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The following is a summary of top news stories Monday.
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COMPANIES
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Berkshire Hathaway has signed a definitive agreement to acquire New York City-based insurance investment group Alleghany. The Omaha, Nebraska-based insurance and industrial conglomerate will acquire Alleghany for $848.02 per share in cash for a total value of $11.6 billion. Alleghany owns multiple operating subsidiaries and manages investments, with a core position in property and casualty insurance and reinsurance. Berkshire Hathaway said the acquisition is a ‘strong strategic fit’, and Alleghany will continue to operate as an independent entity, boosted by capital and support from Berkshire Hathaway. The acquisition price represents 1.26 times Alleghany's book value at the end of 2021, and is a 29% premium to its average stock price on the New York Stock Exchange over the past 30 days, Berkshire Hathaway said. The boards of directors at both companies have unanimously approved the acquisition, which is expected to close in the fourth quarter of this year.
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Troubled Chinese property developer giant China Evergrande and all its units suspended trading in Hong Kong Monday morning, according to a notice to the stock exchange. China's property firms have struggled in the wake of Beijing's drive to curb excessive debt in the real estate sector, as well as rampant consumer speculation. Among those embroiled in the crisis is Evergrande, one of the country's largest developers, which has been involved in restructuring negotiations after racking up $300 billion in liabilities. On Monday, the company announced that trading will be ‘halted’ without giving a reason. Shares of Evergrande Property Services Group and China Evergrande New Energy Vehicle Group were suspended. The suspension the second this year comes ahead of an expected $2 billion repayment obligation on Wednesday, and another next month of $1.4 billion.
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Canada's Barrick Gold said it has agreed to a deal with authorities in Pakistan that will see work at the Reko Diq copper and gold mine resume, though London-listed peer Antofagasta will eventually step aside as a stakeholder. Antofagasta will exit the project and be replaced by state-owned enterprises in Pakistan. Work at the asset was suspended back in 2011 due to a dispute about the legality of the licensing process. Antofagasta's exit process will see the project reconstituted under Tethyan Copper Co, a joint-venture controlled by Antofagasta and Barrick. A consortium of state-owned firms in Pakistan will then acquire shares in the TCC unit that owns the project, in a $900 million deal. ‘Proceeds will be distributed to Antofagasta in return for its exit from the TCC holding structure,’ Antofagasta said. ‘If the conditions to closing are satisfied during 2022, the company would expect to receive those proceeds during 2023,’ it said. A roughly $11 billion penalty imposed on Pakistan by the International Centre for the Settlement of Investment Disputes, part of the World Bank, will be waived, Pakistan Prime Minister Imran Khan tweeted.
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Saudi Arabian Oil said net profit multiplied in 2021, due to higher crude prices, as global economic growth recovered from a pandemic induced downturn. The announcement on Sunday came hours after Yemen's Huthi rebels against whom Saudi Arabia leads a military coalition targeted several locations, including Aramco facilities, in cross-border armed drone attacks. Aramco did not say whether the attacks caused damage. ‘Aramco's net income increased by 124% to $110.0 billion in 2021, compared to $49.0 billion in 2020,’ the company said in a statement. Aramco achieved a net income of $88.2 billion in 2019 before the coronavirus pandemic hit global markets.
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Three companies have lodged a complaint with the European Commission against Microsoft, accusing the US technology giant of anti-competitive practices in its cloud services, sources told AFP on Saturday, confirming media reports. Microsoft is ‘undermining fair competition and limiting the choice of consumers’ in the computing cloud services market, said one of the three, French company OVHcloud, in a statement to AFP. The companies complain that under certain clauses in Microsoft's licensing contracts for Office 365 services, tariffs are higher when the software is not run on Azure cloud infrastructure, which is owned by the US group. In a statement to AFP, Microsoft said ‘European cloud service providers have built successful business models on Microsoft software and services’ and had many options on how to use that software.
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Nestle insisted it is not making any profits in Russia after Ukrainian President Volodymyr Zelensky accused the Swiss nutrition firm of doing business as usual. In a speech live-streamed to a rally outside the Swiss parliament in Bern on Saturday, Zelensky urged Swiss companies to stop doing business in Russia and condemned firms that carried on regardless despite the siege of Mariupol. He singled out Nestle and their ‘good food, good life’ slogan. ‘Business works in Russia even though our children are dying and our cities are being destroyed,’ he said. But a Nestle spokeswoman said many of the firm's activities in Russia had been wound down, following the Kremlin-ordered invasion of neighbouring Ukraine on February 24.
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MARKETS
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Stock prices were in positive territory near midday in Europe on Monday despite a negative lead from Europe and a lower call for Wall Street. The FTSE 100 index was outperforming, let by its two big oil stocks, with Shell up 3.0% and BP up 2.5% in response to Brent oil moving back above $110 a barrel.
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CAC 40: up 0.1% at 6,628.99
DAX 40: up 0.1% at 14,422.76
FTSE 100: up 0.6% at 7,446.35
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Hang Seng: down 1.0% at 21,199.50
Nikkei 225: Tokyo market closed for holiday.
