originally published on Quiver Quantitative

© Reuters. FILE PHOTO: OpenAI logo is seen in this illustration taken, February 3, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) – OpenAI’s annualized revenue recently topped $1.6 billion on strong growth from its ChatGPT product, up from $1.3 billion as of mid-October, the Information reported on Saturday citing people with the knowledge of the figure.

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© Reuters. A view shows a damaged house following what was said to be Ukrainian forces’ shelling in the course of Russia-Ukraine conflict, in the settlement of Urazovo in the Belgorod Region, Russia December 30, 2023. Governor of Russia’s Belgorod Region Vyacheslav
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(Reuters) -Russia said 20 people including two children had been killed and 111 injured in “indiscriminate” Ukrainian strikes allegedly including cluster bombs on the Russian provincial capital of Belgorod on Saturday, and vowed to retaliate.

The Belgorod region, which adjoins northern Ukraine, has like other Russian border zones suffered shelling and drone attacks all year that authorities have blamed on Ukraine, although none have previously been on such a scale.

Newspaper Kommersant cited a source close to the Russian Investigative Committee as saying missiles fired from a multiple rocket launcher in Ukraine’s Kharkiv region had hit a skating rink on the central Cathedral Square, a shopping centre and residential buildings.

No official comment was immediately available from Kyiv, but the Ukrainian news outlet RBC-Ukraine quoted unnamed sources as saying Ukrainian forces had directed fire at military targets in Belgorod in response to the massive Russian bombardment of Ukrainian cities the previous day.

News website Ukrainska Pravda quoted an unnamed security service source as blaming the destruction of civilian infrastructure on “unprofessional actions by Russian air defence, as well as deliberate and planned provocations”.

Russia’s mission to the United Nations in New York said it had requested a meeting of the Security Council, which began at 4 p.m. ET (2100 GMT).

Within hours of the attack on Belgorod, Ukrainian authorities said two Russian S-300 missiles hit the centre of Kharkiv, Ukraine’s second city, injuring 21 people including two boys aged 16 and 14.

One missile hit the Kharkiv Palace Hotel and another an apartment building. Officials said a medical institution and other civilian infrastructure were also damaged.

Air raid sirens had earlier sounded all over Belgorod as regional Governor Vyacheslav Gladkov urged all residents to move to shelters.

“Today, the Kyiv regime attempted an indiscriminate combined strike on the city of Belgorod with two ‘Olkha’ missiles in a banned cluster configuration, as well as Czech-made Vampire rockets,” the Defence Ministry said in a Telegram posting. “This crime will not go unpunished.”

‘APARTMENTS AND SHOPS HIT’

It said most of the rockets, including both the “Olkha” missiles, had been shot down, averting far greater casualties, although fragments had fallen on the city.

Governor Gladkov said 22 apartment buildings had been damaged along with a large number of commercial properties, shopping centres and shops, and that more than 100 cars had been damaged, most of them burned out.

Images posted by the Emergencies Ministry showed at least three burned out cars, and a commercial building with some broken windows. Other images posted online showed black smoke rising from the city.

Two residents told Reuters they had seen air defence missiles rising into the sky followed by explosions in the air and then louder blasts.

Russian state-run news agency RIA quoted the Kremlin as saying President Vladimir Putin had sent a team of health and emergency workers to Belgorod.

Russia, which invaded Ukraine in February 2022 in what it calls a “special military operation”, unleashed its biggest air attack of the war on Friday.

Ukrainian officials said 39 civilians had been killed and 159 wounded as Russia launched 158 missiles and drones at more than 120 cities and towns across Ukraine. On Saturday, the toll climbed to 41, after one person found dead in Kyiv and another succumbed to injuries in Odesa.

Russia said its anti-aircraft units had destroyed 13 Ukrainian rockets over the Belgorod region on Friday, as well as 32 drones overnight over the nearby Bryansk, Oryol and Kursk regions and the Moscow region.

Foreign Ministry spokeswoman Maria Zakharova told RIA that Britain and the U.S. had incited Ukraine to carry out “terrorist acts”, and said European Union countries must also bear blame for supplying it with weapons.