2023-11-16 11:08

HONG KONG/MUMBAI, Nov 16 (Reuters) - U.S investment giant Carlyle Group (CG.O) has lowered the target for its latest pan-Asia private equity fund by at least 30% from its original $8.5 billion, three people with knowledge of the matter said, as a slowing global economy and geopolitical tensions dull investors' appetite. Carlyle, which started raising its sixth Asia-focused fund in mid-2022, has bagged less than $3 billion so far, two of the sources said. Carlyle did not disclose to investors why it had lowered the target, the sources said, with one of the people adding that the recent poor performance of funds could be a factor. Carlyle is now targeting up to $6 billion in total, the sources said. The company is aiming for a final close of the fundraising in the third quarter next year, one of the people said. All the sources declined to be named as they were not authorised to speak to the media. A Carlyle spokesperson declined to comment. Carlyle's downsizing comes as private equity firms struggle to cash out on their assets amid volatility caused by conflicts in the Middle East and Europe, rising inflation and higher interest rates, all factors that are expected to crimp global economic growth next year. It is not immediately clear if Carlyle has already reached first close, which refers to the stage when a private equity firm has secured the bulk of its targeted fundraising amount and can start investing in companies. Investors in private equity companies, known as limited partners, typically reinvest after having booked returns from their previous investments. Asia-focused fundraising has fallen nearly three-fourths this year from 2021, Preqin data shows. While funds raised $299 billion in 2021, that amount fell to $154 billion in 2022 and $73 billion so far this year. Private equity firms have made a total of $15.6 billion in exits in Asia, down 82% year-on-year, Dealogic data showed. No China-focused buyout fund denominated in U.S. dollars has been raised this year, Preqin data showed, as China's economic slowdown and Sino-U.S. tensions weighed on investors' appetite for the world's second largest economy. Sources told Reuters last year Carlyle was aiming to raise $8.5 billion in the pan-Asia fund. FUND ALLOCATION If Carlyle hits the downsized $6 billion target, the latest fund would be smaller than its $6.55 billion fifth pan-Asia fund in 2018, which has invested in companies including Jack Ma's Ant Group and India's Yes Bank (YESB.NS). The new pan-Asia fund will allocate about 30% to 35% of its capital to India, making it Carlyle's largest market in Asia, one of the sources said, adding that 15%-20% will be allocated to China, which is the same allocation range for South Korea. Capital allocation to China had been bigger in Carlyle's previous Asia funds, different sources with knowledge of the matter have said. Carlyle earlier this month reported a smaller-than-expected 43% year-on-year drop in third-quarter distributable earnings, with its realized performance revenues, mostly driven by asset sales from its private equity unit, plummeting 76%. Its chief executive Harvey Schwartz, a former Goldman Sachs banker who took charge in February after the previous CEO abruptly left, said at the earnings call that he was not pleased with fundraising in 2023. The firm, across funds globally, raised $6.3 billion from investors during the second quarter. Total assets under management stood at $382 billion, down 1% from the prior quarter. Carlyle is planning to pull back from investing in U.S.-based consumer, media and retail companies as it looks to focus on other key sectors such as technology and financial services, Reuters reported last month. Carlyle has also faced senior management changes in Asia in recent months. Patrick Siewert, one of Carlyle's most senior dealmakers in Asia, stepped down as partner and head of consumer, media and retail to become a senior adviser, a Carlyle spokesperson said Beijing-based Nina Gong and Hong Kong-based Herman Chang, both managing directors, have also retired, the firm said. Both were with Carlyle for more than a decade cutting deals in Greater China. Carlyle's Hong Kong-based private credit team, which was focused on looking into a potential Greater China joint venture, has also "left to pursue other opportunities", the spokesperson said, adding that its Asian private credit business would continue to be managed as part of the global credit team. (This story has been refiled to add the word 'one' in paragraph 3) https://www.reuters.com/business/finance/carlyle-cuts-asia-fundraising-target-6-bln-challenging-market-sources-2023-11-16/

