2025-05-06 11:42

Argentex was exposed to sudden forex moves FX firm is one of the first high profile victims of market swings Shares resumed trading and plunged 91% this week LONDON, May 6 (Reuters) - In early April, Argentex's (AGFX.L) , opens new tab chief executive Jim Ormonde and chief financial officer Guy Rudolph were buying shares in the London-listed foreign exchange broker as the stock rebounded from a March slump. Ormonde, installed 18 months earlier amid a flagging stock performance, said , opens new tab in an April 2 statement on the company's annual results that Argentex had "reset" in 2024 and was now "well placed to return to profitable growth." In the year to date, its shares had rallied more than 50%. Sign up here. What followed was a dramatic swing in financial markets and a dizzying decline in the company's liquidity position. Within weeks, Argentex would become one of the first high profile corporate victims of market volatility set off by the global trade war. IFX Payments took over Argentex in a rescue deal for just a fraction of what it had been worth, and the CEO and CFO have gone. Argentex declined to comment. UK-based IFX did not respond to requests for comment. April 2 was also "Liberation Day," when U.S. President Donald Trump unveiled sweeping reciprocal tariffs against numerous countries, triggering heightened volatility for trading firms as currency markets moved widely. The safe-haven Swiss franc surged roughly 7% against the U.S. dollar during April, while Deutsche Bank's currencies volatility index (.DBCVIX) , opens new tab, a measure of currency swings, rose as much as 28%, to its highest level in two years. Argentex had navigated previous big market routs such as the fall of sterling against the dollar in 2022, Brexit and the COVID-19 pandemic. But while it had done scenario modelling and stress testing, it hadn't planned for the dollar's rapid devaluation against many major currencies, according to two people familiar with the company. They spoke on condition of anonymity because the information was private. Argentex was most exposed to a sudden strengthening of the pound, Swiss franc and the euro against the greenback, one of the people said. ZERO-ZERO LINES In its 2024 annual report, , opens new tab Argentex said that "regular stress testing is performed to ensure the group has sufficient collateral pledged and other unencumbered resources to cover its current and potential obligations in the event of a significant market movement." Yet when the market moved against it, Argentex was left exposed to cash calls from its liquidity providers and unable to call margin from many of its clients due to its use of zero-zero lines, according to the person. Barclays and Citigroup, which are among Argentex's liquidity providers, declined to comment. This business model, used by some of London's smaller FX brokers, according to one ex-forex trader, does not require customers to pledge initial margin upfront on trades or extra funds for intra-day market volatility. Instead, smaller brokers include margin costs in the prices they charge during the trading day. In the 12 working days from April 3, Argentex paid out over 20 million pounds ($26.65 million), the person said. According to its full-year accounts, at the end of December, Argentex had 18.4 million pounds in net cash. The company said in its accounts that its cash position varies significantly month to month due to margin calls and working capital movements. "Zero-zero contracts aren’t the devil per se," said one Argentex employee said, who spoke on condition of anonymity because they were not authorized to speak publicly. The issue is "making sure the business is in a healthy enough position to take on those contracts," they said. The reasons for Argentex's liquidity crunch were complex: it lacked the hefty balance sheet of its bigger rivals and was unable to adequately hedge its positions, one of the two people said. When the markets were plunged into turmoil by Trump's tariffs, the company was in the process of simplifying its relationships with liquidity providers, rolling out a treasury function to manage its positions and trying to bolster its cash position with new products, they said. The company said in April it was planning to launch digital accounts and payments businesses in the summer. Started in 2012, Argentex was authorized , opens new tab by the UK's Financial Conduct Authority (FCA) as an electronic money institution (EMI) in 2018. About a quarter of its clients are in the financial sector, according to the Argentex website. In 2013, it won the backing of the family office of John Beckwith, one of Britain’s wealthiest financiers, according to 2024 company filings. Beckwith's Pacific Investments Management was the company's leading shareholder with a 17% stake before the deal with IFX was announced, according to LSEG data. A representative for Pacific Investments declined to comment. EMIs flooded London over the last decade, offering payments services and benefiting from a lighter regulatory burden compared to banks. FCA rules , opens new tab require EMIs to keep in check counterparty and liquidity risks, including the possibility that a party doesn't fulfil its obligations. In a letter, , opens new tab published in February, to all CEOs of payments firms, including EMIs, the FCA said that it remained concerned there were still risks to consumers and financial system integrity. It had given EMIs until March 2025 to adequately test their operational resilience for any shock. The FCA declined to comment when contacted by Reuters for this story. Other regulators of Argentex in Australia, Dubai and the Netherlands either declined to comment or did not respond to requests for comment. FIELDING BIDS On April 22, the company asked regulators to suspend trading in its shares, revealing near-term liquidity had been hit by margin calls linked to its foreign exchange forward and options books after a rapid devaluation in the U.S. dollar in the wake of U.S. tariffs and government spending cuts. The next day the company said it needed "an immediate cash injection to ensure the Company's continued solvency." It had received three takeover proposals including from IFX Payments, two of which were rebuffed by the board. The board pursued a deal with IFX Payments for a bridging loan to meet liquidity needs. By April 25, Argentex, which had been worth 52 million pounds when its shares were suspended three days earlier, said it had agreed a deal with IFX to be bought for about 3 million pounds and CEO Ormonde would be leaving with immediate effect. This week, Argentex shares resumed trading and plunged 91%. The company said it had secured a 20 million pound loan from IFX and announced finance chief Rudolph had resigned along with several board members. ($1 = 0.7505 pounds) https://www.reuters.com/business/rebound-rescue-how-argentex-collapsed-untested-currency-swings-2025-05-06/

