Canadian retailer Comark Holdings to restructure as virus crisis weighs

June 3 (Reuters) – Comark Holdings Inc said on Wednesday it would restructure under the Companies’ Creditors Arrangement Act (CCAA) as the fallout from the COVID-19 pandemic hit the Canadian apparel retailer’s business.

Apparel retailers have been facing mounting debt and bankruptcies as the economic damage brought on by the pandemic has forced store closures and pressured discretionary spending.

The fashion retailer’s Ricki’s, Cleo and Bootlegger websites will remain operational, Comark said, adding it would optimize its store footprint during the restructuring.

Canada’s Aldo Group had also said it would restructure under the CCAA last month, as virus-led lockdowns weighed on the footwear retailer’s business.

The CCAA is a Canadian Federal Act that allows large corporations to restructure their finances and avoid bankruptcy, while allowing creditors to receive some form of payment for amounts owed to them.

The company, which was bought by private equity firm Stern Partners in 2015, said it expects its principal shareholder to participate in the restructuring process and to submit a transaction proposal that would allow it to emerge from CCAA protection. (Reporting by Aditi Sebastian; Editing by Devika Syamnath)

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Singapore factory activity rebounds from 11-year low but stays in contraction mode

SINGAPORE – A gauge of manufacturing conditions in Singapore bounced off its worst level in 11 years, but remained within the contraction territory.

The Purchasing Managers’ Index (PMI) was at 46.8 points in May, up 2.1 points from 44.7 in April which was the lowest reading since November 2008 during the global financial crisis.

A reading over 50 indicates expansion, while one below 50 points shows contraction.

This is the fourth month of contraction for the overall manufacturing sector, the Singapore Institute of Purchasing and Materials Management (SIPMM), which compiles the index, said on Wednesday (June 3).

The electronics sector PMI recorded an increase of 3.4 points from April to post a slower contraction at 46.2 – marking the fourth month of contraction.

Ms Sophia Poh, SIPMM’s vice-president of industry engagement and development, said: “Despite weaker supply chain operations arising from last month’s extended local circuit breaker measures, the latest improved PMI readings indicate the resilience of the local manufacturing sectors.

“Going forward, manufacturers are cautiously optimistic of a gradual recovery towards the latter half of the year.”

The overall manufacturing PMI for May reflects the first expansion in the inventory index after three consecutive contractions. The finished goods index also expanded after shrinking for two straight months.

DBS Bank’s senior economist Irvin Seah said: “This is definitely the first glimmer of hope amidst an otherwise very gloomy economic climate.”

The PMI rebound could be a significant turning point for the economy if subsequent non-oil domestic export and industrial production figures follow suit, Mr Seah noted.

However, slower contractions were recorded for the indexes of imports, input prices and order backlog.

The supplier deliveries posted a faster rate of contraction. The employment index contracted for a fourth straight month.

Mr Barnabas Gan, UOB Group’s economist, said the manufacturing sector is still weighted down by ongoing supply chain disruptions and negative demand shocks from the Covid-19 pandemic.

The PMI readings suggest further headwinds against Singapore’s manufacturing environment, with key manufacturing sectors, save for biomedical manufacturing, in the doldrums for the year ahead, Mr Gan said.

He said pharmaceutical production and exports may continue to support Singapore’s overall manufacturing and trade environment.

“Singapore is well-positioned to produce and export medical necessities, which implies that the pharmaceutical industry can act as a support to the overall manufacturing environment,” Mr Gan noted.

Mr Seah said that while the biomedical cluster is likely to support gross domestic product performance and help overall manufacturing to outperform some other sectors despite weak global demand, positive spin-offs to the rest of the economy, such as a boost to employment, are limited.

Pharmaceutical exports accounted for only 9.9 per cent of Singapore’s non-oil domestic exports in 2019, while the biomedical cluster was weighted at just under 20 per cent of total industrial production.

Mr Gan said: “Beyond the pandemic, we would also need to account for incremental headwinds stemming from the renewed US-China trade tensions that may intensify in the months ahead.”

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UPDATE 1-Bank of Canada holds rates steady, says COVID-19 impact has likely peaked

(Adds CAD move, details)

OTTAWA, June 3 (Reuters) – The Bank of Canada held its key overnight interest rate steady on Wednesday and said the impact of the coronavirus pandemic on the global economy appears to have peaked, while the Canadian economy seems to have avoided worst-case scenario projections.

The decision to hold rates steady came on the same day new governor Tiff Macklem took helm of the central bank. The bank slashed rates three times to a record low 0.25% in March and launched its first ever large-scale bond buying program in response to the coronavirus pandemic and low oil prices.

