Britain’s financial watchdog on Monday proposed toughening up safeguards against the illegal marketing of financial products on social media by applying a stringent “consumer duty” that is being rolled out to banks, funds and insurers on July 31.

The Financial Conduct Authority has said its new duty will be a step change in protecting retail investors after years of mis-selling scandals, by forcing firms to demonstrate how they are giving consumer good outcomes.

“Where applicable, the Consumer Duty will raise our expectations of firms communicating financial promotions on social media above the requirement… to be ‘clear, fair and not misleading’,” the FCA said in proposals out to public consultation.

“Firms advertising using social media must consider how their marketing strategies align with acting to deliver good outcomes for retail customers.”

In the fourth quarter of last year, nearly 70% of amended or withdrawn financial marketing following FCA intervention involved a promotion on websites or social media, the FCA said.

The watchdog is targeting so-called ‘finfluencers’ or widely followed people on social media who promote financial products.

“Consumers exhibit high levels of trust in finfluencers, but their advice can often be misleading,” the FCA said.

“Promoting a regulated financial product or service without approval of an FCA authorized person, or providing financial advice without FCA authorisation, may be a criminal offense.”

Promotions should also include risk warnings, it added.
…

China’s economic growth missed forecasts in the second quarter of the year, adding to worries over surging youth unemployment and a weak property sector and raising the likelihood the government will double down on support for the faltering post COVID-19 recovery.

The world’s second largest economy grew at a 6.3% annual pace in the April-June quarter, much slower than the 7% plus growth analysts had forecast given the anemic pace of activity the year before.

Unemployment of youths aged 16 to 24 rose to a record 21.3% in June, up from 20.8% the month before.

Investment in property development, a vital driver of both industrial and consumer demand, sank 7.9% in the first half of the year compared to a year earlier in a troubling sign of persisting weakness in an industry that slowed even before the pandemic as the government moved to rein in excessive borrowing.

Officials have acknowledged that the economy is facing stiff headwinds, but said they expected growth to still reach the ruling Communist Party’s official target for this year of about 5%.

The government will adjust policies to stabilize growth, National Bureau of Statistics spokesman Fu Linghui said at a news conference Monday.

Quarterly growth, the usual measure for other major economies, was 0.8%, according to government data released Monday, in line with expectations but down sharply from 2.2% in January-June.

Analysts have been far less optimistic than the Chinese government about the outlook for the year, given weakening demand for Chinese exports in other major economies.

The numbers are a “worrying result,” said Moody’s Analytics economist Harry Murphy Cruise.

“China’s recovery is going from bad to worse,” he said. “After a sugar injection in the opening months of 2023, the pandemic hangover is plaguing China’s recovery.”

Government spending is likely to help key industries like real estate and construction, but won’t be a “silver bullet,” he said in a commentary.

The 6.3% growth in China’s gross domestic product from April to June outpaced a 4.5% expansion in the previous quarter.

The still robust growth is largely due to the economy growing just 0.4% a year earlier in April-June of 2022 amid strict lockdowns in Shanghai and other cities during COVID-19 outbreaks.

Apart from more government spending, regulators may cut interest rates and take other measures to free up credit, Marcella Chow, global market strategist at J.P. Morgan Asset Management wrote in a report.

“The weak economic readings suggest an urgency in escalating policy support so as to stabilize expectations,” Chow said.

Earlier this year, growth was boosted as people flocked to shopping malls and restaurants after nearly three years of “zero-COVID” restrictions were removed in late 2022.

The government’s growth target of “around 5%” was seen as a conservative goal. It can only be met if the economy maintains close to its current level of growth.

Data released earlier showed exports declined 12.4% in June from a year earlier as global demand faltered after central banks in U.S. and Europe raised interest rates to curb inflation.

Retail sales, an indicator of consumer demand, in June rose 3.1% from the same period in 2022. That’s seen as a strong point, but not strong enough, analysts said.

Industrial output, which measures activity in the manufacturing, mining and utilities sectors, beat analyst’s expectations, rising by 4.4% in June compared to the same month a year earlier.

China’s policymakers are not having to fight inflation, but may end up having to contend with its opposite, deflation, or falling prices due to weak demand. In recent months, the authorities have tried to spur lending and spending, with mixed success.

