2019-08-24 The Economist Latin America

6 The EconomistAugust 24th 2019
The world this week Business

The Business Roundtable,

America’s foremost associa-

tion of chief executives, caused

a stir when it redefined the

purpose of a company, ditch-

ing the decades-old orthodoxy

that increasing shareholder

value should be the only

objective. Now, the bosses say,

companies should also look

out for the interests of custom-

ers, workers, suppliers and

communities, and aim to

increase diversity and protect

the environment. The state-

ment was signed by almost 200

ceos, encompassing relative

upstarts, such as Amazon and

Apple, as well as companies

that trace their roots back well

over 100 years, including

ExxonMobil, General Motors,

JPMorgan Chase and Macy’s.

The minutes from the Federal

Reserve’slatest meeting re-

vealed splits over whether to

lower its main interest rate.

The central bank opted for a cut

of a quarter of a percentage

point, but two of the ratesetters

wanted a half-point cut. Others

wanted to hold rates steady.

Germany’scentral bank

warned that there was a real

risk the country could slip into

recession, describing the

economy as “lacklustre”. The

Bundesbank pointed to data

showing that industrial

production is still slowing.

Thailand’sgovernment

announced a $10bn stimulus

package to spur growth in the

economy, which has been hit

by a surging currency, leading

to a slump in exports. gdprose

by 2.3% in the second quarter

compared with the same three

months last year, the slowest

rate since mid-2014. The stim-

ulus measures include in-

centives for Thais to holiday in

their country, as well as extra

support for farmers, small

businesses and the poor.

In a move that it described as a

“market-based reform”,

China’s central bankset a new

benchmark interest rate, the

Loan Prime Rate, which will

more closely resemble what

commercial banks pay it to

borrow.

Americanregulatorsapproved

aneasingoftherestrictionson

tradingbybanksthathadbeen

introducedundertheVolcker

ruleduringthefinancialcrisis.

Thechanges,firstmootedin

May2018,simplifythelegal

definitionsofwhatconstitutes

proprietarytrading,where

banksusetheirownmoneyto

invest.Criticscontendthat

weakeningtherulewillallow

banksonceagaintoengagein

riskybetsthroughopaque

financialinstruments.

Drop the pilot

Cathay Pacific’sshare price

had another turbulent week

following the surprise resigna-

tion of Rupert Hogg, its British-

born chief executive. Based in

Hong Kong, the airline has

become enmeshed in the city’s

recent political strife. China’s

state-run press has called for a

boycott of Cathay because of its

staff’s participation in ongoing

street protests. Separately,

Alibabahas reportedly post-

poned a blockbuster listing of

shares on the Hong Kong

exchange in part because of the

political uncertainty.

America’s Commerce Depart-

ment extended the exemption

period under which some

American companies can

conduct business with

Huawei, to November 19th.

This is primarily to allow rural

telecom providers more time

“to wean themselves off” the

Chinese maker of telecoms

equipment, which has been

slapped with a ban over

national-security concerns.

SoftBankwas reported to be

planning to lend staff up to

$20bn so that they can buy

stakes in Vision Fund 2. That

would come on top of the

$38bn that the Japanese con-

glomerate is itself ploughing

into the venture-capital pro-

ject, raising questions about

SoftBank’s exposure to poten-

tially risky tech startups.

A long stretch of cost-cutting

and the sale of its shale-gas

business boosted the fortunes

of bhp. The mining company

reported underlying income of

$9.1bn for the 12 months end-

ing June, its best annual profit

in five years, and returned a

record dividend to share-

holders. Although demand for

bhp’s iron ore, copper and coal

is still strong in China, it

flagged trade tensions as a

potential threat to business.

As it works towards restoring

investor confidence following

its troubled acquisition of

Monsanto, Bayer agreed to sell

its animal-health business for

$7.6bn. The German drugs and

chemicals group recently sold

its Coppertone sun-cream unit

and Dr Scholl’s foot-care

division, bringing in more

cash. Bayer faces a host of legal

claims that its Roundup

weedkiller, which it inherited

when it took over Monsanto,

causes cancer.

They’re over here for the beer

The weakness of the pound,

which lowers the cost of buy-

ing British assets to overseas

investors, was reportedly one

of the factors behind an offer

from CK Asset Holdings, a

property investment firm

based in Hong Kong, for

Greene King, a pub chain. The

deal is worth £4.6bn ($5.6bn).

Founded in 1799, Greene King

operates around 2,700 pubs,

which CK Asset believes will

continue to form a central part

of British culture long after

Brexit. Cheers to that.