The Economist - UK (2022-05-28)

8 TheEconomistMay28th 2022
The world this week Business

Glencore, a Swiss­based

commodities company,

resolved various long­standing

corruption allegations against

it. In America it pleaded guilty

to wide­ranging graft that the

Justice Department described

as “staggering”, involving

hundreds of millions of dollars

in bribes to officials in numer­

ous countries, and to running

a scheme to manipulate oil

prices. In Britain it indicated it

would plead guilty to bribery

connected with oil operations

in five African countries. And

in Brazil it is paying a fine for

corrupt payments to Petrobras,

the state­controlled oil compa­

ny. Gary Nagle, who took over

as chief executive last year

from Ivan Glasenberg, on

whose watch the wrongdoing

took place, stressed that Glen­

core has taken significant

steps to enhance its ethics and

compliance programme. 

A surprise profit warning from

Snap, the parent company of

Snapchat, caused its share

price to drop by more than

40%, and rattled investors in

other tech companies,

dragging down the stocks of

Alphabet, Amazon, Apple and

Meta among others. Snap

blamed a range of issues,

including high inflation. The

latest earnings season revealed

slower growth in online

spending by advertisers across

the whole tech sector. 

Abercrombie & Fitch’sstock

also swooned after it reported

an unexpected quarterly loss.

Like other retailers, a&fis

battling higher logistics costs

and a build­up in its inventory

amid the supply­chain crunch,

just as inflation bites and

customers (already skinny at

a&f) tighten their belts. 

In Britain the share prices of

leading oil­and­gas companies

and electricity suppliers fell

sharply ahead of an expected

announcement of a windfall

taxon the industry. The tax, a

u­turn from the government,

which has resisted the move

for months, will be used to

help households struggling

with rocketing energy bills

amid a cost­of­living crisis. 

SouthKorea’scentralbank

raiseditsmaininterestrateby

a quarterofa percentagepoint,

to1.75%.NewZealandupped

itsratebyhalfa point,to2%.

Refuseniks

Americanbanksandinvestors

cannolongerreceiveRussian

bondpayments, aftertheus

TreasuryDepartmentletan

exemptiontoitssanctions

regimethathadallowedthem

toprocessthepaymentsex­

pire.Themoveisintendedto

squeezefurtherRussia’sability

tomakepaymentsonitsdebt.

Theroublereacheditshighest

level against the dollar in four

years, and against the euro in

five years. The Russian cur­

rency collapsed at the start of

Russia’s invasion of Ukraine,

but has strengthened on the

back of government capital

controls to make it the world’s

best performer so far this year.

Ithasbeenboostedbythe

centralbankraisinginterest

rates,Russianexportersbeing

orderedtoconvert80%oftheir

foreigncurrencyintoroubles,

andRussiademanding

paymentforitsenergy

suppliesinroubles.

TheBritishgovernment

approvedthesaleofChelsea

footballclubtoa consortium

ledbyToddBoehly,anAmer­

icanbusinessmanwhotriedto

buytheteamin2019.Roman

Abramovich, a Russianoli­

garchwhowasinvolvedin

peacetalkswithUkrainein

March,gaveupcontrolof

Chelseawhenhewassanc­

tioned.Thegovernmentis

insistingthatheinnoway

benefitsfromthesale;the

proceedswillbeheldina bank

accountandgotocharity.

Theimplementationofa

landmarkdealtointroduce

globalstandardsforcorporate

tax, includinga minimumtax

rateof15%,willbedelayedbya

yearandnotcomeintoforce

until 2024, according to the

secretary­general of the oecd,

which brokered the pact. The

agreement, which has been

signed by more than 130 coun­

tries, faces resistance from

Republicans in the American

Senate and in some European

countries.

Theheadofresponsiblein­

vestingathsbcwassuspend­

ed,afterhesuggestedthat

politiciansandcentralbanks

wereoverstatingthefinancial

risksfromclimatechangeas

theytryto“out­hyperbolethe

nextguy”.A fewdayslaterthe

BankofEnglandpublishedits

biennialclimatestresstestand

saidthatBritishbankscould

takea hitof10­15%ontheir

profitsif theydidnottackle

therisksfromglobalwarming.

Despitetheuncertainoutlook

fortheworldeconomy,Sam-

sungGroupannounceda plan

toinvest450trnwon($356bn)

overthenextfiveyearsin

chipmakingandbiopharma­

ceuticals,creating80,000jobs.

It’sa jungleoutthere

Theoutlookwasnotsorosyfor

Gorillas, a startupthatprom­

isestodelivergroceriestoyour

doorwithinminutes,whichis

sheddinghalfthejobsatits

headquartersinBerlintocut

costs.Thefirmisalsoleaving

four European markets to

focus on Germany, Britain and

other countries where it does

most of its business. Gorillas

raised $1bn in its latest fund­

raising round, but the news on

the vine is that it has run into

stiff competition from rivals

trying to ape its business. 

Russia

Roubles per $, inverted scale

Source: Refinitiv Datastream

175

150

125

100

75

50

202 2022