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(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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HSBC reported a sharp jump in profit in 2021, with all of the Asia-focused bank's regions recording a positive year, and it unveiled a new bumper USD1 billion share buyback programme. In 2021, London-headquartered HSBC reported pretax profit of USD18.91 billion, doubled from USD8.78 billion in 2020 - but coming in behind market forecasts of USD19.12 billion. Driving profits higher was the reversal of the bank's expected credit losses, which was a USD928 million gain in 2021 compared to a USD8.82 billion charge in 2020 as the lender set aside huge sums to handle the fallout from the Covid pandemic. Annual revenue slipped to USD49.55 billion from USD50.43 billion. HSBC's net interest margin in 2021 worsened to 1.20% from 1.32% in 2020 - which was in line with market forecasts.
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Shares in Alibaba slumped 3% in Hong Kong on Tuesday following a report that Beijing regulators had ordered a fresh investigation into state firms' links with the Chinese e-commerce giant's fintech arm Ant Group. China's biggest state-owned firms and banks were told to begin a new round of checks on their financial exposure and other links to Ant and its subsidiaries, Bloomberg reported, in another blow to the beleaguered company and Alibaba's billionaire co-founder Jack Ma. Since late 2020, Chinese regulators have launched a wide-ranging crackdown on alleged anti-competitive practices by Alibaba and other domestic tech giants, which saw a record-breaking planned IPO by Ant Group pulled at the last minute. Bloomberg described the fresh investigation as "by far the most thorough and wide-ranging look into deals with Ant", citing anonymous sources familiar with the matter. It is unclear what triggered the fresh scrutiny, the report said.
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InterContinental Hotels Group said trading improved significantly in 2021 as vaccination rates rose and travel restrictions were lifted around the world. For 2021, IHG swung to a pretax profit of USD361 million from a loss of USD280 million in 2020 on total revenue that was up 21% to USD2.91 billion from USD2.39 billion. IHG declared a total dividend 85.9 US cents for 2021, having paid out nothing the year before.
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Coca-Cola HBC said "effective execution" in a volatile environment drove a strong recovery in 2021. The soft drinks bottler reported 2021 net sales revenue of EUR7.17 billion, up 17% from EUR6.13 billion in 2020, with net profit of EUR547.2 million, up 32% from EUR414.9 million. Coca-Cola HBC declared a EUR0.71 dividend, up 11% from 2020. It raised its payout ratio target to 40% to 50% from 35% to 45% previously, saying this reflected its positive long-term outlook. Comparable earnings before interest and tax rose 24% to EUR831.0 million in 2021 from EUR672.3 million in 2020. Ebit margin expanded to 11.2% from 10.8% and comparable Ebit margin to 11.6% from 11.0%.
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Smith & Nephew reported a rise in annual revenue as the medical devices maker launched a share buyback programme. For 2021, Smith & Nephew posted a trading profit of USD936 million, up 37% from USD683 million in 2020 on revenue of USD5.21 billion, up 14% from USD4.56 billion. Pretax profit was USD586 million, more than doubled from USD246 million. Smith & Nephew declared a final dividend of 23.1 US cents. It also made a new commitment to return surplus cash to shareholders in the form of a regular annual buyback, expected to be between USD250 million and USD300 million in 2022. Looking ahead, Smith & Nephew is targeting underlying revenue growth of 4% to 5% for 2022. Smith & Nephew also said it has appointed Deepak Nath as its new CEO, succeeding Roland Diggelmann, who will step down by mutual agreement. Nath will take up the role on April 1 and Diggelmann will leave on March 31. Nath joins from Siemens Healthineers where most recently he was president of the German company's Diagnostics business segment.
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Antofagasta said profit had more than doubled in 2021, with revenue boosted by almost 50% on the back of higher copper prices, but it warned that production will decrease and prices will continue to stabilize in the coming year. For 2021, the Chilean miner reported profit before tax had more than doubled to USD3.48 billion, up from USD1.41 billion the last year. Revenue was USD7.47 billion, up 46% from USD5.13 billion, reflecting a 47% increase in realised copper prices. Copper sold for an average of USD4.37 per pound in 2021, up from USD2.98 per pound in the year prior. Prices reached an all-time high in May at USD4.86 per pound before stabilising. Antofagasta declared a final dividend of 118.9 cents per share, bringing the total for the year to 142.5 cents, equivalent to 100% of underlying earnings per share. The total dividend in 2020 was 54.7 cents.
