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Swedish furniture retailer IKEA Group is recalling almost 36 million chests and dressers in the United States and Canada that have been linked to the deaths of six children, the US Consumer Product Safety Commission said on Tuesday. 
 
The furnishings can topple over if they are not anchored securely to walls, posing a threat to children, the commission said in a statement. 
 
The recall covers six models of MALM chests or dressers manufactured from 2002 to 2016, as well as about 100 other families of chests or dressers, it said. 
 
&quot;It is simply too dangerous to have the recalled furniture in your home unanchored, especially if you have young children,&quot; CPSC Chairman Elliott Kaye said in a statement. 
 
Tipped-over furniture or television sets kill a US child every two weeks, he said. 
 
Two US toddlers died in separate 2014 incidents when MALM chests fell over on them. A 22-month-old boy was killed last year in a similar incident, after IKEA had announced a repair program included a free wall-anchoring kit. 
 
None of the furnishings in the fatal incidents had been anchored to the wall. 
 
IKEA also had received reports of 41 tip-over incidents involving non-MALM chests that caused 19 injuries and the deaths of three children from 1989 to 2007. 
 
As part of the recall, IKEA is offering refunds or a free wall-anchoring kit. 
 
The US recall covers about 8 million MALM chests and dressers and 21 million other model chests and dressers. About 6.6 million are being recalled in Canada. 
 
(Reuters)

The furnishings can topple over if not anchored to the wall, posing a threat to children

Swedish furniture retailer IKEA Group is recalling almost 36 million chests and dressers in the United States and Canada that have been linked to the deaths of six children, the US Consumer Product Safety Commission said on Tuesday. The furnishings can topple over if they are not anchored securely to walls, posing a threat to children, the commission said in a statement. The recall covers six models of MALM chests or dressers manufactured from 2002 to 2016, as well as about 100 other families of chests or dressers, it said. "It is simply too dangerous to have the recalled furniture in your home unanchored, especially if you have young children," CPSC Chairman Elliott Kaye said in a statement. Tipped-over furniture or television sets kill a US child every two weeks, he said. Two US toddlers died in separate 2014 incidents when MALM chests fell over on them. A 22-month-old boy was killed last year in a similar incident, after IKEA had announced a repair program included a free wall-anchoring kit. None of the furnishings in the fatal incidents had been anchored to the wall. IKEA also had received reports of 41 tip-over incidents involving non-MALM chests that caused 19 injuries and the deaths of three children from 1989 to 2007. As part of the recall, IKEA is offering refunds or a free wall-anchoring kit. The US recall covers about 8 million MALM chests and dressers and 21 million other model chests and dressers. About 6.6 million are being recalled in Canada. (Reuters)

Ikea recalls 36 million chests, dressers after six deaths

Lloyds Banking Group plans to axe about 640 jobs, sources close to the matter said on Wednesday, as Britain&#39;s largest mortgage lender continues to scale back its branch network and workforce. 
 
All affected employees working in information technology and back-office roles and are being told of the decision on Wednesday, the sources said on condition of anonymity because they are not authorised to discuss the plans. 
 
Lloyds, who rescued in a 20.5 billion Pound ($27.4 billion) taxpayer bailout during the financial crisis, is in the midst of major restructuring as part of an aggressive cost-cutting programme. 
 
&quot;The continuation of the bank&#39;s major job loss programme will bring disappointment as staff feel they have already faced two years of endless workforce cuts,&quot; said Rob MacGregor, national officer at the Unite union. 
 
A statement from Lloyds said there will be a net reduction of 525 jobs where newly created roles are included. The bank also said it is closing 23 branches by October because customers increasingly bank online and more functions are automated. 
 
The bank, more than two thirds of the way through three-year plan to cut about a tenth of its workforce, could now consider deeper cuts than originally targetted because of the programme&#39;s swift progress, two separate sources said. 
 
The latest cuts coincide with the biggest upheaval for British banks since the financial crisis. 
 
British voters&#39; surprise decision, last week, to leave the European Union is forcing bank executives to reconsider business models amid uncertainty and earnings downgrades that prompted rattled investors to offload billions of pounds of shares. 
 
Sources close to Britain&#39;s government say it has put on hold plans to sell stakes in Lloyds because market volatility has made it too difficult to judge whether disposals represent value for taxpayers. 
 
The employees affected by Wednesday&#39;s job cuts work in cities including London, Edinburgh, Bristol and Manchester, the sources said. 
 
So far this year, Lloyds has announced plans to cut about 3,580 positions from its 75,000-strong workforce. 
 
The Unite union has said the drawn out process job losses are taking a toll on Lloyds staff, with three quarters of its employees reporting symptoms of stress and four out of every five working unpaid overtime every week. 
 
(Reuters)

Four out of every five employees at Lloyds, who received a $27 bailout in 2009, were reportedly working unpaid overtime every week

Lloyds Banking Group plans to axe about 640 jobs, sources close to the matter said on Wednesday, as Britain's largest mortgage lender continues to scale back its branch network and workforce. All affected employees working in information technology and back-office roles and are being told of the decision on Wednesday, the sources said on condition of anonymity because they are not authorised to discuss the plans. Lloyds, who rescued in a 20.5 billion Pound ($27.4 billion) taxpayer bailout during the financial crisis, is in the midst of major restructuring as part of an aggressive cost-cutting programme. "The continuation of the bank's major job loss programme will bring disappointment as staff feel they have already faced two years of endless workforce cuts," said Rob MacGregor, national officer at the Unite union. A statement from Lloyds said there will be a net reduction of 525 jobs where newly created roles are included. The bank also said it is closing 23 branches by October because customers increasingly bank online and more functions are automated. The bank, more than two thirds of the way through three-year plan to cut about a tenth of its workforce, could now consider deeper cuts than originally targetted because of the programme's swift progress, two separate sources said. The latest cuts coincide with the biggest upheaval for British banks since the financial crisis. British voters' surprise decision, last week, to leave the European Union is forcing bank executives to reconsider business models amid uncertainty and earnings downgrades that prompted rattled investors to offload billions of pounds of shares. Sources close to Britain's government say it has put on hold plans to sell stakes in Lloyds because market volatility has made it too difficult to judge whether disposals represent value for taxpayers. The employees affected by Wednesday's job cuts work in cities including London, Edinburgh, Bristol and Manchester, the sources said. So far this year, Lloyds has announced plans to cut about 3,580 positions from its 75,000-strong workforce. The Unite union has said the drawn out process job losses are taking a toll on Lloyds staff, with three quarters of its employees reporting symptoms of stress and four out of every five working unpaid overtime every week. (Reuters)

Lloyds to axe 640 jobs in cost-cutting drive

UK car dealerships saw the same number of customers over the weekend as before Britons voted for Brexit last week, Britain&#39;s car industry association said on Wednesday, noting that it would not change its forecast for record sales this year. 
 
Car sales hit an all-time high of 2.63 million last year, boosted by cheap finance and easily available credit. 
 
The CEO of the Society of Motor Manufacturers and Traders said the pace of sales growth had slowed in recent months but that he was not immediately changing the forecast of about 2.7 million registrations in 2016. 
 
&quot;I wouldn&#39;t want to jump to conclusions on changing forecasts. In essence, the fundamentals of the market are still strong,&quot; Mike Hawes told reporters at a briefing in London. 
 
&quot;As I understand it, footfall in the dealerships over the weekend was pretty much where it should be despite three rugby test matches and six football matches which normally does have an impact.&quot; 
 
At the same briefing, Jaguar Land Rover&#39;s strategy director and Toyota&#39;s Europe CEO said they saw no short-term changes to their investment plans, which are often made years in advance. 
 
Jaguar Land Rover (JLR), which said it was committed to its British plants and a plan to build a new facility in Slovakia, said it could not envisage a harsh response such as high tariffs from EU allies on it or Britain&#39;s other high-end carmakers. 
 
&quot;I can&#39;t imagine any overly punitive measure in the premium end of the business that would cut off that market opportunity,&quot; JLR&#39;s Strategy Director, Adrian Hallmark, said. 
 
&quot;It would be cutting the European nose off to spite its face.&quot; 
 
(Reuters)

Jaguar Land Rover's strategy director said they saw no short-term changes to their investment plans planned in advance

UK car dealerships saw the same number of customers over the weekend as before Britons voted for Brexit last week, Britain's car industry association said on Wednesday, noting that it would not change its forecast for record sales this year. Car sales hit an all-time high of 2.63 million last year, boosted by cheap finance and easily available credit. The CEO of the Society of Motor Manufacturers and Traders said the pace of sales growth had slowed in recent months but that he was not immediately changing the forecast of about 2.7 million registrations in 2016. "I wouldn't want to jump to conclusions on changing forecasts. In essence, the fundamentals of the market are still strong," Mike Hawes told reporters at a briefing in London. "As I understand it, footfall in the dealerships over the weekend was pretty much where it should be despite three rugby test matches and six football matches which normally does have an impact." At the same briefing, Jaguar Land Rover's strategy director and Toyota's Europe CEO said they saw no short-term changes to their investment plans, which are often made years in advance. Jaguar Land Rover (JLR), which said it was committed to its British plants and a plan to build a new facility in Slovakia, said it could not envisage a harsh response such as high tariffs from EU allies on it or Britain's other high-end carmakers. "I can't imagine any overly punitive measure in the premium end of the business that would cut off that market opportunity," JLR's Strategy Director, Adrian Hallmark, said. "It would be cutting the European nose off to spite its face." (Reuters)

UK car industry: demand not hit by Brexit vote yet, forecast unchanged

Suzuki Motor Corp, on Wednesday, tapped the son of the company patriarch to become chief executive, keeping management of Japan`s fourth-largest automaker with the founding family as it tries to recover from a testing scandal. 
 
The widely expected announcement followed an annual shareholders meeting earlier in the day, when the company said it anticipated &quot;major&quot; impact from volatility in currency markets after Britain voted to leave the European Union. 
 
Toshihiro Suzuki, 57, assumes his role after his father, long-serving chairman Osamu, last month said he would step down as CEO to take responsibility for the firm&#39;s use of incorrect testing methods to calculate vehicle mileage. 
 
Osamu, 86, will remain chairman. Having led the company since 1978, the patriarch will extend his run as one of the longest-serving global auto executives, raising questions about how much longer he can run the company. 
 
Analysts said that while succession had been a long time coming, having father and son in the top two positions means Osamu would reign as he has for nearly 40 years. 
 
&quot;So long as Osamu-san remains chairman, nothing much is going to change,&quot; Marusan Securities analyst Hiroaki Mochida said. 
 
But Mochida said in the near term, Osamu was the best hope in fighting off competition in emerging markets including India, where Suzuki commands a market share of around 40 per cent. 
 
Wednesday&#39;s announcement marks the second executive position passed on by Osamu to his eldest son, who becomes CEO nearly a year after being appointed president as part of the succession plan. 
 
Quiet and soft-spoken in comparison to his outspoken father, Toshihiro joined Suzuki in 1994 after a stint at parts supplier Denso Corp, and led the company&#39;s product planning and global marketing divisions. 
 
Brexit Impact 
 
Earlier on Wednesday, Osamu brushed off a call from a shareholder to relinquish control to take responsibility for lax procedures which led to the use of wrong testing methods, sullying Suzuki`s brand image. 
 
&quot;Stepping down (completely) to take responsibility is irresponsible,&quot; Osamu told applauding investors. &quot;It`s important to stay at the company to prevent a repeat of the worst scandal facing the company (since I&#39;ve led it).&quot; 
 
At the meeting, the company said volatility in the Indian rupee and euro would have a negative impact on earnings, adding it would mitigate the impact through cost-cutting and increased local procurement at overseas plants. 
 
Budgeting for exchange rates of around 105 Yen to the US Dollar and 120 Yen to the Euro through March, Suzuki is already bracing for a 62.0 billion Yen ($605.59 million) hit this year due to currencies, contributing to a 7.8 per cent slide in annual operating profit versus the year earlier. 
 
Analysts said a rise to 100 Yen and 110 Yen in the Dollar and Euro respectively will weigh on operating profit by around five per cent this year, lower than the average hit of around 17 per cent across Japanese automakers expected by JPMorgan analysts. 
 
With a diversified production base featuring India and Hungary, Suzuki has lower currency exposure than Japanese peers. The automaker produces roughly 6.5 per cent of output in Europe, compared with around 59 per cent in Asia excluding China. 
 
(Reuters)

Toshihiro Suzuki assumes his role after his father steps down as CEO to take responsibility for the firm's use of incorrect testing methods

Suzuki Motor Corp, on Wednesday, tapped the son of the company patriarch to become chief executive, keeping management of Japan`s fourth-largest automaker with the founding family as it tries to recover from a testing scandal. The widely expected announcement followed an annual shareholders meeting earlier in the day, when the company said it anticipated "major" impact from volatility in currency markets after Britain voted to leave the European Union. Toshihiro Suzuki, 57, assumes his role after his father, long-serving chairman Osamu, last month said he would step down as CEO to take responsibility for the firm's use of incorrect testing methods to calculate vehicle mileage. Osamu, 86, will remain chairman. Having led the company since 1978, the patriarch will extend his run as one of the longest-serving global auto executives, raising questions about how much longer he can run the company. Analysts said that while succession had been a long time coming, having father and son in the top two positions means Osamu would reign as he has for nearly 40 years. "So long as Osamu-san remains chairman, nothing much is going to change," Marusan Securities analyst Hiroaki Mochida said. But Mochida said in the near term, Osamu was the best hope in fighting off competition in emerging markets including India, where Suzuki commands a market share of around 40 per cent. Wednesday's announcement marks the second executive position passed on by Osamu to his eldest son, who becomes CEO nearly a year after being appointed president as part of the succession plan. Quiet and soft-spoken in comparison to his outspoken father, Toshihiro joined Suzuki in 1994 after a stint at parts supplier Denso Corp, and led the company's product planning and global marketing divisions. Brexit Impact Earlier on Wednesday, Osamu brushed off a call from a shareholder to relinquish control to take responsibility for lax procedures which led to the use of wrong testing methods, sullying Suzuki`s brand image. "Stepping down (completely) to take responsibility is irresponsible," Osamu told applauding investors. "It`s important to stay at the company to prevent a repeat of the worst scandal facing the company (since I've led it)." At the meeting, the company said volatility in the Indian rupee and euro would have a negative impact on earnings, adding it would mitigate the impact through cost-cutting and increased local procurement at overseas plants. Budgeting for exchange rates of around 105 Yen to the US Dollar and 120 Yen to the Euro through March, Suzuki is already bracing for a 62.0 billion Yen ($605.59 million) hit this year due to currencies, contributing to a 7.8 per cent slide in annual operating profit versus the year earlier. Analysts said a rise to 100 Yen and 110 Yen in the Dollar and Euro respectively will weigh on operating profit by around five per cent this year, lower than the average hit of around 17 per cent across Japanese automakers expected by JPMorgan analysts. With a diversified production base featuring India and Hungary, Suzuki has lower currency exposure than Japanese peers. The automaker produces roughly 6.5 per cent of output in Europe, compared with around 59 per cent in Asia excluding China. (Reuters)

Suzuki Motor appoints founding family scion as CEO

Britain&#39;s vote to leave the European Union (EU) continued to reverberate through financial markets, with the Pound falling to its lowest level in 31 years, despite government attempts to relieve some of the confusion about the political and economic outlook.&nbsp;

UK finance minister George Osborne said early Monday that the British economy was strong enough to cope with the market volatility caused by last week&#39;s Brexit&nbsp;referendum which has resulted in the biggest blow since World War II&nbsp;to the European goal of forging greater unity.

&quot;Our economy is about as strong as it could be to confront the challenge our country now faces,&quot; Osborne told reporters.&nbsp;

&quot;It is inevitable after Thursday&#39;s vote that Britain&#39;s economy is going to have to adjust to the new situation we find ourselves in,&quot; said Osborne, who later ruled himself out of the running to succeed David Cameron as prime minister.

