The slowdown of China

The latest analysis of the well-known French investment bank Natixis dealt with the development of the Chinese economy and the impact on the entire global economy. While there is a short-term boom in China, in the longer-term Natixis expects a slowdown and this could affect many markets and sectors.* Natixis predicts that China’s potential growth could fall to 2%.*

However, according to the bank’s economists, the situation should change and several structural factors will hamper it in the coming years.* These include an ageing population as well as the declining productivity of new investment. The government relies heavily on state-owned companies, which, according to Natixis, are inefficient.

Overall, the Chinese slowdown could have an impact on the slowdown in world trade as well as on countries that are major exporters to the country.* The flow of capital to China and its closely linked economies could also be weakened, which would be reflected in their exchange rates.*

Will the Olympic Games in Japan be cancelled?

A recent poll in the Nikkei newspaper found that 62% of the Japanese public continued to prefer cancelling of Olympics as concerns arose about the spread of Covid-19 mutations. It is also not expected that most Japanese will be vaccinated until the beginning of the games.*

The riots intensify with the arrival of the first international team. The arrival of athletes puts more pressure on Prime Minister Yoshihid Suga, who is facing many medical, political and business leaders demanding a rethink of the Games, while international Olympics officials say they want to stick to the schedule.*

Nomura Research Economist Takahide Kiuchi has calculated that the cost of cancellation would exceed $16.5 billion. On the other hand, he adds that the cost of managing the spread of infection caused by the Olympic Games would be higher. Organizers are currently investigating whether to allow local audiences.

AstraZeneca is asking the EU for approval of the transaction

The EU antitrust regulator will decide by July 5 whether to approve the bid of the Anglo-Swedish drug manufacturer AstraZeneca to buy the American company Alexion for $39 billion, the European Commission announced after receiving the request.

On Monday, AstraZeneca asked the EU to approve an agreement that is the biggest bet ever on rare immunological diseases, as well as business support that includes fast-growing cancer drugs and a major vaccine against Covid-19.

The Commission may sanctify the agreement with or without conditions. In the worst-case scenario, it could launch a four-month investigation in case of serious concerns.

The UK Competition and Market Authority is also reviewing the offer that has already been given the green light in the United States, Canada, Brazil and Russia.

Loss of the Shell

Climate activists have won the Dutch court ruling, requiring Royal Dutch Shell to drastically reduce emissions, which means lower oil and gas production.* The loss foreshadows that Shell, ExxonMobil and Chevron are under pressure to reduce carbon emissions faster. On the contrary, this is good news for Saudi Aramco’s Saudi national oil company, Abu Dhabi’s national oil company, Gazprom in Russia and Rosneft.

Performance of Royal Dutch Shell’s shares (Source of the graph: Tradingview) [1]  

Offer to buy Telefonica

The Swedish EQT fund offered 1.8 billion euros to buy Telefonica’s submarine cable business. Telefonica, which is supervised by investment banks Societe Generale and Greenhill, should decide by the summer.

Performance of Telefonica’s shares (Source of the graph: Tradingview) [2]

Watch this week:

Thursday, June 3, 2021

The eurozone will publish the development of the composite PMI index in May. It expects an unchanged value of 56.9 points. *

The US will report initial jobless claims. It is expected to decrease to 395 thousand. *

Friday, June 4, 2021

The USA reports the development of unemployment in May. Expectation is 0.2% decrease to 5.9%. *

Source of the text: Investing, Zerohedge, Financial Times, Reuters, Tradingview

[1,2,] Past performance is no guarantee of future results

*     Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.