Market Uncertainty Rises Amid Italian Bank Tax, US Downgrades, Toshiba Delisting
Unexpected events are fueling market uncertainty.
An unexpected piece of news suddenly triggered a crash in European markets. On August 8, local time, the Italian cabinet unexpectedly approved a tax plan that would impose a “windfall profit tax” on the banking industry. Affected by this, Italian bank stocks collectively dived, and the Italian banking sector plummeted 7.6%. European stock markets also set off a wave of selling. As of the close, Italy’s FTSE MIB index fell by more than 2%, leading the decline in European stock markets. The Eurozone Stoxx 50 index and the German stock index both fell by more than 1%.
The U.S. banking industry has also encountered a “crisis.” The three major U.S. stock indexes opened lower that night. As of the close, the Nasdaq fell 0.79%, the Dow fell 0.45%, and the S&P 500 fell 0.42%. On the news side, Moody’s released a report on the 7th that it downgraded the credit ratings of 10 small and medium-sized banks in the United States and put 6 large US banks on the downgrade watch list.
In the Japanese market, the century-old giant is about to come to an end. On August 7, Japan’s Toshiba Corporation announced that a consortium dominated by “Japanese industrial partners” will officially launch a tender offer for Toshiba with a total amount of about 2 trillion yen (about 101 billion yuan). If the acquisition plan is approved, Toshiba will delist within 2023.
In addition, bad news suddenly came from the global epidemic. As one of the countries with the highest population density in the world, Bangladesh is experiencing a large-scale outbreak of dengue fever, with more than 60,000 people infected and more than 300 people dead. This figure hit a new high in this century. The country’s health ministry said this year’s dengue outbreak was unusually severe.
Banking “crisis”
An unexpected piece of news suddenly triggered a crash in European markets.
On August 8, local time, the cabinet led by Italian Prime Minister Meloni unexpectedly approved a tax plan that will tax banks’ “extra profits”. According to Bloomberg News, the tax will bring more than 2 billion euros (about 15.8 billion yuan) to the national coffers.
Italian Deputy Prime Minister Matteo said Italy had agreed to “take 40% of the extra billions of euros in banks’ profits” in 2023, which would be used to cut taxes and support mortgages for first-time buyers.
The news surprised the market. After the news was announced, Italian bank stocks dived collectively. Among them, the stock price of Intesa Sanpaolo once plunged 8.6% in intraday trading, and the stock price of UniCredit Bank plunged 7% in intraday trading, dragging the euro zone bank index plummeting 3.4%, the highest level since March this year. biggest drop.
Market panic spread, and European markets set off a wave of selling. As of the close, Italy’s FTSE MIB index fell more than 2%, leading the decline in European stock markets. The euro zone Stoxx 50 index and the German stock index both fell more than 1%.
Leonardo Pellandini, equity strategist at Julius Baer, said financials accounted for more than 30 percent of the Italian stock market, making it vulnerable to the newly approved tax.
Bloomberg Bank analyst Lento Tang estimates that because a special tax will be imposed on “extra profits” this year, the net profit of Italian banks in 2023 may be reduced by about 10%, which means that the Italian government will raise about 2 billion euros.
Although the “window profits tax” is limited to the Italian market, the move has drawn market attention to financial institutions in various European countries.
In fact, apart from Italy, other European countries are also considering similar taxation models. In Britain, banks face accusations of “profiteering” as rising interest rates boost their lending margins while putting huge pressure on customers; Spain outlines plans for a temporary tax on bank income for the first time in 2022 , to raise funds to help offset the cost of living crisis; In addition, some Baltic countries are also considering measures to increase taxes on commercial banks, because the increase in commercial banks’ loan interest rates has led to increased profits.
Bank of America also ushered in a “crisis”. Rating agency Moody’s released a report on the 7th, downgrading the credit ratings of 10 small and medium-sized US banks, and putting 6 large US banks on the downgrade watch list. Moody’s said that the expansion of commercial real estate risk exposure has become a key risk for the banking industry, which is mainly due to the continued interest rate hikes by the US Federal Reserve, telecommuting to reduce demand for office buildings, and financial institutions to tighten credit for commercial real estate projects.