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Bezons, France-based payment services provider Worldline reported a rise in income in 2021, with growth across its business and guided for another strong performance in 2022. Net income improved to EUR191 million from EUR127 million in 2020. Operating margin before depreciation and amortization, the company's preferred earnings metric, rose to EUR933 million from EUR700 million, leading to operating income rising to EUR304 million from EUR201 million.
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Fresenius said it was able to meet its improved guidance in 2021 and expects further growth in 2022. Fresenius Medical Care, a separately listed company partly owned by Fresenius, also saw sales and income rise in 2021. For 2021, Fresenius recorded net income of EUR1.82 billion, up from EUR1.71 billion. Operating income slipped to EUR4.16 billion from EUR4.39 billion. Sales rose to EUR37.52 billion from EUR36.28 billion in 2020. Fresenius Medical Care saw 2021 net income drop to EUR969 million from EUR1.16 billion, as sales slipped to EUR17.62 billion from EUR17.86 billion.
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Germany's top court has ruled that owners of new diesel cars made by Volkswagen who were affected by the so-called Dieselgate scandal may still be entitled to financial compensation despite having missed a legal deadline. The ruling applies to thousands of owners of new VW diesel cars who sued Volkswagen for damages after an initial three-year deadline. They were hoping to make use of a special provision in the German Civil Code that allows for exceptions in compensation cases. The Federal Court of Justice said the owners may still be entitled to "residual damages," with a deadline to claim of 10 years after the purchase. In this case VW must refund most of the purchase price, taking into account the kilometres already driven, and in return, the customer has to give up his car.
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MARKETS
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Oil prices rose to their highest level since 2014, with the North Sea benchmark encroaching USD100 a barrel, amid concern about the possible disruption of exports from Russia, due to Western sanctions. Meanwhile OPEC continues to reject calls to pump more crude to make up the difference. Amid concern about a full-blown invasion of Ukraine by Russia and the implication for inflation from higher energy prices, stock markets were lower globally. Wall Street reopens on Tuesday after a holiday weekend and is called lower, with the tech-heavy Nasdaq Composite index pointed down more than 2%.
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CAC 40: down 0.5% at 6,752.62
DAX 40: down 0.8% at 14,615.54
FTSE 100: up 0.1% at 7,491.60
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Hang Seng: closed down 2.7% at 23,520.00
Nikkei 225: closed down 1.7% at 26,449.61
S&P/ASX 200: closed down 1.0% at 7,161.30
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DJIA: called down 0.5%
S&P 500: called down 1.2%
Nasdaq Composite: called down 2.3%
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EUR: down at USD1.1320 (USD1.1338)
GBP: down at USD1.3580 (USD1.3607)
USD: flat at JPY114.80 (JPY114.83)
Gold: up at USD1,900.50 per ounce (USD1,896.42)
Oil (Brent): up at USD98.88 a barrel (USD95.19)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The world's largest security body, the OSCE, will hold an extraordinary meeting on Tuesday after Russian President Vladimir Putin recognised two Ukraine breakaway regions as independent and ordered in his troops. The meeting of the OSCE's Permanent Council at 1400 GMT aims to "address this breach of international law and fundamental OSCE principles," Poland, which currently holds the body's chairmanship, said. "The decision by President Putin to recognise parts of the Donetsk and Luhansk regions as independent is a clear violation of international law," it said in a statement. "This step is against OSCE commitments as well as Minsk agreements and undermines the organisation's involvement in a peaceful settlement of the conflict." Western leaders have widely condemned Putin's move late Monday to recognise the regions in eastern Ukraine. The Vienna-based Organization for Security & Co-operation in Europe has 57 members including Russia, Ukraine and the US.
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Ukrainian leader Volodymyr Zelensky demanded an immediate halt to the Nord Stream 2 project to pipe Russian natural gas to Germany via the Baltic Sea. Zelensky said Russia must be punished for its recognition Monday of Ukraine's two separatist-held regions with "immediate sanctions" that include "the complete stop of Nord Stream 2". A minister in Germany's three-way coalition government, Food & Agriculture Minister Cem Ozdemir, told broadcaster Deutschlandfunk on Tuesday that the project should not be continued. "I have never understood the project, it is a project that targets Ukraine, that increases our dependence on Russian gas," he said. When asked if he would call for a stop to the pipeline, he replied: "Absolutely."