Boris Johnson, a leading proponent of&nbsp;Brexit&nbsp;and the frontrunner to be the next prime minister, praised Osborne for saying &quot;some reassuring things to the markets&quot;.

The former London mayor said it was now clear that &quot;people&#39;s pensions are safe, the pound is stable, markets are stable. I think that is all very good news.&quot;

But neither Osborne&#39;s nor Johnson&#39;s words failed to stop the slide in stocks on world markets which began last Friday when Britons confounded investors&#39; expectations by voting to end 43 years of EU membership.

European bank shares had their worst two-day fall on record and world stocks as measured by Morgan Stanley Capital International (MSCI) index saw their worst two-day fall since the collapse of US&nbsp;investment bank Lehman Brothers during the 2008 financial crisis. On Friday alone about $2.8 trillion was wiped off the value of world stocks, the biggest daily loss ever.&nbsp;

Sterling fell to a low around $1.3120, its lowest level since mid-1985. The Euro also remained weak, after falling to a three-month low around $1.0910 on Friday.&nbsp;

Asian stocks markets opened weaker on Tuesday, with MSCI&#39;s Asia ex-Japan index extending losses for a third day, down 0.5 per cent. Japan&#39;s Nikkei was off 0.7 per&nbsp;cent.

&quot;Markets already appear to be pricing in a full-blown recession in the UK&nbsp;and rising recession risk in the rest of Europe,&quot; said David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management.

Ratings agency Standard &amp; Poor&#39;s (S&amp;P) stripped Britain of its last remaining top-notch credit rating on Monday, warning that more downgrades could follow.&nbsp;

&quot;In our opinion, this (referendum) outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the UK,&quot; S&amp;P said in a statement.

The yield on British 10-year government bonds fell below 1.0 per cent for the first time as investors bet the&nbsp;Brexit&nbsp;vote would trigger a Bank of England interest rate cut aimed at steadying the economy.

US&nbsp;stocks ended lower for a second day also, following European markets, pulled down by banking stocks amid uncertainty over London&#39;s future as the region&#39;s financial capital. Safe-haven bond and gold prices rose.

US&nbsp;Treasury Secretary Jack Lew on Monday said he sees no signs of a financial crisis arising from Britain&#39;s decision last week, although he admitted that the result does present additional &quot;headwinds&quot; for the US&nbsp;economy.

Visiting Brussels, US&nbsp;Secretary of State John Kerry said it was important that &quot;nobody loses their head&quot; as the EU and Britain deal with the fallout from the referendum.

European Central Bank President Mario Draghi expressed &quot;sadness&quot; on Monday at Britain&#39;s vote to leave the EU.&nbsp;

Draghi will fly to Brussels on Tuesday, where he is expected to brief European leaders about the impact of the UK vote on the euro zone at a two-day European Council meeting.&nbsp;

POLITICAL CONFUSION IN BRITAIN

With the ruling UK&nbsp;Conservative party looking for a new leader after Cameron&#39;s resignation on Friday and lawmakers from the opposition Labour party stepping up a rebellion against their leader, Britain sank deeper into political chaos.

&quot;There&#39;s no political leadership in the UK right when markets need the reassurance of direction,&quot; said Luke Hickmore of Aberdeen Asset Management, expressing the view of many in the City of London financial centre.

British broadcaster Sky News said work and pensions minister Stephen Crabb was also considering a bid for the Conservative party leadership, with business secretary Sajid Javid seeking to become finance minister. Both were in favour of staying in the EU. The editor of the Spectator magazine tweeted that Health Secretary Jeremy Hunt was also &quot;highly likely&quot; to launch a bid.&nbsp;

Cameron says he will stay on until October as a caretaker and that his successor should trigger the formal process of leaving the EU. His Conservative Party in parliament recommended choosing a successor by early September.

The prime minister sought to calm fears over the fallout of the referendum and said parliament should not try to block Britain&#39;s departure. A majority of parliamentarians, like him, had argued that Britain should stay in the EU.

&quot;I am clear, and the cabinet agreed this morning, that the decision must be accepted,&quot; Cameron told parliament, which also faces a public petition for a new referendum.&nbsp;

While the question of whether to leave the EU has split the ruling Conservative party, divisions within the opposition are also deep. A wave of Labour lawmakers resigned from leader Jeremy Corbyn&#39;s team on Monday, adding to the 11 senior figures who quit on Sunday, saying his campaign to keep Britain in the EU was half-hearted.

Corbyn, a left-winger who has strong support among ordinary party members, has said he is not stepping down.

Discontent with the political establishment in general and the Conservatives in particular was a factor behind the vote to leave, although many&nbsp;Brexit&nbsp;backers focused on immigration, complaining too many migrants had arrived from eastern Europe.

Piling on misery for beaten English &quot;remain&quot; voters, the country&#39;s soccer team on Monday crashed out of the Euro 2016 soccer competition to tiny Iceland.

&quot;We embarrassed ourselves three of four days ago in the referendum, we&#39;ve embarrassed ourselves now. It&#39;s a really, really sad time to be English,&quot; lamented English soccer fan Alex in the French city of Nice.

EUROPE WANTS QUICKER RESOLUTION

Cameron&#39;s refusal to start formal moves to pull the country out of the EU has prompted many European leaders to demand quicker action by Britain, the EU&#39;s second largest economy after Germany, to leave the 28-country bloc.

&quot;It should be implemented quickly. We cannot remain in an uncertain and indefinite situation,&quot; French Finance Minister Michel Sapin said on France 2 television.

Guenther Oettinger, German member of the EU&#39;s executive European Commission, said delay would hurt Europe as well as Britain. &quot;Every day of uncertainty prevents investors from putting their funds into Britain, and also other European markets,&quot; he told Deutschlandfunk radio.

Cameron heads to Brussels on Tuesday for a grim EU summit dinner, while the other 27 leaders will meet for the first time without him on Wednesday morning to plan their next moves. They are likely to stress a willingness to negotiate, but only after London binds itself to a tight two-year exit timetable.

The leaders of France, Germany and Italy met in Berlin on Monday and said Europe needed to respond to its people&#39;s concerns by setting clear goals to improve security, the economy and prospects for young people.

German Chancellor Angela Merkel, who has appeared to take a softer line on Britain&#39;s decision than some European leaders, said she had &quot;neither a brake nor an accelerator&quot; to control events, adding: &quot;We just don&#39;t want an impasse.&quot;

The political, economic and regulatory uncertainty is being felt across the globe at a time when economies are still slowly recovering from the 2008 economic crisis, interest rates are close to zero, and central banks have fewer tools than normal to revive demand if countries enter recession.&nbsp;

South Korea said on Tuesday it would propose a supplementary budget of around 10 trillion Won ($8.44 billion), in part to help it manage&nbsp;Brexit&nbsp;turmoil in financial markets. 
 
(Reuters)

European bank shares had their worst two-day fall on record and world stocks saw their worst two-day fall since the 2008 financial crisis

Britain's vote to leave the European Union (EU) continued to reverberate through financial markets, with the Pound falling to its lowest level in 31 years, despite government attempts to relieve some of the confusion about the political and economic outlook. UK finance minister George Osborne said early Monday that the British economy was strong enough to cope with the market volatility caused by last week's Brexit referendum which has resulted in the biggest blow since World War II to the European goal of forging greater unity. "Our economy is about as strong as it could be to confront the challenge our country now faces," Osborne told reporters. "It is inevitable after Thursday's vote that Britain's economy is going to have to adjust to the new situation we find ourselves in," said Osborne, who later ruled himself out of the running to succeed David Cameron as prime minister. Boris Johnson, a leading proponent of Brexit and the frontrunner to be the next prime minister, praised Osborne for saying "some reassuring things to the markets". The former London mayor said it was now clear that "people's pensions are safe, the pound is stable, markets are stable. I think that is all very good news." But neither Osborne's nor Johnson's words failed to stop the slide in stocks on world markets which began last Friday when Britons confounded investors' expectations by voting to end 43 years of EU membership. European bank shares had their worst two-day fall on record and world stocks as measured by Morgan Stanley Capital International (MSCI) index saw their worst two-day fall since the collapse of US investment bank Lehman Brothers during the 2008 financial crisis. On Friday alone about $2.8 trillion was wiped off the value of world stocks, the biggest daily loss ever. Sterling fell to a low around $1.3120, its lowest level since mid-1985. The Euro also remained weak, after falling to a three-month low around $1.0910 on Friday. Asian stocks markets opened weaker on Tuesday, with MSCI's Asia ex-Japan index extending losses for a third day, down 0.5 per cent. Japan's Nikkei was off 0.7 per cent. "Markets already appear to be pricing in a full-blown recession in the UK and rising recession risk in the rest of Europe," said David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management. Ratings agency Standard & Poor's (S&P) stripped Britain of its last remaining top-notch credit rating on Monday, warning that more downgrades could follow. "In our opinion, this (referendum) outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the UK," S&P said in a statement. The yield on British 10-year government bonds fell below 1.0 per cent for the first time as investors bet the Brexit vote would trigger a Bank of England interest rate cut aimed at steadying the economy. US stocks ended lower for a second day also, following European markets, pulled down by banking stocks amid uncertainty over London's future as the region's financial capital. Safe-haven bond and gold prices rose. US Treasury Secretary Jack Lew on Monday said he sees no signs of a financial crisis arising from Britain's decision last week, although he admitted that the result does present additional "headwinds" for the US economy. Visiting Brussels, US Secretary of State John Kerry said it was important that "nobody loses their head" as the EU and Britain deal with the fallout from the referendum. European Central Bank President Mario Draghi expressed "sadness" on Monday at Britain's vote to leave the EU. Draghi will fly to Brussels on Tuesday, where he is expected to brief European leaders about the impact of the UK vote on the euro zone at a two-day European Council meeting. POLITICAL CONFUSION IN BRITAIN With the ruling UK Conservative party looking for a new leader after Cameron's resignation on Friday and lawmakers from the opposition Labour party stepping up a rebellion against their leader, Britain sank deeper into political chaos. "There's no political leadership in the UK right when markets need the reassurance of direction," said Luke Hickmore of Aberdeen Asset Management, expressing the view of many in the City of London financial centre. British broadcaster Sky News said work and pensions minister Stephen Crabb was also considering a bid for the Conservative party leadership, with business secretary Sajid Javid seeking to become finance minister. Both were in favour of staying in the EU. The editor of the Spectator magazine tweeted that Health Secretary Jeremy Hunt was also "highly likely" to launch a bid. Cameron says he will stay on until October as a caretaker and that his successor should trigger the formal process of leaving the EU. His Conservative Party in parliament recommended choosing a successor by early September. The prime minister sought to calm fears over the fallout of the referendum and said parliament should not try to block Britain's departure. A majority of parliamentarians, like him, had argued that Britain should stay in the EU. "I am clear, and the cabinet agreed this morning, that the decision must be accepted," Cameron told parliament, which also faces a public petition for a new referendum. While the question of whether to leave the EU has split the ruling Conservative party, divisions within the opposition are also deep. A wave of Labour lawmakers resigned from leader Jeremy Corbyn's team on Monday, adding to the 11 senior figures who quit on Sunday, saying his campaign to keep Britain in the EU was half-hearted. Corbyn, a left-winger who has strong support among ordinary party members, has said he is not stepping down. Discontent with the political establishment in general and the Conservatives in particular was a factor behind the vote to leave, although many Brexit backers focused on immigration, complaining too many migrants had arrived from eastern Europe. Piling on misery for beaten English "remain" voters, the country's soccer team on Monday crashed out of the Euro 2016 soccer competition to tiny Iceland. "We embarrassed ourselves three of four days ago in the referendum, we've embarrassed ourselves now. It's a really, really sad time to be English," lamented English soccer fan Alex in the French city of Nice. EUROPE WANTS QUICKER RESOLUTION Cameron's refusal to start formal moves to pull the country out of the EU has prompted many European leaders to demand quicker action by Britain, the EU's second largest economy after Germany, to leave the 28-country bloc. "It should be implemented quickly. We cannot remain in an uncertain and indefinite situation," French Finance Minister Michel Sapin said on France 2 television. Guenther Oettinger, German member of the EU's executive European Commission, said delay would hurt Europe as well as Britain. "Every day of uncertainty prevents investors from putting their funds into Britain, and also other European markets," he told Deutschlandfunk radio. Cameron heads to Brussels on Tuesday for a grim EU summit dinner, while the other 27 leaders will meet for the first time without him on Wednesday morning to plan their next moves. They are likely to stress a willingness to negotiate, but only after London binds itself to a tight two-year exit timetable. The leaders of France, Germany and Italy met in Berlin on Monday and said Europe needed to respond to its people's concerns by setting clear goals to improve security, the economy and prospects for young people. German Chancellor Angela Merkel, who has appeared to take a softer line on Britain's decision than some European leaders, said she had "neither a brake nor an accelerator" to control events, adding: "We just don't want an impasse." The political, economic and regulatory uncertainty is being felt across the globe at a time when economies are still slowly recovering from the 2008 economic crisis, interest rates are close to zero, and central banks have fewer tools than normal to revive demand if countries enter recession. South Korea said on Tuesday it would propose a supplementary budget of around 10 trillion Won ($8.44 billion), in part to help it manage Brexit turmoil in financial markets. (Reuters)

Post Brexit, UK political confusion keeps world markets on edge

Gold rose on Monday, staying close to more than two-year high hit on Friday, as uncertainty over Britain&#39;s vote to leave the European Union (EU) pushed investors to sell equities and seek safer assets.

Bullion finished Friday up 4.8 per cent, its biggest one-day gain since January 2009 as the British vote sparked sales of riskier assets. Gold is often perceived as a hedge against economic and financial risk.

&quot;The short-term tactical gold buying of highly speculative flows has a history of being not sustainable, but there are also longer-term investors in this rally, who worry about contagion and ramifications in other markets and parts of the world,&quot; Sharps Pixley chief Ross Norman said.

Spot gold rose as much as 1.5 per cent to a session high of $1,335.30 an ounce and was up 0.8 per&nbsp;cent&nbsp;at $1,326.26 by 3:16 p.m. EDT (1916 GMT). It rallied 8 per cent to $1,358.20 at one stage on Friday, the highest price since March 2014.&nbsp;

U.S. gold futures settled up $2.30, or 0.2 per cent, at $1,324.70 per ounce.&nbsp;

Britain&#39;s shock vote to leave the EU&nbsp;roiled global markets for a second day, hammering US&nbsp;and European banks, lifting bond prices and dragging the British Pound to a 31-year low.&nbsp;

&quot;The uncertainty around the timing of negotiations to leave the EU means that not only do investors become more defensive and buy things like gold and the dollar, but it also keeps sterling under pressure and translates into a permanent loss of economic activity at domestic level,&quot; ETF Securities analyst Martin Arnold said.

The British referendum verdict probably means the Fed&#39;s ambitions for two rate rises this year have been placed on hold, analysts and experts said.

Goldman Sachs has raised its gold price forecasts saying Brexit suggested a more sustainable impact on the trajectory of U.S. interest rates.

UBS Wealth Management Research raised its three-month price forecast for gold to $1,275-$1,425 per ounce and 12-month to $1,275, on uncertainties following the UK vote and its expectation for just one Fed rate hike this year.

&quot;Central bank readiness to provide additional monetary support if needed should support gold&#39;s short-term appeal,&quot; UBS said.

Holdings in SPDR Gold Trust GLD, the world&#39;s largest gold-backed exchange-traded fund, jumped 2 per cent on Friday to the highest since July 2013.

Spot silver rose 0.1 per cent&nbsp;at $17.67 per ounce. Platinum was down 0.2 per cent&nbsp;at $979 an ounce and palladium was up 1.7 per cent&nbsp;at $556.10. 
 
