Central Bank Of Turkey Initiates Rate Cuts With 250bp And Narrows The Corridor

Central Bank

Economic

Summary:

At the December Monetary Policy Committee meeting, the CBT cut its policy rate by 250bp to 47.5%, which was more than the consensus forecast of a 150bp reduction, but in line with our expectation and narrowed the interest rate corridor from 600bp to 300bp.

At the final MPC meeting of the year, the Central Bank of Turkey (CBT) initiated an easing cycle as widely expected and cut the policy rate by 250bp to 47.5%, though expectations related to the size of the cut varied between 100bp-to-250bp. Additionally, the CBT narrowed the interest rate corridor from 600bp to 300bp (by setting the overnight borrowing and lending rates 150 basis points below and above the policy rate), returning to the width before the March 2024 meeting. Given excess liquidity in the system, creating downward pressure in ON rates being sterilised by the CBT through net open market operations (OMO), and sell-side TL currency/gold swap auctions (reverse swap), the narrower corridor will reduce the volatility in ON rates and push closer to the policy rate.

The governor’s remarks at the introduction of the latest Inflation Report in early November signalled the start of rate cuts as he explained that keeping the policy rate unchanged implies a more restrictive monetary stance as inflation and inflation expectations decline. Accordingly, we saw a revision to the statement last month with an implicit guidance on real rates and setting the scene for the start of gradual rate cuts in line with a decline in realised and expected inflation. Given this backdrop of raising expectations for a rate cut in December, recent developments have also added to them, including i) a lower-than-expected 30% hike in minimum wage, implying a measured 1ppt additional impact on the headline inflation and ii) eight planned MPC meetings in 2025 vs twelve originally, hinting at a higher size of rate cuts per meeting.

In the December statement, the CBT has kept the policy guidance with a continuing commitment to i) keep rates higher for longer until a significant and sustained decline in the underlying trend of monthly inflation and convergence of inflation expectations to the CBT’s projected forecast range and ii) determine the level of the policy rate in a way to ensure the tightness required by the projected disinflation path, taking into account both realised and expected inflation. The CBT also added a relatively hawkish message and stated that it would take its decisions “prudently on a meeting-by-meeting basis with a focus on the inflation outlook”. While implying a continuation of interest rate cuts in the period ahead, the addition to forward guidance shows that the cuts will depend on the data, but not be aggressive and uninterrupted.

In the MPC note, the other points worth mentioning are:

Regarding the assessment of the inflation outlook, while acknowledging flat underlying trend in November the CBT has remained cautiously optimistic as it sees leading indicators point to a decline in the underlying trend in December with a moderation in unprocessed food inflation after an elevated course in October and November.

For domestic demand, the bank assessed that domestic demand continues to slow down in the last quarter in currently disinflationary levels.

The CBT continues to expect a significant contribution from increased coordination of fiscal policy to the disinflation process. The government announced some actions recently, including an increase in withholding tax collected from dividends, introduction in tax for e-commerce transactions, more than 40% adjustment in some administrative fines. This implies that the government is taking some steps towards the 3% budget deficit target for 2025, supporting the CBT view.

All in all, given the expected normalisation in unprocessed food prices leading to the higher-than-expected November inflation, growing evidence of an economic slowdown and recent CBT signals implying the initiation of an easing cycle, the bank cut the policy rate in December. While the cut was 250bp with a message implying data-driven, cautious, and meeting-based decision-making, the spread between overnight borrowing and lending narrowed to 300bp. The narrowing of the corridor would prevent a significant decline in ON rates with the excess liquidity.

