China to lift curbs on foreign fund offshore investments
China will lift a two-year suspension on foreign funds raising money in the country to invest overseas as early as June, people familiar with the matter said, a sign that Beijing is getting less anxious about capital outflow pressures. Some industry executives said the expected resumption of the Qualified Domestic Limited Partnership (QDLP) program may mean that an official crackdown on capital outflows and a weakening of the dollar have provided the authorities with more policy flexibility. The Shanghai Municipal Government Financial Services Office, which runs the QDLP scheme, did not respond to requests for comment, while the State Administration of Foreign Exchange (SAFE), which controls the capital account, did not immediately respond to a request for comment. The QDLP program allows foreign fund managers to raise money within a set quota from high net-worth Chinese investors through a wholly-owned onshore fund management company and invest the cash overseas.
St. Louis Fed’s Bullard says expected rate hikes ‘too aggressive’
The Fed’s expected plans for rate increases may be too fast for an economy that has shown recent signs of weakness, St. Louis Federal Reserve President James Bullard said on Friday, sketching out the case for a continued go-slow approach. Since the Fed raised rates in March inflation data have dipped and so have long-term bond yields, the opposite of what would happen if investors and the public felt the economy was going to continue on a strong enough course to justify further rate hikes. In its most recent set of projections central bank officials said they foresaw raising rates two more times over the course of this year, a pace Bullard said may be “overly aggressive relative to actual incoming data on U.S. macroeconomic performance.” “On balance, the U.S. macroeconomic data have been relatively weak since the March…meeting,” Bullard said at a breakfast presentation to the Association for Corporate Growth. “U.S. inflation and inflation expectations have surprised to the downside in recent months. Labour market improvement has slowed.”
Some euro zone banks ‘in denial’ about bad loans: ECB’s Nouy
Some euro zone banks are “in denial” about their problems with unpaid loans, the European Central Bank’s chief supervisor has told a Finnish weekly. “In all euro area countries, there are … banks that are not doing so well but are committed — and bravely so — to tackling their problems; and then others that are somewhat in denial and will have to change to improve,” Daniele Nouy told Talouselämä in an interview published on Friday. She was responding to questions about a request for public help by Italy’s Monte dei Paschi di Siena (BMPS.MI) and apparent failures to clean up the banking sector in that country and in Germany. Struggling with a large and growing pile of bad loans, Monte Paschi has applied for a recapitalization by the Italian state but the rescue has yet to be approved by European authorities. The ECB, as the euro zone’s top banking watchdog, set Monte Paschi’s capital shortfall at 8.8 billion euros in December but Nouy said earlier this week “additional discussions” about the bank’s losses were necessary. Monte Paschi’s Chairman Alessandro Falciai said on Wednesday he remained “greatly optimistic” over the outcome of the bank’s request.