China’s stock market fell again on Wednesday, with the Shanghai Composite dropping 1.27% to 2,927.29.
Chinese indexes have fallen about 16% in the last three days alone, sending shock waves throughout markets globally. The People’s Bank of China slashed rates again yesterday, making it the fifth cut since November last year.
The further fall in Chinese shares affected European markets again, many of which were trading down around 1 percent this morning. The FTSE is currently down 1.36 percent at 5998.84.
The number of complaints from customers who claim they were mis-sold packaged bank accounts has risen, according to the industry’s watchdog.
Packaged bank accounts are often labelled gold or platinum accounts, with monthly fees of between £5 and £25. They offer a range of additional services, including insurance, cheaper loans and other benefits.
The Ombudsman is now seeing about 1,000 complaints about packaged accounts every week; in comparison, there were only 21,348 such complaints in the whole of 2014, and just 5,667 in 2013.
The complaints are either because people were signed up to the accounts without asking, the bank never cancelled them after a request to do so, or the benefits – such as insurance – were inapplicable to them.
Royal Bank of Scotland, Barclays and Lloyds have set aside £732 million between them to compensate customers for possible mis-sold packaged accounts, fuelling concerns that it may escalate into a scandal the size of mis-sold PPI.
China’s central bank have announced that it will cut interest rates and relaxed reserve requirements in a further attempt to bring the economy under control.
The People’s Bank of China will lower the benchmark bank lending rate by 25 basis points, to 4.6 percent, effective tomorrow.
The move has boosted European share prices further, with the FTSE 100 in London jumping 3.3 percent after the move. Germany’s DAV is also up nearly 5 percent on the news, with the NYSe up 2.6 percent.
This is the latest in a series of moves by the Chinese authorities who have made continual efforts to prop up the markets over the past few weeks. Yesterday, after the Chinese markets caused volatility around the world the government took no further action, prompting speculation that it would stop further intervention and adopt a more laissez-faire approach.
However, this appears not to be the case. The People’s Bank of China has also announced that it will ower the reserve requirement ration by 50 basis points to 18 percent.
Shares in China plunged 7 percent overnight, on top of their 8 percent drop on Monday.
On the constantly evolving fintech scene, a new player is emerging; say hello to Hello Soda, who have created a new platform that uses social media data to assessing the creditworthiness of loan applications.
Whilst most people are aware that recruiters may scan potential applicants’ social media profiles for clues about their suitability, analysing minute data from those sites to assess their creditworthiness is something quite different. Founded in 2013, the new platform PROFILE aims to inject an element of human behaviour into a typical computer-led lending application process, and give a more accurate depiction of customers’ situations. The company is the brainchild of James Blake, previously head of Global Sales at the UK’s second largest credit reference agency Call Credit and tech entrepreneur, Paul Shepherd.
PROFILE founder, James Blake
This process benefits both lenders and consumers, who get quicker decisions that are more accurately aligned to ‘the fabric of their life’. The data can also be used by recruitment and gaming companies to help compile personality profiles. Blake says:
“That human element, especially in lending, disappeared with the financial crash in 2008 when the world changed, leaving many people unable to access credit.
“With the exponential growth in online data, it makes sense to take a ‘snapshot’ of a person’s real life and cross reference that with traditional metrics to further verify an individual’s application in a way that benefits the customer and lending provider”.
The information Blake refers to comprises of thousands of pieces of online data, including the use of only capital letters when filling out forms ad the amount of time a person spends reading terms and conditions. These are then collated to deliver a ‘Soda Score’ that forecasts trustworthiness, affordability and consumer intent.
“We think technology should be leveraged to the mutual benefit of vendor and consumer,” says Paul Shepherd, Hello Soda’s co-founder and marketing director, “and we believe PROFILE does that.”
The Manchester-based company recently took part in Pitch@Palace 3.0, the third event organised by HRH The Duke of York, which aims to identify the most promising technology startups from within the creative industries. Furthermore, the company has attracted backing from several European investors and has recruited leading data-scientists and engineers from the likes of Skype and General Electric.
For further information on HelloSoda and their services, visit their website here.
The Big Four supermarkets had another slow quarter, as growth in the British grocery market continues to stagnate according to figures from Kantar Worldpanel.
Fraser McKevitt, head of retail and consumer insight at Kantar, comments: “Industry growth of around or below 1% has now persisted since summer 2014 and has become the new normal. Despite the accelerating British economy like-for like grocery prices are still falling, with a representative basket of everyday items now 1.7% cheaper than in 2014.”