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CEPR

Economic

The transition to a greener economy is a necessity (Kanzig 2024). It will require significant shifts in the way goods and energy are produced and consumed (European Parliament 2024) as well as the reallocation of production factors, including workers. Although the overall effects in terms of aggregate economic output and employment could be relatively small, the effects are likely to be concentrated – by economic activity, geographical area, and workers’ characteristics – with a risk of amplifying inequalities in outcomes and opportunities. In particular, the transition is expected to induce a contraction of jobs in high-polluting activities (often labelled ‘brown’ jobs) and an expansion of so-called ‘green’ jobs, or those involving green activities according to the O*NET classification (Valero et al. 2021, Vona et al. 2018, Vandeplas et al. 2022, Causa et al. 2024, Causa and Phillips 2024, O*NET 2010). A just transition in the labour market should minimise costs for individuals and communities. Achieving this will require policies to improve the allocation of workers and support the re-employment of dismissed ones, especially towards greener occupations, while managing and minimising the scarring effects associated with job losses in polluting industries. In addition, given the marked differences in industrial specialisation across regions, policy interventions should be place-based.

Workers in high-polluting occupations tend to have lower educational attainment (Causa et al. 2024). In cases of job dismissal, they often experience larger earnings losses compared with workers in non-energy-intensive and transport sectors (Barreto et al. 2024). Comprehensive labour market policies and effective educational systems and upskilling programmes can help mitigate such losses and the risk of scarring, while also accelerating the green transition. Recent empirical work on a large sample of EU countries (Causa et al. 2024) finds that the estimated risk of long-term unemployment for individuals displaced from high-polluting jobs is lower, after accounting for country-specific effects and individual characteristics, in countries where higher shares of the population have a tertiary education and more adults participate in training (Table 1, Panel A). To facilitate the matching of workers to new jobs, training and active labour market programmes should be complemented with balanced and adequate income support and unemployment benefits, which are associated with a higher probability of transitioning from unemployment to employment, particularly among the long-term unemployed (Table 1, Panel B).

In addition, policies fostering access to quality education and training can help fulfil the increasing demand for workers in green jobs (as defined in Causa et al. 2024) since, net of other observable characteristics, the odds of getting a green job are twice as high for workers with high levels of education, especially in STEM fields (Figure 1). In fact, the transitions from unemployment to green jobs are more likely in countries with higher rates of adult proficiency in literacy and numeracy and a higher share of workers with formal training (Table 1, Panel A).

Labour Market Transitions in a Greener Economy_1

Labour Market Transitions in a Greener Economy_2

In terms of promoting transitions from joblessness to employment in green jobs, beyond the key role of education and training, labour market institutions are instrumental. These include active labour market policies, cash support to unemployed workers, and well-designed institutions to promote effective collective wage bargaining and social dialogue. Progress in this area is particularly beneficial for women, less-educated workers, and those living in rural areas (Table 1, Panel A). Policies like training, public employment services that support job searches (PES), and employment incentives are associated with higher chances of transitioning from non-employment to green jobs for higher-educated workers (Table 1, Panel B). While not causal, this association suggests the need to better design and target such policies for more exposed and vulnerable workers, especially those with lower education levels.

On the other hand, the transition from unemployment to green jobs is less likely in countries with relatively high employment protection and product markets and occupational entry regulations that hinder business and labour market dynamism (Table 1, Panel C). Such an association is particularly strong for vulnerable groups, like lower-educated individuals and those just entering the labour force after completing their studies. These results are in line with the general literature on the effects of employment protection legislation on job-finding rates and labour market transitions (Bassanini and Garnero 2013, Causa et al. 2022, Scarpetta 2014).

Labour Market Transitions in a Greener Economy_3

The labour market literature shows that housing policies favouring residential mobility tend to facilitate the spatial reallocation of workers and promote business dynamism, enhancing the ability of workers to seize job opportunities (Causa et al. 2021, Causa et al. 2020, Andrews et al. 2011). This is also the case in the context of the green transition: for example, hirings from studies are hindered by strong house price dynamics, with higher house prices acting as possible barriers to geographical mobility. Social rental housing and the provision of housing allowances (i.e. housing-related monetary benefits) increase the odds of an individual moving from joblessness to a job, including a green job, with the benefits of housing allowances being more widespread than those of social housing. At the same time, these housing support policies are associated with significantly lower risks of long-term unemployment, especially for lower-educated individuals. Finally, reducing excessively rigid rental market regulations could also lift barriers to geographical mobility and enhance transitions from joblessness to employment (Table 1, Panel D).

