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Yahoo
16-03-2025
- Business
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Market Turmoil Breaks Years of Junk Debt Outperformance in EM
(Bloomberg) -- A plunge in global risk appetite is pushing emerging-market investors into higher quality dollar bonds, signaling a years-long rally in junk debt from developing nations might be at an end. Trump DEI Purge Hits Affordable Housing Groups How Britain's Most Bike-Friendly New Town Got Built Electric Construction Equipment Promises a Quiet Revolution ICE Eyes Massive California Tent Facility Amid Space Constraints The Dark Prophet of Car-Clogged Cities Money managers from Pinebridge Investments to T. Rowe Price and TCW Group are scooping up sovereign notes from countries including Mexico, Colombia and South Africa, touting their high liquidity, market access and fair valuation. Names rated around BB and BBB, they say, are well-positioned to benefit from falling US Treasury yields and withstand persistently high borrowing costs that may impact their riskier peers. 'We see more value in the BBB/BB segment in emerging markets as a result of the current market forces and a slight dip in sentiment,' said Anders Faergemann, a senior money manager at Pinebridge Investments in London. 'That means having less exposure to the cuspy high-yield segment and taking a cautious approach to credits that are highly sensitive to US Treasury volatility.' Investment grade bonds in developing nations are up 2.5% in 2025, beating high yield for the first time in five years. The outperformance is even greater for higher-quality junk debt — dollar bonds rated BB have handed an average return of 3% to investors, with Panama, Brazil and Colombia leading gains, according to data compiled on a Bloomberg index. Global markets have been whipsawed in the past few weeks by the Trump administration's shape-shifting tariff policy and growing recession risks for the world's largest economy. Uncertainty over the Ukraine peace deal and elections ranging from Germany and Canada to developing nations added more volatility. All the turmoil has forced traders to gravitate toward safe haven assets — gold has soared, while US Treasury yields have dropped. In emerging markets, that's pushed traders out of riskier credits and into higher-quality debt, which tends to be more correlated with developed assets. The possibility of countries like Morocco being raised to investment grade could drive more money into the market, further supporting performance. It's a shift from the 'close your eyes and buy anything' in high yield that earned EM investors double-digit returns in the past two years. Now, with some vulnerable nations still shut out of global capital markets, tighter spreads and ballooning interest payments on a $29 trillion pile of debt, new outperformers have emerged. Meanwhile, last year's top gainers including Ecuador, El Salvador and Argentina have fallen to among the worst performers in 2025 — with traders saying spreads in lower-rated debt aren't wide enough to reward investors anymore. JPMorgan recommended dialing down risk exposure in the distressed space last Thursday, citing concerns that historically tight valuations won't withstand a larger correction in risk assets amid signs of weakness in the US economy. The strategists reaffirmed the view this week. Attractive Value Sovereign bonds from higher quality emerging economies will be less impacted by policy shifts like the US foreign aid retrenchment, which can weigh on low income countries, said Samy Muaddi, head of emerging markets fixed income at T. Rowe Price. Even Mexico, while still facing tariff threats, has enough fiscal standing to absorb some bad news, he added. The country, one of a handful in Latin America with an investment-grade stamp, has some dollar bonds that yield more than 7%. 'That's an attractive proposition long term,' he said. 'You have the opportunity to earn the historical return on the asset class in a much safer way.' To Polina Kurdyavko, head of emerging market debt at RBC BlueBay Asset Management, sovereign spreads in Mexico and Colombia's bonds have become too wide in reaction to President Donald Trump's tariff threats. 'In these countries, valuations overcompensate you for the risk of the tariffs and potential fundamental deterioration,' Kurdyavko said. They're 'some of our core overweights because they've widened given the fear of the policies, which we feel is a little bit over done.' The extra yield investors request to hold Mexico's dollar debt stands at 332 basis points over US Treasuries, more than double the level for their similarly rated peers, according to JPMorgan & Chase data. The spread for Colombia is also wider than the average BB-rated credits in emerging markets. 'There was a lot more risk premium embedded in those credits than we realized,' said David Robbins, emerging markets investor at TCW, who also highlighted Panama as one of the top gainers year-to-date, with nearly 6% returns. 'We're starting to see spreads tighten there.' A few names rated CCC and lower have outperformed this year. Lebanon is benefitting from ongoing debt talks and a ceasefire in the Middle East. Bolivia bonds have gained due to coupon payments and signs of a potential regime change. And Suriname is living up to a big oil boom. But overall, lower-rated junk bonds now face more hurdles as risk sentiment sours. 'For 2025, the characterization within the sovereign space is de-risking out of frontiers into mainstream, preferring your kind of bellwether, traditional emerging credits,' said Muaddi. What to Watch Brazil's central bank will likely raise rates, while South Africa is expected to cut them Policymakers in Chile, Indonesia, Taiwan and Russia are all likely to keep borrowing costs unchanged Nigeria and South Africa will publish inflation data. Countries including Brazil, Peru, Colombia and Argentina will report economic activity data China's economic data for January-February is expected to show a bumpy recovery, with fixed asset investment picking up, industrial production growth easing, and retail sales slowing --With assistance from Vinícius Andrade and Selcuk Gokoluk. Nvidia Looks Past DeepSeek and Tariffs for AI's Next Chapter How America Got Hooked on H Mart How Trump's 'No Tax on Tips' Could Backfire for the Working Class College Presidents on Trump, Tuition and Universities Under Pressure As China's Birth Rate Drops, Pampered Pets Reap the Benefits ©2025 Bloomberg L.P.