2025-05-06 11:40

ADM's ag services and oilseeds profit fell 52% in Q1 Trade tensions with China impact ADM's profit margins ADM plans $500-$750 million cost cuts over 3-5 years Adjusted Q1 profit beats estimates despite decline from last year CHICAGO, May 6 (Reuters) - Tariffs and trade chaos stung Archer-Daniels-Midland (ADM.N) , opens new tab as the grains merchant on Tuesday posted its weakest first-quarter profit in five years and warned of eroding returns amid U.S. President Donald Trump's efforts to redraw global markets. Slumping sales and weak crop-processing margins slashed operating profit by more than half for ADM's ag services and oilseeds unit, its largest division, more than offseting flat to stronger results in its other business segments. Sign up here. ADM shares were up 2.6% at $48.75 as results bested Wall Street expectations. "With uncertainty related to global trade and regulatory policy continuing to have an impact on the business, we were able to drive positive momentum in focused areas," CEO Juan Luciano said. Trade tensions between the U.S. and China, the largest crop importer, are creating a drag for ADM, which has seen its profit erode in recent quarters due to ample global crop supplies and thinning margins. ADM is also reeling from an accounting scandal that sparked federal investigations and sent its stock price tumbling, with shares down nearly 30% since news of the financial irregularities broke in January last year. The company is responding to the challenges through a cost-cutting and consolidation push. ADM said in February it planned to cut costs by $500 million to $750 million over the next three to five years and has been slashing jobs and downsizing operations since then. ADM reaffirmed its full-year adjusted earnings forecast of $4 to $4.75 per share, but said it expects profit at the lower end of the range. Although it would be the company's weakest performance since 2020, the guidance was not as dire as some investors had feared. "Investors had generally expected much weaker guidance, given the sharp deterioration in the macroeconomic environment in recent months," said Arun Sundaram, senior equity analyst at CFRA Research. Ag services and oilseeds segment operating profit tumbled 52% in the first quarter while ADM's carbohydrate solutions division saw earnings slip 3% as improved ethanol biofuel results offset lower starches and sweeteners margins. A 13% operating profit bump in the company's much smaller nutrition segment and lower costs helped the global grain merchant's first-quarter results. The Chicago-based company posted an adjusted profit of 70 cents per share for the three months ended March 31, down from $1.46 per share in the first quarter last year but above analysts' average estimate of 67 cents, according to data compiled by LSEG. (This story has been refiled to add the word 'down' in paragraph 6) https://www.reuters.com/business/adm-reports-first-quarter-profit-beat-2025-05-06/

