Finance
South Korea is not worried about ‘dramatic’ capital outflows for now, finance minister says
South Korea’s finance minister has shrugged off short-term dangers of capital outflows from the Asian financial system as gaps in world charges widen.
SeongJoon Cho | Bloomberg | Getty Photographs
South Korea’s finance minister has shrugged off short-term dangers of capital outflows from the Asian financial system as gaps in world charges widen.
Chatting with CNBC on the Group of 20 assembly in Bali, Choo Kyung-ho stated capital outflows from a rustic do not happen because of a single financial driver — resembling rate of interest gaps — since traders are additionally swayed by different components, just like the power of an financial system.
Choo, who can also be the nation’s deputy prime minister, acknowledged there are considerations the U.S. could also be headed for extra aggressive charge hikes, and the widening charge hole might set off capital outflows from South Korea.
“The speed hole has occurred earlier than a few occasions, however we did not expertise any main capital outflows,” he stated Friday, in keeping with CNBC’s translation. “Based mostly on that, I believe capital outflow would not occur merely due to a charge differential.”
Capital outflows happen when property and cash go away one nation for one more attributable to higher funding returns, resembling increased rates of interest.
In June, the U.S. Federal Reserve elevated benchmark rates of interest by 75 foundation factors, its most aggressive charge hike since 1994.
The U.S. Federal Reserve is poised to make one other main charge hike at its coming July assembly with some merchants betting final week on a rise as excessive as 100 foundation factors, after U.S. client inflation hit a 40-year excessive of 9.1%.
Fundamentals are key
“An important issues are an financial system’s fundamentals, whether or not the financial system can present reliability to markets. These are the components that transfer capital,” Choo instructed CNBC’s Martin Soong.
Nonetheless, the South Korean finance minister stated the Fed’s aggressive rate of interest hikes — an try and rein in inflation — remains to be trigger for concern. The rising distinction in borrowing prices between the U.S. and South Korea might speed up capital flows between the 2 nations down the street, he added.
… I’m not apprehensive about any dramatic capital outflows.
Choo Kyung-ho
South Korea finance minister
Latest capital inflows into the South Korean financial system, notably into the treasury markets, have additionally helped mitigate considerations of an outward capital flight, Choo added.
“South Korea’s financial system is experiencing a smaller moderation in comparison with the worldwide financial system. And it’s nonetheless on a restoration path,” he stated.
“That is why I’m not apprehensive about any dramatic capital outflows.”
Final week, the Financial institution of Korea acknowledged there have been dangers of capital outflows when it delivered a historic half-point rate of interest enhance in a bid to rein in rising costs, as inflation soared to its quickest tempo in 24 years.
Considerations of capital outflows, or capital flight, are beginning to emerge as central banks globally race to boost rates of interest in an effort to curb rising inflation.
The disparity in charges between markets — particularly with some markets just like the U.S. favoring extra aggressive charge hikes — can begin to drive scorching cash flows as traders seek for higher returns.
Incidents of capital flight previously embody actions of cash reacting to U.S. quantitative easing measures after the sub-prime disaster, which included elevated liquidity and decrease rates of interest.
The weakening of the U.S. greenback pressured capital into different markets resembling rising economies in Asia, elevating inflationary pressures and appreciating the currencies in these markets.
Sizzling cash outflows in Asia?
Economists have began to warn about this spherical of scorching cash flows.
Mizuho Financial institution analysts stated in a observe final week there have been considerations of capital outflows from India, notably because the U.S. is actively elevating rates of interest and weaknesses are showing in India’s financial system.
India posted a document $25.6 billion commerce deficit in June, as crude oil and coal imports surged.
“It will exacerbate unstable capital outflows, at a time when the US Fed is already dedicated to aggressive charge hikes, implying higher INR depreciation pressures,” stated analysts Vishnu Varathan, Lavanya Venkateswaran and Tan Boon Heng.
“The Reserve Financial institution of India, conscious about this predicament, is bracing for additional charge hikes.”
Thailand too might take into account extra charge hikes to maintain up with Fed charge rises amid a depreciating Thai baht which “threatened to worsen imported inflation and exacerbate capital outflows in an opposed suggestions loop”, the analysts stated.
The Chinese language financial system might additionally expertise elevated pressures in capital outflows because of U.S. charge hikes though China’s personal muted financial system was the extra seemingly driver for cash flows, stated Larry Hu, Macquarie Group’s chief China economist, stated in a observe final month.
Is the dragon slain? Or just wounded?
Inflation has been the scourge of the economy for the last three years. It spiked from a benign 1.4% when President Biden took office in 2021 to a searing 9% some 18 months later. The Federal Reserve took aim with speedy interest rate hikes, and it seemed to work. By September, inflation was down to 2.4%, almost in the normal zone.
Then, an upward blip. The latest data shows inflation ticked back up to 2.6% in October. That could be a spot on the X-ray that turns out to be nothing. Or it could signal that inflation is making a comeback, which would scramble the outlook for interest rates, financial markets, and the policies of the incoming Trump administration.
The inflation uptick in October wasn’t a fluke based on hurricanes or other one-time anomalies. Most important goods and services categories rose, including food, energy, rent, and vehicles. This came one month after the Fed basically declared victory over inflation. In September, the Fed reversed monetary policy and started cutting interest rates, signaling that the time had come to worry more about keeping growth humming than about getting prices down.
The Fed is staying the course for now. It cut short-term rates again on Nov. 14 and may do so again at its next policy meeting in December. But the odds of more rate cuts are dropping, with policymakers waiting for more lab results in the form of forthcoming inflation data.