Our findings demonstrate that structural policies known to support labour market inclusiveness and efficiency are also likely to support a green transition that is both smooth and fair. Yet, they also highlight that the impact of the transition to a greener economy and climate mitigation policies is uneven across socioeconomic groups characterised by different educational and skill background as well as geographical areas, such as territories and regions characterised by different industrial specialisation structures. Successful policy experiences in the past can help national and sub-national governments build tailored approaches to support an efficient and fair labour market transition process.

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Warren Takunda

Cryptocurrency

Bitcoin reserves on Binance, the world’s largest crypto exchange by trading volume, have dropped to levels not seen since January 2024, just two months before Bitcoin’s price skyrocketed 90% in March.

If Bitcoin follows the same pattern with its current price of $98,680, it would mean a $187,500 price in a matter of months.

Signals investors are confident

Binance’s Bitcoin reserves recently dipped below 570,000 BTC — the lowest level since January, according to CryptoQuant contributor Darkfost in a Dec. 25 analyst note.

When exchange reserves decline, this typically signals that investors are moving Bitcoin into cold storage and are bullish about its long-term price prospects. Binance Bitcoin Reserves Hit January Levels — Months Before BTC Jumped 90%_1

Binance Bitcoin Reserves Hit January Levels — Months Before BTC Jumped 90%_1

Bitcoin’s price was $98,680 at the time of publication. Source: CoinMarketCap

Binance’s reserves dropped to a similar level in January, and two months later, on March 13, Bitcoin surged to $73,679, marking a then all-time high.

“When periods of withdrawals occur, it is often a sign of positive momentum building in the market,” Darkfost said.

Bitcoin dominance hovering below 60%

Bitcoin dominance currently stands at 58.4%, just below the critical 60% level, according to TradingView.

However, some analysts say the 60% level could signal a wider rotation toward other crypto assets.

On Aug. 18, Into The Cryptoverse founder Benjamin Cowen said he believed Bitcoin “will make that final move” toward 60% no later than December, which it ended up tapping just two months later on Oct. 30. Binance Bitcoin Reserves Hit January Levels — Months Before BTC Jumped 90%_2

Binance Bitcoin Reserves Hit January Levels — Months Before BTC Jumped 90%_2

Bitcoin dominance is sitting at 58.4% at the time of publication. Source: TradingView

Meanwhile, Bitcoin has struggled to hold above the psychological level of $100,000 since first breaking it on Dec. 5.

Bitcoin’s price has been trading under the $100,000 mark since Dec. 19, after reaching a new high of $108,300 recorded on Dec. 17.

According to Ryan Lee, chief analyst at Bitget Research, Bitcoin’s price may exceed $105,000 once liquidity returns after the Christmas holidays.

Bitcoin’s current downtrend is a typical symptom of the holiday illiquidity, Lee recently told Cointelegraph:

“Post-Christmas, market activity typically picks up again, with funds expected to actively position for sectors that might benefit from Trump’s upcoming inauguration… The expected trading range for BTC this week is $94,000 - $105,000.”

Source: Cointelegraph

Risk Warnings and Disclaimers

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PIMCO

Economic

As major central banks lower interest rates, is the prolonged and painful downturn in commercial real estate (CRE) finally coming to an end? Yes, at least in some sectors, according to senior investors from PIMCO’s commercial real estate platform. In a recent roundtable discussion, they emphasized that recovery will likely be slow and uneven, requiring a strategic focus on specific geographies and sectors, along with a considered choice between debt and equity investments.

Q: The commercial real estate market has been at an impasse throughout much of 2024. Looking ahead, do you believe the market will finally turn the corner in 2025?

John Murray (managing director, global private commercial real estate): Yes, there appears to be more willingness to bring transactions to market following the September rate cut by the Federal Reserve. We are seeing some green shoots, particularly in core transactions in the multifamily sector, and redemptions in core open-end funds seem to be slowing.

That said, I don’t expect a sharp rebound in 2025 similar to what occurred after the global financial crisis (GFC). During that period, the industry was aided by a plethora of Federal Reserve programs, including quantitative easing, which led to a dramatic decline in capitalization rates.