S&P/ASX 200: closed down 0.2% at 7,278.50
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DJIA: called down 0.3%
S&P 500: called down 0.2%
Nasdaq Composite: called down 0.3%
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EUR: soft at $1.1055 ($1.1061)
GBP: down at $1.3145 ($1.3178)
USD: firm at JP¥119.22 (JP¥119.15)
GOLD: down at $1,925.60 per ounce ($1,938.46)
OIL (Brent): up at $111.30 a barrel ($107.51)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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China's central bank left its key interest rate unchanged, as expected. The one-year loan prime rate was held at 3.7%. The five-year rate also was unmoved at 4.6%, the People's Bank of China said. The loan prime rate is a lending reference rate set monthly by 18 banks. The People's Bank of China revamped the mechanism to price loan prime rate in August 2019, loosely pegging it to the medium-term lending facility. It is the second successive meeting the central bank has kept its key interest rate unchanged. It had cut interest rates in both January and December.
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Hong Kong will resume international flights from nine countries including the US and the UK in April, city leader Carrie Lam said. After the highly transmissible Omicron variant emerged in January, authorities quickly put in place flight bans from eight countries deemed high-risk including the US, Britain, France and India and in February added a ninth, Nepal. But infections climbed rapidly within the finance hub despite tightening social distancing measures, and in three months Hong Kong recorded more than a million cases and 5,600 deaths. On Monday, Lam said starting April 1, Hong Kong will remove flight bans - known as a 'circuit breaker' for the nine countries. ‘The circuit-breaker...is inopportune now,’ she said during a press conference.
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China's ambassador to the US on Sunday said his country was not sending weapons to Russia for use in Ukraine, but he did not definitively rule out the possibility Beijing might do so in the future. In a lengthy phone call on Friday, US President Joe Biden warned his Chinese counterpart Xi Jinping that there would be ‘consequences’ if Beijing provided material support to Moscow as it prosecutes its war against Kyiv. Asked Sunday on CBS whether China might send money or weapons to Russia, Ambassador Qin Gang spoke about the present, saying: ‘There is disinformation about China providing military assistance to Russia. We reject that.’ Instead, ‘what China is doing is sending food, medicine, sleeping bags and baby formula, not weapons and ammunition to any party,’ he said.
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Ukraine has rejected an ultimatum to surrender the besieged port city of Mariupol to Russian forces, its deputy prime minister told Ukrainian media Monday. ‘There can be no talk of surrendering weapons. We have already informed the Russian side of this,’ Iryna Vereshchuk told Ukrainska Pravda newspaper. ‘It's a deliberate manipulation and it's a real hostage situation,’ she added of the demand. Russia gave the city an ultimatum late Sunday, urging its defenders to surrender before 05:00 am on Monday. ‘We call on units of the Armed Forces of Ukraine, territorial defence battalions, foreign mercenaries to stop hostilities, lay down their arms and, along the humanitarian corridors agreed with the Ukrainian side, enter the territories controlled by Kyiv,’ said Mikhail Mizintsev, head of the Russian National Defence Control Centre.
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France has frozen and seized assets of Russian oligarchs to the tune of around €850 million. Property worth €539 million had been blocked, French Economy Minister Bruno Le Maire told radio station RTL. Another €150 million from private accounts at French banks have been frozen and two yachts worth €150 million have been seized, he said. France established a taskforce to implement EU sanctions against Russian oligarchs or those close to President Vladimir Putin. It is tasked with finding their assets in France and identifying the owners of bank accounts, luxury villas and yachts, which is a complicated endeavour due to the many shell companies used to hide identities.
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Germany has committed to ‘fast track’ the construction of two liquefied natural gas terminals as part of a new long-term deal with Qatar as it looks to reduce dependence on Russian gas, the Gulf state said. Economic Affairs Minister Robert Habeck secured the accord during talks in Doha with its emir and energy minister who have been pressing European nations to strike long-term deals to guarantee their supplies. European states have been forced to turn to Qatar in recent months as they seek an LNG alternative to Russian gas in the wake of Moscow's invasion of Ukraine. Qatar has insisted on long contracts because of the huge cost of investing in gas production. Already one of the world's top three LNG exporters, Qatar plans to increase production by 50% by 2027.
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UK Chancellor Rishi Sunak is reportedly gearing up to slash fuel duty in his spring statement as UK Prime Minister Boris Johnson pursues long-term measures to guard against future energy bill pressures. Sunak appeared on Sunday to hint at help for motorists in his so-called 'mini-budget', with measures to prevent filling up cars from being ‘prohibitively expensive’ expected to be unveiled on Wednesday. There are suggestions the chancellor could temporarily cut fuel duty by as much as 5p per litre to support families and businesses through the cost of living crisis, PA reported. Forecourt prices have risen sharply since Russia's invasion of Ukraine, with average prices at a record 165.9p per litre for petrol and 177.3p per litre for diesel. With pressure mounting on Sunak to act, he told the BBC on Sunday that ‘of course’ he was prepared to step-in to help those on tightly-squeezed budgets. However, the No 11 incumbent added that he ‘can't solve every problem’ as he conceded Britons faced a ‘difficult’ time amid ballooning inflation.
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UK house prices registered their largest March increase for nearly 20 years, figures by property portal Rightmove showed. UK house prices hit a record high of £354,564 in March, up 1.7% monthly. It was the largest monthly increase in March since 2004. On an annual basis, prices surged 10%, the chunkiest annual increase since June 2014. ‘This unprecedented price level is being stoked by the greatest imbalance between buyer demand and the number of properties available for sale that we have ever measured at this time of year. This is the strongest spring sellers' market that we have ever seen in several metrics,’ Rightmove said.
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