“In Canada, the pandemic has led to historic losses in output and jobs. Still, the Canadian economy appears to have avoided the most severe scenario,” the bank said in its release.

The vast majority of economists polled by Reuters last week said they expect the bank will hold rates at 0.25% until at least the end of next year, while money markets do not expect any further moves this year.

The Canadian dollar rose to 1.3490 per U.S. dollar, or 74.13 U.S. cents, after the interest rate decision.

Macklem, a long time central banker and former dean of a prominent Canadian business school, takes over from former Governor Stephen Poloz, who retired following a seven-year term on Tuesday.

The central bank has stated it can deliver more monetary stimulus if needed to meet its 2% inflation target. (Reporting by Kelsey Johnson, Julie Gordon and Steve Scherer in Ottawa Editing by Chizu Nomiyama and Marguerita Choy)

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Jerome Powell says Fed to keep on with coronavirus crisis fight

WASHINGTON (REUTERS) – Federal Reserve chairman Jerome Powell on Friday (May 29) reiterated the US central bank’s promise to use its tools to shore up the economy amid the coronavirus pandemic, even as investor attention is turning to the next phase of its response.

“This is an emergency of a nature we haven’t really seen before,” Powell, a graduate of Princeton University, told Alan Blinder, an economics professor at the Ivy League college and a former Fed vice-chairman, in a webcast event.

“We crossed a lot of red lines that had not been crossed before and I am very comfortable that this is that situation where you do that.”

Details of the US central bank’s coronavirus-era programmes are nearly complete, and the Fed is “days away from making our first loans” under the Main Street lending facility, Powell said on Friday.

Now, investors are looking for clues about when the Fed may restart large-scale bond-buying and firm up promises about how long it might continue.

The Fed has been buying government bonds and mortgage-backed securities to counter the economic fallout from the pandemic, but in relatively modest quantities compared with what might be needed to hold down longer-term interest rates in coming months and boost the recovery with sustained cheap borrowing costs.

Global investors have been doing the Fed’s work so far, bidding down US Treasury yields to record-low levels – the yield on the benchmark 10-year note has been below 1 per cent since late March.

But between a possible economic rebound and the trillions in extra debt the Treasury is in the midst of issuing, pressure may build in the other direction, and market analysts are pushing for guidance.

“The reopening process… now seems to be moving quite fast, and quite likely faster than the Fed anticipated,” Krishna Guha, vice-chairman of Evercore ISI and a former New York Fed official, said in an analysis on Thursday.

He argued the central bank should not wait to begin setting expectations about its longer-term plans since households and businesses may be setting theirs.

The Fed could best foster a recovery and support needed government spending “with strong commitments to maintain easy monetary conditions and guard against an unwanted increase” in longer-term interest rates, Guha said.

The discussion is under way, according to the minutes of the Fed’s April 28-29 policy meeting. Still, officials see no rush to commit themselves until it is clearer whether the rebound will be fast or slow, how quickly unemployment falls, and how interest rates behave – with US$3 trillion (S$4.2 trillion) in bonds being issued in the April-to-June period alone to fund pandemic-relief programmes.

The pandemic “is going to lead to a test of the notion… that the demand for US Treasury debt is infinite,” Blinder said last month. “We haven’t come anywhere close to testing the limits… But there’s going to be a lot more to be sold.”

That could raise challenges similar to those faced by the Bank of Japan and the European Central Bank – how far to go in buying bonds to keep interest rates low not just for consumers or companies, but for governments financing crisis programmes.

It may not be avoidable, said William English, a professor at the Yale School of Management and a former head of the Fed’s monetary affairs division.

“I don’t expect explicit fiscal-monetary cooperation unless the situation turns out to be extraordinarily bad,” English said in a webcast briefing organised by Cornerstone Macro.

Nonetheless, a commitment like the Bank of Japan’s to keep long-term government rates low “should allow additional fiscal policy, and something like that sort of communication by the Fed is not unlikely.”

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China Club at Capital Tower closes for good after years of losses

SINGAPORE (THE BUSINESS TIMES) – The China Club Singapore, a members-only club that has been a networking ground for many corporate executives, is closing for good after suffering years of losses amid stiff competition and rising costs.

The club was to have been closed only temporarily from April 7 to June 1, in line with Singapore’s circuit breaker period. But on Wednesday (May 27), the club informed members that it would close permanently on June 1.

In a letter signed off by general manager Andrew Mah, China Club said that it has been facing stiff competition posed by new food and beverage (F&B) establishments that emerged in the vicinity.

In addition, “like the F&B sector in Singapore, we have been seeing escalating labour costs and operating costs”.

Despite the management’s best efforts, China Club therefore suffered losses for “a few years” and will no longer be able to remain financially viable. “It is with deep regret that we will have to file for voluntary liquidation and close the club,” it added.