Although the Fed has finally begun to cut rates, we don’t expect long rates to fall anywhere close to 2021 levels. Thus, cap rates should remain elevated relative to 2021, and this, along with the growing wall of maturing CRE loans, suggests the thawing process will be prolonged.

Russell Gannaway (managing director, alternative credit): I agree that we should see increased activity and a trend toward recovery next year. Public markets already indicate that we are farther along the route to recovery than private markets suggest. For instance, valuations for equity real estate investment trusts (REITs) and collateralized mortgage-backed securities (CMBS) are approaching 2021 levels. While public markets could be wrong, I believe we will start to see private markets catch up next year.

François Trausch (managing director, PIMCO Prime Real Estate): Investors should keep in mind that in Europe, unlike in the U.S., interest rates were negative or close to zero from 2009 to 2022, and most market players got used to this. So while rates are coming down, they are not likely to reach levels anywhere close to what we saw after the GFC. This requires a significant change in mindset: In our view, investors should not rely on low rates or decreasing cap rates, but focus instead on pockets of growth where rent and net operating income (NOI) will increase. This transition will take time.

That said, while we don’t expect substantial growth across Europe, we can reasonably expect growth in Asia, which could help markets recover more quickly.

Q: Have valuations bottomed out?

Gannaway: Valuations are in the process of bottoming out, if they have not already done so. I would say this is the case in certain areas.

Seray Incoglu (executive vice president, global private commercial real estate): Class A buildings have likely bottomed out, with some selling below replacement cost. However, Class B and Class C properties, particularly in sectors such as office and life sciences, still have room to decline. Delinquency rates and maturity defaults are marginally elevated, but this may not fully reflect the extent of the distress. For example, delinquency rates for CRE collateralized loan obligations (CLOs) have increased to 7% from less than 1% before the pandemic. CRE issuers are taking back defaulted loans at par, likely masking some underlying issues still facing the market.

Murray: To quantify, we believe liquidation values have hit bottom, having fallen 20%–40% from their peak. Recent core-focused transactions traded at 20% to 25% discounts to 2021 levels. Interestingly, the NCREIF Open End Diversified Core Equity Index suggests U.S. CRE values have only fallen 16%, so we probably have a bit more to go, at least as it relates to formal indices such as this one.

Trausch: To the extent investors hold on to assets and forced sales are limited, we are at the bottom, at least according to the valuation companies. However, if we see a pickup in forced sales – and there is good reason to believe that could happen – valuations could face further pressure. Remember, the pretend-and-extend practices that followed the GFC could be justified at the time because rates came down quite quickly. But now, if rates fall more slowly, it becomes less justifiable for lenders, especially banks, which are growing more impatient with defaults and their impact on capital charges.

Q: What factors do you think the market is currently underappreciating or overestimating?

Trausch: Rates are declining in Europe, but for the wrong reasons – specifically, low economic growth prospects, particularly in Germany and France, although growth remains stronger in Spain and Italy. In addition, the market’s newfound excitement about office properties may be overdone. While institutional investors will hang on to their best properties, it’s important to remember that well-located offices and those with alternative uses represent only a small segment of the market. Tenants are becoming more discerning, favoring higher-quality, more sustainable assets. This trend presents an opportunity for both owners and lenders to upgrade properties to core-plus status. But it also highlights a risk for weaker properties, which are likely to continue facing declining occupancy over time.

Gannaway: I agree. There is no benefit to being early to this party. Remember that Class B and C malls took 10 years to transition to alternative uses. Furthermore, I don’t think the market fully appreciates how slowly and carefully the Fed will reduce rates.

Murray: Likewise, I think the market is overestimating the significance of the recent rate cuts on valuations. Lower short-term rates are like a bandage: They reduce the bleeding but don’t necessarily cure the wound, which is higher cap rates.

Incoglu: The market may also be overlooking how regulatory pressures on capital are driving a secular downshift in bank lending. Despite recent signs of improvement in bank lending conditions, the focus of banks has been and will remain on core assets, maintaining lower leverage, generating income from products such as deposits and investment banking fees, and creating opportunities for alternative lenders.