Fixed-asset investment — spending on factory equipment, construction and other infrastructure projects to drive growth — rose by a still tepid 3.8% for the first half of 2023 compared to the same period of 2022.
…

Redoubling support for war-stricken Ukraine is the “single best” way to aid the global economy, U.S. Treasury Secretary Janet Yellen said Sunday, along with boosting emerging economies and tackling debt distress.Yellen also said on the sidelines of a G20 finance ministers’ summit in India she would “push back” on criticism there was a tradeoff between aid to Ukraine and developing nations.

“Ending this war is first and foremost a moral imperative,” she told reporters in Gandhinagar. “But it’s also the single best thing we can do for the global economy.”

Yellen also pointed to efforts to tackle debt distress faced by struggling economies, bank reform and a global tax deal, and warned it was “premature” to talk of lifting tariffs on China.

Russia’s invasion of Ukraine — both countries are global breadbaskets that together exported almost a quarter of the world’s wheat supply — triggered shockwaves in economies worldwide by sending prices for food and fuel shooting up.

Japan’s Finance Minister Shunichi Suzuki, speaking after a G7 meeting of ministers, “reconfirmed the G7’s unshakeable support” to Ukraine.

“We confirmed that Russia-owned assets that are under the G7’s supervision would not be transferred until Russia pays damages to Ukraine,” Suzuki said, adding that Moscow should also “pay long-term reconstruction costs.”

Any discussion on Ukraine is awkward for G20 host India, which has not condemned Russia’s invasion but is also part of the Quad grouping alongside Australia, the United States and Japan.

Yellen also cited debt restructuring progress in Zambia, which she discussed with Chinese officials in Beijing last week, and said she expected Ghana and Sri Lanka debt treatments would be finalized soon.

She said it was still too soon to lift restrictions placed on China during a trade war launched by former U.S. President Donald Trump.

“Tariffs were put in place because we had concerns with unfair trade practices on China’s side, and our concerns with those practices remain, they really haven’t been addressed,” Yellen said. “Perhaps over time this is an area where we could make progress, but I’d say it is premature to use this as an area for de-escalation.”

Yellen pointed to other work tackling debt distress and the reform of multilateral development banks, including the World Bank and other regional lenders, in efforts she said could unlock $200 billion over the next decade.

More than half of all low-income countries are near or in debt distress, double the case in 2015, she said.

G20 finance chiefs and central bank heads are due to meet Monday and Tuesday in Gandhinagar in Gujarat, the state where India’s independence leader Mahatma Gandhi was born.

World Bank chief Ajay Banga warned of a “deep mistrust… quietly pulling the Global North and South apart” over issues such as the climate change crisis, post-pandemic recovery efforts, the war in Ukraine and a lack of progress in the fight against poverty.

“The Global South’s frustration is understandable,” Banga said in an op-ed. “In many ways they are paying the price for the prosperity of others. When they should be ascendant, they’re concerned promised resources will be diverted to Ukraine’s reconstruction; they feel aspirations are being constrained because energy rules aren’t applied universally, and they’re worried a burgeoning generation will be locked into a prison of poverty.”

The International Monetary Fund said finding common efforts to tackle the weak global economy would be crucial.

The world will be looking for joint action to address rising economic fragmentation, slowing growth, and high inflation,” the IMF said in a statement ahead of the meeting.

The G20 will also discuss cryptocurrency regulations, as well as making access to financing to mitigate and adapt to the impacts of climate change easier for developing nations.”In the Global North, climate change means emissions reductions,” Banga said.  

“But in the Global South, it is a matter of survival, because hurricanes are stronger, heat-resistant seeds are in short supply, drought is destroying farms and towns, and floods are washing away decades of progress.”

A newly agreed first step on a fairer distribution of tax revenues from multinational firms reached by 138 countries Wednesday is also set to be delivered during the G20 talks.
…

Elon Musk says Twitter is still losing cash because advertising has dropped by half.

In a reply to a tweet offering business advice, Musk tweeted Saturday, “We’re still negative cash flow, due to (about a) 50% drop in advertising revenue plus heavy debt load.”

“Need to reach positive cash flow before we have the luxury of anything else,” he concluded.

Ever since he took over Twitter in a $44 billion deal last fall, Musk has tried to reassure advertisers who were concerned about the ouster of top executives, widespread layoffs and a different approach to content moderation. Some high-profile users who had been banned were allowed back on the site.

In April, Musk said most of the advertisers who left had returned and that the company might become cash-flow positive in the second quarter.

In May, he hired a new CEO, Linda Yaccarino, an NBCUniversal executive with deep ties to the advertising industry.

