The Economist - 8 June 2024

Год выпуска: June 2024

Автор: The Economist Newspaper and The Economist Group

Жанр: Экономика/Политика

Издательство: «The Economist Newspaper Ltd»

Формат: PDF (журнал на английском языке)

Качество: OCR

Количество страниц: 80

A TRIUMPH FOR INDIAN DEMOCRACY

• This week’s shock election result will change India—ultimately for the better: leader, page 9.
• Narendra Modi could respond to electoral disappointment in two different ways, page 15.
• The heartland, and especially lower-caste voters, soured on the BJP, page 18.

Billionaires bad bet on Trump

• Supporting him risks giving wealthy donors poor returns: leader, page 10.
• What the former president’s 34 felony convictions mean for the election, page 19.

Where Ukraine is beating Russia

• Crimea is becoming a death trap for Russia's forces, page 45.

When to buy expensive stocks

• A new paper offers answers: Buttonwood, page 65.

From chatbots to robots

• Robots are benefiting from advances in artificial intelligence. This is good news: leader, page 11, and analysis, page 67.

The world this week Politics

• Narendra Modi looks likely to serve a third term as India’s prime minister, after his Bharatiya Janata Party and its allies won a slim majority. The ruling alliance won 293 seats, compared with the opposition’s 234. Mr iModi had claimed that they would win upwards of 400 seats. The BJP itself lost 63 seats compared with the last election in 2019.
• Imran Khan, a former prime minister of Pakistan, was acquitted of leaking state secrets in a ruling by the high court in Islamabad. The former cricketer will remain in jail for a separate conviction. He is appealing the case.
• South Korea said it would resume military activities along its border with the North.
• President Yoon Suk-yeol suspended the military agreement between the two Koreas after Pyongyang sent balloons carrying rubbish over the border. It called them “gifts of sincerity”. Seoul vowed to “protect the lives and safety of its people”.
• Donald Trump was convicted on all 34 counts of falsifying business records to hide hush-money payments to a former porn star before the election in 2016. Mr Trump called the trial a “disgrace” and said that “the real verdict” would come on November 5th, the day of the election. It is the first time that a former American president has been found guilty of a crime. Mr Trump, who will be sentenced on July 11th, vowed to appeal. His campaign said it raised nearly $53m in the 24 hours after the verdict, and that more than a third of the donors had given forthe first time.
• Hunter Biden’s trial in Delaware began this week. Prosecutors allege that the president’sson lied about using drugs while buying a revolver in 2018. Another trial, over allegations that he failed to pay his taxes, is due in September. It had seemed that Mr Biden might avoid the two ordeals altogether, until his plea deal with prosecutors fell apart last year.
• President Joe Biden signed an executive order that would limit asylum claims at America’s southern border with Mexico. The rule prevents people who cross the border illegally from applying for asylum once encounters with border-control officials exceed an average of 2,500 a day—a threshold that will be easily crossed.

Quick U-turn

• New York abruptly cancelled contentious plans to introduce congestion pricing on cars driving downtown. The scheme was due to begin on June 30th but has been postponed indefinitely. It had been predicted to raise $ibn annually for capital projects by New' York’s Metropolitan Transportation Authority.
• Nigel Farage, a high-profile Brexiteer, said he would take over as leader of Reform, a right-w ing insurgent party, and stand for Parliament in Britain’s general election. A stronger show ing for Reform would be more bad news for the Conservatives, who are lagging badly in the polls. The Economist's prediction model puts their chance of victory at less than 1%.
• The European Union’s voters started heading to the polls for elections to the 720-member European Parliament. Voting takes place from June 6th to 9th, but no ballots w'ill be counted until all the votes have closed. An informal coalition between centre-right, centre left and liberals is expected to again win a majority, but the parties of the populist right are likely to improve their standing. More than 350m people are eligible to vote.
• Veterans of the D-Day landings in Normandy returned to the beaches on June 6th to mark the 80th anniversary of the start of the liberation of Europe. Joe Biden, France’s Emmanuel Macron and Germany’s Olaf Scholz and Volodymyr Zelensky of Ukraine were among those attending. No Russian representative w'as invited, despite that country’s huge sacrifices in the second w'orld war.
• The African National Congress lost its parliamentary majority for the first time in the 30 years since the end of apartheid in elections on May 29th. The party, which got 40% of votes, will need a coalition if it is to form a government. Investors hope it will do so with the main opposition, the Democratic Alliance, which got 22% of votes and has sensible economic policies. There are concerns the ANC might instead form a government with radical populist parties such as the Economic Freedom Fighters or uMkhonto weSizw'e, both of which want to nationalise land and banks.
• Zambia’s creditors approved a plan to restructure some of its $13.4bn in debt, which w'ill allow the country to emerge from default after three-and-a-half years. xMeanwhile the IMF will probably augment an existing $1.3bn bail-out by providing an additional $388m in financing to the drought-strickencountry.
• Joe Biden revealed an Israeli proposal fora pause in the fighting in Gaza and the exchange of Israeli hostages held by Hamas forsome Palestinian prisoners. This would form the basis of a long-term “cessation of hostilities”. America said it was waiting for a response from Hamas, the Islamist group in Gaza. Meanwhile Israel bombed a school in Gaza, claiming it contained fighters involved in the Octo-beryth attacks. Hamas-affiliated press said the strike killed at least 27 people.
• Missile attacks by Hizbullah, the Lebanese militia-cum-political party, sparked wildfires in northern Israel and the Golan Heights. Israeli shelling started fires in Lebanon near the border. On a visit to the region, Binyamin Netanyahu, the Israeli prime minister, said Israel was prepared for “very intense action in the north”.