(Reuters)

With uncertainty over Britain's vote to leave EU, investors are pushed to sell equities and seek safer assets

Gold rose on Monday, staying close to more than two-year high hit on Friday, as uncertainty over Britain's vote to leave the European Union (EU) pushed investors to sell equities and seek safer assets. Bullion finished Friday up 4.8 per cent, its biggest one-day gain since January 2009 as the British vote sparked sales of riskier assets. Gold is often perceived as a hedge against economic and financial risk. "The short-term tactical gold buying of highly speculative flows has a history of being not sustainable, but there are also longer-term investors in this rally, who worry about contagion and ramifications in other markets and parts of the world," Sharps Pixley chief Ross Norman said. Spot gold rose as much as 1.5 per cent to a session high of $1,335.30 an ounce and was up 0.8 per cent at $1,326.26 by 3:16 p.m. EDT (1916 GMT). It rallied 8 per cent to $1,358.20 at one stage on Friday, the highest price since March 2014. U.S. gold futures settled up $2.30, or 0.2 per cent, at $1,324.70 per ounce. Britain's shock vote to leave the EU roiled global markets for a second day, hammering US and European banks, lifting bond prices and dragging the British Pound to a 31-year low. "The uncertainty around the timing of negotiations to leave the EU means that not only do investors become more defensive and buy things like gold and the dollar, but it also keeps sterling under pressure and translates into a permanent loss of economic activity at domestic level," ETF Securities analyst Martin Arnold said. The British referendum verdict probably means the Fed's ambitions for two rate rises this year have been placed on hold, analysts and experts said. Goldman Sachs has raised its gold price forecasts saying Brexit suggested a more sustainable impact on the trajectory of U.S. interest rates. UBS Wealth Management Research raised its three-month price forecast for gold to $1,275-$1,425 per ounce and 12-month to $1,275, on uncertainties following the UK vote and its expectation for just one Fed rate hike this year. "Central bank readiness to provide additional monetary support if needed should support gold's short-term appeal," UBS said. Holdings in SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, jumped 2 per cent on Friday to the highest since July 2013. Spot silver rose 0.1 per cent at $17.67 per ounce. Platinum was down 0.2 per cent at $979 an ounce and palladium was up 1.7 per cent at $556.10. (Reuters)

Gold gains as Investors seek refuge in bullion market after Brexit vote

Volkswagen&#39;s (VW) settlement with nearly 500,000 US&nbsp;diesel car owners and government regulators over polluting vehicles is valued at more than $15 billion, two sources briefed on the matter said on Monday.

The settlement, to be announced on Tuesday (June 28) in Washington, includes $10.033 billion to offer buybacks to owners of about 475,000 polluting vehicles and nearly $5 billion in funds to offset excess diesel emissions and boost zero emission vehicles, the sources said.

A separate settlement with nearly all US&nbsp;state attorneys general over excess diesel emissions will be announced on Tuesday and is expected to be more than $500 million. This&nbsp;would&nbsp;push the total to over $15 billion, a separate source briefed on the matter said.

Spokeswomen for the US&nbsp;environmental protection agency and Volkswagen declined to comment.

&quot;The settlement for Volkswagen is really the first step that they&#39;ve made publicly after the admission of fault they made publicly in September of last year,&quot; said Patrick Min, Senior Industry Insights Analyst with TrueCar. &quot;So the amount of $15 billion, far and away the largest amount in US&nbsp;history is really the first step in terms of setting aside money in order to repair vehicles or actually buy them back from owners.&quot;

Speaking on condition of anonymity the first sources said that owners of 2.0 litre diesel VW 2009-2015 cars will receive at least $5,100 compensation along with the estimated value of the vehicles as of September 2015, before the scandal erupted. Some owners will get as much as $10,000 in compensation, the first sources said, depending on the value of the car.

The $10.033 billion is the maximum VW could pay if it had to buyback all vehicles, but the actual amount VW will pay could be significantly less if a large number of owners take buybacks.

Prior owners will get half of current owners, while people who leased cars will also get compensation, said the first sources.

Owners would also receive the same compensation if they choose to have the vehicles repaired, assuming U.S. regulators approve a fix at a later date.&nbsp;

&quot;This is just the tip of the iceberg in terms of what they can expect from other follow-on lawsuits, from certain states such as California that are going to go for even more action,&quot; said Min, on what further legal action VW may be facing. &quot;The impacts are going to continue further with respect to future product development and what Volkswagen can achieve with&nbsp;a diminished budget going forward.&quot;

The settlement includes $2.7 billion in funds to offset excess diesel emissions and $2 billion in VW investments in green energy and zero emission vehicle efforts, the first sources said. The diesel offset fund could rise if VW has not fixed or bought back 85 percent of the vehicles by mid-2019, the first sources said.

The $2 billion in green energy and zero emission efforts will be spent over 10 years, the first sources said, and will include zero emission vehicle infrastructure.&nbsp;

The settlement, the largest ever automotive buyback offer in U.S. history and most expensive auto industry scandal, stems from the German automaker&#39;s admission in September 2015 that it intentionally misled regulators by installing secret software that allowed U.S. vehicles to emit up to 40 times legally allowable pollution.

VW still must reach agreement with regulators on whether it will offer to buyback 85,000 larger 3.0 liter Porsche, Audi&nbsp;and SUVs that emitted up to nine times legally allowable pollution and how much it may face in civil fines for admitting to violating the Clean Air Act.

Reuters reported earlier the initial VW settlement would not include civil penalties under the U.S. Clean Air Act or address about 85,000 larger 3.0 litre Audi, Porsche and VW vehicles that emitted less pollution than 2.0 litre vehicles. A deal covering the 3.0 litre vehicles may still be months away.

The settlement does not address lawsuits from investors or a criminal investigation by the Justice Department.

Owners will have until December 2018 to decide whether to sell back vehicles or opt for&nbsp;fixes that may not eliminate all excess emissions.

VW cannot resell or export the vehicles bought back unless EPA approves a fix, Reuters reported last week.

VW, the world&#39;s second largest automaker, has seen U.S. VW brand sales suffer in the wake of the crisis. VW brand sales are down 13 per cent in the United States in 2016, while sales of its luxury Audi and Porsche units have risen. 
 
(Reuters)

The company had lied on emissions tests, will offer buybacks to nearly 475,000 diesel car owners in the States

Volkswagen's (VW) settlement with nearly 500,000 US diesel car owners and government regulators over polluting vehicles is valued at more than $15 billion, two sources briefed on the matter said on Monday. The settlement, to be announced on Tuesday (June 28) in Washington, includes $10.033 billion to offer buybacks to owners of about 475,000 polluting vehicles and nearly $5 billion in funds to offset excess diesel emissions and boost zero emission vehicles, the sources said. A separate settlement with nearly all US state attorneys general over excess diesel emissions will be announced on Tuesday and is expected to be more than $500 million. This would push the total to over $15 billion, a separate source briefed on the matter said. Spokeswomen for the US environmental protection agency and Volkswagen declined to comment. "The settlement for Volkswagen is really the first step that they've made publicly after the admission of fault they made publicly in September of last year," said Patrick Min, Senior Industry Insights Analyst with TrueCar. "So the amount of $15 billion, far and away the largest amount in US history is really the first step in terms of setting aside money in order to repair vehicles or actually buy them back from owners." Speaking on condition of anonymity the first sources said that owners of 2.0 litre diesel VW 2009-2015 cars will receive at least $5,100 compensation along with the estimated value of the vehicles as of September 2015, before the scandal erupted. Some owners will get as much as $10,000 in compensation, the first sources said, depending on the value of the car. The $10.033 billion is the maximum VW could pay if it had to buyback all vehicles, but the actual amount VW will pay could be significantly less if a large number of owners take buybacks. Prior owners will get half of current owners, while people who leased cars will also get compensation, said the first sources. Owners would also receive the same compensation if they choose to have the vehicles repaired, assuming U.S. regulators approve a fix at a later date. "This is just the tip of the iceberg in terms of what they can expect from other follow-on lawsuits, from certain states such as California that are going to go for even more action," said Min, on what further legal action VW may be facing. "The impacts are going to continue further with respect to future product development and what Volkswagen can achieve with a diminished budget going forward." The settlement includes $2.7 billion in funds to offset excess diesel emissions and $2 billion in VW investments in green energy and zero emission vehicle efforts, the first sources said. The diesel offset fund could rise if VW has not fixed or bought back 85 percent of the vehicles by mid-2019, the first sources said. The $2 billion in green energy and zero emission efforts will be spent over 10 years, the first sources said, and will include zero emission vehicle infrastructure. The settlement, the largest ever automotive buyback offer in U.S. history and most expensive auto industry scandal, stems from the German automaker's admission in September 2015 that it intentionally misled regulators by installing secret software that allowed U.S. vehicles to emit up to 40 times legally allowable pollution. VW still must reach agreement with regulators on whether it will offer to buyback 85,000 larger 3.0 liter Porsche, Audi and SUVs that emitted up to nine times legally allowable pollution and how much it may face in civil fines for admitting to violating the Clean Air Act. Reuters reported earlier the initial VW settlement would not include civil penalties under the U.S. Clean Air Act or address about 85,000 larger 3.0 litre Audi, Porsche and VW vehicles that emitted less pollution than 2.0 litre vehicles. A deal covering the 3.0 litre vehicles may still be months away. The settlement does not address lawsuits from investors or a criminal investigation by the Justice Department. Owners will have until December 2018 to decide whether to sell back vehicles or opt for fixes that may not eliminate all excess emissions. VW cannot resell or export the vehicles bought back unless EPA approves a fix, Reuters reported last week. VW, the world's second largest automaker, has seen U.S. VW brand sales suffer in the wake of the crisis. VW brand sales are down 13 per cent in the United States in 2016, while sales of its luxury Audi and Porsche units have risen. (Reuters)

Volkswagen will settle for over 15 billion US dollars: Sources

Two ratings agencies downgraded Britain on Monday because of its vote to leave the European Union (EU), citing risks to its economy and political upheaval. 
 
Standard &amp; Poor&#39;s (S&amp;P) removed Britain&#39;s coveted AAA status, downgrading it by two notches with a long-term negative outlook. 
 
&quot;In our opinion, this outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the UK,&quot; a statement from the agency read. 
 
&quot;The Brexit result could lead to a deterioration of the UK&#39;s economic performance, including its large financial services sector, which is a major contributor to employment,&quot; it said. 
 
Fitch cut its credit rating by one notch from &#39;AA+&#39; to &#39;AA&#39;, with a negative outlook. It lowered its economic growth forecast to 0.9 percent in 2017 and 2018 from 2 percent previously. 
 
&quot;Fitch believes that uncertainty following the referendum outcome will induce an abrupt slowdown in short-term GDP growth,&quot; its analysis wrote. 
 
Both ratings agencies listed a possible second referendum on Scottish independence as a significant risk in the future. 
 
Voters in Scotland backed staying in the EU but pro-Brexit sentiment in England carried the overall &quot;Leave&quot; vote, prompting a rise in support for independence according to polls. 
 
The risks facing Britain are increased by the &quot;political upheaval&quot; that has followed the vote with the resignation of Prime Minister David Cameron and a leadership crisis in the opposition Labour party. 
 
Divisions within the ruling Conservative party and a lack of clarity of Britain&#39;s future trade relationship with the EU increase the risks, according to both agencies. 
 
A lack of clarity over what trading relationship the UK might have with the EU will also damage confidence, they noted. 
 
&quot;We believe that the lack of clarity on these key issues will hurt confidence, investment, GDP growth, and public finances in the UK, and put at risk important external financing sources vital to the financing of the UK&#39;s large current account deficits,&quot; S&amp;P wrote. 
 
Britain voted by 52 per cent in favour of leaving the EU last week in a result that has hit European markets and sent the British Pound tumbling to a three-decade low against the dollar. 
 
Following the vote, fellow ratings agency Moody&#39;s cut Britain&#39;s credit rating outlook to &quot;negative&quot; but kept its overall rating at a high &quot;Aa1&quot;. 
 
(AFP)

Standard & Poor's removed Britain's coveted AAA status, downgrading it by two notches with a long-term negative outlook

Two ratings agencies downgraded Britain on Monday because of its vote to leave the European Union (EU), citing risks to its economy and political upheaval. Standard & Poor's (S&P) removed Britain's coveted AAA status, downgrading it by two notches with a long-term negative outlook. "In our opinion, this outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the UK," a statement from the agency read. "The Brexit result could lead to a deterioration of the UK's economic performance, including its large financial services sector, which is a major contributor to employment," it said. Fitch cut its credit rating by one notch from 'AA+' to 'AA', with a negative outlook. It lowered its economic growth forecast to 0.9 percent in 2017 and 2018 from 2 percent previously. "Fitch believes that uncertainty following the referendum outcome will induce an abrupt slowdown in short-term GDP growth," its analysis wrote. Both ratings agencies listed a possible second referendum on Scottish independence as a significant risk in the future. Voters in Scotland backed staying in the EU but pro-Brexit sentiment in England carried the overall "Leave" vote, prompting a rise in support for independence according to polls. The risks facing Britain are increased by the "political upheaval" that has followed the vote with the resignation of Prime Minister David Cameron and a leadership crisis in the opposition Labour party. Divisions within the ruling Conservative party and a lack of clarity of Britain's future trade relationship with the EU increase the risks, according to both agencies. A lack of clarity over what trading relationship the UK might have with the EU will also damage confidence, they noted. "We believe that the lack of clarity on these key issues will hurt confidence, investment, GDP growth, and public finances in the UK, and put at risk important external financing sources vital to the financing of the UK's large current account deficits," S&P wrote. Britain voted by 52 per cent in favour of leaving the EU last week in a result that has hit European markets and sent the British Pound tumbling to a three-decade low against the dollar. Following the vote, fellow ratings agency Moody's cut Britain's credit rating outlook to "negative" but kept its overall rating at a high "Aa1". (AFP)

Ratings agencies downgrade UK after Brexit vote

South Korea will propose a supplementary budget of around 10 trillion Won ($8.44 billion) to parliament soon, the government said on Tuesday, as it tackles Brexit turmoil in financial markets, weak exports, and a corporate overhaul of the country&#39;s shipping and shipbuilding industries.

President Park Geun-hye called on all government ministries to have the supplementary budget ready as soon as possible.

&quot;Unrest in global financial markets has been growing from Brexit. Uncertainties over the Chinese economy and geopolitical risks from North Korea are still pressuring our economy,&quot; she said at a meeting of economy-related officials and lawmakers.

&quot;The economic situation inside and outside our country is more serious than ever. If we do not take extraordinary measures there are concerns growth and employment will contract in the second half of the year.&quot;

The supplementary budget will be spent on stimulus measures including a big retail spending drive, rebates on appliances, a tax incentive to replace older diesel cars, and additional unemployment benefits for shipbuilding workers.

The extra budget will be mostly funded from a surplus in tax revenue for the first half of the year, avoiding the need to sell more treasury bonds and run up additional government debt.

Equities cautiously inched up after the announcement as an extra budget had been widely expected, given South Korea&#39;s soft economic growth.

Shares were up 0.4 per cent while the Won rose 0.8 per cent against the dollar helped partly by offshore factors.

&quot;This looks like the finance ministry just pushed the ball over to the Bank of Korea again,&quot; said Stephen Lee, an economist at Samsung Securities.

&quot;What I&#39;m a bit concerned about is that tax revenue going forward might not be as great as it was in the first half of the year...We might face some difficulties later if the Brexit aftermath on exports and capex is worse than expected.&quot;

Lee said the Bank of Korea may face pressure to cut interest rates again after it lowered them to a record low 1.25 per cent to bolster economic growth earlier this month.

Finance Minister Yoo Il-ho said last week a supplementary budget would have to be ratified before mid-July to have maximum effect. Lawmakers in both ruling and opposition parties favour the extra budget.

Reflecting more difficult conditions inside and outside the country, the finance ministry lowered its growth forecast for this year to 2.8 per cent from the 3.1 per cent projected in December last year.

Inflation for 2016 was also downgraded to 1.1 per cent from 1.5 per cent forecast previously.

The extra budget comes as the latest buffer against possible fallout from the corporate restructuring of the country&#39;s struggling shipping and shipbuilding firms. Earlier this month, the government and central bank said they would create an 11 trillion Won fund to support two state-run banks most exposed to these industries.