But since then, Twitter has upset some users by imposing new limits on how many tweets they can view in a day, and some users complained that they were locked out of the site. Musk said the restrictions were needed to prevent unauthorized scraping of potentially valuable data.

Twitter got a new competitor this month when Facebook owner Meta launched a text-focused app, Threads, and gained tens of millions of sign-ups in a few days. Twitter responded by threatening legal action.
…

On the heels of a trip to Beijing, U.S. Treasury Secretary Janet Yellen is back in India for the third time in nine months, this time to meet finance ministers from the Group of 20 nations about global economic challenges like the increased threat of debt defaults facing low-income countries.

Yellen will use her time in Gandhinagar to try to foster warming relations between the U.S. and India. She also plans a stop in Hanoi, Vietnam, to address supply chain reliability, clean energy transition and other matters of economic resilience.

Yellen’s goals for her time in India: press for debt restructuring in developing countries in economic distress, push to modernize global development banks to make them more climate-focused and deepen the ever-growing U.S.-India relationship.

Yellen’s frequent stops in the country signal the importance of that relationship at a time of of tensions with China.

India’s longstanding relationship with Russia also will loom as the Kremlin’s invasion of Ukraine continues despite U.S. and allied countries’ efforts to sanction and economically bludgeon Russia’s economy. India has not taken part in the efforts to punish Russia and maintains energy trade with that country despite a Group of Seven agreed-upon price cap on Russian oil, which has seen some success in slowing Russia’s economy.

Still, the U.S. increasingly relies on India and has courted its leaders.

President Joe Biden hosted a White House state visit honoring Indian Prime Minister Narendra Modi in June, designed to highlight and foster ties. The two leaders pronounced the U.S.-India relationship never stronger and rolled out new business deals between the nations.

Raymond Vickery Jr., a policy expert on U.S.-India relations at the Center for Strategic and International Studies, said Yellen’s coming to India shortly after visiting China is meaningful in that Indian officials “are going to want to know in great detail what happened in the meetings with her Chinese counterparts and see where it fits with their perspective on economic relations with China.”

“They’re going to want to know whether or not the United States is serious about moving some of its sourcing activity from China to India.”

A senior Treasury official, speaking on condition of anonymity to preview Yellen’s trip, said there was hope that debt treatments for Ghana and Sri Lanka will be discussed and completed quickly at the meetings.

Sri Lanka and Ghana defaulted on their international debts last year, roughly two years after Zambia defaulted. And more than half of all low-income countries face debt distress, which hurts their long-term ability to function and develop.

Last month, Zambia and its government creditors, including China, reached a deal to restructure $6.3 billion in loans, on the sidelines of a global finance summit in Paris.

The agreement covers loans from countries such as France, the U.K., South Africa, Israel and India as well as China — Zambia’s biggest creditor at $4.1 billion of the total. The deal may provide a roadmap for how China will handle restructuring deals with other nations in debt distress.

Yellen’s trip comes shortly after she spent a week in China, meeting the nation’s finance ministry and discussing mutual trade restrictions and national security concerns.

Harold W. Furchtgott-Roth, a senior fellow at the Hudson Institute, said Yellen’s trip to India “is a reflection of a naturally developing alliance.”

“India has a great deal of tension with China — they have constant border disputes,” he said.” And India wants to develop and has developed into sort of an Indian Ocean naval power, which is also a region that China wants to develop.”
…

On a recent cross-border shopping trip, four friends from Fray Bentos, Uruguay, visited the nearby Argentine city of Gualeguaychú, where they could afford to live lavishly and snap up eye-popping bargains.

Thanks to a huge disparity in the two South American countries’ currencies, Stella Ferreira and a friend treated themselves to a low-cost pampering at a hair salon, while two other friends looked for stylish but inexpensive pants.

With its economy faltering, Argentina’s peso has plunged against the U.S. dollar and its annual inflation is 115.6%, one of the highest rates in the world. In contrast, Uruguay’s economy is more stable, with low inflation and a stronger currency.

The result has been a huge flow of shoppers from Uruguay throwing an economic lifeline to struggling Argentine stores and restaurants in cities like Gualeguaychú, Concordia and Colón.

But there’s a downside for Uruguayan businesses along the border: In the provinces of Salto, Paysandú, Río Negro and Soriano, municipal authorities say 170 stores closed in the first five months of this year. Businesses still open complain they hardly have any customers.