Yahoo
16-03-2025
- Business
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China Ramps Up Criticism of Li Ka-shing's BlackRock Ports Deal
(Bloomberg) -- Chinese authorities increased pressure on CK Hutchison Holdings Ltd. over its plan to sell its Panama ports stake by sharing a second newspaper commentary attacking the deal. Trump DEI Purge Hits Affordable Housing Groups Electric Construction Equipment Promises a Quiet Revolution How Britain's Most Bike-Friendly New Town Got Built ICE Eyes Massive California Tent Facility Amid Space Constraints The Dark Prophet of Car-Clogged Cities The Hong Kong and Macau Affairs Office on Saturday reposted a commentary originally published in Ta Kung Pao, saying the planned sale of the ports by the Hong Kong company had triggered deep concerns among Chinese people and questioned whether the deal was harming China and aiding evil. 'Why were so many important ports transferred to ill-intentioned US forces so easily? What kind of political calculations are hidden in the so-called commercial behavior on the surface? Great entrepreneurs are never cold-blooded and speculating profit-seekers, but passionate and proud patriots!' said the opinion piece in the newspaper, a publication that tends to support Beijing's policies. The Chinese government agency, the country's top office on Hong Kong affairs, first indicated its displeasure over the transaction last week by sharing an earlier Ta Kung Pao commentary. That post drove CK Hutchison shares down 6.4% on Friday, their biggest decline since 2020. The conglomerate founded by Hong Kong billionaire Li Ka-shing, this month agreed to sell off the bulk of its global ports business to a consortium led by BlackRock Inc. The sale included a controlling share in ports near the Panama Canal, an apparent victory for US President Donald Trump after he had raised concerns about their ownership. The first Ta Kung Pao commentary called on companies to be careful about which 'side they should stand on.' It said social media users had accused CK Hutchison of 'spineless groveling' and 'selling out' Chinese people. Under the agreement, CK Hutchison will sell 43 ports in 23 countries, while keeping facilities in mainland China and Hong Kong. The transaction is set to generate cash proceeds of more than $19 billion. Because the deal involves only overseas assets it is unlikely to need Beijing's sign-off, but the recent attacks have stoked concern that China might somehow try to intervene. The fresh opinion piece lauded the 'heroic actions' of Ren Zhengfei, founder of Huawei Technologies Co., a Chinese phone and device manufacturer that has long been targeted on national security grounds by the US and other Western nations. 'Both history and reality remind entrepreneurs at the forefront of the storm that in the face of the U.S.'s bullying, only by standing firmly with the country and fighting bravely can they defend their country, win dignity and maintain their reputation,' the commentary said. Those who choose to do the opposite, it said, may 'make a lot of money for a while, but in the end they will have no future and will bear history's blame.' Calls and an email sent to CK Hutchison offices in Hong Kong went unanswered outside of office hours on Sunday. The apparent expression of disapproval by Chinese authorities underscores the balancing act facing executives whose companies get caught up in the widening China-US rivalry. CK Hutchison and sister company CK Asset Holdings Ltd. are registered in the Cayman Islands — a move carried out in 2015 as part of a group-wide restructuring. CK Hutchison accrues almost 90% of its revenue from outside of mainland China and Hong Kong. The potential purchase by BlackRock would be one of the biggest acquisitions of the year. Before the agreement, Trump argued that China had taken over the critical waterway, without providing evidence, and that the US was paying too much for the passage of ships. He previously demanded the fees charged on US naval and merchant ships be lowered, or else Panama should return the canal to the US. --With assistance from Alice Huang. Nvidia Looks Past DeepSeek and Tariffs for AI's Next Chapter How America Got Hooked on H Mart How Trump's 'No Tax on Tips' Could Backfire for the Working Class College Presidents on Trump, Tuition and Universities Under Pressure How Natural Gas Became America's Most Important Export ©2025 Bloomberg L.P.