All rise

• Egypt announced that it would quadruple the price of subsidised bread. The subsidy was due to cost i25bn Egyptian pounds next year, more than 3% of government spending. When the government tried to reduce subsidies in 1977, deadly riots ensued. So far, the response has been muted.
• Claudia Sheinbaum was elected as Mexico’s first female president. The former mayor of Mexico City won with more than 59% of the vote forthe ruling Morena party. The country’s markets have been spooked by the huge mandate handed to Ms Sheinbaum.
• Nayib Bukele was sw orn in as president of El Salvador. He vow'ed to cure the country of its “illnesses”. Mr Bukele, who was re-elected with a huge margin in February, is popular largely thanks to his crackdown on crime. He helped change the international image of his country of 6.3m.

The world this week Business

• India’s stockmarket, which became the world’s fourth-largest earlier this year, swung wildly in the wake of a surprise election result that saw Narendra Modi’s Bharatiya Janata Party lose its majority. Having reached a record high after exit polls forecast a landslide for the BJP, the benchmark BSE Sensex index fell by 6% once the results were announced. It recovered a little the next day. The prices of shares in companies owned by Gautam Adani, a close associate of Mr Modi, were especially hard hit.
• Mexican share prices also dropped after a shock election result, with Claudia Sheinbaum winning the presidency by a bigger-than-expected margin. Investors worried that her congressional majority would allow her to change the constitution and erode checks and balances. The peso fell, too.
• America, meanwhile, is gaining a new bourse: the Texas Stock Exchange, which announced that it had raised $120m from investors including BlackRock and Citadel Securities. The exchange aims to rival the New York Stock Exchange and Nasdaq, and to host its first listing in 2026.
• Nvidia’s market capitalisation soared past $3trn, leading it to overtake Apple as the world’s second-biggest company. The chipmaker’s share price has risen so much in recent years that it is conducting a ten-for-one stock split, to make small trades easier.
• Shares in GlaxoSmithKline fell sharply after a judge in Delaware ruled that evidence linking Zantac, a heartburn treatment, to cancer cases was admissible in court. The share price of Sanofi, which sells a reformulated version of the drug, also fell.
• GameStop saw its share price jump by as much as 75% after a photo posted to Reddit seemed to show Keith Gill holding 5m shares and 120,000 call options in the company. Mr Gill was one architect of the “meme stock” craze of 2021, exhorting retail traders to buy shares in order to give hedge funds (several of which had shorted GameStop) a bloody nose. By the time trading closed on the day the photo was posted, his position was worth $260m.
• Bill Ackman sold a 10% stake in Pershing Square, the firm through which he manages a closed-end hedge fund with over$15bn in assets.The deal values his company at more than $iobn, and is thought to be a prelude to a public listing.

Chocks away!

• Boeing launched its CST-100 Starliner spacecraft from Cape Canaveral, Florida, carrying two astronauts from NASA, America’s space agency. It was only the sixth launch of a new, crewed spacecraft in NASA’s history. Boeing’s Starliner programme is a rival to one run by Elon iMusk’s SpaceX.
• An EU court ruled that McDonald’s has lost its “Big Mac” trademark for chicken burgers, though it will keep it for the better known beef recipe. The decision followed a long battle between McDonald’s and Supermac’s, an Irish competitor that claimed the trademark was preventing its expansion.
• An American court dealt the Securities and Exchange Commission a serious blow by rejecting its proposed rules to force private-equity and hedge funds to be more transparent. Championed by Gary Gensler, the regulator’s chairman, the rules would have required fund managers to send investors detailed quarterly performance and expense reports. The judge ruled that their imposition would exceed the SEC’s statutory authority.
• Widespread medical use of psychedelics looks less likely after a panel assembled by America’s Food and Drug Administration voted against the use of MDMA, the active ingredient in ecstasy, to treat post-traumatic stress disorder. That is bad news for Lykos Therapeutics, a biotech firm developing such a treatment.

Softly, softly

• The Bank of Canada lowered its policy rate from 5% to 4.75%, making it the first G7 central bank to cut rates in this cycle. Inflation has fallen to 2.7% from a peak of 8.1% in 2022. Though the central bank’s target is 2%, a softening economy may have prompted it to cut early: Canada’s unemployment rate hit 6.1% in April.
• Fears grew that America’s economy may also be slowing down, after the private sector added fewer jobs than forecast in May. The manufacturing sector contracted, too, with factory activity falling. Treasury yields dropped in response, as traders marked up the probability that the Federal Reserve would cut rates sooner rather than later.
• Global investors have withdrawn $40bn from environmental, social and governance funds so far this year, making it the first in which such funds have faced net outflows.