2025-05-06 11:31

BRUSSELS, May 6 (Reuters) - Abu Dhabi state oil giant ADNOC is set to secure unconditional EU antitrust approval for its 14.7 billion euro ($16.6 billion) takeover of German chemicals company Covestro (1COVG.DE) , opens new tab, two people with direct knowledge of the matter said. The deal, ADNOC's biggest ever, underscores Middle East countries' plans to diversify their investments and reduce dependence on oil amid the global transition to cleaner energy. Sign up here. The European Commission does not see any competition issues because there are no overlaps between the two companies, the people said. The EU competition watchdog, which is scheduled to decide on the deal by May 12, declined to comment. ADNOC, which expects to close the deal in the second half of this year, could not be immediately reached for comment. Covestro, which earlier on Tuesday cut its 2025 core profit expectations, said it does not speculate about regulatory proceedings. "XRG and Covestro are working constructively with all relevant authorities on the FSR, FDI and Merger Control filings. We are confident that all outstanding approvals can be obtained within the long-stop date (02.12.2025)," the company said in an email. Once the deal is completed, XRG - the international investment arm of ADNOC - will become the new majority shareholder in Covestro, which makes plastics and chemicals for the automotive, construction, and engineering sectors. The South African and Indian competition watchdogs have already cleared the deal without demanding remedies. The acquisition is also subject to the EU's Foreign Subsidies Regulation (FSR), where the focus is on unfair foreign aid for companies. The rules aim to rein in unfair competition from non-EU companies subsidised by their governments. ADNOC has yet to seek FSR clearance for the deal. It secured unconditional EU approval last year under the FSR for its acquisition of fertiliser firm Fertiglobe. ($1 = 0.8839 euros) https://www.reuters.com/markets/deals/eu-antitrust-regulators-okay-adnoc-covestro-deal-sources-say-2025-05-06/

2025-05-06 11:29

SEOUL, May 6 (Reuters) - South Korea's central bank chief said currency volatility will likely continue for some time amid uncertainties in the global economy and domestic politics, the Yonhap news agency reported on Tuesday. "It is still too early to say whether the currency exchange rate has hit the bottom," Bank of Korea Governor Rhee Chang-yong was quoted as saying, referring to the Korean won's value against the U.S. dollar. Sign up here. Rhee also said the BOK will likely have to cut the growth forecast and lower lending rates to boost the economy, according to the report. He made the remarks during a meeting with reporters accompanying him to the annual meeting of the Asian Development Bank in Milan on Monday. South Korea has been dealing with a leadership vacuum amid months of political turmoil which saw the Korean won weaken. Rhee said it was a "difficult week" for South Korea, the report said, referring to the current political situation one month before the snap presidential election on June 3. Former Prime Minister Han Duck-soo and former Finance Minister Choi Sang-mok resigned last week and Han entered the presidential race brought about by the ousting of former President Yoon Suk Yeol over his short-lived imposition of martial law in December. "It was a difficult week as we had to provide an explanation on the current situation in South Korea, which is seen as a developed country from the outside," Rhee said, according to the report. "It is the responsibility of those remaining in their positions to make every possible effort in the ongoing trade negotiations with the U.S. for the sake of the national interest," he added. South Korean and U.S. officials held their first round of trade talks in Washington last month as Seoul pushes to cut a deal that could curb the impact of U.S. tariffs on vital sectors like the auto industry. https://www.reuters.com/sustainability/boards-policy-regulation/bank-korea-chief-says-volatility-fx-market-continue-yonhap-reports-2025-05-06/