“Inflation might soon be front-page news again,” Capital Economics announced in a Nov. 13 analysis. The forecasting firm argues that the currently inflationary trend is OK, but the future outlook is more worrisome — in large part because of what Donald Trump plans to do once he takes office next January.
At least two elements of Trump’s agenda are inflationary: new tariffs on imports and the mass deportation of undocumented migrants. Tariffs are taxes that raise the cost of imported goods directly. Deporting migrants would reduce the size of the labor force, especially targeting lower-wage workers. Replacing them with workers who might demand higher pay — or with costly machines — would raise costs one way or another, with producers passing as much as they could on to consumers.
A third inflation concern is Trump’s desire to cut taxes further, which can have a stimulus effect by putting more money in people’s pockets, boosting spending and demand and sometimes leading to higher prices.
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“Given all that President-elect Trump has promised to do quickly — such as hike tariffs, cut taxes further and slash immigration — one can easily foresee a re-acceleration of inflation next year,” Bernard Baumohl, chief global economist at Economic Outlook Group, wrote on Nov. 13. “The Federal Reserve is now in a real quandary.”
Finance
Vallourec SA (VLOUF) Q3 2024 Earnings Call Highlights: Strategic Moves and Financial Resilience …
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EBITDA Margin: Maintained a healthy margin similar to previous quarters.
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Full Year EBITDA Outlook: Reiterated at EUR800 million to EUR850 million.
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Cash Generation: EUR130 million in Q3, reducing net debt for the eighth consecutive quarter.
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Net Debt Reduction: Over EUR1.2 billion reduction since 2022.
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Q3 Group EBITDA Margin: Close to 19%.
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Tubes Volumes: Reduced to 292 kilotons in Q3.
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Mine & Forest Segment EBITDA: Expected slightly below EUR100 million for the full year.
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Net Debt Reduction in Q3: EUR124 million.
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Full Year Mine Production Expectation: Approximately 5 million tonnes, down from 6 million tonnes.
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Q3 Cash Flow: Total cash generation of EUR130 million.
Release Date: November 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Vallourec SA (VLOUF) maintained a healthy EBITDA margin in Q3 2024, driven by strong international OCTG market performance.
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The company generated significant cash flow, reducing net debt for the eighth consecutive quarter, totaling a reduction of over EUR1.2 billion since 2022.
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Vallourec SA (VLOUF) announced its first strategic acquisition in nearly a decade with Thermotite do Brasil, enhancing its position in the offshore line pipe market.
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The company is progressing well with its optimization program in Brazil, which is expected to significantly contribute to closing the profitability gap.
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Vallourec SA (VLOUF) plans to announce a dividend proposal for its 2025 AGM, marking the first dividend in 10 years, reflecting strong financial health.
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The US OCTG market experienced softness, impacting Vallourec SA (VLOUF)’s overall performance.
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The global iron ore market softened in Q3, leading to lower prices and sales volumes in the Mine & Forest segment.
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Vallourec SA (VLOUF) lowered its full-year mine production expectations to approximately 5 million tonnes, down from 6 million tonnes.
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Q3 2024 saw a reduction in tonnage sold and a slight decrease in average realized prices, leading to a year-over-year decline in revenues and EBITDA.
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The company faces potential challenges from the new tax environment in France, which could impact shareholder remuneration strategies like share buybacks.
Q: Is a share buyback still an option for shareholder remuneration given the new tax environment in France? A: Philippe Guillemot, CEO: While we never exclude any ways to return excess cash to shareholders, the potential tax implications in France make share buybacks less attractive. We plan to return cash to shareholders with a payout ratio of 80% to 100%, starting from Q3. The dividend proposal will be announced in February, based on Q3 cash generation.
SHEPHERDSTOWN, W. Va., November 15, 2024–(BUSINESS WIRE)–JSB Financial Inc. (OTCPink: JFWV) reported net income of $2.0 million for the quarter ended September 30, 2024, representing an increase of $1.3 million when compared to $643 thousand for the quarter ended September 30, 2023. Basic and diluted earnings per common share were $7.64 and $2.33 for the third quarter of 2024 and 2023, respectively. The third quarter results include the recognition of an interest recovery totaling $1.3 million, a recovery to the allowance for credit losses on loans totaling $252 thousand and a recovery of legal fees totaling $17 thousand on prior nonperforming loans. Excluding the impact of these notable items, pre-tax income of $959 thousand for the third quarter of 2024 was $187 thousand more than the same period in 2023.
Net income for the nine months ended September 30, 2024 totaled $3.4 million, representing an increase of $1.1 million when compared to $2.3 million for the same period in 2023. Basic and diluted earnings per common share were $13.33 and $8.46 for the nine months ended September 30, 2024 and 2023, respectively. Annualized return on average assets and average equity for September 30, 2024 was 0.87% and 17.65%, respectively, and 0.66% and 13.17%, respectively, for September 30, 2023. Excluding the impact of the notable items in the third quarter of 2024, pre-tax income of $2.7 million for the nine months ended September 30, 2024 was $96 thousand lower than the same period in 2023.
“We are pleased with our performance for the third quarter, which includes one-time recoveries on nonperforming loans totaling $1.5 million. Additionally, our team continued to create, deepen and expand our customer relationships which resulted in an increase in total deposits of 10% when compared to the second quarter and 17% year-over-year,” said President and Chief Executive Officer, Cindy Kitner. “During the third quarter, we saw stable loan growth, which was funded through loan maturities and deposit growth, and we continue to have strong credit quality metrics including past dues, nonaccruals, charge offs and nonperforming loans, all of which remained at historically low levels.”
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