Lee noted global financial markets were reacting more sensitively to political events around the world. He saw a danger of volatility spiking again when Italy holds its own referendum regarding constitutional reforms in October and from the US&nbsp;presidential election on November 8.

To keep capital flows from rocking the economy, the government said it will continue with plans to ease the cap on the foreign currency forward positions local banks can hold from 40 per cent from the current 30 per cent starting July.

It will also pass an amendment in September to temporarily lower an existing levy on foreign exchange borrowings by banks, securities firms, creditors and insurance companies. The levy aims to reduce sudden volatility in markets. 
 
($1 = 1,184.9000 Won) 
 
(Reuters)

The extra budget will be mostly funded from surplus in tax revenue, avoiding the need to sell more treasury bonds and run up additional debt

South Korea will propose a supplementary budget of around 10 trillion Won ($8.44 billion) to parliament soon, the government said on Tuesday, as it tackles Brexit turmoil in financial markets, weak exports, and a corporate overhaul of the country's shipping and shipbuilding industries. President Park Geun-hye called on all government ministries to have the supplementary budget ready as soon as possible. "Unrest in global financial markets has been growing from Brexit. Uncertainties over the Chinese economy and geopolitical risks from North Korea are still pressuring our economy," she said at a meeting of economy-related officials and lawmakers. "The economic situation inside and outside our country is more serious than ever. If we do not take extraordinary measures there are concerns growth and employment will contract in the second half of the year." The supplementary budget will be spent on stimulus measures including a big retail spending drive, rebates on appliances, a tax incentive to replace older diesel cars, and additional unemployment benefits for shipbuilding workers. The extra budget will be mostly funded from a surplus in tax revenue for the first half of the year, avoiding the need to sell more treasury bonds and run up additional government debt. Equities cautiously inched up after the announcement as an extra budget had been widely expected, given South Korea's soft economic growth. Shares were up 0.4 per cent while the Won rose 0.8 per cent against the dollar helped partly by offshore factors. "This looks like the finance ministry just pushed the ball over to the Bank of Korea again," said Stephen Lee, an economist at Samsung Securities. "What I'm a bit concerned about is that tax revenue going forward might not be as great as it was in the first half of the year...We might face some difficulties later if the Brexit aftermath on exports and capex is worse than expected." Lee said the Bank of Korea may face pressure to cut interest rates again after it lowered them to a record low 1.25 per cent to bolster economic growth earlier this month. Finance Minister Yoo Il-ho said last week a supplementary budget would have to be ratified before mid-July to have maximum effect. Lawmakers in both ruling and opposition parties favour the extra budget. Reflecting more difficult conditions inside and outside the country, the finance ministry lowered its growth forecast for this year to 2.8 per cent from the 3.1 per cent projected in December last year. Inflation for 2016 was also downgraded to 1.1 per cent from 1.5 per cent forecast previously. The extra budget comes as the latest buffer against possible fallout from the corporate restructuring of the country's struggling shipping and shipbuilding firms. Earlier this month, the government and central bank said they would create an 11 trillion Won fund to support two state-run banks most exposed to these industries. Lee noted global financial markets were reacting more sensitively to political events around the world. He saw a danger of volatility spiking again when Italy holds its own referendum regarding constitutional reforms in October and from the US presidential election on November 8. To keep capital flows from rocking the economy, the government said it will continue with plans to ease the cap on the foreign currency forward positions local banks can hold from 40 per cent from the current 30 per cent starting July. It will also pass an amendment in September to temporarily lower an existing levy on foreign exchange borrowings by banks, securities firms, creditors and insurance companies. The levy aims to reduce sudden volatility in markets. ($1 = 1,184.9000 Won) (Reuters)

South Korea may propose $8.4 billion in extra budget to shield against Brexit, domestic risks

Hungary&#39;s government is drawing up a list of incentives to lure companies leaving Britain after the Brexit vote, economy minister Mihaly Varga told business daily Vilaggazdasag in an interview published today. 
 
The interview did not go into details on what sort of offers would be made to persuade companies to move to Hungary, or how far the plan had progressed. 
 
Varga said Britain&#39;s exit from the EU would probably affect Hungary in the longer term, as it would hit the EU&#39;s budget, and thus the development funds flowing to eastern Europe. 
 
But Varga said this was not an immediate issue, as Britain&#39;s negotiations with the EU would last at least for two years, and there was no need to amend Hungary&#39;s budget this year or next. 
 
He said Hungary also had no plan to follow Britain&#39;s example in leaving the EU. 
 
&quot;There is no such intention, no such plan, no such scenario or idea,&quot; Varga told the paper. 
 
He said he expected market turbulence to subside this week after Friday&#39;s sharp falls. 
 
(Reuters)

Budapest has no plan to follow London's example in leaving the EU, said economy minister Mihaly Varga

Hungary's government is drawing up a list of incentives to lure companies leaving Britain after the Brexit vote, economy minister Mihaly Varga told business daily Vilaggazdasag in an interview published today. The interview did not go into details on what sort of offers would be made to persuade companies to move to Hungary, or how far the plan had progressed. Varga said Britain's exit from the EU would probably affect Hungary in the longer term, as it would hit the EU's budget, and thus the development funds flowing to eastern Europe. But Varga said this was not an immediate issue, as Britain's negotiations with the EU would last at least for two years, and there was no need to amend Hungary's budget this year or next. He said Hungary also had no plan to follow Britain's example in leaving the EU. "There is no such intention, no such plan, no such scenario or idea," Varga told the paper. He said he expected market turbulence to subside this week after Friday's sharp falls. (Reuters)

Hungary prepares incentives to lure firms leaving Britain after Brexit vote

Two of China&#39;s biggest steelmakers are planning to merge, they said, as the industry faces a global glut that has hammered producers worldwide. 
 
Baosteel Group, China&#39;s second-largest steelmaker, is &quot;planning a strategic restructuring with Wuhan Iron and Steel Group&quot;, another giant, both companies&#39; listed units said in separate statements to the Shanghai stock exchange yesterday. 
 
But the restructuring plan has not yet been confirmed, the statements said, without giving further details.&nbsp;The two firms rank 5th and 11th respectively in the world. 
 
Baosteel produced 36.1 million tonnes of steel last year, its website says -- more than Brazil and three times more than Britain, according to the World Steel Association, whose ranking shows that if Baosteel was a country, then it would be eighth in the world. 
 
But Chinese steel demand has slumped as its economic growth has slowed and the global steel industry is assailed by huge overcapacity, which has plunged manufacturers into losses from Asia to Europe to the US, and seen political rows and accusations of dumping. 
Shanghai-based Baosteel&#39;s net profit plummeted 83 percent to 1.0 billion Yuan (USD 150 million) last year, while Wuhan Steel lost 7.5 billion Yuan, compared with a 1.3 billion Yuan net profit in 2014. 
 
Beijing has vowed to eliminate 100-150 million tonnes of capacity -- out of a total of 1.2 billion tonnes - by 2020.&nbsp;&quot;The merger of Baosteel and Wuhan Steel fits with the government strategy of improving efficiency and reducing competition and overcapacity,&quot; Xu Xiangchun, chief analyst at consultancy Mysteel Research, told Bloomberg News.&nbsp;&quot;With these two leading the effort there might be more mergers ahead.&quot; 
 
Wuhan Steel chairman Ma Guoqiang denied speculation of a merger at a shareholder meeting earlier this month, the Beijing News reported. 
Trading in both firms&#39; shares was suspended on Monday. 
 
(AFP)

Global steel industry is assailed by huge overcapacity, which has plunged manufacturers into losses from Asia to Europe to the US

Two of China's biggest steelmakers are planning to merge, they said, as the industry faces a global glut that has hammered producers worldwide. Baosteel Group, China's second-largest steelmaker, is "planning a strategic restructuring with Wuhan Iron and Steel Group", another giant, both companies' listed units said in separate statements to the Shanghai stock exchange yesterday. But the restructuring plan has not yet been confirmed, the statements said, without giving further details. The two firms rank 5th and 11th respectively in the world. Baosteel produced 36.1 million tonnes of steel last year, its website says -- more than Brazil and three times more than Britain, according to the World Steel Association, whose ranking shows that if Baosteel was a country, then it would be eighth in the world. But Chinese steel demand has slumped as its economic growth has slowed and the global steel industry is assailed by huge overcapacity, which has plunged manufacturers into losses from Asia to Europe to the US, and seen political rows and accusations of dumping. Shanghai-based Baosteel's net profit plummeted 83 percent to 1.0 billion Yuan (USD 150 million) last year, while Wuhan Steel lost 7.5 billion Yuan, compared with a 1.3 billion Yuan net profit in 2014. Beijing has vowed to eliminate 100-150 million tonnes of capacity -- out of a total of 1.2 billion tonnes - by 2020. "The merger of Baosteel and Wuhan Steel fits with the government strategy of improving efficiency and reducing competition and overcapacity," Xu Xiangchun, chief analyst at consultancy Mysteel Research, told Bloomberg News. "With these two leading the effort there might be more mergers ahead." Wuhan Steel chairman Ma Guoqiang denied speculation of a merger at a shareholder meeting earlier this month, the Beijing News reported. Trading in both firms' shares was suspended on Monday. (AFP)

Chinese steel giants plan merger in face of global glut

The Indian&nbsp;government has whittled down its list of candidates for the next governor of its central bank, the Reserve Bank of India (RBI), to four, three of whom are economists and veterans of the central bank and&nbsp;the other is&nbsp;the head of India&#39;s&nbsp;largest bank, State Bank of India.

A senior government official said the four are: RBI deputy governor Urjit Patel; former deputy governors Rakesh Mohan and Subir Gokarn; and State Bank of India&nbsp;Chair Arundhati Bhattacharya.

Two government officials also said that outgoing governor Raghuram Rajan was expected to join the search committee to appoint three external members of a new six-member RBI monetary policy committee (MPC).

The objective, these officials said on condition of anonymity due to the sensitivity of the matter, was to ensure that the MPC is constituted as soon as possible - probably before the appointment of Rajan&#39;s successor. 
 
(Reuters)

Three of them are veterans of the central bank, the fourth heads the country's largest bank

The Indian government has whittled down its list of candidates for the next governor of its central bank, the Reserve Bank of India (RBI), to four, three of whom are economists and veterans of the central bank and the other is the head of India's largest bank, State Bank of India. A senior government official said the four are: RBI deputy governor Urjit Patel; former deputy governors Rakesh Mohan and Subir Gokarn; and State Bank of India Chair Arundhati Bhattacharya. Two government officials also said that outgoing governor Raghuram Rajan was expected to join the search committee to appoint three external members of a new six-member RBI monetary policy committee (MPC). The objective, these officials said on condition of anonymity due to the sensitivity of the matter, was to ensure that the MPC is constituted as soon as possible - probably before the appointment of Rajan's successor. (Reuters)

India whittles list of possible Rajan successors down to four

The pound was sitting at three-decade lows Monday morning as currency markets were left reeling from Britain`s shock decision to leave the European Union. 
 
Sterling collapsed to its lowest level since 1985 on Friday ahead of official referendum results as early numbers suggested that the vote would surprise markets, which had widely expected voters to opt for the status quo. 
 
On Monday morning in Tokyo, the pound was at $1.3379, off $1.3670 in New York but still above $1.3229, its lowest point earlier Friday. 
 
&quot;People are finding it difficult to comprehend what Brexit implies for the future -- we don`t know yet what the magnitude of the shock will be,&quot; Steven Barrow, head of Group-of-10 strategy at Standard Bank Group in London, told Bloomberg News. 
 
The euro bought 82.07 pence against 81.31 pence, while the dollar ticked up to 102.34 Yen, from 102.21 yen on Friday. 
 
Japan`s currency surged Friday as traders scooped up the safe-haven unit, seen as a safe bet in times of turmoil. 
 
But the rally in the Yen, which had already been on the upswing before the vote, poses a threat to profits at major Japanese exporters. 
 
And Britain`s vote to leave the EU could have significant consequences for more than 1,000 Japanese firms that operate in Britain -- many of which see it as a staging point for dealing in Europe. 
 
&quot;It was very regrettable,&quot; Sadayuki Sakakibara, chairman of Keidanren, Japan`s biggest business lobby, said of the result on Friday. 
 
Japanese Prime Minister Shinzo Abe held an emergency meeting with top officials Monday morning to discuss Brexit and how to deal with the market fallout. 
 
Ahead of the meeting, Abe pointed to unspecified measures to smooth out any impact on the world`s number three economy.&nbsp; 
 
&quot;We will make thorough efforts so that (Brexit) will not negatively affect Japan`s economy and the business of small to medium-sized firms,&quot; he said, without elaborating. 
 
On Friday, Finance Minister Taro Aso pledged that Tokyo was ready to adopt strong measures to address wild volatility on financial markets. 
 
His remarks hinted at a possible market intervention to cool the surging yen. 
 
Recently, Japanese officials, including Aso, have been warning over the Yen&#39;s rise and said an intervention was possible. However, such a move could put Japan on a collision course with its G20 counterparts, who have agreed to hold off stepping into forex markets to manipulate their currencies. 
 
Officials from the Bank of Japan (BoJ) were at the meeting on Monday. The BoJ has said it was ready to lean on a currency swap agreement it has with other major central banks to supply liquidity for markets in an effort to counter the wild volatility. 
 
(AFP)

Japanese Prime Minister Shinzo Abe held an emergency meeting with top officials Monday morning to review Brexit and the market fallout

The pound was sitting at three-decade lows Monday morning as currency markets were left reeling from Britain`s shock decision to leave the European Union. Sterling collapsed to its lowest level since 1985 on Friday ahead of official referendum results as early numbers suggested that the vote would surprise markets, which had widely expected voters to opt for the status quo. On Monday morning in Tokyo, the pound was at $1.3379, off $1.3670 in New York but still above $1.3229, its lowest point earlier Friday. "People are finding it difficult to comprehend what Brexit implies for the future -- we don`t know yet what the magnitude of the shock will be," Steven Barrow, head of Group-of-10 strategy at Standard Bank Group in London, told Bloomberg News. The euro bought 82.07 pence against 81.31 pence, while the dollar ticked up to 102.34 Yen, from 102.21 yen on Friday. Japan`s currency surged Friday as traders scooped up the safe-haven unit, seen as a safe bet in times of turmoil. But the rally in the Yen, which had already been on the upswing before the vote, poses a threat to profits at major Japanese exporters. And Britain`s vote to leave the EU could have significant consequences for more than 1,000 Japanese firms that operate in Britain -- many of which see it as a staging point for dealing in Europe. "It was very regrettable," Sadayuki Sakakibara, chairman of Keidanren, Japan`s biggest business lobby, said of the result on Friday. Japanese Prime Minister Shinzo Abe held an emergency meeting with top officials Monday morning to discuss Brexit and how to deal with the market fallout. Ahead of the meeting, Abe pointed to unspecified measures to smooth out any impact on the world`s number three economy. "We will make thorough efforts so that (Brexit) will not negatively affect Japan`s economy and the business of small to medium-sized firms," he said, without elaborating. On Friday, Finance Minister Taro Aso pledged that Tokyo was ready to adopt strong measures to address wild volatility on financial markets. His remarks hinted at a possible market intervention to cool the surging yen. Recently, Japanese officials, including Aso, have been warning over the Yen's rise and said an intervention was possible. However, such a move could put Japan on a collision course with its G20 counterparts, who have agreed to hold off stepping into forex markets to manipulate their currencies. Officials from the Bank of Japan (BoJ) were at the meeting on Monday. The BoJ has said it was ready to lean on a currency swap agreement it has with other major central banks to supply liquidity for markets in an effort to counter the wild volatility. (AFP)

Pound weak on post-Brexit fallout

In delaying its IPO by two years, Japanese messaging app company Line Corp bought time to correct weak financial reporting controls, work on its business plan, bolster staffing - and left billions of dollars on the table as its valuation shrivelled. 
 