However, budget retailers have had another good period, continuing to push down the market share of the Big Four.
Asda has retaken its position as Britain’s second largest supermarket, and growth at Aldi has accelerated to 18.0 percent. Lidl’s sales have also risen, up 12.8 percent, taking its market share to a new high of 4.1 percent. Aldi and Lidl now have a combined market share of 9.7 percent, up from 8.4 percent a year ago.
Tesco’s (LON:TSCO) market share fell from 28.8 percent to 28.3 percent year on year, and Sainsbury’s (LON:SBRY) share of the market fell 0.1 percent to 16.3 percent.
Anglo American diamond giant De Beers has lowered prices by 9 percent, according to Bloomberg.
The economic slowdown in China has affected demand, with the area being one of the key diamond markets, combined with the effects of the recent commodities slump. Production cuts failed to support demand for the precious stones, as traders, cutters and polishers fail to make a profit.
The site quotes three unnamed sources, who say the information is not yet public. De Beers have cut their full-year production goal to from 32 million carats to between 28 and 30 million.
Shares in Poundland (LON:PLND) shot up 4 percent this morning after being given the go ahead to acquire the 99p Store chain.
An investigation by the antitrust watchdog has concluded that the merger will not significantly reduce competition on the high street, however in findings reported this morning it was announced that the deal “may not be expected to result in a substantial lessening of competition”.
The Competitions and Market Authority have given the green light to the agreement, meaning that Poundland will buy 99p Stores for £55 million.
Poundland has opened about 600 stores since 1990 in the UK, Ireland and Spain and plans to launch 60 shops annually over the next two years in the UK and Ireland.
BHP Billiton (LON:BLT) are up 6 percent this morning after releasing final year results, despite disclosing their worst underlying profit in a decade.
Falling commodities prices and trouble in the Chinese markets have affected the company’s performance. Their underlying attributable profit fell to $6.42bn for the year to June from $13.26bn a year earlier, a drop of 86 percent.
The company has pledged not to cut its dividend to shareholders and has reduced their capital spending to $8.5 billion in 2016 to meet that goal.
BHP Billiton Chief Executive Officer, Andrew Mackenzie, confirmed that volatility in China had affected the company’s outlook:
“In the short term we expect ongoing economic reforms in China to contribute to periods of market volatility. And, while we remain confident in the long-term outlook for commodities demand as emerging economies continue to urbanise and industrialise, we have lowered our forecast of peak Chinese steel demand to between 935 million tonnes and 985 million tonnes in the mid 2020’s.
“However, improved productivity can further stretch the capacity of our existing operations to increase volumes at very low cost.”
As the ‘Great Fall of China’ continues, it appears that Chinese policy makers have begun to take a step back and let the markets run their course rather than intervene as they have done over the past few weeks.
Perhaps authorities have recognized that the recent measures designed to prop up the market appear to have done little, and been left with little choice but to instigate a more laissex-faire approach and watch the drama unfold.
The Shanghai Composite Index tumbled another 7.6 percent to 2,964.97 at the close, sinking below the 3,000 level for the first time in eight months.
However the FTSE bucked the trend and rallied this morning. Germany’s DAX index did the same, up 2.8% after a steep plunge yesterday, suggesting that investors may be resisting the urge to panic.
Whilst the Chinese stock market is taking a hit, growth for the world’s biggest economy is still on track at 7% for the year – still an impressive rate for any country. Australian Prime Minister Tony Abbott spoke out against panicking over the problems in China:
“I think it’s important that people don’t hyperventilate about these type of things.
“It is not unusual to see stock market corrections. It is not unusual to see bubbles burst in particular markets and for there to be some flow-on effect in other stock markets, but the fundamentals are sound.”
Chancellor George Osborne announced plans to sell off more of the government’s share in Lloyds (LON:LLOY) bank.
UK Financial Investments, the company that holds the goverment’s stakes in both Lloyds and RBS, has reduced it’s holding to 12.97%.
George Osborne was quoted as saying that he hopes the sale of the UK government’s shares in Lloyds Banking Group will soon be completed.
“My view is that we want the government out of the banking system in the UK,” Reuters agency reported him as saying.
“I hope that [Lloyds] will be complete within the year.”.
The government began selling off the 43% stake in September 2013, after the government bailed the bank out with £20.5bn after the financial crisis. The banking group is currently trading down 2.73 percent at 73.78 pence per share.
