In Brief – N.29 – February 14, 2016

The central Bank of Japan (BOJ) stunned markets by announcing it will apply a negative interest rate on some funds that financial institutions park at the central bank, in a bid to boost lending and help revive the economy.

Chinese authorities have arrested 21 people involved in an online finance scheme which is suspected of defrauding 900,000 investors of about 50 billion yuan. The 21 people worked for Ezubao, a peer-to-peer lender widely described in Chinese state media as a Ponzi scheme.

“Draft EU renegotiation document shows real progress in all 4 areas where UK needs change but there’s more work to do,” Prime Minister David Cameron said about ongoing renegotiation talks with the EU.

BP reported a 91% decline in Q4 2015 earnings after average crude oil prices dropped to the lowest in more than a decade. The company’s shares fell the most since August 2015.

Dongfeng Renault Automotive Company (DRAC) opened a plant in Wuhan, Hubei Province, China. It will have an initial production capacity of 150,000 vehicles per year which has the potential to be doubled to 300,000 vehicles.

This is the most important Chinese acquisition ever. ChemChina offered $43 billion to buy Swiss agro-chemical Syngenta which rejected not long ago a similar move by US competitor Monsanto.

Another sign that recession might be building up? GoPro forecast revenue well below analysts’ estimates following a quarter of disappointing holiday sales, and said Chief Financial Officer Jack Lazar is stepping down.

Re-establishing European borders as a result of the migration crisis could cost France more than €10 billion per year. Undeterred and drawing a parallel with the cost of at least €50 billion of migrants in Germany, most of the French seem ready to bear the cost.

China’s foreign exchange reserves, the world’s largest, fell by $99.5 billion in January 2015, the central bank said. In all, foreign reserves fell to $3.23 trillion, the lowest level since May 2012.

12 Pacific Rim countries have set the stage for the TPP and what may become the world’s largest trading bloc. Yet the landmark free trade deal faces more roadblocks before it becomes a done deal.

The global oil surplus will be bigger than previously estimated, increasing the risk of further price losses, as OPEC members Iran and Iraq bolster production while demand growth slows, according to the IEA.

On concerns for the health of global economy, banks are likely to face increased pressure and investors are likely to continue to look to other sectors than emerging markets and energy companies.

French banks are “twice more robust than before the 2008 financial crisis,” said France’s central bank governor François Villeroy de Galhau. Also, the euro areahas the macro-prudential tools needed to overcome the excess of the financial cycle.”

Chinese editor Qihoo 360 acquired Norwegian Opera Sofware, the world’s 5th most-used web browser, in a $1.2 billion transaction through the Golden Brick fund. This is a 56% premium for shareholders on the 30-day average price of the stock.

“I am concerned about Ukraine’s slow progress in improving governance and fighting corruption, and reducing the influence of vested interests in policymaking,” said IMF chief Christine Lagarde.

Foreign economic developments (…) pose risks to US economic growth,” said Fed chair Janet Yellen. “Uncertainty about China’s exchange rate policy and the prospects for its economy (…) led to increased volatility in global financial markets,” she added.