The Economist UK - 10.08.2019

The EconomistAugust 10th 2019 7
The world this week Business

America officially categorised

China as a currency manip-

ulator for the first time in 25

years, after the yuan weakened

past the psychologically signif-

icant mark of seven to the

dollar, the lowest point for the

Chinese currency since the

financial crisis. The yuan

trades narrowly in China

around an exchange rate set by

the central bank. It dismissed

the idea that the yuan had been

manipulated, submitting that

its depreciation was caused

instead by “shifts in market

dynamics”, which include

“escalating trade frictions”.

Those trade frictions had

indeed escalated when Donald

Trump earlier announced 10%

tariffson an additional

$300bn-worth of Chinese

goods in the two countries’

trade war. Mr Trump said he

was punishing China for not

keeping its promise to buy

more American agricultural

goods, among other things.

Stockmarketshad a rocky

week, with the s&p500, Dow

Jones Industrial Average and

nasdaqindices recording their

worst trading day of the year so

far. Most Asian currencies

tumbled following the yuan’s

depreciation. But the yen,

considered to be a haven in

uncertain times, soared

against the dollar. The yields

on government bonds, anoth-

er safe bet, fell as investors

ploughed into the market.

Investors were also unnerved

by a wave of larger-than-ex-

pected interest-rate cuts.

India’s central bank shaved

0.35 of a percentage point off

its main rate, to 5.4%; New

Zealand’s slashed its bench-

mark rate from 1.5% to 1%; and

Thailand’s first cut in four

years left its main rate at 1.5%.

All three were pessimistic

about the prospects for growth.

A trade dispute caused sales of

cars made in Japanto plunge

in South Korealast month.

Samsung, South Korea’s big-

gest maker of smartphones

and memory chips, said it was

searching for substitute

suppliers of some essential

chemicals that Japan has tight-

ened its grip on, which South

Korea calls an embargo. This

week Japan approved its first

shipment of high-tech materi-

al to South Korea in a month.

The row was sparked by a

political spat.

The golden girl

The euselected Kristalina

Georgievaas its candidate to

head theimf, but only after the

rancorous exercise concluded

with some telephone diplo-

macy. Ms Georgieva is cur-

rently the second-highest

official at the World Bank.

Under an informal convention,

Europe gets to pick the manag-

ing director of the imf(and

America the president of the

World Bank), so Ms Georgieva

is favoured to get the job in

October, when the imfwill

choose its leader. But it must

first change a rule that says a

new managing director must

be under 65. Ms Georgieva

turns 66 on August 13th.

John Flint’s decision to step

down as chief executive of

hsbcafter just 18 months in

the job took markets by sur-

prise. His resignation was

made “by mutual agreement

with the board”, which report-

edly lost confidence in Mr

Flint’s ability to steer the bank

through increasingly choppy

waters stirred by trade ten-

sions between America and

China. Most ofhsbc’s profit

comes from Asia. The bank is

expected to take its time

choosing a successor.

A report prepared for the Inter-

governmental Panel on Cli-

mate Change suggested that a

move away from meat and

towardsplant-based diets

could help fight global warm-

ing, but it pulled back from

recommending that people

become vegetarians. Compa-

nies selling plant-based pro-

ducts have seen their share

prices soar this year.

The latest takeover in the

consolidating payments

industry sawMastercard

agreeing to buyNets, a Danish

real-time payments provider,

for $3.2bn. It is Mastercard’s

biggest acquisition to date.

Take a chance on me

Vivendi, a French media com-

pany, said it was considering

selling a stake of at least 10% of

its Universal Musicbusiness

to Tencent, a Chinese tech-

nology conglomerate, possibly

raising that to 20% at a later

date. If completed, a deal might

allow Tencent to combine its

expertise in streaming with

Universal’s vast catalogue of

artists, which include Abba,

the Beatles, Drake, Elton John

and Taylor Swift.

The Harland and Wolff

shipyard in Belfast entered

administration, marking the

probable end of a business that

built the Titanicand other

famous vessels. The yard once

employed 15,000 workers, but

now just 122 work on repairs. It

has not built a ship since 2003.

Barneys New York, a luxury

department-store chain that

opened shop in 1923, filed for

bankruptcy protection and

said it would close most of its

stores. The company is restruc-

turing its debt and expects to

keep seven stores open, in-

cluding its flagship premises

in Manhattan, made famous by

“Sex and the City”. Its insolven-

cy proves that the upheaval in

retailing is not confined to

suburban shopping malls.