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Consumer price inflation in Italy accelerated to a 26-year high in January, in line with market expectations, figures from Istat showed. The annual rate of consumer price inflation in Italy accelerated to 4.8% in January from 3.9% in December. The annual core inflation rate - which excludes energy and unprocessed food - edged up to 1.8% from 1.5% in December. On a monthly basis, prices were 1.5% higher in January, compared to a 0.4% increase in December from November. The harmonised index of consumer prices, used for EU-wide comparison, was unchanged in January from December, slowing from a 0.5% rise in December from November. Year-on-year, the index was instead 5.1% higher in January, following a 4.2% rise the month before.
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A US Federal Reserve official said she expects high inflation through at least the first half of 2022 and therefore backs an interest rate hike in March, though by how much would depend on data. "I support raising the federal funds rate at our next meeting in March," governor Michelle Bowman said, stressing that should the economy evolve as she expects, "additional rate increases will be appropriate in the coming months." She did not specify how big a hike she expects at this point. "I will be watching the data closely to judge the appropriate size of an increase," she said during a speech at the American Bankers Association Community Banking Conference on Monday. US inflation is sitting at its highest level in four decades, battering President Joe Biden's popularity and dealing a heavy blow to households and businesses in the world's largest economy.
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The UK government recorded a public finance surplus in January as the economy continued to reopen, figures from the Office for National Statistics showed. January is typically a month when income tax payments come in, namely from receipts of self-assessed taxes, so this often leads to a surplus. UK public sector net borrowing - excluding public sector banks - was a surplus of GBP2.9 billion in January, swinging from a deficit of GBP16.8 billion in December and a GBP2.5 billion deficit in January of last year. However, the surplus was lower than the GBP3.5 billion market forecast. The figure comes as UK Chancellor Rishi Sunak faces pressure to reverse planned increases in National Insurance contributions in April.
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All coronavirus laws in England including the legal requirement for people who test positive to isolate will end on Thursday before free universal testing is scrapped in April. Boris Johnson set out the strategy for "living with Covid" late on Monday afternoon after a Cabinet disagreement centring on funding for future surveillance of the virus disrupted his plans. The UK prime minister told the Commons it was time to "move from government restrictions to personal responsibility", but Labour warned the plan would leave the nation "vulnerable". Those who receive a positive Covid-19 test will still be advised to stay at home for at least five days, but will not be obliged to under law under the plans subject to parliamentary approval. Routine contact tracing will also end on Thursday, as will the GBP500 self-isolation payments and the legal obligation for individuals to tell their employers about their requirement to isolate.
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The UK and EU have reiterated their determination to find "durable solutions" to the Northern Ireland Protocol after a meeting on the contentious trading arrangements ended without a breakthrough. Foreign Secretary Liz Truss and European Commission Vice President Maros Sefcovic issued a joint statement after taking stock of progress in negotiations to reduce red tape associated with the disputed Irish Sea trade rules. On Monday, Truss and Sefcovic jointly chaired an EU/UK committee on the implementation of the protocol. Afterwards, Sefcovic said intensified negotiations over recent months to find an agreed settlement had so far resulted in "neither a breakthrough nor a breakdown". Sefcovic, who described his relationship with Truss as "positive", said talks would continue with a "laser focus" on practical solutions.
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Canadian Prime Minister Justin Trudeau on Monday defended his use of emergency powers to end weeks-long trucker-led protests and argued that lingering threats require the measures to remain in force for now. Trudeau's decision earlier this month to invoke the Emergencies Act for only the second time in Canada's history has been criticized as overreach by his political opponents. The Canadian Civil Liberties Union is suing the government. "This state of emergency is not over," Trudeau said in his first appearance before reporters since authorities at the weekend broke up what the prime minister called "dangerous and unlawful" protests that brought the capital Ottawa to a standstill and blocked border crossings into the US. "There continues to be real concerns about the coming days," he added.
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By Tom Waite; thomaslwaite@alliancenews.com
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