Line&#39;s initial public offering in the next three weeks is set to raise about $1 billion, which given a global drought of such deals could make it the biggest tech listing this year, but sceptical fund managers point to tepid growth in Line&#39;s home market and doubts about its prospects for regional expansion. They also question whether its advertising revenue strategy will work. 
 
In seeking to earn more from its major Asian markets of Japan, Thailand, Indonesia and Taiwan, Line will try to generate more revenue from services such as advertising and offer more localized products, its IPO filing said. 
 
The bulk of Line&#39;s revenue comes from games and sales of emojis and electronic stickers, including Brown the bear and Cony, his flatulent rabbit girlfriend. 
 
&quot;Localisation of the service, of the marketing, of the stickers that we provide - this is very important,&quot; CEO Takeshi Idezawa told Reuters in April. 
 
Fund managers who have watched Line&#39;s growth slow in a crowded global messaging app market assess the plan with caution. 
 
&quot;I&#39;m not interested,&quot; said Yasuo Sakuma, portfolio manager at Bayview Asset Management, which manages 270 billion yen ($2.64 billion). &quot;Its growth outlook is very poor.&quot; 
 
&quot;Among the four countries that it&#39;s focusing on, only Indonesia has big room for growth in use,&quot; he added. &quot;Even there, the business outlook is not that easy.&quot; 
 
Growth in Line&#39;s monthly active users has tailed off after tripling across the world over the past three years. Last year, user numbers rose just 13 million to 218 million at the end of March, the IPO filing showed. The company isn&#39;t providing much visibility about the future either - it says in its filing that limited operating history makes it &quot;difficult&quot; to forecast future results. 
 
Globally, Line is the seventh-most used messenger app, data from researcher Statista shows, behind the likes of Facebook&#39;s WhatsApp and Tencent&#39;s WeChat. 
 
Earthquake Aftermath 
 
The company will fix its IPO price range on Monday. There is no change to the listing&#39;s schedule following Britain&#39;s vote to leave the European Union, a Line spokeswoman said on Friday. 
 
The dual New York and Tokyo listing, set for July 14-15, would value Line at about 588 billion yen ($5.75 billion) and make it the country&#39;s largest listing since Japan Post&#39;s $12 billion offering last year. 
 
Line&#39;s likely valuation is far less than the $10 billion-$20 billion that was expected by investors when South Korean parent Naver Corp previously talked of a Line listing in 2013-2014, although Line may not have had much choice but to wait. 
 
Line declined to comment, citing a media blackout period ahead of the IPO. 
 
Line&#39;s messaging app was launched as NHN Japan in the aftermath of Japan&#39;s 2011 earthquake and tsunami to overcome downed communications, growing unexpectedly to become the country&#39;s dominant mobile messaging platform over the next few years. 
 
However, in that period, it identified what it described in its IPO filing as &quot;material weaknesses&quot; in controls over financial reporting. 
 
Line has now tightened board and management approval for major transactions, it said in its prospectus, and crafted a strategy focusing on Japan, Thailand, Indonesia and Taiwan, which account for more than half its users. 
 
Line has also bolstered staff numbers by recruiting over 750 workers between December 2014 and March, its IPO filing shows, with designers and engineers among the recruits. It has around 2,540 full-time employees. 
 
Pushed as value pay 
 
Idezawa, who became Line&#39;s chief executive in March last year, has been key to tightened procedures, a person familiar with the matter said. Idezawa is known for his strictness on compliance-related matters, the person added. 
 
Idezawa was previously chief executive of, internet company Livedoor, joining that company a year after it was hit by a high-profile 2006 accounting scandal. 
 
&quot;When Line was first seriously considering an IPO around 2013, the overall company was pretty disorganised,&quot; said a person involved in the IPO. &quot;It was very much still a venture in terms of mindset. So a lot of people were hired to strengthen the company.&quot; 
 
Line has pitched its IPO to investors in terms of value and steady returns instead of explosive growth potential. 
 
While that story has been met favourably by Japan&#39;s risk-averse retail investors - Tokyo brokerages including Daiwa Securities say retail investors have shown strong interest in Line shares - fund managers are wary of Line&#39;s ad-driven growth push. 
 
&quot;I went to the company&#39;s meeting with investors... but nothing moved me,&quot; said a fund manager at a major Japanese asset management firm who declined to be named because of company rules against discussing individual shares. &quot;It&#39;s not clear how it can make money out of its advertisement business.&quot; 
 
(Reuters)

Line's likely valuation is far less than the $10 billion-$20 billion that was expected by investors

In delaying its IPO by two years, Japanese messaging app company Line Corp bought time to correct weak financial reporting controls, work on its business plan, bolster staffing - and left billions of dollars on the table as its valuation shrivelled. Line's initial public offering in the next three weeks is set to raise about $1 billion, which given a global drought of such deals could make it the biggest tech listing this year, but sceptical fund managers point to tepid growth in Line's home market and doubts about its prospects for regional expansion. They also question whether its advertising revenue strategy will work. In seeking to earn more from its major Asian markets of Japan, Thailand, Indonesia and Taiwan, Line will try to generate more revenue from services such as advertising and offer more localized products, its IPO filing said. The bulk of Line's revenue comes from games and sales of emojis and electronic stickers, including Brown the bear and Cony, his flatulent rabbit girlfriend. "Localisation of the service, of the marketing, of the stickers that we provide - this is very important," CEO Takeshi Idezawa told Reuters in April. Fund managers who have watched Line's growth slow in a crowded global messaging app market assess the plan with caution. "I'm not interested," said Yasuo Sakuma, portfolio manager at Bayview Asset Management, which manages 270 billion yen ($2.64 billion). "Its growth outlook is very poor." "Among the four countries that it's focusing on, only Indonesia has big room for growth in use," he added. "Even there, the business outlook is not that easy." Growth in Line's monthly active users has tailed off after tripling across the world over the past three years. Last year, user numbers rose just 13 million to 218 million at the end of March, the IPO filing showed. The company isn't providing much visibility about the future either - it says in its filing that limited operating history makes it "difficult" to forecast future results. Globally, Line is the seventh-most used messenger app, data from researcher Statista shows, behind the likes of Facebook's WhatsApp and Tencent's WeChat. Earthquake Aftermath The company will fix its IPO price range on Monday. There is no change to the listing's schedule following Britain's vote to leave the European Union, a Line spokeswoman said on Friday. The dual New York and Tokyo listing, set for July 14-15, would value Line at about 588 billion yen ($5.75 billion) and make it the country's largest listing since Japan Post's $12 billion offering last year. Line's likely valuation is far less than the $10 billion-$20 billion that was expected by investors when South Korean parent Naver Corp previously talked of a Line listing in 2013-2014, although Line may not have had much choice but to wait. Line declined to comment, citing a media blackout period ahead of the IPO. Line's messaging app was launched as NHN Japan in the aftermath of Japan's 2011 earthquake and tsunami to overcome downed communications, growing unexpectedly to become the country's dominant mobile messaging platform over the next few years. However, in that period, it identified what it described in its IPO filing as "material weaknesses" in controls over financial reporting. Line has now tightened board and management approval for major transactions, it said in its prospectus, and crafted a strategy focusing on Japan, Thailand, Indonesia and Taiwan, which account for more than half its users. Line has also bolstered staff numbers by recruiting over 750 workers between December 2014 and March, its IPO filing shows, with designers and engineers among the recruits. It has around 2,540 full-time employees. Pushed as value pay Idezawa, who became Line's chief executive in March last year, has been key to tightened procedures, a person familiar with the matter said. Idezawa is known for his strictness on compliance-related matters, the person added. Idezawa was previously chief executive of, internet company Livedoor, joining that company a year after it was hit by a high-profile 2006 accounting scandal. "When Line was first seriously considering an IPO around 2013, the overall company was pretty disorganised," said a person involved in the IPO. "It was very much still a venture in terms of mindset. So a lot of people were hired to strengthen the company." Line has pitched its IPO to investors in terms of value and steady returns instead of explosive growth potential. While that story has been met favourably by Japan's risk-averse retail investors - Tokyo brokerages including Daiwa Securities say retail investors have shown strong interest in Line shares - fund managers are wary of Line's ad-driven growth push. "I went to the company's meeting with investors... but nothing moved me," said a fund manager at a major Japanese asset management firm who declined to be named because of company rules against discussing individual shares. "It's not clear how it can make money out of its advertisement business." (Reuters)

Line struggles to demonstrate its growth plan

The China-led Asian Infrastructure Investment Bank (AIIB) will be different from institutions like the World Bank because it has a greater understanding of the developing world&#39;s needs, officials said on Sunday at its first annual meeting. 
 
Chinese President Xi Jinping proposed the bank two years ago and it began operations in January, with 57 founding member countries and $100 billion in committed capital, which it plans to invest in projects across the region. 
 
The AIIB, which intends to invest $1.2 billion this year, has said it is aiming to meet international standards of governance, though some members say there is still work to be done. 
 
Speaking on the final day of the bank&#39;s inaugural annual meeting, Chinese Finance Minister Lou Jiwei said the AIIB needed to establish its niche. 
 
&quot;The AIIB needs to establish its comparative advantage relative to existing multilateral development banks like the World Bank,&quot; Lou said. 
 
&quot;Compared with the Asian Development Bank, World Bank and other multilateral development banks, the AIIB&#39;s advantage lies in its keener understanding of the successful experience and lessons of developing countries&#39; years of development.&quot; 
 
The AIIB&#39;s board approved its first four deals worth $509 million on Friday, with three projects co-financed with the World Bank, the Asian Development Bank, the United Kingdom Department for International Development and the European Bank for reconstruction and development. 
 
The co-financed projects are a slum renovation in Indonesia and highway construction in Pakistan and Tajikistan. A power grid upgrade project in Bangladesh will be solely AIIB financed. 
 
AIIB President Jin Liqun said it was the focus on infrastructure that specifically marked out the bank as different and that they were committed to the concept of international best practice. 
 
&quot;The question is, how do you define international best practice? I will not agree to anything which could be considered international best practice unless this kind best practice incorporates the development experience of China and many countries in Asia and elsewhere over the last three or four decades,&quot; Jin said. 
 
&quot;So our bank would like to have the development experience, the so-called international best practice, reflecting the experience of China, India (and) so many countries in Asia. So we should have a different model of development.&quot; 
 
The AIIB is also looking to expand its numbers this year and will take applications for new members through the end of September. 
 
(Reuters)

The Asian Infrastructure Investment Bank's board approved its first four deals worth $509 million for reconstruction and development

The China-led Asian Infrastructure Investment Bank (AIIB) will be different from institutions like the World Bank because it has a greater understanding of the developing world's needs, officials said on Sunday at its first annual meeting. Chinese President Xi Jinping proposed the bank two years ago and it began operations in January, with 57 founding member countries and $100 billion in committed capital, which it plans to invest in projects across the region. The AIIB, which intends to invest $1.2 billion this year, has said it is aiming to meet international standards of governance, though some members say there is still work to be done. Speaking on the final day of the bank's inaugural annual meeting, Chinese Finance Minister Lou Jiwei said the AIIB needed to establish its niche. "The AIIB needs to establish its comparative advantage relative to existing multilateral development banks like the World Bank," Lou said. "Compared with the Asian Development Bank, World Bank and other multilateral development banks, the AIIB's advantage lies in its keener understanding of the successful experience and lessons of developing countries' years of development." The AIIB's board approved its first four deals worth $509 million on Friday, with three projects co-financed with the World Bank, the Asian Development Bank, the United Kingdom Department for International Development and the European Bank for reconstruction and development. The co-financed projects are a slum renovation in Indonesia and highway construction in Pakistan and Tajikistan. A power grid upgrade project in Bangladesh will be solely AIIB financed. AIIB President Jin Liqun said it was the focus on infrastructure that specifically marked out the bank as different and that they were committed to the concept of international best practice. "The question is, how do you define international best practice? I will not agree to anything which could be considered international best practice unless this kind best practice incorporates the development experience of China and many countries in Asia and elsewhere over the last three or four decades," Jin said. "So our bank would like to have the development experience, the so-called international best practice, reflecting the experience of China, India (and) so many countries in Asia. So we should have a different model of development." The AIIB is also looking to expand its numbers this year and will take applications for new members through the end of September. (Reuters)

China praises AIIB's greater understanding of developing world

With property prices in Britain predicted to plummet post-Brexit,&nbsp;foreign investors, especially in Asia, are already poised for a buying spree.

It is an ironic twist to the shock referendum result -- many who opted to leave the European Union saw their vote as a deterrent to outsiders looking to take advantage of economic opportunities in Britain.

The aftermath of Thursday&#39;s vote to leave the EU saw the resignation of British Prime Minister David Cameron and the collapse of the pound to a 31-year low. There was pandemonium on currency, equity and oil markets.

At around 2100 GMT Friday, sterling was down about 8.8 per cent against the dollar compared with Thursday night, and&nbsp;foreign&nbsp;exchange experts predicted more weakness ahead.

Property prices are also expected to take a hit, with reports of buyers pulling out of transactions due to market uncertainty.

But while there may be a &quot;wait and see&quot; approach for some, ambitious&nbsp;foreign investors are on the hunt for bargains while the exchange rate is so low.

&quot;Several of my opportunistic investors have said we really ought to think about this seriously, and to think whether we should take advantage of this new window in the market,&quot; said Nicholas Brooke, chairman of professional property services for the Royal Institution of Chartered Surveyors.

&quot;Anyone who&#39;s not dealing in sterling would see an opportunity.&quot;

Brooke, whose firm plays an advisory role for prospective buyers, said while many clients remained cautious, some in Hong Kong and China with &quot;substantial&quot; investment capabilities had voiced interest.

London-based international property agent Knight Frank also said&nbsp;foreign investors would be wary as they assessed the full impact of the Brexit fallout, but the drop in the pound would mean their buying power would &quot;increase significantly&quot;.

Interest would be especially strong from China, Hong Kong and Singapore, -- where investors have a long history of buying up property in Britain, especially London, the firm&#39;s Asia-Pacific specialist Nicholas Holt said.

Chinese international property portal Juwai.com predicted 30 per cent more consumer enquiries this month than in May.

The historic low of the pound against the Singapore dollar also constituted a &quot;fantastic buying opportunity&quot; for investors in the city, added Donald Han, executive director of Chesterton Singapore, a consultancy specialising in UK property. 
 
&#39;Wholehearted embrace&#39; 
 
Asian investors have long sought out both commercial and residential UK property off the back of potential for capital growth and a resilient economy.

London house prices are some of the most expensive in the world and have been on the rise over the past six years.

But in the wake of the Brexit vote, international consultancy KPMG has forecast house prices could fall five per cent nationwide and even more in the capital.

Property consultancy Jones Lang LaSalle (JLL) said capital value adjustment could be down up to 10 per cent in the next two years.

The International Monetary Fund has warned that the British economy could sink into recession next year and overall economic output would be 5.6 per cent lower than otherwise forecast by 2019, with unemployment rising back above six per cent.

However, the Brexit camp argues that the business world will adapt quickly with Britain&#39;s flexible and dynamic economy buoyed by new economic partners and selective immigration.

&quot;The UK&#39;s decision to leave the EU is an historic event and we should embrace this wholeheartedly,&quot; said Robin Paterson, joint chairman of UK Sotheby&#39;s International Realty.

He predicted increased investment from from Asia as well as the US.

Besides established investors into Britain, some areas might see new blood join the fray.

JLL predicts more buyers from India, which is already an established source of property investment into Britain.

&quot;It is very likely that many more Indians will seek to&nbsp;invest&nbsp;there,&quot; said Anuj Puri, JLL chairman and country head for India.