This comes 19 years after the club opened at the top floor of the 52-floor Capital Tower in Tanjong Pagar. The premium office building counts CapitaLand, GIC and JPMorgan as its top three tenants.

The club offered not only privacy, but also spectacular views – it is surrounded by 16m-tall glass and “on a clear day, Malaysia and Indonesia can be glimpsed”, according to its website.

China Club said it has since refunded April’s fees to members and stopped the collection of fees from May. Deposits for events and function room bookings have also been refunded; members’ F&B deposits will be refunded as well.

The club also thanked members for their “unwavering support” throughout the years.

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South African Airways administrators can appeal layoff ruling – court

JOHANNESBURG, May 25 (Reuters) – Administrators at South African Airways (SAA) can appeal a Labour Court ruling ordering them to halt a layoff process, the court said on Monday.

State-owned SAA has been fighting for its survival since entering a form of bankruptcy protection called “business rescue” in December.

The Labour Court’s decision earlier this month to side with two trade unions was a blow to the administrators who have said layoffs are necessary to avoid the airline being liquidated.

The administrators sought leave to appeal on the grounds that another court might make a different ruling. They said in a statement they would seek an urgent date for the appeal to be heard.

Job cuts are politically sensitive in South Africa, where unemployment is around 30 percent.

SAA, which has not made a profit since 2011, has received bailouts of more than 20 billion rand ($1.1 billion) over the past three years.

It is running low on cash after the coronavirus pandemic forced it to halt all commercial passenger flights and the government said it would not provide further funding.

SAA’s administrators are due to publish a business rescue plan by the end of the week, but they have said that in the absence of extra funding their preference is for a structured wind-down of the business.

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EMERGING MARKETS-Latam FX, stocks rally on economic recovery hopes

    By Susan Mathew
    May 25 (Reuters) - Latin American currencies firmed on
Monday on hopes of an economic recovery as more economies
emerged from pandemic-induced lockdowns, although simmering
U.S.-China trade tensions tempered risk appetite.
    Brazil's real surged 2.1%, extending gains to a
fourth session, while Mexico's peso appeared to be headed
for its sixth straight winning session. Chile's currency
gained 0.8%. 
    In line with broader emerging market peers, regional stocks
rallied. Sao Paulo's Bovespa index jumped 3.5% to a
12-week high, while Chilean stocks rose 1%.    
    Volumes were thin as UK and U.S. markets were closed for 
holidays in those countries.
    Data showing improving business confidence from Europe's
powerhouse, Germany, reinforced hopes that further easing of
restrictions in countries to curb the spread of the novel
coronavirus would help the global economy emerge from what is
expected to be a deep recession.
    "The low point of the slump should now be behind us and
there even is the chance for a short-lived strong rebound in the
coming months," Carsten Brzeski, chief economist for the euro
zone at ING, said of the data. 
    The regional picture remained grim, however, with Brazil on
Friday sharply revising downward its 2020 budget deficit and
national debt forecasts to record levels, reflecting the hit to
tax revenues and need for massive emergency spending caused by
the health crisis.
    With over 360,000 cases, Brazil is the second worst-hit
country globally by the COVID-19 disease caused by the virus.
Brazil's President Jair Bolsonaro has been an open critic of
social distancing protocols, calling for increased business
activity to keep the economy afloat.
    A federal investigation revealing likely abuse of power has
further hit Bolsonaro's popularity. And, several ministers from
his administration have resigned in the last two months over
differences with him.
    In Mexico, President Andres Manuel Lopez Obrador said a
slowdown in China's economy this year should allow Mexico to
attract more investment.
    U.S.-China trade tensions stewed as the White House warned
of sanctions on China as Beijing pressed ahead with a new
security law on Hong Kong that threatens the city's status as a
financial hub.
    Markets in Argentina and Colombia were closed for national
holidays. 
    
    Key Latin American stock indexes and currencies at 1424 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets     910.93     0.63
                                   
 MSCI LatAm               1730.03     3.59
                                   
 Brazil Bovespa          85064.42     3.52
                                   
 Mexico IPC              35867.96     0.23
                                   
 Chile IPSA               3760.80        1
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.4565     2.11
                                   
 Mexico peso              22.6270     0.43
                                   
 Chile peso                 802.2     0.41
                                   
 Peru sol                  3.4197     0.27
                                   
 
 (Reporting by Susan Mathew in Bengaluru; editing by Jonathan
Oatis)
  

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French government's crisis measures have cost 450 bln euros – finance minister

PARIS, May 25 (Reuters) – French government measures to prop up the economy through the coronavirus crisis have cost 450 billion euros ($490 billion), the equivalent of 20% of GDP, the finance minister said on Monday.