Q: In our Real Estate Outlook in July 2024, we indicated a preference for debt over equity Investments in real estate. Does that inclination still hold?

Murray: Yes, it’s still an attractive time to be a lender across the risk spectrum. Interest rates remain elevated, and property valuations and business plans have been disrupted given the weak economic backdrop. In particular, we are seeing a lot more opportunities on the higher end of the risk spectrum for rescue capital and gap financing.

Trausch: We previously said, “Go broad in debt and stay narrow in equity.” While this remains true overall, we believe the market now presents a more attractive entry point for long-term equity investors than it did even six months ago, as liquidation values bottom out and supply pressures subside. That said, investors should remain disciplined and highly selective.

Q: What are your highest-conviction views regarding where and how to invest?

Gannaway: I continue to gravitate to the residential sector, which is underpinned by strong long-term supply/demand dynamics. In the U.S., we anticipate a housing shortage over the next five years, which will have clear implications for sustained or growing demand for build-to-rent strategies, as well as for existing single-family and multifamily properties. While there are still some near-term supply challenges, over the long run we believe it’s the right place to invest, with the Sun Belt being a great example of this.

Trausch: We should pay attention to the residential sector, but as Russ said, it’s essential to be discerning and identify the right pockets of opportunity. Another one of these is multifamily housing in Japan, where household formation is still increasing in big cities such as Tokyo and Osaka, tenant delinquency is rare, and financing conditions are attractive.

More generally, student housing has shown strong rental growth – not only in the traditional markets of the U.S., the U.K., and Australia, but also in continental Europe and parts of Asia.

Murray: Data centers remain at the top of my list, particularly in Europe. Demand continues to grow globally, but we believe in the convergence story in Europe, which is five to seven years behind the U.S. in data center capacity relative to its population. The gap is underpinned in part by digital sovereignty regulations, which require countries to retain critical data, software, and hardware within their borders.

Incoglu: I would be remiss not to flag sectors where we are exercising greater caution. During and immediately following COVID-19, the life sciences sector became highly sought after for both investment and development. However, net absorption has shown signs of deceleration in recent quarters due to new supply and reduced tenant demand in several markets. That said, select operators in specific markets are well-positioned to navigate and overcome current market challenges.

Q: Any parting thoughts?

Incoglu: This cycle will not unfold like any previous one. This alone will create volatility and tactical trade opportunities, particularly in public markets. As such, investors should consider how they might allocate across all four quadrants – public and private equity, and public and private debt.

Gannaway: There remains a clear gap between public and private markets that must close in one direction or another. The ability to accurately assess relative value – whether in public or private markets, or in determining where to invest across the capital stack – will likely be the skill set that separates the winners from the losers in 2025.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Cohen

Cryptocurrency

Economic

Crypto was once a fringe sideshow for the investing public, a concern for D.C. policymakers and a subject of ridicule for top Wall Street figures.

That changed in 2024.

Digital assets such as bitcoin (BTC-USD) can now be owned and traded by regular Americans like a stock. Some of the biggest players on Wall Street are hailing it as a wise investment. And an incoming administration in Washington, D.C., is promising major legislative changes to support the industry.

Crypto's widespread acceptance translated into major gains for investors who were along for the ride.

Those holding bitcoin are up 126% since the beginning of the year as the price of the world’s largest cryptocurrency set new records and surged past $100,000 following the election of Donald Trump. The market value of all crypto swelled by nearly $1.7 trillion, according to Coinmarketcap.

"It's all lining up for the crypto industry right now," Ian Katz, a managing partner with Capital Alpha, told Yahoo Finance.

Enthusiasts don’t see the rally ending anytime soon.

This time next year, "we're going to have the same conversation, that bitcoin has had an incredible run," Bitwise chief investment officer Matt Hougan told Yahoo Finance. Bitwise expects bitcoin to cross $200,000 before the end of 2025.

One of the biggest Wall Street beneficiaries of this shift, BlackRock (BLK) CEO Larry Fink, was once a "proud skeptic" of bitcoin. The boss of the world’s largest money manager has evolved into one of its best-known advocates.

