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The world is waiting for the return of Chinese tourists

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  • UK ministers have met the heads of the health, rail and education unions in a fresh bid to stop a new round of coronavirus public sector strikesbut failed to achieve a breakthrough.

  • Unemployment hit in the euro area a New low of 10.9 million In November, while industrial production in Germany, its largest economy, increased more than expected, adding to evidence that the bloc may face only a mild recession.

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Good evening.

Today is red letter day for the world’s airlines, hotels and luxury companies: the Chinese are back.

For the past three years, it has been The largest number of tourism in the world It was effectively cut off from the rest of the world by Beijing’s strict “zero Covid” policies of mass testing, lockdown and quarantine of arrivals, but Chinese citizens are now free to travel again without fear of being quarantined when they return.

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Hong Kong It is one of the first places to take advantage. Thousands poured in both directions between the city and the mainland yesterday as internal borders reopened.

In addition to allowing families to reunite, the move is a welcome relief for the luxury retailer in Hong Kong, the lifeblood of its retail sector, which has lost its status as leader. The most expensive shopping area in the world to New York last year. On a larger scale 353 billion euros global luxury market It could benefit by 6 to 8 percent in sales this year from the return of the Chinese, according to consultancy Bain, with Japan in particular poised for an early boost.

Although limited commercial flights and a backlog of visa applications may mean the rest of the world will have to wait a little longer to feel the benefits of China’s reopening, the rewards are big: In 2019 before the pandemic hit, 155 million Chinese traveled abroad and spent $255 billion. According to Citi. The China Outbound Tourism Research Institute estimates that 18 million will travel internationally in the first half of the year, followed by 40 million in the second half.

Asian Airlines, already buoyed by the reopening of Japan in October, the obvious beneficiary. The Asia-Pacific region saw the largest increase in passenger traffic over the past year, despite being generally slower than the rest of the world to end restrictions.

It is also set to benefit from the lifting of travel restrictions Macau casinos That missed the big Chinese players who used to make up half of the gaming revenue in the city, the only place where casino gambling is legal in China.

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As Asia business editor Leo Lewis points out, the return of the “global collective giant” is not only of economic interest, but could also help Reset negative views About the state that took hold during the pandemic.

“It is perhaps no coincidence that the narrative of decoupling between China and the West makes far more sense now than it did in 2019 when Chinese business leaders, mid-level executives and shopaholic middle classes prowled the planet in their tens of millions,” Lewis writes.

It could also help change the narrative, he argues, that Beijing has suppressed global corporate voices. He concludes, “Resuming Chinese travel abroad is not a panacea for the onset of deglobalization and deglobalisation, but it may serve to energize the voices of those who wish to slow it down.”

Need to know: UK and European economy

The UK government exaggerates the latter benefits financial reforms and being “disingenuous” in saying that they were a Profits from Britain leaving the European Unionaccording to the Tory chair of a key parliamentary committee.

Ireland‘s Investment for accommodation The scheme proved very successful with wealthy Chinese. Since it began in 2012, Chinese investors, including those from Hong Kong, have accounted for more than 90 percent of successful applicants and 1.18 billion euros have been invested in total.

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Need to know: The global economy

If investors want to avoid last year’s mistake of believing the increase is over global inflation It will be short and superficial, they need to realize that the slowdown in China, the European Union and the United States is such It happens for various reasonssays investment expert Mohamed El-Erian.

Survey foreign policy experts He referred to a decade of political turmoil, and predicted that Russia would become Failed governmentChina will invade Taiwan and at least one additional country will acquire nuclear weapons.

Europe was the world’s largest importer of liquefied natural gas In 2022 as I tried Replacement of pipeline supplies from Russia, surpassing Japan and China. With Europe needing to refill storage facilities, the global LNG market is set to remain tight, which could drive up prices for gas users around the world.

Bar graph (million tons) showing the EU outperforming its competitors in LNG imports

Governor of the Central Bank of India Shaktikanta Das He told the Financial Times that he was concerned debt levels among his regional trading partners but was optimistic about his country’s growth prospects.

Need to know: business

The Financial Times revealed that Wall Street banks are preparing to announce fourth-quarter earnings Goldman Sachs can start Cut up to 3,200 jobs within days as you try to rein in costs. The cuts are the deepest Goldman has made in its recent history and more drastic than the plans of its peers. The Lex column (for premium subscribers) says earnings forecast European companies he Overly optimistic.

Despite the “big” blow from the termination of sales to Russia, Rolls-Royce Sold out last year More cars than ever before, driven by demand from the United States, its largest market. Meanwhile in China, the world’s largest electric vehicle market, Tesla friends They protested the company’s rate cutsupset that their cars had lost a great deal of their value.

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last fall in technology stock It was good news for at least one group: Short sellers. Until recently, they were being squeezed by low interest rates and the rapid rebound in stocks from the pandemic.