Since mid March, the government has mobilised a package of measures including state-subsidised furloughs, state-guaranteed loans, tax deferrals and handouts to small firms.

“If we take everything that has been done with the budget and in support of businesses’ cashflows, it’s 450 billion euros, 20% of the nation’s wealth on the table,” Finance Minister Bruno Le Maire said on BFM TV.

He added that President Emmanuel Macron would announce “strong measures” in support of car-makers, the latest industry to get a sector specific plan to help it back on its feet. ($1 = 0.9192 euros) (Reporting by Leigh Thomas and Sudip Kar-Gupta; Editing by Toby Chopra)

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Lethbridge councillors set intentions in first meeting as new COVID-19 recovery committee

Lethbridge city council met for the first of new weekly meetings on Thursday, sitting as the Lethbridge Community and Economic Recovery Committee, which has been tasked with aiding in city-wide recovery from the COVID-19 pandemic.

The first meeting of the committee — which name has been shortened to Recovery Lethbridge by some councillors — included a short agenda, with the first order of business being electing a chair.

Councillor Belinda Crowson was nominated by Mayor Chris Spearman, and was elected committee chair by acclimation.

Crowson said she was excited to take on the new role.

“This is very much about making sure everyone is moving along, that things are getting done are reported back,” she said. “This is wonderful because it gives me a chance to help coordinate everything and to help make sure that anything my colleagues need in their work on the sub-committees is getting done, and that they’re supported.”

Councillor Jeffery Coffman was named vice-chair of the committee, which will function with four sub-committees reporting back at meetings each Thursday moving forward.

“We’ve made sure that everything reports back to this group. This is a committee of council and this committee will report up to council,” said Crowson.

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“So the process has been set that we’re going to ask each of those groups to set a chair, and that chair then will meet with the chairs of the other committees, and that will then report up so that everything is connected.”

Crowson said the hope is to support the city through both the community and corporate recovery that will follow the COVID-19 pandemic.

“We looked at the needs, and then we broke those into categories, and now we’ve assigned ourselves those various roles,” she said.

The sub-committees were confirmed to be made up of the following members:

  • Economic and business recovery — Business improvements, local construction and red tape reduction
    • Mayor Chris Spearman, councillors Ryan Parker and Blaine Hyggen
    • Councillors Jeffery Coffman, Belinda Crowson and Joe Mauro
    • Councillors Rob Miyashiro, Jeff Carlson and Mark Campbell
    • City manager Craig Dalton and the City of Lethbridge senior management team

    The economic and business recovery group will work closely with Economic Development Lethbridge and the Lethbridge Chamber of Commerce, who have together presented as the Lethbridge and Region Economic Recovery Task Force frequently over the last two months.

    Crowson said the new committee will not duplicate the work of any other community organizations, and that communication will be key to having all parts work effectively together.

    “The worst thing that could happen is siloing, so that information is not being shared across. So we’ve set this up very carefully to make sure that there’s good communication, that the public is going to be involved and aware of what’s going on, and that we’ll get the best ideas around the table,” she said.

    Each sub-committee has now been tasked with finding members of the public to join the recovery efforts.

    “So there’s going to be three members of council on each, and then we’re asking them to find seven to 10… members that would be connected to the issues that they are looking at,” said Crowson.

    “They will be able to bring information, to bring advice, to bring recommendations, to be there to bounce ideas off of — so that’s the next step.”

    The sub-committees have been given two weeks to outline individual terms of reference, define how success will be measured and bring community members on board.

    That information will be shared at the June 4 meeting of the committee.

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PRESS DIGEST- Financial Times – May 22

May 22 (Reuters) – The following are the top stories in the Financial Times. Reuters has not verified these stories and does not vouch for their accuracy.

Headlines

– Atlantia seeks €1bn credit line for toll road unit in Genoa bridge disaster on.ft.com/3bMyYFi

– Clarks cuts 900 jobs as it strengthens digital push on.ft.com/2yonGt7

– Oxfam makes deep cuts as charities reel from effects of virus on.ft.com/36lgp9V

Overview

– Italian infrastructure company Atlantia SPA is in talks to obtain a 1.25 billion euro ($1.37 billion) state-backed credit line for it’s toll road arm Autostrade per l’Italia that was involved in the Genoa bridge disaster.

– Clarks, the British shoemaker and retailer, said it would cut 900 jobs following a strategy review to cut costs, moving to more digital operations and trimming down it’s UK stores.

– Oxfam International will close operations in 18 countries and lay off 1,450 staff due to the financial effects to the coronavirus outbreak. ($1 = 0.9134 euros) (Compiled by Bengaluru newsroom)

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