(AFP)

&nbsp;

It's ironic. Many Britons who opted to leave the EU thought their vote would keep outsiders out

With property prices in Britain predicted to plummet post-Brexit, foreign investors, especially in Asia, are already poised for a buying spree. It is an ironic twist to the shock referendum result -- many who opted to leave the European Union saw their vote as a deterrent to outsiders looking to take advantage of economic opportunities in Britain. The aftermath of Thursday's vote to leave the EU saw the resignation of British Prime Minister David Cameron and the collapse of the pound to a 31-year low. There was pandemonium on currency, equity and oil markets. At around 2100 GMT Friday, sterling was down about 8.8 per cent against the dollar compared with Thursday night, and foreign exchange experts predicted more weakness ahead. Property prices are also expected to take a hit, with reports of buyers pulling out of transactions due to market uncertainty. But while there may be a "wait and see" approach for some, ambitious foreign investors are on the hunt for bargains while the exchange rate is so low. "Several of my opportunistic investors have said we really ought to think about this seriously, and to think whether we should take advantage of this new window in the market," said Nicholas Brooke, chairman of professional property services for the Royal Institution of Chartered Surveyors. "Anyone who's not dealing in sterling would see an opportunity." Brooke, whose firm plays an advisory role for prospective buyers, said while many clients remained cautious, some in Hong Kong and China with "substantial" investment capabilities had voiced interest. London-based international property agent Knight Frank also said foreign investors would be wary as they assessed the full impact of the Brexit fallout, but the drop in the pound would mean their buying power would "increase significantly". Interest would be especially strong from China, Hong Kong and Singapore, -- where investors have a long history of buying up property in Britain, especially London, the firm's Asia-Pacific specialist Nicholas Holt said. Chinese international property portal Juwai.com predicted 30 per cent more consumer enquiries this month than in May. The historic low of the pound against the Singapore dollar also constituted a "fantastic buying opportunity" for investors in the city, added Donald Han, executive director of Chesterton Singapore, a consultancy specialising in UK property. 'Wholehearted embrace' Asian investors have long sought out both commercial and residential UK property off the back of potential for capital growth and a resilient economy. London house prices are some of the most expensive in the world and have been on the rise over the past six years. But in the wake of the Brexit vote, international consultancy KPMG has forecast house prices could fall five per cent nationwide and even more in the capital. Property consultancy Jones Lang LaSalle (JLL) said capital value adjustment could be down up to 10 per cent in the next two years. The International Monetary Fund has warned that the British economy could sink into recession next year and overall economic output would be 5.6 per cent lower than otherwise forecast by 2019, with unemployment rising back above six per cent. However, the Brexit camp argues that the business world will adapt quickly with Britain's flexible and dynamic economy buoyed by new economic partners and selective immigration. "The UK's decision to leave the EU is an historic event and we should embrace this wholeheartedly," said Robin Paterson, joint chairman of UK Sotheby's International Realty. He predicted increased investment from from Asia as well as the US. Besides established investors into Britain, some areas might see new blood join the fray. JLL predicts more buyers from India, which is already an established source of property investment into Britain. "It is very likely that many more Indians will seek to invest there," said Anuj Puri, JLL chairman and country head for India. (AFP)

With home prices expected to crash post-Brexit, foreign investors poised for buying spree

China&#39;s policymakers and leading economists today voiced concerns about Britain&#39;s vote to leave the European Union, with the finance minister saying it has heightened market uncertainty, though some expect a limited impact on the Chinese economy. 
 
The &quot;Brexit&quot; decision &quot;will cast a shadow over the global economy ... The repercussions and fallout will emerge in the next five to 10 years,&quot; said Lou Jiwei, China&#39;s minister of finance, at the first annual meeting of the Asian Infrastructure Investment Bank in Beijing. 
 
&quot;It&#39;s difficult to predict now,&quot; he said. &quot;The knee-jerk reaction from the market is probably a bit excessive and needs to calm down and take an objective view.&quot; 
 
Stock markets around the world plunged in the wake of the referendum. Sterling&#39;s value also plummeted. 
 
Lou&#39;s views were echoed by the head of China&#39;s top economic planning authority and other economists at the World Economic Forum (WEF) in the northern city of Tianjin. 
 
&quot;For Chinese firms that are going to invest or carry out mergers, entrepreneurs are smarter than me, and they will definitely wait and see,&quot; Xu Shaoshi, chairman of the National Development and Reform Commission, said at WEF today. 
 
&quot;The Brexit incident wil affect China&#39;s economy via investment, trade and capital,&quot; he said. &quot;But I believe the impact will not be big and relevant government departments have made contingency plans.&quot; 
 
Huang Yiping, a professor at Peking University and a member of the central bank&#39;s monetary policy committee, said it is hard to judge the direct impact of the British referendum on China&#39;s economy. 
 
&quot;If (Brexit) is an important landmark in terms of a reversal of globalisation, I think that&#39;s very bad for the world, it&#39;s very bad for China,&quot; Huang said. 
 
Li Daokui, a professor at Tsinghua University and a former adviser to China&#39;s central bank, was more optimistic on the referendum&#39;s effects on the world&#39;s second-largest economy. 
 
&quot;China is perhaps one of the least impacted economies in the world by the event of Brexit,&quot; he told an audience at WEF. 
 
&quot;The only short-term impact I can think about is the exchange rate of the Renminbi ... But I do think within a few trading sessions that situation will very quickly be subdued,&quot; Li said. 
 
Also speaking at WEF was economist Nouriel Roubini, famed for predicting the global financial crisis, who said the decision to leave the European Union &quot;creates a whole bunch of financial, economic, political and geopolitical uncertainties.&quot; 
 
It could be the &quot;beginning of the disintegration&quot; of the bloc of countries, the euro zone or the United Kingdom, said Roubini. 
 
&quot;I don&#39;t expect a global recession or another global financial crisis,&quot; he added. &quot;I think the impact of Brexit is significant but not of the same size and magnitude of the one we had 2007 to 2009.&quot; 
 
Michael Falcon, CEO of Global Investment Management Asia Pacific at JP Morgan, said he expects more market volatility but doubts the vote will derail a global recovery. 
 
&quot;It is a shock, not a crisis, and so far markets seem to be handling this pretty well,&quot; Falcon said at the WEF conference. 
 
(Reuters)

The repercussions and fallout will emerge in the next five to 10 years, said Lou Jiwei, China's finance minister

China's policymakers and leading economists today voiced concerns about Britain's vote to leave the European Union, with the finance minister saying it has heightened market uncertainty, though some expect a limited impact on the Chinese economy. The "Brexit" decision "will cast a shadow over the global economy ... The repercussions and fallout will emerge in the next five to 10 years," said Lou Jiwei, China's minister of finance, at the first annual meeting of the Asian Infrastructure Investment Bank in Beijing. "It's difficult to predict now," he said. "The knee-jerk reaction from the market is probably a bit excessive and needs to calm down and take an objective view." Stock markets around the world plunged in the wake of the referendum. Sterling's value also plummeted. Lou's views were echoed by the head of China's top economic planning authority and other economists at the World Economic Forum (WEF) in the northern city of Tianjin. "For Chinese firms that are going to invest or carry out mergers, entrepreneurs are smarter than me, and they will definitely wait and see," Xu Shaoshi, chairman of the National Development and Reform Commission, said at WEF today. "The Brexit incident wil affect China's economy via investment, trade and capital," he said. "But I believe the impact will not be big and relevant government departments have made contingency plans." Huang Yiping, a professor at Peking University and a member of the central bank's monetary policy committee, said it is hard to judge the direct impact of the British referendum on China's economy. "If (Brexit) is an important landmark in terms of a reversal of globalisation, I think that's very bad for the world, it's very bad for China," Huang said. Li Daokui, a professor at Tsinghua University and a former adviser to China's central bank, was more optimistic on the referendum's effects on the world's second-largest economy. "China is perhaps one of the least impacted economies in the world by the event of Brexit," he told an audience at WEF. "The only short-term impact I can think about is the exchange rate of the Renminbi ... But I do think within a few trading sessions that situation will very quickly be subdued," Li said. Also speaking at WEF was economist Nouriel Roubini, famed for predicting the global financial crisis, who said the decision to leave the European Union "creates a whole bunch of financial, economic, political and geopolitical uncertainties." It could be the "beginning of the disintegration" of the bloc of countries, the euro zone or the United Kingdom, said Roubini. "I don't expect a global recession or another global financial crisis," he added. "I think the impact of Brexit is significant but not of the same size and magnitude of the one we had 2007 to 2009." Michael Falcon, CEO of Global Investment Management Asia Pacific at JP Morgan, said he expects more market volatility but doubts the vote will derail a global recovery. "It is a shock, not a crisis, and so far markets seem to be handling this pretty well," Falcon said at the WEF conference. (Reuters)

China's finance minister sees 'Brexit' heightening uncertainty for markets

Talks on Britain leaving the European Union must be carried out quickly to limit uncertainty, ECB Governing Council member Francois Villeroy de Galhau said today, adding London&#39;s financial centre was at risk of losing its prized &quot;EU passport&quot;. 
 
Banks based in London rely on a so-called EU passport to operate across the bloc&#39;s capital market unhindered. Some banks have said they would shift operations to the euro zone if Britain left the EU. 
 
The City of London will not be able to keep that passport if Britain leaves the EU&#39;s single market of trade in goods and services, Villeroy told France Inter radio. 
 
&quot;There is a precedent, it is the Norwegian model of European Economic Area, that would allow Britain to keep access to the single market but by committing to implement all EU rules,&quot; he said. 
 
&quot;It would be a bit paradoxical to leave the EU and apply all EU rules, but that is one solution if Britain wants to keep access to the single market.&quot; 
 
Central banks are efficiently dealing with the fallout of Thursday&#39;s UK vote to leave the EU, said Villeroy, who is also governor of the French central bank, adding: &quot;The euro is a solid currency.&quot; 
 
&quot;What happened on Thursday is bad news, first of all for Britain,&quot; he said. &quot;Of course there will be negative consequences for the European economy but there will be much more limited than the negative consequences all experts forecast for the UK economy.&quot; 
 
Brexit does not put the French economy at any risk of contracting in the next quarters, he said, confirming past growth forecasts of at least 1.4 per cent for 2016. 
 
(Reuters)

Some London-based banks have said they would shift operations to the euro zone if Britain left the EU

Talks on Britain leaving the European Union must be carried out quickly to limit uncertainty, ECB Governing Council member Francois Villeroy de Galhau said today, adding London's financial centre was at risk of losing its prized "EU passport". Banks based in London rely on a so-called EU passport to operate across the bloc's capital market unhindered. Some banks have said they would shift operations to the euro zone if Britain left the EU. The City of London will not be able to keep that passport if Britain leaves the EU's single market of trade in goods and services, Villeroy told France Inter radio. "There is a precedent, it is the Norwegian model of European Economic Area, that would allow Britain to keep access to the single market but by committing to implement all EU rules," he said. "It would be a bit paradoxical to leave the EU and apply all EU rules, but that is one solution if Britain wants to keep access to the single market." Central banks are efficiently dealing with the fallout of Thursday's UK vote to leave the EU, said Villeroy, who is also governor of the French central bank, adding: "The euro is a solid currency." "What happened on Thursday is bad news, first of all for Britain," he said. "Of course there will be negative consequences for the European economy but there will be much more limited than the negative consequences all experts forecast for the UK economy." Brexit does not put the French economy at any risk of contracting in the next quarters, he said, confirming past growth forecasts of at least 1.4 per cent for 2016. (Reuters)

ECB's Villeroy: Brexit talks must be quick, City of London at risk of losing 'EU passport'

The S&amp;P 500 turned negative for the year-to-date on Friday as Wall Street suffered its largest selloff in 10 months after Britain&#39;s decision to leave the European Union caught traders wrong-footed. 
 
In the busiest trading volume for a single session in nearly five years, financial stocks led the decline on the S&amp;P 500 with a 5.4 per cent drop - the largest for the sector since November 2011. 
 
The S&amp;P 500 lost all the year&#39;s gains and suffered its largest decline since late August last year. 
 
Equity futures neared an 11-month high to start the overnight session as markets wrongly bet that the &quot;Remain&quot; camp would prevail in Britain&#39;s referendum, but sold off sharply as the results showed otherwise - even triggering a market stop put in place to curtail volatility. 
 
The decline during regular market hours seemed more orderly, and the S&amp;P managed to close in the area of what analysts called significant technical support, near 2,040. 
 
Still, many expect the next weeks to remain volatile. 
 
The CBOE Volatility index ended up 49 percent at 25.76, its highest level since Feb. 11 - when equities hit their lows of the year. 
 
&quot;The market has really not fully digested the second-order impacts of this,&quot; said Stephen Auth, chief investment officer at Federated Investors in New York. 
 
&quot;We are keeping our clients in dividend stocks and on a defensive strategy,&quot; he said. &quot;That&#39;s the story until we reach better risk-reward levels,&quot; which Auth said could be near the S&amp;P 500&#39;s February low near 1,830. 
 
High-dividend-paying utilities were the only S&amp;P 500 sector to end the day in the black, with a meagre 0.09 percent gain. 
 
The Dow Jones industrial average fell 611.21 points, or 3.39 percent, to 17,399.86, the S&amp;P 500 lost 76.02 points, or 3.6 percent, to 2,037.3, and the Nasdaq Composite dropped 202.06 points, or 4.12 percent, to 4,707.98. 
 
Many market participants, however, saw the broad-based decline as an opportunity for investors on the sidelines to gradually increase their stock holdings. 
 
&quot;What I see going to happen is the Federal Reserve will not raise rates in 2016, that is off the table and a market positive,&quot; said Doug Cote, chief market strategist at Voya Investment Management in New York. 
 
&quot;If you have cash on the sidelines it could be a buying opportunity but I wouldn&#39;t be changing (bonds-stocks) allocations right now,&quot; he said, adding he expects other major central bank&#39;s policies to also give the market support. 
 
The weekly declines in the S&amp;P 500 and Dow industrials, both off 1.6 percent, were the largest since February, and the Nasdaq&#39;s 1.9 percent drop was marginally lower than the previous week&#39;s. 
 
The relatively less severe weekly decline points to an unravelling of trades put in place after polls last weekend showed increasing momentum for the &quot;Remain&quot; camp in the British referendum. 
 
Traders were closely following moves in currencies, calling them the contagion mechanism between markets. The pound tumbled to near $1.32, its lowest level since 1985, before bouncing back to a loss of 8 percent at $1.3678. 
 
The decline came on fears the Britons&#39; decision to leave the EU could hurt investment and usher in many months of both political and economic uncertainty. 
 
&quot;Expect weaker investment and thereby slower economic growth to persist during the 2-3 year negotiations to leave the European Union,&quot; Deutsche Bank economists said in a Friday note. 
 
Volume in U.S. exchanges hit 15.3 billion as the trade-heavy reconstitution of the Russell indexes crossed at the market close. It was the highest volume since August 2011 according to Bats Global Markets and compares with the daily average of 6.8 billion over the last 20 trading sessions. 
 
Declining issues outnumbered advancing ones on the NYSE by a 5.47-to-1 ratio, and on the Nasdaq, a 5.20-to-1 ratio favoured decliners. 
 
The S&amp;P 500 posted 28 new 52-week highs and 12 new lows; the Nasdaq recorded 33 new highs and 107 new lows. 
 
