The Ukraine conflict has continued to create ructions this week.
On Wednesday, the US said Moscow’s claims that it is withdrawing forces amassed near Ukraine are “false”. “In fact, we have now confirmed that in the last several days, Russia has increased its troop presence along the Ukrainian border by as many as 7,000,” an official said.
Meanwhile, Klaas Knot chair of the Financial Stability Board, called on global leaders to “think twice” before imposing sanctions in the event of an invasion. Suspending Russia from the international payments system Swift could cause “severe disruption in payment flows”, he warned.
Indeed, companies are increasingly being caught in the crossfire of modern warfare, argues Elisabeth Braw, fellow at the American Enterprise Institute think-tank. This comes as states use methods like cyber attacks and intellectual property theft to intimidate enemies.
Inflation is adding to economic woes too. UK consumer prices rose at an annual rate of 5.5 per cent in January – the highest rate since March 1992.
Meanwhile at the Fed, minutes from January’s meeting of the Federal Open Market Committee indicate that policymakers agree rates will rise “soon”, but there is little agreement on how aggressive tightening should be.
Concerns about Russia and Ukraine, inflation and the possibility that the Fed will quickly tighten monetary policy have led to the most serious spell of volatility in US Treasuries – the world’s most important bond market – since March 2020.
Geopolitics also loom large for global businesses in Hong Kong – with mixed reactions to China exerting more influence over the city in areas including its strict pandemic response.
Norton Rose Fulbright plans to “pivot to China”. The law firm’s Hong Kong business will focus on working for mainland Chinese companies and banks, with recruiters in some specialisms already briefed to only consider professionals who can speak Mandarin.
French spirits maker Pernod Ricard, on the other hand, has asked its Hong Kong-based senior executives to temporarily relocate away from the city. Sources say this is so they can serve other Asian markets and travel to its Paris-based head office.
On to corporate governance, and activist investors have continued to make themselves heard. Glencore posted record earnings this week, with plans to return $4bn to shareholders.
But not all investors are happy. On Monday, hedge fund Bluebell Capital Partners set out a plan for the commodities group to demerge its coal division. Glencore could retain control of the spin-off by a dual-share structure it argued.
The proposed split shows just how hard it is to clean up coal, argues UK business writer Cat Rutter Pooley. “Bluebell’s latest proposal takes Glencore’s claim that it is best-placed to run down the assets at face value. But it then challenges the company to commit to doing so even if it doesn’t receive the full benefit of the assets.”
And finally, do good things come to those who wait? UK ministers are due to set out plans to overhaul audit and corporate governance in the coming weeks. The reforms, first proposed over three years ago, are said to be circulating around government departments for final sign off.