Yahoo
16-03-2025
- Business
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Baidu Releases Reasoning AI Model to Take On DeepSeek
(Bloomberg) -- Baidu Inc. released a new artificial intelligence model that articulates its reasoning, in an apparent bid to regain momentum against up-and-coming rivals like DeepSeek. Trump DEI Purge Hits Affordable Housing Groups Electric Construction Equipment Promises a Quiet Revolution How Britain's Most Bike-Friendly New Town Got Built ICE Eyes Massive California Tent Facility Amid Space Constraints The Dark Prophet of Car-Clogged Cities The Ernie X1 model by China's internet search leader works similarly to DeepSeek R1 — which shocked Silicon Valley by offering comparable performance to the world's best chatbots at a fraction of their development cost. Baidu's reasoning model excels in areas like daily dialogs, complex calculations and logical deduction, it said in a statement Sunday. Baidu also upgraded its flagship foundation model to Ernie 4.5. It immediately made all tiers of its service — including the X1 model — free for its chatbot users, several weeks than earlier previously planned. The Beijing-based company was the first in China's trillion-dollar tech sector to launch a chatbot modeled after OpenAI's ChatGPT, but rival chatbots from ByteDance Ltd. and Moonshot AI soon took over in popularity. Open-sourced models like Alibaba's Qwen and then DeepSeek gained greater recognition within the global developer community. Ernie 4.5 outperforms OpenAI's latest GPT 4.5 in text generation, Baidu said, citing several industry benchmarks. Baidu has declared that it will make Ernie AI models open-source from June 30, representing a major strategic shift post the rise of DeepSeek. It also integrated the R1 model into its search engine — its bread-and-butter business. The generative AI boom showed up in Baidu's December-quarter results via a 26% jump in cloud revenue. That rise, driven by services provided to developers chasing computing power, was overshadowed by weak advertising sales amid China's economic malaise. Baidu concluded last month a drawn-out deal to acquire the YY Live streaming platform Joyy Inc. The $2.1 billion takeover released some $1.6 billion that Baidu previously deposited into escrow accounts, which it plans to invest into AI and cloud infrastructure. Nvidia Looks Past DeepSeek and Tariffs for AI's Next Chapter How America Got Hooked on H Mart How Trump's 'No Tax on Tips' Could Backfire for the Working Class College Presidents on Trump, Tuition and Universities Under Pressure How Natural Gas Became America's Most Important Export ©2025 Bloomberg L.P.
Yahoo
16-03-2025
- Business
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US Steel Activist Investor Boosts Holding in Turnaround Push
(Bloomberg) -- Ancora Holdings Group has added to its holdings of United States Steel Corp. as the activist investor continues to push its case to replace the board and install a new chief executive officer to lead a turnaround of the American steelmaker. Trump DEI Purge Hits Affordable Housing Groups Electric Construction Equipment Promises a Quiet Revolution How Britain's Most Bike-Friendly New Town Got Built ICE Eyes Massive California Tent Facility Amid Space Constraints The Dark Prophet of Car-Clogged Cities Ancora's position in the Pittsburgh-based steelmaker is now worth more than $100 million, Jim Chadwick, portfolio manager and head of the firm's Alternatives subsidiary, said in an interview. Chadwick said he continues to buy as it becomes more likely that Nippon Steel Corp.'s offer to buy US Steel will fall through. Ancora and Alan Kestenbaum — its nominee to replace David Burritt as CEO of US Steel — haven't yet spelled out a detailed plan to investors on how they intend to turn around the once-iconic steelmaker. Chadwick said they'll be investing 'significant' capital and resources to grow the North American flat-rolled steel business. 'If we go to the finish line on this, I'd like to be a top-10 shareholder in the company. That's the goal,' Chadwick said in an interview. 'If there's a situation of the deal not going to happen, which I think is where we're headed, I wouldn't want leadership to use that and come back and keep themselves entrenched.' The recent buying adds to the activist investor's initial holding of some 0.18% it revealed in January after former President Joe Biden blocked the deal, citing national security concerns. The increased position, Chadwick said, puts Ancora at just about 1% of total shares outstanding, putting it barely inside the top 20 holders. Kestenbaum has also began buying stock personally — enough to make him a larger shareholder of US Steel than the steel producer's current CEO, Chadwick said. A government filing with further details could be available later Friday, he said. The move comes as hope for the deal that drew massive attention during the 2024 American presidential election has shown little progress. President Donald Trump last month made clear that he didn't want