(Reuters) 
&nbsp;

Financial stocks led the decline on the S&P 500 with a 5.4 per cent drop, the largest for the sector since November 2011

The S&P 500 turned negative for the year-to-date on Friday as Wall Street suffered its largest selloff in 10 months after Britain's decision to leave the European Union caught traders wrong-footed. In the busiest trading volume for a single session in nearly five years, financial stocks led the decline on the S&P 500 with a 5.4 per cent drop - the largest for the sector since November 2011. The S&P 500 lost all the year's gains and suffered its largest decline since late August last year. Equity futures neared an 11-month high to start the overnight session as markets wrongly bet that the "Remain" camp would prevail in Britain's referendum, but sold off sharply as the results showed otherwise - even triggering a market stop put in place to curtail volatility. The decline during regular market hours seemed more orderly, and the S&P managed to close in the area of what analysts called significant technical support, near 2,040. Still, many expect the next weeks to remain volatile. The CBOE Volatility index ended up 49 percent at 25.76, its highest level since Feb. 11 - when equities hit their lows of the year. "The market has really not fully digested the second-order impacts of this," said Stephen Auth, chief investment officer at Federated Investors in New York. "We are keeping our clients in dividend stocks and on a defensive strategy," he said. "That's the story until we reach better risk-reward levels," which Auth said could be near the S&P 500's February low near 1,830. High-dividend-paying utilities were the only S&P 500 sector to end the day in the black, with a meagre 0.09 percent gain. The Dow Jones industrial average fell 611.21 points, or 3.39 percent, to 17,399.86, the S&P 500 lost 76.02 points, or 3.6 percent, to 2,037.3, and the Nasdaq Composite dropped 202.06 points, or 4.12 percent, to 4,707.98. Many market participants, however, saw the broad-based decline as an opportunity for investors on the sidelines to gradually increase their stock holdings. "What I see going to happen is the Federal Reserve will not raise rates in 2016, that is off the table and a market positive," said Doug Cote, chief market strategist at Voya Investment Management in New York. "If you have cash on the sidelines it could be a buying opportunity but I wouldn't be changing (bonds-stocks) allocations right now," he said, adding he expects other major central bank's policies to also give the market support. The weekly declines in the S&P 500 and Dow industrials, both off 1.6 percent, were the largest since February, and the Nasdaq's 1.9 percent drop was marginally lower than the previous week's. The relatively less severe weekly decline points to an unravelling of trades put in place after polls last weekend showed increasing momentum for the "Remain" camp in the British referendum. Traders were closely following moves in currencies, calling them the contagion mechanism between markets. The pound tumbled to near $1.32, its lowest level since 1985, before bouncing back to a loss of 8 percent at $1.3678. The decline came on fears the Britons' decision to leave the EU could hurt investment and usher in many months of both political and economic uncertainty. "Expect weaker investment and thereby slower economic growth to persist during the 2-3 year negotiations to leave the European Union," Deutsche Bank economists said in a Friday note. Volume in U.S. exchanges hit 15.3 billion as the trade-heavy reconstitution of the Russell indexes crossed at the market close. It was the highest volume since August 2011 according to Bats Global Markets and compares with the daily average of 6.8 billion over the last 20 trading sessions. Declining issues outnumbered advancing ones on the NYSE by a 5.47-to-1 ratio, and on the Nasdaq, a 5.20-to-1 ratio favoured decliners. The S&P 500 posted 28 new 52-week highs and 12 new lows; the Nasdaq recorded 33 new highs and 107 new lows. (Reuters)

Largest selloff in 10 months on Wall Street after Brexit

Moody&#39;s Investors Service cut Britain&#39;s credit rating outlook to &quot;negative&quot; on Friday, saying the vote to pull out of the European Union could hurt its economic prospects. 
 
While retaining the country&#39;s overall rating at a high &quot;Aa1&quot;, Moody&#39;s said after the Brexit vote that it expects the country&#39;s growth to slow, economic policy-making to suffer and the country&#39;s finances to weaken while it struggles through the details of the breakup. 
 
&quot;During the several years in which the UK will have to renegotiate its trade relations with the EU, Moody&#39;s expects heightened uncertainty, diminished confidence and lower spending and investment to result in weaker growth,&quot; it said. 
 
&quot;Over the longer term, should the UK not be able to secure a favorable alternative trade arrangement with the EU and other countries, the UK&#39;s growth prospects would be materially weaker than currently expected.&quot; 
 
During the talks with the European Union on how to structure future political, economic and trade relations, Moody&#39;s believes that many investment and spending decisions in the country will be put on hold. 
 
Much depends on the future trade relationship between Britain and the EU. Currently trade is completely open between the two. 
 
Moody&#39;s also said that the change in government that will come with the resignation of Prime Minister David Cameron will create uncertainty over the country&#39;s financial discipline. 
 
It said that Britain&#39;s savings from not having to contribute to the EU budget will not compensate for the negative effects of lower growth. 
 
(AFP)

Country's overall rating stays at a high 'Aa1'

Moody's Investors Service cut Britain's credit rating outlook to "negative" on Friday, saying the vote to pull out of the European Union could hurt its economic prospects. While retaining the country's overall rating at a high "Aa1", Moody's said after the Brexit vote that it expects the country's growth to slow, economic policy-making to suffer and the country's finances to weaken while it struggles through the details of the breakup. "During the several years in which the UK will have to renegotiate its trade relations with the EU, Moody's expects heightened uncertainty, diminished confidence and lower spending and investment to result in weaker growth," it said. "Over the longer term, should the UK not be able to secure a favorable alternative trade arrangement with the EU and other countries, the UK's growth prospects would be materially weaker than currently expected." During the talks with the European Union on how to structure future political, economic and trade relations, Moody's believes that many investment and spending decisions in the country will be put on hold. Much depends on the future trade relationship between Britain and the EU. Currently trade is completely open between the two. Moody's also said that the change in government that will come with the resignation of Prime Minister David Cameron will create uncertainty over the country's financial discipline. It said that Britain's savings from not having to contribute to the EU budget will not compensate for the negative effects of lower growth. (AFP)

Britain's credit rating outlook cut to 'negative'

The Asian Infrastructure Investment Bank (AIIB) stressed its independence from China at its first annual meeting today, saying it plans to cooperate with other development banks and add new members, including Hong Kong.&nbsp; 
 
Chinese President Xi Jinping proposed the bank two years ago and it began operations in January, with 57 founding member countries and $100 billion in committed capital, which it plans to invest in projects across the region.&nbsp; 
 
The AIIB, which intends to invest $1.2 billion this year, said it is aiming to meet international standards of governance, although some members say there is still work to be done.&nbsp; 
 
And in response to concern that China, its biggest backer, will dominate, the AIIB said it answers to all its shareholders. 
 
&quot;China as much as other shareholders has been very supportive of the governance standards that we&#39;re setting and of the transparency around the bank&#39;s operations,&quot; AIIB vice president Danny Alexander said. 
 
AIIB&#39;s board approved its first four deals worth $509 million on Friday, with three projects co-financed with the World Bank, the Asian Development Bank, the United Kingdom Department for International Development and the European Bank for Reconstruction and Development.&nbsp; 
 
The co-financed projects are a slum renovation in Indonesia and highway construction in Pakistan and Tajikistan. A power grid upgrade project in Bangladesh will be solely AIIB financed. 
 
&quot;We are working on a number of additional projects and look forward to bringing them to our Board for its approval later this year,&quot; said AIIB President Jin Liqun. 
 
It is crucial for the AIIB to comply with multilateral agency procedures and rules, Chinese Vice-Premier Zhang Gaoli, said at the opening ceremony for AIIB&#39;s annual meeting.&nbsp; 
 
&quot;AIIB should learn from the successful experience of other multilateral agencies and forge close partnership with the World Bank, Asian Development Bank and other institutions,&quot; he said, a commitment which was echoed by the AIIB&#39;s Jin. 
 
The bank, with only 38 full-time staff, needs organization and procedures to be fleshed out, say members.&nbsp; 
 
&quot;The roles of the management and the Board should be more clearly defined. Over the past six months, the basic framework for operation took shape, but there is still much to be done,&quot; Korean finance minister and AIIB governor Ilho Yoo said, adding that it needs to develop its environmental and social framework.&nbsp; 
 
The bank&#39;s lean operation and flexibility as a new organization was a positive for the European Bank for Reconstruction and Development (EBRD), which is partnering on one of AIIB`s first deals.&nbsp; 
 
&quot;What impresses me is the efficiency they go about things. AIIB is a natural partner because they are willing and able to take risk, such as going into private public partnership structures,&quot; said Thomas Maier, the EBRD&#39;s managing director for infrastructure. 
 
Zhang also said that China will contribute $50 million to a new fund set up by the AIIB to support member countries with project preparations.&nbsp; 
 
The AIIB is looking to expand its numbers this year and will take applications for new members through the end of September. 
 
Hong Kong, despite being a special administrative region of China, has applied for membership, and Jin said he is confident Hong Kong will soon be a full member of the bank.&nbsp; 
 
Beijing has been looking for ways to support Hong Kong, which has been convulsed by political turmoil.&nbsp; 
 
(Reuters)

China, the biggest funder, addresses concern that it'll dominate the bank by insisting it's accountable to all shareholders

The Asian Infrastructure Investment Bank (AIIB) stressed its independence from China at its first annual meeting today, saying it plans to cooperate with other development banks and add new members, including Hong Kong. Chinese President Xi Jinping proposed the bank two years ago and it began operations in January, with 57 founding member countries and $100 billion in committed capital, which it plans to invest in projects across the region. The AIIB, which intends to invest $1.2 billion this year, said it is aiming to meet international standards of governance, although some members say there is still work to be done. And in response to concern that China, its biggest backer, will dominate, the AIIB said it answers to all its shareholders. "China as much as other shareholders has been very supportive of the governance standards that we're setting and of the transparency around the bank's operations," AIIB vice president Danny Alexander said. AIIB's board approved its first four deals worth $509 million on Friday, with three projects co-financed with the World Bank, the Asian Development Bank, the United Kingdom Department for International Development and the European Bank for Reconstruction and Development. The co-financed projects are a slum renovation in Indonesia and highway construction in Pakistan and Tajikistan. A power grid upgrade project in Bangladesh will be solely AIIB financed. "We are working on a number of additional projects and look forward to bringing them to our Board for its approval later this year," said AIIB President Jin Liqun. It is crucial for the AIIB to comply with multilateral agency procedures and rules, Chinese Vice-Premier Zhang Gaoli, said at the opening ceremony for AIIB's annual meeting. "AIIB should learn from the successful experience of other multilateral agencies and forge close partnership with the World Bank, Asian Development Bank and other institutions," he said, a commitment which was echoed by the AIIB's Jin. The bank, with only 38 full-time staff, needs organization and procedures to be fleshed out, say members. "The roles of the management and the Board should be more clearly defined. Over the past six months, the basic framework for operation took shape, but there is still much to be done," Korean finance minister and AIIB governor Ilho Yoo said, adding that it needs to develop its environmental and social framework. The bank's lean operation and flexibility as a new organization was a positive for the European Bank for Reconstruction and Development (EBRD), which is partnering on one of AIIB`s first deals. "What impresses me is the efficiency they go about things. AIIB is a natural partner because they are willing and able to take risk, such as going into private public partnership structures," said Thomas Maier, the EBRD's managing director for infrastructure. Zhang also said that China will contribute $50 million to a new fund set up by the AIIB to support member countries with project preparations. The AIIB is looking to expand its numbers this year and will take applications for new members through the end of September. Hong Kong, despite being a special administrative region of China, has applied for membership, and Jin said he is confident Hong Kong will soon be a full member of the bank. Beijing has been looking for ways to support Hong Kong, which has been convulsed by political turmoil. (Reuters)

China-backed AIIB seeks cooperation and new members, beyond 57 founding countries

German steel firm Thyssenkrupp and Indian steel company Tata Steel could sign a Memorandum of Understanding (MoU) on merging their European steel businesses within weeks, German business monthly Manager Magazin reported on Friday, citing inside sources. 
 
Valuations are being discussed, along with the question of whether Tata would make a payment to Thyssenkrupp - whose European steel business is larger - in the event of a 50:50 venture, the magazine reported. 
 
Neither Thyssenkrupp or Tata had an immediate comment on the report. 
 
(Reuters)

Valuations are being discussed along with the question of whether Tata would make a payment to Thyssenkrupp

German steel firm Thyssenkrupp and Indian steel company Tata Steel could sign a Memorandum of Understanding (MoU) on merging their European steel businesses within weeks, German business monthly Manager Magazin reported on Friday, citing inside sources. Valuations are being discussed, along with the question of whether Tata would make a payment to Thyssenkrupp - whose European steel business is larger - in the event of a 50:50 venture, the magazine reported. Neither Thyssenkrupp or Tata had an immediate comment on the report. (Reuters)

Thyssenkrupp, Tata may merge European steel businesses

Oil prices slumped by more than six per cent on Friday after Britain voted to leave the European Union, raising fears of a broader economic slowdown that could reduce demand for oil. 
 
Financial markets have been worried for months about what Brexit, or a British exit from the European Union, would mean for Europe&#39;s future, but were clearly not fully factoring in the risk of a leave vote. 
 
British Prime Minister David Cameron, who campaigned to remain in the EU, said he would stand down by October. 
 
Brent crude was down $1.90 at $49.01 a barrel. US crude was down $1.90 at $48.21 a barrel. 
 
Earlier in the day, both contracts were down by more than $3, or over six per cent, the biggest intra-day declines for both since April 18, when a meeting of top global oil producers failed to agree on an output freeze. 
 
Sterling sank 10 per cent in value to its weakest since the mid-1980s. The FTSE 100 fell more than eight per cent at the open, with banks among the hardest hit. 
 
&quot;In the interim, it&#39;s down for everything from equities to oil. Bad economies in the UK and Europe are not good for oil and there could be a domino effect on other economies in Asia,&quot; said IHS oil analyst Victor Shum. 
 
Some analysts said oil could face further downward pressure. 
 
&quot;Our view is that we have not yet seen the low oil price of the day with Brent likely to trade down towards $45 or lower before we have seen the worst of it,&quot; Bjarne Schieldrop, chief commodity analyst at SEB, said in note to clients. 
 
The vote to break with Europe is set to usher in deep uncertainty over trade and investment and fuel the rise of anti-EU movements across the continent. 
 
&quot;Today, it&#39;s all about sentiment and everybody looking at each and saying &#39;what&#39;s next?&#39;&quot; said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam. 
 
&quot;It will be interesting how we trade next week, because then the first impact is behind us and at some point the market should return to look at fundamentals again,&quot; Cleef added. 
 
Analysts have said that once the market refocuses on fundamentals, oil was likely to fall, given abundant stocks around the world are shrinking very slowly despite large production outages in countries like Nigeria. 
 
(Reuters)

Brent crude was down $1.90 a barrel while US crude was down $1.90 a barrel

Oil prices slumped by more than six per cent on Friday after Britain voted to leave the European Union, raising fears of a broader economic slowdown that could reduce demand for oil. Financial markets have been worried for months about what Brexit, or a British exit from the European Union, would mean for Europe's future, but were clearly not fully factoring in the risk of a leave vote. British Prime Minister David Cameron, who campaigned to remain in the EU, said he would stand down by October. Brent crude was down $1.90 at $49.01 a barrel. US crude was down $1.90 at $48.21 a barrel. Earlier in the day, both contracts were down by more than $3, or over six per cent, the biggest intra-day declines for both since April 18, when a meeting of top global oil producers failed to agree on an output freeze. Sterling sank 10 per cent in value to its weakest since the mid-1980s. The FTSE 100 fell more than eight per cent at the open, with banks among the hardest hit. "In the interim, it's down for everything from equities to oil. Bad economies in the UK and Europe are not good for oil and there could be a domino effect on other economies in Asia," said IHS oil analyst Victor Shum. Some analysts said oil could face further downward pressure. "Our view is that we have not yet seen the low oil price of the day with Brent likely to trade down towards $45 or lower before we have seen the worst of it," Bjarne Schieldrop, chief commodity analyst at SEB, said in note to clients. The vote to break with Europe is set to usher in deep uncertainty over trade and investment and fuel the rise of anti-EU movements across the continent. "Today, it's all about sentiment and everybody looking at each and saying 'what's next?'" said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam. "It will be interesting how we trade next week, because then the first impact is behind us and at some point the market should return to look at fundamentals again," Cleef added. Analysts have said that once the market refocuses on fundamentals, oil was likely to fall, given abundant stocks around the world are shrinking very slowly despite large production outages in countries like Nigeria. (Reuters)

Oil prices dive after Britain votes to leave EU

Executives at&nbsp;Asian&nbsp;automakers with factories in Britain, largely set up to export to the European Union, say they could slow investments in Britain or pause them for now, after the country voted to leave the 28-nation bloc.

