Los Angeles tops Shanghai as one of the biggest financial centers in the world

Los Angeles tops Shanghai as one of the biggest financial centers in the world

Los Angeles is already the center of the entertainment world. Now it’s taking on a bigger role in the financial universe.

The California city has moved up to number six on the Global Financial Centres Index (GFCI), a list of the world’s top financial centers, topping Shanghai for the first time and moving the Chinese city down a notch.

The list, assembled by think tanks Z/Yen Partners and the China Development Institute, looks at 120 financial centers around the world, ranking them based on an online questionnaire from thousands of professionals in the industry.

New York, not surprisingly, once again topped the list (as it has been since 2018) and London took the number two spot. Singapore once again ranked third, topping Hong Kong.

There was, however, a fair bit of upheaval in the most recent rankings. Chicago, Boston, and Seoul entered the top 10, replacing Paris, Shenzhen, and Beijing. And, while they failed to make the top 10, Atlanta and San Diego both rose more than 10 places in the rankings.

“While there is considerable variation across centres, the index suggests that confidence in financial centres and the world economy remains high, with a recognition that inflation levels are falling and economic growth generally secure, even with the instability caused by the continuing war in Ukraine,” Dhanesswurnath Thakoor, CEO of FSC Mauritius, wrote in the report’s foreward.

Here’s how the Top 10 shook out, along with their ranking in last year’s list.

  1. New York, US   (1)
  2. London   (2)
  3. Singapore   (3)
  4. Hong Kong   (4)
  5. San Francisco   (5)
  6. Los Angeles   (7)
  7. Shanghai   (6)
  8. Chicago   (12)
  9. Boston   (14)
  10. Seoul   (11)

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Deutsche Bank shares slide 13% after sudden spike in the cost of insuring against its default

Deutsche Bank shares slide 13% after sudden spike in the cost of insuring against its default

Deutsche Bank shares slide as cost of insuring against its default rises

Deutsche Bank shares fell by more than 13% on Friday morning following a spike in credit default swaps on Thursday night, as concerns about the stability of European banks persisted.

The German lender’s shares retreated for a third consecutive day and have now lost more than a fifth of their value so far this month. Credit default swaps — a form of insurance for a company’s bondholders against its default — leapt to 173 basis points on Thursday night from 142 basis points the previous day.

The emergency rescue of Credit Suisse by UBS, in the wake of the collapse of U.S.-based Silicon Valley Bank, has triggered contagion concern among investors, which was deepened by further monetary policy tightening from the U.S. Federal Reserve on Wednesday.

A logo stands on display above the headquarters of Deutsche Bank AG at the Aurora Business Park in Moscow, Russia.

Andrey Rudakov | Bloomberg | Getty Images

Swiss and global regulators and central banks had hoped that the brokering of Credit Suisse’s sale to its domestic rival would help calm the markets, but investors clearly remain unconvinced that the deal will be enough to contain the stress in the banking sector.

Deutsche Bank’s additional tier one (AT1) bonds — an asset class that hit the headlines this week after the controversial writedown of Credit Suisse’s AT1s as part of its rescue deal — also sold off sharply.

Deutsche led broad declines for major European banking stocks on Friday, with German rival Commerzbank shedding 9%, while Credit Suisse, Societe Generale and UBS each fell by more than 7%. Barclays and BNP Paribas both dropped by more than 6%.

Deutsche Bank has reported 10 straight quarters of profit, after completing a multibillion euro restructure that began in 2019, with the aim of reducing costs and improving profitability. The lender recorded an annual net income of 5 billion euros ($5.4 billion) in 2022, up 159% from the previous year.

Its CET1 ratio — a measure of bank solvency — came in at 13.4% at the end of 2022, while its liquidity coverage ratio was 142% and its net stable funding ratio stood at 119%.

Deutsche Bank declined to comment.

Spillover risk

Financial regulators and governments have taken action in recent weeks to contain the risk of contagion from the problems exposed at individual lenders, and Moody’s said in a note Wednesday that they should “broadly succeed” in doing so.

“However, in an uncertain economic environment and with investor confidence remaining fragile, there is a risk that policymakers will be unable to curtail the current turmoil without longer-lasting and potentially severe repercussions within and beyond the banking sector,” the ratings agency’s credit strategy team said.

“Even before bank stress became evident, we had expected global credit conditions to continue to weaken in 2023 as a result of significantly higher interest rates and lower growth, including recessions in some countries.”

Moody’s suggested that, as central banks continue their efforts to reel in inflation, the longer that financial conditions remain tight, the greater the risk that “stresses spread beyond the banking sector, unleashing greater financial and economic damage.”

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UK retail sales jump as consumer confidence improves

UK retail sales jump as consumer confidence improves

UK retail sales jumped in February, rebounding for the second successive month, while consumer confidence increased in March, according to data published on Friday.

The figures come despite rising inflation across the UK and a series of interest rate increases from the Bank of England.

The volume of retail sales, or the amount of goods sold in shops, increased 1.2 per cent between January and February, following a 0.9 per cent increase the previous month, according to figures from the Office for National Statistics. The figure was well above analyst forecasts of a 0.5 per cent increase.

Separately, research group GfK said its index of consumer confidence, a closely watched measure of how people view their personal finances and wider economic prospects, had risen this month by two points to -36.

The reading was the highest since March 2022 and in line with analyst forecasts, but it remained well below zero, indicating an overall decline in confidence.

Respondents to the survey, which ran between March 1 and 14, were more optimistic about the year ahead, with the sub-index measuring their general outlook on the future economic situation increasing by 3 points to -40.

But Joe Staton, client strategy director at GfK, said the overall improvement masked “continuing concerns among consumers about their personal financial situation”.

Line chart of Consumer confidence index showing UK consumer confidence grew in March

Respondents’ forecast for their personal finances in the next year fell three points to -21, pointing to the fact that “wages are not keeping up with rising prices and the cost of living crisis remains a stark reality for most”, said Staton.

Overall, consumer confidence in March was five points lower than in the same month in 2022, as soaring energy bills, higher interest rates and food prices squeezed household budgets over the past year.

The GfK data followed confirmation on Wednesday from the Office for National Statistics that consumer price inflation rose to 10.4 per cent in February, up from 10.1 per cent in January.

The unexpected uptick in inflation has reinforced fears that price rises are increasingly being driven by domestic pressures in the services sector, which tend to be more persistent than the external shock of high energy prices.

“Just having enough money to live right and pay the bills remains the number one concern for consumers across the UK,” said Staton.

Nevertheless, GfK noted that consumers in March reported a slight uptick in their willingness to make expensive purchases, as well as in the likelihood that they would put money into savings accounts.

Ashley Webb, UK economist at Capital Economics, a research company, said that “even though real household incomes have been eroded due to high inflation, households appear to have supported their real spending by using their pandemic savings”. She added that resilience in the labour market had also lifted consumer morale.

The survey comes a day after the Bank of England raised interest rates by 0.25 percentage points to 4.25 per cent, marking the central bank’s 11th consecutive increase since December 2021 in response to high inflation.

Webb said that while further rises in the base rate were “likely to weigh on consumer confidence, we don’t expect interest rates to rise much further from here.

“Instead, we expect the easing in inflation and the resultant boost in real household incomes will support consumer confidence this year.”

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