A $1 billion bar chart showing the largest profits and losses for US short sellers in 2022

South Korea’s leading vaccine producer said,Homeland pride” About Me China It will likely continue to use its less effective homegrown Covid stabs, even while the country has had its worst outbreaks. A glimmer of hope comes from the handful of Chinese manufacturers who are experimenting RNA messenger shots.

Lloyd’s of London Insurance Company paisley First ever launched Disaster electronic bondsenabling investors to get involved in the fast-growing business to protect organizations from ransomware strikes.

world of work

Since the balance of power in the workplace is tilted towards the employees, how is it possible managers They still assert their authority? Good management is a balance between Strong leadership and supportwrites business psychotherapist Naomi Shragai.

Rival European cities excel London When it comes to restoring activity in offices and hotels after the pandemic, according to a survey that measures Use of elevators in buildings.

Columnist Emma Jacobs He says businesses should follow e-commerce platform Shopify’s decision to purge no-nonsense and Long meetings.

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Some good news

US animal health company Dalan said it has received approval from regulators for the world’s first vaccine Honey bee protection from brood disease.

Bee's honey
The new vaccine will protect honey bees from infectious bacterial diseases that can decimate colonies. © AFP / Getty Images

work on it Discover the big ideas shaping today’s workplaces with a weekly newsletter from Work & Careers Editor Isabel Berwick. Participation here

Climate chart: an explanation – Learn about the most important weather data for the week. Participation here

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Economic

We need to pay more attention to skewed economic signals

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The writer is chair of Queen’s College, Cambridge and advisor to Allianz and Gramercy

Inflation was the dominant economic and financial issue of 2022 for most countries around the world, especially for advanced economies that have a consequential impact on the global economy and markets.

The effects have been seen in declining living standards, increasing inequality, increasing borrowing costs, stock and bond market losses, and occasional financial mishaps (fortunately small and so far contained).

In this new year, recession, both actual and feared, has joined inflation in the driving seat of the global economy and is likely to replace it. It’s a development that makes the global economy and investment portfolios subject to a wide range of possible outcomes — something that a growing number of bond investors seem to be aware of more than their equity counterparts.

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International Monetary Fund iYou will likely review soon Her economic growth forecasts again, predicting that “a third of the world will be hit by recession this year”. What is particularly notable to me about these worsening global prospects is not only that the world’s three major economic regions – China, the European Union and the United States – are slowing down together, but also that this is happening for different reasons.

In China, a chaotic exit from the wrong Covid-19 policy is undermining demand and causing more supply disruptions. Such headwinds to domestic and global economic well-being will continue as long as China fails to improve the coverage and effectiveness of its vaccination efforts. The strength and sustainability of the subsequent recovery will also require that the country more vigorously renew a growth model that can no longer rely on greater globalization.

The European Union continues to deal with energy supply disruptions as the Russian invasion of Ukraine continues. Strengthening inventory management and reorientation of energy supplies is well advanced in many countries. However, it is not yet sufficient to lift immediate constraints on growth, let alone resolve long-term structural headwinds.

The United States has the least problematic view. The headwinds to growth are due to the Fed’s struggle to contain inflation after mischaracterizing rate increases as fleeting and then initially being too timid to adjust monetary policy.

The Fed’s shift to an aggressive front-load of interest rate hikes came too late to prevent the spread of inflation in the services sector and wages. As such, inflation is likely to remain stubborn at around 4 percent, be less sensitive to interest rate policies and expose the economy to greater risk for accidents from additional policy errors that undermine growth.

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The uncertainties facing each of these three economic areas suggest that analysts should be more careful in reassuring us that recessionary pressures will be “short and shallow”. They need to be open, if only to avoid repeating the mistake of prematurely dismissing inflation as transient.

This is especially important because these diverse drivers of recessionary risk make financial fragility more threatening and policy shifts more difficult, including potentially Japan. Get out of interest rate control Policy. The range of possible outcomes is extraordinarily large.

On the one hand, a better policy response, including improving the supply response and protecting the most vulnerable populations, can counteract the global economic slowdown and, in the case of the United States, avert a recession.

On the other hand, additional policy errors and market turmoil can lead to self-reinforcing vicious cycles with rising inflation and rising interest rates, weakening credit and compressed earnings, and stressing market performance.

Judging by market prices, more bond investors are better understanding this, including by refusing to follow the Fed’s interest rate guidance this year. Instead of a sustainable path to higher rates for 2023, they believe recessionary pressures will lead to cuts later this year. If true, government bonds would provide the yield and potential for badly missed portfolio risk mitigation in 2022.

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However, parts of the stock market is still weakly bearish pricing. Reconciling these different scenarios is more important than investors. Without better alignment within markets and with policy signals, the positive economic and financial outcomes we all desire will be no less likely. They will also be challenged by the risk of more unpleasant outcomes at a time of less economic and human resilience.