Automakers, including Toyota &nbsp;and Nissan, had been among the manufacturers that have warned that a period of uncertainty would follow a Brexit vote, as trade and labour deals with Europe are renegotiated. Most on Friday estimated it could take around two years.

Toyota and Nissan had said in the run-up to the vote that continued membership of the European Union was preferable for their operations: a vote to leave would create new challenges for an industry that employs some 800,000 people in Britain.

&quot;We don&#39;t have any choice but to be more cautious with our investment decisions, including moves like whether to produce a new or significantly redesigned vehicle model in the UK,&quot; said one official at a global automaker with manufacturing capacity in Britain, speaking on condition of anonymity.

Tata Motors&#39; Jaguar Land Rover is Britain&#39;s largest carmaker, followed by Nissan, which has been in Britain for three decades and makes 475,000 cars a year in the country, most of them for export inside the European Union and beyond.

Sunderland in northern England, where Nissan has its operations, was among the constituencies that surprised pundits by voting to leave. 
 
&quot;Big question for automakers, is what kind of trade deals with the EU would be negotiated. That is the big unknown,&quot; a second executive at a global automaker said.

&nbsp;

TARIFF-FREE EXPORTS

Exports from Britain to the European Union are free of tariffs and duties. Toyota has said duties under new trading deals could be as much as 10 per cent, hitting either prices or margins, and denting sales.

Toyota produced about 190,000 cars in Britain last year. Of that, 75 per cent went to the European Union. Only 10 per cent was shipped and sold within Britain.

South Korea&#39;s auto association said it was worried a departure could revive a 10-per cent tariff on exports of passenger vehicles to UK -- unless a separate deal is negotiated.

&nbsp;&quot;This could inevitably undermine the price competitiveness of South Korean automakers in UK, as opposed to Japanese and German rivals which have production bases there,&quot; said Kim Tae-nyen, vice president at the Korea Automobile Manufacturers Association (KAMA).

Aside from Toyota, Tata and Nissan, others manufacturing in Britain include BMW, GM and Honda.

Honda produces around 140,000 vehicles per year, including the CR-V crossover SUV and Civic sedan at its plant in Swindon. Half of its production is exported to the EU.

Some industry officials have said the exit even raises the prospects of those automakers moving Britain-based manufacturing capacity elsewhere in the EU bloc.

For now, officials said efforts would turn to lobbying hard for better trade deals.

&quot;Obviously, trading deals to be worked out subsequently could be a worse situation than we have now, or better, or all the same. We don&rsquo;t know, and that&rsquo;s the problem,&quot; said the second executive.

(Reuters)

According to Toyota and Nissan, Britain's exit will create new challenges for the industry that employs 800,000 people in Britain

Executives at Asian automakers with factories in Britain, largely set up to export to the European Union, say they could slow investments in Britain or pause them for now, after the country voted to leave the 28-nation bloc. Automakers, including Toyota and Nissan, had been among the manufacturers that have warned that a period of uncertainty would follow a Brexit vote, as trade and labour deals with Europe are renegotiated. Most on Friday estimated it could take around two years. Toyota and Nissan had said in the run-up to the vote that continued membership of the European Union was preferable for their operations: a vote to leave would create new challenges for an industry that employs some 800,000 people in Britain. "We don't have any choice but to be more cautious with our investment decisions, including moves like whether to produce a new or significantly redesigned vehicle model in the UK," said one official at a global automaker with manufacturing capacity in Britain, speaking on condition of anonymity. Tata Motors' Jaguar Land Rover is Britain's largest carmaker, followed by Nissan, which has been in Britain for three decades and makes 475,000 cars a year in the country, most of them for export inside the European Union and beyond. Sunderland in northern England, where Nissan has its operations, was among the constituencies that surprised pundits by voting to leave. "Big question for automakers, is what kind of trade deals with the EU would be negotiated. That is the big unknown," a second executive at a global automaker said. TARIFF-FREE EXPORTS Exports from Britain to the European Union are free of tariffs and duties. Toyota has said duties under new trading deals could be as much as 10 per cent, hitting either prices or margins, and denting sales. Toyota produced about 190,000 cars in Britain last year. Of that, 75 per cent went to the European Union. Only 10 per cent was shipped and sold within Britain. South Korea's auto association said it was worried a departure could revive a 10-per cent tariff on exports of passenger vehicles to UK -- unless a separate deal is negotiated. "This could inevitably undermine the price competitiveness of South Korean automakers in UK, as opposed to Japanese and German rivals which have production bases there," said Kim Tae-nyen, vice president at the Korea Automobile Manufacturers Association (KAMA). Aside from Toyota, Tata and Nissan, others manufacturing in Britain include BMW, GM and Honda. Honda produces around 140,000 vehicles per year, including the CR-V crossover SUV and Civic sedan at its plant in Swindon. Half of its production is exported to the EU. Some industry officials have said the exit even raises the prospects of those automakers moving Britain-based manufacturing capacity elsewhere in the EU bloc. For now, officials said efforts would turn to lobbying hard for better trade deals. "Obviously, trading deals to be worked out subsequently could be a worse situation than we have now, or better, or all the same. We don’t know, and that’s the problem," said the second executive. (Reuters)

Asian car makers fret over uncertainty ahead after Brexit vote

World stocks headed for one of the biggest slumps on record on Friday, as a decision by Britain to leave the European Union triggered eight per cent falls for Europe&#39;s biggest bourses and a record plunge for Sterling. 
 
Such a body blow to global confidence could well prevent the Federal Reserve from raising interest rates as planned this year, and might even provoke a new round of emergency policy easing from all the major central banks. 
 
Risk assets were scorched as investors fled to the traditional safe-harbours of top-rated government debt, Japanese Yen and gold. 
 
Billions were wiped from share values as Europe saw London&#39;s FTSE drop six per cent in early deals, Germany&#39;s and France&#39;s CAC 40 slump 7.5 and nine per cent and Italian and Spanish markets plunge more than 11 per cent. 
 
Britain&#39;s big banks took a $130 billion battering with Lloyds and Barclays plunging as much as 30 per cent. EMINI S&amp;P 500 futures were down four per cent and Japan&#39;s Nikkei ended down 7.9 per cent. 
 
The British Pound collapsed no less than 18 US cents, easily the biggest fall in living memory, to hit its lowest since 1985. The Euro, in turn, slid 3.2 per cent to $1.1012 as investors feared for its very future. 
 
Having campaigned to keep the country in the EU, British Prime Minister David Cameron confirmed he would step down. 
 
Results showed a 51.9/48.1 per cent split for leaving, setting the UK on an uncertain path and dealing the largest setback to European efforts to forge greater unity since World War Two. 
 
Sterling sank a staggering 10 per cent at one point and was last at $1.3582, having carved out a range of $1.3228 to $1.5022. The fall was even larger than during the global financial crisis and the currency was moving two or three cents in the blink of an eye. 
 
&quot;It&#39;s an extraordinary move for financial markets and also for democracy,&quot; said co-head of portfolio investments of London-based currency specialist Millennium Global Richard Benson. 
 
&quot;The market is pricing interest rate cuts from the big central banks and we assume there will be a global liquidity add from them in the next few hours,&quot; he added. 
 
The shockwaves affected all asset classes and regions. 
 
The safe-haven Yen sprang higher to stand at 102.15 per Dollar, having been as low as 106.81 at one stage. The Dollar peak decline of four per cent was the largest since 1998. 
 
That prompted warnings from Japanese officials that excessive forex moves were undesirable. Indeed, traders were wary in case global central banks chose to step in to calm the volatility. 
 
The Bank of England said it would take all necessary steps to shield Britain&#39;s economy. A source told Reuters it was in touch with other major central banks. The Bank of Japan governor Haruhiko Kuroda added his bank was also ready to provide liquidity if needed to ensure market stability. 
 
Other currencies across Asia and in eastern Europe as it woke up suffered badly on worries that alarmed investors could pull funds out of emerging markets. Poland, where many of the eastern Europeans in Britain come from, saw its Zloty slump five per cent. 
 
Recession fears 
Europe&#39;s natural safety play, the 10-year German government bond, surged to send its yields tumbling back into negative territory and a new record low. 
 
MSCI&#39;s broadest index of Asia-Pacific shares outside Japan slid almost five per cent, while Shanghai stocks lost 1.1 per cent. 
 
Financial markets have been gripped for months by worries about what Brexit, or a British exit from the European Union, would mean for Europe&#39;s stability. 
 
&quot;Obviously, there will be large spill-over effects across all global economies if the &#39;Leave&#39; vote wins. Not only will the UK go into recession, Europe will follow suit,&quot; was the gloomy prediction of Matt Sherwood, head of investment strategy at fund manager Perpetual in Sydney. 
 
Investors duly stampeded to sovereign bonds, with US Treasury futures jumping over 2 points in an extremely rare move for Asian hours. 
 
Yields on the cash note fell 24 basis points to 1.49 per cent, the steepest one-day drop since 2009 and the lowest yield since 2012. 
 
As investors sought safer assets, the rally even extended to UK bonds, despite ratings agency Standard and Poor&#39;s warning it would likely downgrade the country&#39;s triple A rating if it left the EU. 
 
Yields on benchmark 10-year gilts fell 27 basis points to 1.108 per cent. 
 
Across the Atlantic, investors were pricing in even less chance of another hike in US interest rates given the Federal Reserve had cited a British exit from the EU as one reason to be cautious on tightening. 
 
&quot;It adds weight to the camp that the Fed would be on hold. A July (hike) is definitely off the table,&quot; Mike Baele, managing director with the private client reserve group at US Bank in Portland, Oregon. 
 
Fed funds futures were even toying with the chance that the next move could be a cut in US rates. 
 
Commodities likewise swung lower as a Brexit would be seen as a major threat to global growth. US crude shed $3.00 to $47.11 a barrel in erratic trade while Brent fell as much as six per cent to $47.83 before clawing back to $48.18. 
 
Industrial metal copper sank three per cent but gold galloped more than six per cent higher thanks to its perceived safe haven status. 
 
(Reuters)

The British Pound hits its lowest since 1985, the Euro slides 3.2 per cent while Sterling sinks by 10 per cent

World stocks headed for one of the biggest slumps on record on Friday, as a decision by Britain to leave the European Union triggered eight per cent falls for Europe's biggest bourses and a record plunge for Sterling. Such a body blow to global confidence could well prevent the Federal Reserve from raising interest rates as planned this year, and might even provoke a new round of emergency policy easing from all the major central banks. Risk assets were scorched as investors fled to the traditional safe-harbours of top-rated government debt, Japanese Yen and gold. Billions were wiped from share values as Europe saw London's FTSE drop six per cent in early deals, Germany's and France's CAC 40 slump 7.5 and nine per cent and Italian and Spanish markets plunge more than 11 per cent. Britain's big banks took a $130 billion battering with Lloyds and Barclays plunging as much as 30 per cent. EMINI S&P 500 futures were down four per cent and Japan's Nikkei ended down 7.9 per cent. The British Pound collapsed no less than 18 US cents, easily the biggest fall in living memory, to hit its lowest since 1985. The Euro, in turn, slid 3.2 per cent to $1.1012 as investors feared for its very future. Having campaigned to keep the country in the EU, British Prime Minister David Cameron confirmed he would step down. Results showed a 51.9/48.1 per cent split for leaving, setting the UK on an uncertain path and dealing the largest setback to European efforts to forge greater unity since World War Two. Sterling sank a staggering 10 per cent at one point and was last at $1.3582, having carved out a range of $1.3228 to $1.5022. The fall was even larger than during the global financial crisis and the currency was moving two or three cents in the blink of an eye. "It's an extraordinary move for financial markets and also for democracy," said co-head of portfolio investments of London-based currency specialist Millennium Global Richard Benson. "The market is pricing interest rate cuts from the big central banks and we assume there will be a global liquidity add from them in the next few hours," he added. The shockwaves affected all asset classes and regions. The safe-haven Yen sprang higher to stand at 102.15 per Dollar, having been as low as 106.81 at one stage. The Dollar peak decline of four per cent was the largest since 1998. That prompted warnings from Japanese officials that excessive forex moves were undesirable. Indeed, traders were wary in case global central banks chose to step in to calm the volatility. The Bank of England said it would take all necessary steps to shield Britain's economy. A source told Reuters it was in touch with other major central banks. The Bank of Japan governor Haruhiko Kuroda added his bank was also ready to provide liquidity if needed to ensure market stability. Other currencies across Asia and in eastern Europe as it woke up suffered badly on worries that alarmed investors could pull funds out of emerging markets. Poland, where many of the eastern Europeans in Britain come from, saw its Zloty slump five per cent. Recession fears Europe's natural safety play, the 10-year German government bond, surged to send its yields tumbling back into negative territory and a new record low. MSCI's broadest index of Asia-Pacific shares outside Japan slid almost five per cent, while Shanghai stocks lost 1.1 per cent. Financial markets have been gripped for months by worries about what Brexit, or a British exit from the European Union, would mean for Europe's stability. "Obviously, there will be large spill-over effects across all global economies if the 'Leave' vote wins. Not only will the UK go into recession, Europe will follow suit," was the gloomy prediction of Matt Sherwood, head of investment strategy at fund manager Perpetual in Sydney. Investors duly stampeded to sovereign bonds, with US Treasury futures jumping over 2 points in an extremely rare move for Asian hours. Yields on the cash note fell 24 basis points to 1.49 per cent, the steepest one-day drop since 2009 and the lowest yield since 2012. As investors sought safer assets, the rally even extended to UK bonds, despite ratings agency Standard and Poor's warning it would likely downgrade the country's triple A rating if it left the EU. Yields on benchmark 10-year gilts fell 27 basis points to 1.108 per cent. Across the Atlantic, investors were pricing in even less chance of another hike in US interest rates given the Federal Reserve had cited a British exit from the EU as one reason to be cautious on tightening. "It adds weight to the camp that the Fed would be on hold. A July (hike) is definitely off the table," Mike Baele, managing director with the private client reserve group at US Bank in Portland, Oregon. Fed funds futures were even toying with the chance that the next move could be a cut in US rates. Commodities likewise swung lower as a Brexit would be seen as a major threat to global growth. US crude shed $3.00 to $47.11 a barrel in erratic trade while Brent fell as much as six per cent to $47.83 before clawing back to $48.18. Industrial metal copper sank three per cent but gold galloped more than six per cent higher thanks to its perceived safe haven status. (Reuters)

World stocks in free fall as UK votes to exit EU

Bank of England governor Mark Carney said on Friday the central bank was ready to provide 250 billion Pounds ($345.93 billion) of additional funds to support financial markets after Britain voted to leave the European Union. 
 
&quot;We are well prepared for this. Her Majesty&#39;s Treasury and the Bank of England have engaged in extensive contingency planning and the Chancellor and I have remained in close contact, including through the night and this morning,&quot; he said. 
 
Carney also said the central bank will consider whether to take additional policy responses in the coming weeks. 
 
&quot;In the future we will not hesitate to take any additional measures required to meet our responsibilities as the United Kingdom moves forward,&quot; he said. 
 
Global financial markets plunged as results from Thursday&#39;s referendum showed a near 52-48 per cent split for leaving. 
 
(Reuters)

Her Majesty's Treasury and the central bank have been planning a contingency scheme, says Mark Carney

Bank of England governor Mark Carney said on Friday the central bank was ready to provide 250 billion Pounds ($345.93 billion) of additional funds to support financial markets after Britain voted to leave the European Union. "We are well prepared for this. Her Majesty's Treasury and the Bank of England have engaged in extensive contingency planning and the Chancellor and I have remained in close contact, including through the night and this morning," he said. Carney also said the central bank will consider whether to take additional policy responses in the coming weeks. "In the future we will not hesitate to take any additional measures required to meet our responsibilities as the United Kingdom moves forward," he said. Global financial markets plunged as results from Thursday's referendum showed a near 52-48 per cent split for leaving. (Reuters)

Bank of England to supply 250 billion Pounds to help markets after Brexit vote