With about $100 apiece, the four friends planned to get their hair done, buy clothing, gasoline and other goods and eat out in Gualeguaychú, in Entre Rios province, which for more than a year has been a shopping mecca for Uruguayans looking for deals. Back in Uruguay, Ferreira, 29, said that same $100 would “get your hair done and not much else.”

Uruguayan businesses just across the border are finding it hard to compete with such bargains.

“Everything is very quiet,” said Susana Guerrero, owner of a shop that sells cheese and sweets in Salto. “I lost an employee, and I did not replace him.”

Guerrero went to Gualeguaychú on an exploratory trip and now sees why Uruguayans are going there to shop. The price differences between the two countries can be staggering. A liter of sunflower oil that costs $5 in Uruguay is 50 cents in Argentina. A jar of skin-care cream that costs $10 in Uruguay can be had for a dollar across the border. And a liter of gasoline in Uruguay is close to $2. In the Argentine province of Entre Rios it is 52 cents.

“Yes, it’s cheap and we can’t fight it,” Guerrero said.

Fray Bentos storefronts, meanwhile, are covered with signs offering specials in a bid to attract customers.

“This year, sales have dropped by 40% or more,” said Alicia Nedor, who works in a pharmacy. She said the sector is seeing its worst crisis in decades.

Nedor, 70, said several small businesses have closed in Fray Bentos and the big ones have laid off staff.

Cross-border bargain hunters also hail from neighboring Chile, Paraguay and Brazil. In Uruguay, industry representatives have called the phenomenon a “border pandemic” and even the country’s president has acknowledged the problem.

“The prices of goods in Argentina are extremely cheap, and naturally its neighbors consume where it is cheaper for them,” President Luis Lacalle Pou said in early May. “This creates an imbalance. We have applied measures, but it is not enough.”

The government then introduced additional measures, including tax breaks for Uruguayan businesses and a 5-kilogram limit on what Uruguayans returning from Argentina can bring with them. But business leaders say the controls are not applied and are demanding a “zero-kilo” border policy, something that Lacalle Pou has rejected.

Lacalle Pou said the government will seek to make sure contraband doesn’t cross the border but added that “it is impossible to solve the exchange rate problem with Argentina.”

The Catholic University of Uruguay has developed a Border Price Indicator for the Argentine city of Concordia, about 200 kilometers (125 miles) north of Gualeguaychú. According to its latest data from May, it is 59% cheaper to buy a basket of food, drinks, clothing and household products in Concordia than in the Uruguayan town of Salto.

The price gap reflects the devaluation of the Argentine peso, which has lost 47% of its value against the U.S. dollar at the official rate so far this year.

Argentina has struggled with inflation multiple times over the last century. Its current crisis started in 2018 but has worsened in the past year and a half, said María Castiglioni, director of C&T Asesores Económicos. The inflation problem arose from several factors, she said, including government overspending and problems in monetary policy.

The country doesn’t have funds to solve its overspending because it has lost access to the international debt market after multiple defaults on its loans. The loss of access means other countries do not feel confident lending money to Argentina.

As this debt crisis arose, the government turned to the country’s central bank for assistance. In an effort to sustain the economy, the central bank hasn’t stopped printing pesos, which has led to the devaluing of the peso. The increase in the flow of pesos also led to ballooning inflation that Argentinians experience every day.

On holidays and weekends, long lines of cars wait to cross the General San Martín International Bridge that crosses the Uruguay River and joins Argentina’s Gualeguaychú with Fray Bentos in Uruguay.

Between June 30 and July 4, which included the first days of the southern winter vacation for Uruguayans, more than 100,000 people left Uruguay for Argentina, most of them through the three border crossings in Entre Ríos. The majority were Uruguayans, although there were other nationalities. Uruguay has a population of about 3.4 million people.

Claudio Gatt, who owns the hair salon Ferreira and her friends went to, said that the flow of Uruguayans into Argentina has been like oxygen.

“If they were not here, sales would drop by a minimum of 50%,” he said.

Signs reading “dollars accepted” hang in store windows in Gualeguaychú and its main streets are filled with visitors from different parts of Uruguay. Half of the purchases of medicines and cleaning supplies in the city are by Uruguayans, according to a local business chamber.

For Alejandro Ramos, a 49-year-old Argentine teacher who lives in Gualeguaychú, the problem is not the Uruguayans, because “they come and buy legally.”

The problem “is us,” he said. “We first have to realize that we are an economic disaster in this country.”
…