2023-11-16 11:05

A look at the day ahead in U.S. and global markets from Mike Dolan Ebbing oil prices are cheerleading this week's renewed optimism on U.S. disinflation - with retail soundings still perky into the Thanksgiving period and as the data diary shifts to housing and industry. This week's stock and bond surge on news of a fresh decline in headline and 'core' U.S. consumer price inflation last month was underscored on Wednesday by data showing the biggest decline in producer prices in three and a half years. That drop, which takes annual producer price inflation as low as 1.3%, was driven largely by falling gasoline prices. And so the ongoing retreat in crude prices keeps coloring that picture, with U.S. oil extending losses on Thursday on a mix of higher supply from the United States and lackluster energy demand from China. U.S. crude stocks rose by 3.6 million barrels last week, according to the U.S. Energy Information Administration, twice what analysts had expected. And that meets news that China's oil refinery throughput fell back in October as industrial fuel demand weakened. The overall energy and inflation picture is helping buoy consumption and stokes the 'soft landing' narrative investors are betting on. While U.S. retail sales growth cooled sharply last month, they were ahead of forecasts and upward revisions to prior months underlined the strength of the consumer, along with positive indications about the holiday quarter. With investors eyeing Walmart earnings later, shares in Target (TGT.N) surged almost 20% on Wednesday after the retailer forecast a fourth-quarter profit above expectations on easing supply chain costs. That lifted shares of others including Macy's (M.N) and Kohl's (KSS.N) and the overall S&P 500 consumer staples index (.SPLRCS). Even though Federal Reserve officials are refusing to fully rule out another interest rate hike in the cycle, San Francisco Fed chief Mary Daly described the latest inflation picture as 'very, very encouraging." Futures markets are even more encouraged and have taken another hike completely off the table - and now put about an 80% chance of a rate cut by May. And after consolidating Tuesday's plunge on Wednesday, Treasury yields have resumed their decline. Many Fed officials have pointed to housing as a key focus and the November NAHB index of housing market sentiment out later will be watched closely alongside industrial readings for last month. The S&P500 (.SPX) hit its highest in more than two months on Wednesday and stock futures held the line ahead of the bell. The mood was helped on confirmation a government shutdown this week was finally averted in the U.S. Senate. The picture in overseas markets, where the economic picture is cloudier, was more mixed. Chinese stocks fell again (.CSI300) as investors were disappointed by a meeting between the leaders of the world's two largest economies and the property bust there smoldered. China's new home prices fell for the fourth month in October as government support measures did little to lift the gloom hanging over the debt-laden property sector. There was a flat response to the long-awaited meeting between U.S. President Joe Biden and Chinese leader Xi Jinping in San Francisco on Wednesday and concerns it did not deliver more, despite some signs of detente between the two leaders. Xi also told Biden that Taiwan was the biggest, most dangerous issue in U.S.-China ties, a senior U.S. official told reporters, while Biden responded by assuring Xi that Washington was determined to maintain peace in the region. Elsewhere, Japanese exports grew for a second straight month in October but at a sharply slower pace due to slumping China-bound shipments of chips and steel. Key developments that should provide more direction to U.S. markets later on Thursday: * U.S. weekly jobless claims, Oct industrial production, NAHB Nov housing market index, Philadelphia Fed Nov business survey, Kansas City Fed Nov business survey, Oct import/export prices and TIC data on foreign holdings of Treasuries * U.S. corporate earnings: Walmart, Applied Materials, Ross Stores, Bath & Body Works * Federal Reserve Board Governor Christopher Waller, Fed Board Governor Lisa Cook, New York Fed President John Williams, Fed Vice Chair for Supervision Michael Barr and Cleveland Fed chief Loretta Mester all speak. European Central Bank President Christine Lagarde, ECB vice president Luis de Guindos and ECB supervisor Andrea Enria all speak. Bank of England Deputy Governor Dave Ramsden speaks * Mexico's President Andres Manuel Lopez Obrador meets China's President Xi Jinping in San Franciso * U.S. Treasury auctions 4-week bills https://www.reuters.com/markets/us/global-markets-view-usa-2023-11-16/

2023-11-16 10:13

LONDON, Nov 16 (Reuters) - U.S economic growth is set to slow but remain positive in 2024, European growth will remain subdued and China will see lower but 'potentially higher quality growth' UBS Wealth Management's Chief Investment Office said on Thursday. Their base-case scenario for 2024 sees equities and bonds both delivering positive returns, as slowing U.S. economic growth, falling inflation and lower rate expectations drive yields down, which should support equities. The absence of a severe U.S. recession should mean companies can continue to grow earnings, UBS said. That scenario sees the S&P500 at 4,700 points at the end of the year, up from 4,502 as of Wednesday's close (.SPX) the U.S. 10-year yield at 3.5% - it was at 4.506% on Thursday - and the euro at $1.12 - last $1.085. In addition, they expect geopolitics to play an outsized role in 2024 - "The U.S. presidential election, the ongoing Israel-Hamas and Russia-Ukraine wars, and the rivalry between the U.S. and China could all affect markets globally. Investors should prepare for bouts of politically driven volatility and consider hedges." https://www.reuters.com/markets/global-markets-outlook-ubs-2023-11-16/