"I was a proud skeptic, and I studied it, learned about it, and I came away saying, 'OK, you know, my opinion [for] five years was wrong,'" Fink said earlier this year while discussing his previous views with CNBC.

His firm, BlackRock, now recommends intrigued investors put "as much as 2%" of their portfolio into bitcoin.

"We believe bitcoin is an asset class in itself; it is an alternative to other commodities like gold," Fink told analysts during an October earnings call.

Crypto Got Everything it Wanted in 2024_1

BlackRock and 10 other money managers such as Fidelity Investments and Franklin Templeton got the green light in January to launch spot bitcoin exchange-traded funds, allowing everyday investors to get exposure to the world’s largest cryptocurrency without having to own it.

BlackRock's ETF, IBIT, then became the fastest-growing ETF in history. The 11 ETFs that launched amassed $100 billion in assets under management as of Dec. 18, according to JPMorgan Research.

"You had folks who would have been allocating to bitcoin, but because there was no traditionally trusted, easy, efficient way to do it for their circumstances, they weren't in it," Robbie Mitchnick, BlackRock's head of digital assets, told Yahoo Finance. "And then the ETFs changed that."

BlackRock’s embrace of crypto (it also launched a smaller spot ether ETF in late July) coincided with an election year where pro-crypto congressional candidates received lots of industry support. Some of crypto's biggest players — including Coinbase Global (COIN), Ripple, and venture firm Andreessen Horowitz — spent some $135 million via super PACs.

Crypto Got Everything it Wanted in 2024_2

As a candidate, Trump also made a number of promises to the industry. He pledged to fire SEC Chair Gary Gensler, one of the industry’s greatest antagonists; appoint a crypto presidential advisory council; and establish a "strategic national bitcoin stockpile" with the help of Congress.

Whether the president-elect will make the US government a bitcoin holder or even buyer remains a hot debate.

But Gensler has already given his resignation notice and will be replaced by well-known crypto lawyer Paul Atkins if confirmed. For years, Atkins has made it clear he favors clearer regulations of cryptocurrencies that don’t stifle innovation or impose unnecessary oversight.

Trump has also appointed venture capitalist David Sacks to the role of AI and crypto czar. Through his venture firm, Sacks has already backed a number of crypto and AI firms.

Some other Trump Cabinet appointees have also in the past disclosed or discussed their exposure to crypto.

Crypto Got Everything it Wanted in 2024_3

If those executive branch appointees weren't enough, the industry is also eagerly awaiting what will easily be the most pro-crypto Congress in history.

"People are shocked by it because we're a new industry, and we're newly influential in Washington," Nic Carter, a partner and co-founder of crypto venture firm Castle Island Ventures, told Yahoo Finance.

The GOP is expected to push forward pro-crypto legislation that would offer clear regulation of stablecoins and the broader crypto market and even give big banks a better route to interact with digital assets.

Carter has met with Republicans to discuss the crypto world's lack of US banking access.

"We were an industry that's been picked on relentlessly for the last four years, and it's only natural that we would try and protect our interests," he added.

Crypto Got Everything it Wanted in 2024_4

But many regulated US banks still can’t touch crypto, Goldman Sachs CEO David Solomon noted at a recent Reuters conference.

"Everyone's speculating as to how that regulatory framework will evolve, but it's still unclear how the regulatory framework is going to evolve," Solomon added.

It’s still anyone's guess how long it could take for the first piece of crypto legislation to land before the House and Senate and then Trump.

"I would just caution people, if you think on Jan. 20 a switch is going to flip and everything's going to be better and roses for bitcoin and the digital asset community, it's just not how Washington works," Anthony Scaramucci, a crypto investor who worked in Trump’s first administration, told Yahoo Finance.

Crypto Got Everything it Wanted in 2024_5

These unknowns aren't giving much pause to some crypto evangelists though.

"Every day for the past four years I've said, buy bitcoin, don't sell the bitcoin. I'm going to be buying more bitcoin,” MicroStrategy chairman and staunch bitcoin bull Michael Saylor told Yahoo Finance this month.