Due to multiple negative influences, US stocks opened lower across the board, and then the decline expanded. As of the close, the Nasdaq fell 0.79%, the Dow fell 0.45%, and the S&P 500 fell 0.42%. Among them, the “four major U.S. banks” collectively closed down. Bank of America and Goldman Sachs both fell more than 2%.
Epidemic raid
On August 8, The Paper quoted the TASS news agency as reporting that the Ministry of Health of Bangladesh announced on its official website on the 7th that as of August 7 local time, the country has reported a total of 66,700 confirmed cases of dengue fever and 313 deaths this year. This figure is the highest since 2000. The country’s health ministry said this year’s dengue outbreak was unusually severe.
In addition, according to Reuters, more than 32,000 cases of infection have occurred in Dhaka, the capital of Bangladesh, which has caused a shortage of medical resources in the capital region.
According to the report, industry experts said that Bangladesh’s huge summer rainfall led to flooding, creating favorable conditions for the breeding of mosquitoes, while insufficient medical resources and ultra-high population density have led to further large-scale spread of the dengue fever epidemic. Experts predict that the number of dengue infections in Bangladesh will continue to rise rapidly and reach its peak in September this year, when the number will be “terribly large”.
Bangladesh’s health minister, Zahid Maleque, said the government had taken several initiatives to limit the spread of mosquito-borne diseases, including expanding hygiene awareness campaigns and organizing anti-mosquito drives after the rains.
According to reports, dengue fever is an acute mosquito-borne infectious disease prevalent in tropical and subtropical regions. The World Health Organization (WHO) pointed out that dengue fever has become the fastest-spreading and most widespread infectious disease in recent years, and the number of global infection cases can reach 100 million to 400 million cases every year. Although more than 80% of dengue fever cases are only mild or asymptomatic infections, dengue fever can still be fatal if not treated in time.
The century-old giant will delist
Japan’s century-old giant is about to come to an end.
According to Xinhua News Agency, on August 7, Japan’s Toshiba Corporation announced that a consortium dominated by Japan’s domestic fund “Japan Industrial Partners” (JIP) will formally initiate a total of approximately 2 trillion yen (approximately RMB 101 billion) to Toshiba. yuan) tender offer.
According to reports, the consortium is composed of more than 20 Japanese companies and will acquire Toshiba shares at a price of 4,620 yen per share, slightly higher than Toshiba’s latest closing price. So far, semiconductor manufacturer ROHM has announced that it will invest 300 billion yen, and ORIX has announced that it will invest 200 billion yen.
The tender offer is expected to close on Sept. 20, at which time the acquisition will go smoothly if the acquirer buys more than two-thirds of Toshiba shares. Toshiba plans to hold an extraordinary general meeting of shareholders in late November to discuss the tender offer. If the acquisition plan is approved at the meeting, Toshiba will delist within 2023.
Akihiro Watanabe, chairman of the board of directors of Toshiba Corporation, said that all the procedures are currently going on smoothly, and major shareholders have no strong objections to the JIP proposal.
Founded in 1875, Toshiba was once a symbol of the strength of Japan’s technology manufacturing industry. It is listed as Japan’s “Big Three White Household Appliances” along with Sharp and Panasonic. It has great influence in the fields of home appliances, electrical appliances, energy, and infrastructure.
For Toshiba Corporation, the financial fraud scandal exposed in 2015 at the turning point of its operation, the amount of fraud was as high as 230 billion yen. Since then, Toshiba has fallen into a financial crisis, and has been in a state of chaotic management and difficult operations for a long time. In 2017, Toshiba became insolvent and was on the verge of delisting.
On August 7 local time, Toshiba Corporation disclosed its latest financial report, which showed that in the second quarter of this year, the company had a net loss of 25.3 billion yen (about 1.3 billion yuan). The main reason for the loss is that the performance of Kioxia, a NAND Flash manufacturer in which Toshiba holds about 40% of the shares, has deteriorated due to poor memory market conditions.
In recent years, Toshiba has repeatedly reported mergers and acquisitions and reorganization plans, all of which were aborted. In March of this year, Toshiba’s board of directors reluctantly stated that it was ready to accept the acquisition proposal of the consortium led by “Japanese industrial partners”.