Nippon Steel to hold a majority stake in the US firm. White House Meanwhile, Kestenbaum has been criss-crossing the Northeast Corridor to woo union members and politicians on his plan for US Steel. The long-time commodity industry executive in recent weeks met with White House officials, according to people familiar with the meeting, and union leaders in Pittsburgh. White House spokespeople didn't immediately respond to a request for comment. Kestenbaum's moves and Ancora's boosted stock holdings are the first signs to investors of more serious action being taken since revealing their activist stake 'I have met him,' Jason Zugai, vice president of United Steelworkers Local 2227 who supported the Nippon Steel offer, said in a message. Zugai said he likes Kestenbaum's plan 'if the Nippon deal falls apart.' United Steelworkers President David McCall — who vigorously opposed the Nippon Steel deal and was a key figure who swayed Biden's decision to block it — last month called Kestenbaum 'a much better choice' than current CEO Burritt. McCall stopped short of a full endorsement, but the growing chorus of steelworkers who are open to the idea of replacing Burritt indicates workers may be more interested in a new leader than trudging through another takeover saga. Nippon Steel To be sure, the activist and Kestenbaum aren't the only ones making contacts in Washington. Nippon Steel Vice Chairman Takahiro Mori and Burritt have each met with Commerce Department officials, including Secretary Howard Lutnick in recent weeks, according to people familiar with the meetings. Last month, Nippon Steel reiterated its objective for the $14.1 billion takeover of US Steel, despite Trump saying the Japanese firm would consider an investment instead. US Steel said in a late-January statement that it's board has a proven track record of acting in the best interests of the company and stockholders. The company said it remains 'confident that our partnership with Nippon Steel is the best deal for American steel, American jobs, American communities and American supply chains.' The stress of the takeover talks has not been lost on US Steel's union members. Multiple leaders and rank-and-file members over the last year have confidentially expressed to Bloomberg News their growing frustrations with the pending deal and how taxing it has been to focus on their jobs amid a daily stream of political speeches, advertisements, investor interest and media attention. While union support won't guarantee Kestenbaum will ever see the inside of US Steel's boardroom, let alone become CEO, it does highlight steelworkers' political sway in Pennsylvania. The battleground state voted for Trump and has a nationally popular Democratic governor. Both championed union workers throughout the 2024 campaign cycle, and those men and women will be an important constituency if Governor Josh Shapiro — an early 2028 presidential nominee favorite — hopes to be reelected next year. --With assistance from Josh Wingrove. (Updates with union comment in 10th paragraph) Nvidia Looks Past DeepSeek and Tariffs for AI's Next Chapter How America Got Hooked on H Mart How Trump's 'No Tax on Tips' Could Backfire for the Working Class College Presidents on Trump, Tuition and Universities Under Pressure How Natural Gas Became America's Most Important Export ©2025 Bloomberg L.P. Sign in to access your portfolio
Yahoo
16-03-2025
- Business
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Macron's Approval Rating Jumps 5 Points in Ipsos Poll
(Bloomberg) -- President Emmanuel Macron's approval rating jumped 5 points as worries among French citizens over international crises soared, according to a poll by Ipsos-Cesi école d'ingénieurs for La Tribune Dimanche newspaper. Trump DEI Purge Hits Affordable Housing Groups Electric Construction Equipment Promises a Quiet Revolution How Britain's Most Bike-Friendly New Town Got Built ICE Eyes Massive California Tent Facility Amid Space Constraints The Dark Prophet of Car-Clogged Cities Support for Macron's actions rose to 27% in March, the survey published late Saturday showed. Concerns over international crises such as in Ukraine and the Middle East was among the top three issues for 33% of respondents, up from 17% in February. US President Donald Trump has pared back support for Ukraine and has indicated that the US may step back from its traditional security role in Europe. The surprise move has sent European countries scrambling to boost defense spending and rethink their military positioning. Support for French Prime Minister Francois Bayrou fell 2 points to 25%, according to Ipsos. Ipsos surveyed 1,000 adults online on from March 12 through March 14. The margin of error was about 2.7 points. Nvidia Looks Past DeepSeek and Tariffs for AI's Next Chapter How America Got Hooked on H Mart How Trump's 'No Tax on Tips' Could Backfire for the Working Class College Presidents on Trump, Tuition and Universities Under Pressure How Natural Gas Became America's Most Important Export ©2025 Bloomberg L.P.
