Weekly Market Update - 15 August 2022

Keeping The Peace

HSBC’s largest shareholder, Ping An Insurance Group, is unconvinced by the bank’s case against a proposed spinoff of its Asia operations, arguing that the lender is in need of urgent and radical change. The Chinese insurer estimates a spinoff would generate additional market value of $25 billion to $35 billion, release $8 billion in capital requirements, and save on HQ and infrastructure costs. Chairman Mark Tucker and CEO Noel Quinn last week said the Chinese insurer’s Asian carve-out plan was unworkable and posed a major risk to the London-headquartered company, adding that a breakup would potentially have a “negative impact” on Hong Kong.

Source: Bloomberg

Rents Rising

Rental costs in the US are soaring at the fastest pace in more than three decades, surpassing a median of $2,000 a month for the first time ever and pushing rents above pre-pandemic levels in most major cities. Demand for rentals has soared after many would-be homebuyers backed out of the market after mortgage rates jumped.

Source: Bloomberg

Energy Prices

The energy crisis that’s crippled Europe for months could get worse with just about two months to go before the winter heating period officially begins. The region is still heavily dependent on Russian gas to get through the colder months, and any further disruptions to supply could heighten the risk of blackouts and rationing. The Rhine -- northwest Europe’s most important river for the transport of industrial goods, including energy products such as diesel and coal -- is set to become virtually impassable at a key waypoint in Germany on Friday, due to low water amid a scorching heat wave. The impact could linger for months, potentially driving up gas demand as a replacement.

Source: Bloomberg