2023-11-16 10:11

LONDON, Nov 16 (Reuters) - Bank of England rate-setter Megan Greene said on Thursday that global investors had not fully caught on to the prospect that central bank interest rates may have to stay at restrictive levels for some time. Greene, an external member of the BoE's Monetary Policy Committee, said there had been structural changes in major economies over recent years that pointed to a need for higher interest rates. "I think markets globally haven't really clocked on to this, Greene told Bloomberg Television. The U.S. economist is among the minority of rate-setters who voted to keep on raising interest rates at the last two meetings, when the majority opted to hold them. How long interest rates need to stay restrictive in Britain would depend on the data, she said. "There are reasons to think that the economy may be structurally a little bit different. That suggests we might need to stay restrictive for longer," Greene said. British financial markets show a 25 basis-point cut in Bank Rate is almost fully priced in by mid-2024, with two more likely to follow by the end of next year. Greene said on Thursday that the BoE was not talking about cutting rates. This week's inflation and jobs data were "good news" from the central bank's perspective, she said, citing cooling services inflation and weakening pay growth. "I would put all of this in the category of good news, but I think there are still reasons to worry about the persistence of inflation in the UK," Greene said. Asked on how she might vote at next month's policy announcement on Dec. 14, Greene said she would want to see the economic data due between now and then. https://www.reuters.com/world/uk/boes-greene-says-latest-data-good-news-uk-inflation-outlook-2023-11-16/

2023-11-16 08:54

Philippine c.bank keeps policy rate steady at 6.5% as forecast Says inflation outlook has moderated C.bank says ready to resume policy tightening if needed MANILA, Nov 16 (Reuters) - The Philippine central bank kept its policy rate (PHCBIR=ECI) steady at 6.5% on Thursday, as expected, warning that its fight with inflation was not over and it could raise rates again. Risk to the inflation outlook "still leans significantly toward the upside," the central bank said even as it lowered its "risk-adjusted" inflation forecasts for this year and next, which remain well outside its 2%-4% target range. The central bank raised rates in an off-cycle review last month to the highest since mid-2007. It has raised rates 450 basis points since May 2022. "The Monetary Board continues to deem it necessary to keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes fully evident and inflation expectations are firmly anchored," Deputy Governor Francisco Dakila told a media briefing. The Bangko Senral ng Pilipinas reiterated it was prepared to "resume policy tightening as necessary to steer inflation towards a target consistent path." The central bank lowered its inflation estimate for this year and next to 6.1% and 4.4%, respectively, from 6.2 and 4.7% previously, following recent signs of easing price pressures. For 2025, it gave a forecast of 3.4%. Like many countries in the world, the Philippines has been grappling with high inflation which has dampened domestic demand, a key driver of growth, and has forced the central bank to aggressively hike rates. The Philippines peso fell 0.2% to 55.79 against the U.S. dollar, largely unchanged after the central bank's decision on Thursday, correctly predicted by 16 out of 23 economists in Reuters poll. The rest expected a 25 basis point hike. "The Monetary Board noted keeping the policy rate steady will allow previous policy rate adjustments ... to continue to work their way through the economy," Dakila said. Thursday's decision to leave rates unchanged followed the central bank's off-cycle 25 basis point hike on Oct. 26, and Nov. 9 data that showed the economy posted a faster-than-expected expansion of 5.9% in the third quarter. Ahead of the policy rate decision, BSP Governor Eli Remolona told an economic briefing in San Francisco inflation could ease back to the 2%-4% target range next year but the country is "not out of the woods yet". Some economists were divided over the outlook for policy, with Capital Economics saying the central bank's tightening cycle is over, while ING is not completely ruling out further hikes should inflation risks flare up again. BSP's next scheduled meeting is on Dec. 14, its last for the year. https://www.reuters.com/markets/asia/philippine-cbank-stays-hold-maintains-hawkish-tone-2023-11-16/

2023-11-16 06:50

HAMBURG, Nov 16 (Reuters) - Parts of the river Rhine in Germany have been closed to shipping because of a rise in water levels following recent heavy rain, German authorities said on Thursday. Rhine river shipping has been stopped around Maxau in south Germany, the German inland waterways navigation agency WSA said. High water means vessels do not have enough space to sail under bridges, preventing vessels reaching Switzerland. Central and northern sections of the river are open to shipping. Water levels are forecast to fall, allowing shipping to resume later on Thursday or on Friday, said the water level forecasting service of the Rheinland-Pfalz state government. The Rhine is an important shipping route for commodities including minerals, coal and oil products such as heating oil, grains and animal feed. The river has repeatedly suffered from low water levels because of unusually dry summers in recent years. https://www.reuters.com/business/environment/high-water-closes-parts-rhine-river-south-germany-shipping-2023-11-16/