“I'm going to be buying bitcoin at the top, forever."

Even some remaining skeptics on Wall Street admit it would have been smart to get in earlier.

“Of course, I wish I bought something that trades at 100 times the price it traded at a few years ago, right?” Citadel CEO Ken Griffin said at the NYT DealBook Summit earlier this month.

“We all have FOMO.”

Source: yahoo finance

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Owen Li

Economic

Stocks

Toyota Shares Gain for Second Day after Report on ROE Target_1

The stock gained 6% in Tokyo, capping an 11%, two-day gain. Shares advanced on Wednesday after the Nikkei newspaper reported the company plans to increase its ROE to 20%, citing an unidentified executive. A spokesperson said that Toyota “doesn’t have an explicit target or deadline” for ROE.

If the report is accurate, “the company would need to boost earnings from the value chain, in order to further propel profit margins upward,” Morgan Stanley MUFG Securities Co. analyst Shinji Kakiuchi wrote in a report. “We’ll also be watching for Toyota, as a part of moves to improve capital efficiency, to take funds from selling its equity holdings to bolster shareholder returns further.”

Toyota shares have jumped over 20% this year, outperforming the broader Topix index, as a weaker yen helped boost income in its home currency. Still, the latest announcement by the world’s biggest automaker showed global sales plateaued in November as lackluster demand coalesced with a pause in production at two plants.

Here are what other analysts and investors are saying on Toyota:

Toyota Shares Gain for Second Day after Report on ROE Target_2

SBI Securities Co. (Koji Endo)

Toyota first revealed its 20% ROE target in its interim financial results briefing

The target is ambitious; Toyota will need to take on drastic measures, and a large-scale shareholder return policy will be essential to achieve its goal such as increasing dividends or conducting buybacks

Shinkin Asset Management Co. (Naoki Fujiwara)

Talks of Toyota’s 20% ROE target leads to expectations of unwinding of cross-holdings, and shareholder returns

Investors likely focused on the speed of which all this may happen

Daiwa Securities Co. (Eiji Kinouchi)

Many investors have been underweight the stock, so there are expectations its positive performance will continue after the new year

Source: Bloomberg

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Justin

Economic

Forex

BEIJING (Dec 26): China revised upwards its 2023 gross domestic product (GDP) by 2.7% to 129.4 trillion yuan (US$17.73 trillion or RM79.3 trillion), a top statistics official said on Thursday, while releasing the fifth national economic census.

Policy support late this year has set China's economy on track to hit a growth target of "around 5%" as activity warmed slightly, but challenges such as potential US tariff hikes still weigh on prospects for next year.

Kang Yi, the head of the National Bureau of Statistics, made the remarks at a press conference in Beijing, the capital, adding that the bureau would publish further details of the revision on its website in the next few days.

China's economy has "withstood the test of multiple internal and external risks over the past five years, and maintained a generally stable trend while progressing," Kang said.

The fifth economic census carried out over the past five years encompassed the three years of the Covid-19 pandemic, which had a significant impact on the economy, he said.

The international environment had witnessed "profound and complex changes" since the previous such census, he added.

The revision of 2023 GDP would not have a significant impact on China's 2024 GDP growth rate, Lin Tao, the bureau's deputy head, told the same briefing, however.

On Thursday, the World Bank raised its forecast for China's economic growth in 2024 and 2025, but warned that subdued household and business confidence, along with headwinds in the property sector, would keep weighing it down next year.

The economic census showed changes in China's job market, with 25.6% more people employed in the tertiary industries at the end of 2023 than at the end of 2018, but secondary industries had 4.8% fewer employees.

As a severe property crisis hobbles a macroeconomic rebound, employees of property developers fell 27% to 2.71 million by the end of 2023 against the corresponding 2018 figure, the economic census data showed.

Overall employment in the property industry rose 40.2% to stand at 1.04 million by the end of 2023 over the figure at the end of 2018.

Tertiary industries range from retail to transport, catering, accommodation, finance and property, while secondary industries cover mining, manufacturing, utilities and construction, for example.