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Macro hedge funds end 2022 higher, investors say, while many others take big losses By Reuters

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© Reuters. FILE PHOTO: Traders work on the trading floor of the New York Stock Exchange (NYSE) in New York City, US, January 5, 2023. REUTERS/Andrew Kelly

By Svea Herbst Baylis

NEW YORK (Reuters) – Some hedge funds betting on macroeconomic trends have boasted of double and even triple-digit gains for 2022, while other high-profile companies that have long been on technology stocks have suffered heavy losses in volatile markets, investors said.

Rokos Capital, run by Chris Rokos and one of a handful of so-called global macro companies, gained 51% last year. Fund investors this week, who asked not to be identified, said Brevan Howard Asset Management, the company where Rokos once worked, posted a gain of 20.14% and Caxton Associates returned 16.73%.

Haider Capital Management’s Haider Jupiter Fund rose 193%, an investor said.

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Data from hedge fund research showed that many macro managers have avoided crumbling stock markets that have been rocked by rapid interest rate increases and geopolitical turmoil, including the war in Ukraine, to rank among the best performers in the hedge fund industry. The company’s macro index rose 14.2% while the general index of hedge funds fell 4.25%, its first loss since 2018.

Equity hedge funds, where the bulk of the industry’s roughly $3.7 trillion in assets are invested, fared worse with a loss of 10.4%, according to HFR data. And while that beat the broader stock market’s loss of 19.4%, some high-profile funds posted even bigger losses.

Tiger Global Management lost 56% while Whale Rock Capital Management ended the year with a 43% loss and Maverick Capital lost 23%. Coatue Management ended 2022 with a loss of 19%.

But not all companies that bet on technology stocks suffered. John Thaler JAT Capital finished the year with a 3.7% gain after fees after a 33% increase in 2021 and a 46% gain in 2020.

Sculptor Capital Management (NYSE::), where founder Dan Och is fighting the company’s current CEO in court over his salary increase, posted a 13% drop.

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David Einhorn’s Greenlight Capital, which bet that Elon Musk would be forced to buy Twitter, ended the year up 37% while Rick Sandler’s Eminence Capital rose 7%.

A number of so-called multi-manager companies where teams of portfolio managers bet on a variety of sectors also boast positive returns and have been able to deliver on their promise that hedge funds can deliver better returns in distressed markets.

Balyasny’s Atlas Fund (NYSE: Enhanced) gained 9.7%, while Point72 Asset Management gained 10%. Millennium Management gained 12% while Carlson Capital ended the year with a 7% gain.

Representatives for the companies either did not respond to requests for comment or declined to comment.

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German automakers point to easing supply chain problems

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Sales at BMW and Mercedes-Benz jumped in the final months of 2022 as the German premium auto brands indicated supply chain problems plaguing the industry were abating.

Automakers around the world have experienced parts shortages since the pandemic, especially semiconductors, leaving many of them with large fleets of incomplete vehicles that can’t be delivered to customers.

BMW and Mercedes each said their full-year vehicle deliveries fell last year by 4.8 percent and 1 percent, respectively, due to Suppliers Bottlenecks as well as lockdowns in China and the war in Ukraine.

But supply pressures eased in the last quarter of the year, as BMW recorded a 10.6 percent jump in sales, with 651,798 vehicles delivered, and Mercedes fulfilling 540,800 orders, up 17 percent from the same period in 2022.

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BMW He said the main effects of supply chain bottlenecks and continued lockdowns were felt in the first six months of the year, adding that “sales were steadily picking up in the second half.”

Mercedes boss Ula Kallenius told the Financial Times last week that the list of problems in the auto supply chain was declining, but added that long waits for cars would continue into 2023.

“One chip is enough to be vital [ . . .] Missing, and then you can’t finish the car, even if you have everything else.

Both brands recorded strong sales growth electric car. Mercedes, which last week announced a plan to build 10,000 charging docks, said EV shipments grew 124 percent to 117,800 last year compared with its predecessor.

Similarly, BMW reported strong growth in electric vehicle sales, with deliveries of fully electric vehicles doubling last year to 215,755.

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Analysts at Bank of America said that sales of electric vehicles, including hybrid cars, reached a historic peak last November, with 1.1 million units sold. They attributed this largely to the upcoming phase-out of customer subsidies in Germany.

Participate in Mercedes BMW and BMW prices held steady Tuesday morning as investors priced in an image of an improving showing.

Rolls-Royce, a subsidiary of BMW, announced Monday that sales have hit a 119-year record, driven by strong demand in the United States, its largest market.

The luxury brand has been largely unaffected by the semiconductor pressure, mainly because it makes relatively few compounds and therefore needs fewer chips.

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