2025-05-06 11:19

May 6 (Reuters) - Futures tied to Canada's main stock index edged lower on Tuesday, as U.S. President Donald Trump's fresh tariff threats renewed trade war fears, while investors awaited the Federal Reserve's monetary policy decision. June futures on the S&P/TSX index (.SXFcv1) , opens new tab were down 0.1% at 6:30 a.m. ET (1030 GMT). Sign up here. Late on Monday, Trump said he plans to announce pharmaceutical tariffs over the next two weeks, adding to the levies rhetoric that has unsettled global financial markets and kept investors on edge in recent months. This follows Trump's tariffs on foreign-made movies, his first on services, that were announced on Sunday. The governors of six U.S. states said on Monday they have invited Canadian provincial leaders to discuss the impact of the tariffs while being critical of the measures taken by the U.S. president. Separately, Prime Minister Mark Carney said last week he was expecting "difficult but constructive" talks with Trump on Tuesday. The focus will be on the Fed's two-day meeting, scheduled to start later in the day, with the central bank widely expected to stay put on interest rates. Investors will closely monitor policymakers' comments for any hints of potential monetary policy easing this year. In commodities, gold prices rose to a two-week high. Copper prices edged higher, buoyed by signs of U.S.-China trade talks. Oil gained more than $1 per barrel on Tuesday. Canada's main stock index fell on Monday as a drop in oil prices weighed on energy shares and investors reduced some risk ahead of the Fed's interest rate decision this week. FOR CANADIAN MARKETS NEWS, CLICK ON CODES: TSX market report Canadian dollar and bonds report CA/ Reuters global stocks poll for Canada , Canadian markets directory https://www.reuters.com/markets/europe/tsx-futures-fall-after-fresh-trump-tariffs-fed-meet-focus-2025-05-06/

2025-05-06 11:18

HAVANA, May 6 (Reuters) - A bustling restaurant in old Havana offers diners a blast from the distant past - small circular flatbreads made from ground yucca served alone or topped with any combination of onion, tomato, pork and garlic. The dish, known locally as casabe, has been around for over a thousand years, historians said. More recently, it has mostly been relegated to field hands and Cuban country outposts. Sign up here. Now it may be making a comeback. Cuba's dire economic crisis has vastly reduced the import and production of such basics as wheat flour, sugar and salt. This has prompted some to give the simple flatbread another look. Its only ingredient is locally grown yucca root, also known as cassava. “In a time of food crisis like the one we're currently experiencing, we believe cassava bread can help," said Yudisley Cruz, co-founder of Yucasabi, a small business and restaurant that promotes yucca-based products. Her small restaurant in touristy old Havana sells a single casabe for 15 pesos (4 cents), making it nutritious, delicious and affordable for both tourists and locals alike, she said. Cruz's restaurant - the only one in Cuba dedicated exclusively to yucca - is trying to popularize the flatbread in urban areas. But in the countryside, peddlers on foot, bike and moto-taxi sell casabe at even lower prices, a rare foodstuff nearly everyone can afford. Its near universal appeal, simplicity and cultural roots - it was first cooked on hot rocks by the indigenous Taino people in Cuba and elsewhere in the Caribbean - prompted the United Nations last year to add the food to its intangible cultural heritage of humanity list. Yucasabi, which features paintings of Tainos in Cuba's lush countryside on its walls, has given the ancient bread a modern spin, in hopes of attracting a new and larger clientele. "Casabe from Cuba, 100% artisanal, vegan, zero gluten," reads its advertising on social media. Simplicity, however, remains the flatbread's top selling point, says Julio Cesar Nunez, an 82-year-old traditional casabe producer who lives outside Havana. Nunez oversees the harvest, peeling, drying, grinding of the yucca root. That is formed into tortilla-like discs and cooked on sheet metal over flames. “Anyone who takes the time to learn can do it," he said. https://www.reuters.com/world/americas/ancient-cuban-flatbread-makes-comeback-economic-crisis-bites-2025-05-06/