By David Shepardson

WASHINGTON (Reuters) – TikTok creators and three U.S. Democratic Party lawmakers on Wednesday said they opposed any potential ban on the Chinese-owned short video sharing app that is used by more than 150 million Americans.

On Thursday TikTok CEO Shou Zi Chew will testify before the U.S. House Energy and Commerce Committee amid growing calls for a ban over national security concerns at a time when relations between Beijing and Washington have deteriorated.

Representatives Jamaal Bowman, Mark Pocan and Robert Garcia and TikTok creators called at a press conference in Washington for broad-based privacy legislation that would address all large social media companies.

“Why the hysteria and the panic and the targeting of TikTok?” Bowman asked. “Let’s do the right thing here – comprehensive social media reform as it relates to privacy and security.”

Still, far more U.S. lawmakers want TikTok banned. Critics fear that TikTok user data in the United States could be passed on to China’s government. Last week, TikTok said the administration of President Joe Biden demanded its Chinese owners divest their stakes or it face a potential ban.

Creators talked on Wednesday about posting videos of baking cakes or selling greeting cards to Tiktok followers. Some held up signs saying TikTok benefits small businesses. TikTok says 5 million businesses use the app.

TikTok creator Jason Linton uses TikTok to share videos of his three adopted children in Oklahoma and has interacted with people around the world.

“I am asking our politicians – don’t take away the community that we’ve all built – a community that lasts, that loves,” Linton said at the press conference.

Pocan said a “xenophobic witch hunt” is motivating some in Congress to seek a TikTok ban. “Banning TikTok isn’t the answer. Making sure Americans data is safe is,” he said.

Senator Ed Markey, a Democrat, said on the Senate floor on Wednesday that TikTok is a threat that needs to be addressed but it is not the only surveillance threat to young people. That position “is deliberately missing the Big Tech forest for the TikTok trees.”

Democratic Senator Mark Warner said two additional senators backed his bipartisan legislation with Republican John Thune to give the Biden administration new powers to ban TikTok.

“Congress needs to give the administration the tools to review and mitigate the harms posed by foreign technology products that come from adversarial nations,” Warner said.

(Reporting by David Shepardson; editing by Grant McCool)

By Neil Jerome Morales and Enrico Dela Cruz

MANILA (Reuters) – The Philippine central bank stayed in an inflation-fighting mode on Thursday, raising its benchmark interest rate by 25 basis points to 6.25%, but said its next policy decision will depend largely on how consumer prices behave in the coming months.

The quarter-point hike, which was predicted by all but one of 24 economists in a Reuters poll, brought to 425 basis points the total tightening the central bank has delivered since May.

“The Monetary Board’s decision was based on the sum of new information and its assessment of the effects of past policy actions, which warranted a continuation of monetary tightening to anchor inflation expectations,” Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla told a media briefing.

While reiterating the Philippine banking system’s resilience, Medalla said the rate hike was warranted to “preserve the buffer against external spillovers” from stresses in the financial systems of advanced economies.

“The BSP continues to keep a watchful eye over developments in the international banking industry,” Medalla said.

The banking sector has been in turmoil since the collapse of two mid-sized U.S. banks earlier this month, which prompted a rout in banking stocks and led to a takeover of 167-year-old Credit Suisse by its Swiss rival UBS .

The peso firmed 0.1% to 54.33 against the U.S. dollar as of 0805 GMT after the BSP’s policy announcement, while Philippine shares closed 0.15% lower on Thursday. The central bank revised down its forecasts for inflation this year and next and reiterated it was prepared to act if needed to slow the pace of consumer price increases to within its 2%-4% comfort range.

After annual inflation slightly eased to 8.6% in February, the central bank now expects inflation to average 6.0% in 2023 and 2.9% in 2024, compared with 6.1% and 3.1% predicted previously.

“In the past, we were more or less assured that there will be another increase, now clearly it really depends on the data,” Medalla said.

ING Economist Nicholas Mapa said after Thursday’s policy decision the central bank may pause its policy-tightening cycle in May barring supply-side shocks. 

The Philippine central bank’s rate move followed the Fed’s quarter point rate rise coupled with a warning that the banking industry stress could trigger a credit crunch.

While the U.S. Federal Reserve’s rate actions “may be relevant” in the policy decision of the Philippine central bank, its future policy action “really depends on what happens to our assessment of the inflation,” Medalla said.

(Reporting by Neil Jerome Morales and Enrico dela Cruz; Writing by Karen Lema; Editing by Ed Davies and Tomasz Janowski)

(Reuters) -Japan Airlines has placed its first-ever order for the Boeing 737 MAX, announcing a plan on Thursday to buy 21 jets to replenish its narrowbody fleet.

The deal is worth at least $2.5 billion at list prices, Reuters previously reported, and notches a win for Boeing against European rival Airbus, which was in talks with JAL on the bestselling A320neo narrowbody jet.

JAL President Yuji Akasaka told reporters the company intended to bring the new planes into its fleet from 2026. The range and fuel efficiency of the 737 MAX will reduce carbon emissions by 15% compared to the planes they are replacing, he said.

“I believe this is a very high potential aircraft,” Akasaka said.

Reuters reported details of the deal on Wednesday, citing industry sources.

The JAL order ensures a foothold for the MAX with Japan’s flagship carrier as Boeing strives to undermine Airbus’s lead in the narrowbody market.

“One problem that has hobbled the (737 MAX) program is that despite good orders, there haven’t been as many high profile users. This certainly helps a lot,” said Richard Aboulafia, an aerospace analyst with AeroDynamic Advisories.

Although JAL predominantly operates Boeing planes, it delivered a shock to the aircraft industry in 2013 when it opted to buy Airbus’s A350 widebody aircraft over the Boeing 787 Dreamliner, which at the time was struggling to correct technical problems.

While JAL’s current fleet of 48 Dreamliners now dwarfs the 11 A350s owned by the carrier, the initial Airbus order raised questions about whether Boeing would continue to dominate the Japanese market.

Those concerns were heightened by the 737 MAX crisis, which led All Nippon Airways (ANA) to delay finalizing an order for 20 MAXs first announced in January 2019. ANA and Boeing concluded the MAX deal in July.

The Boeing 737-800 currently makes up the largest portion of JAL’s narrowbody fleet, with the carrier owning 47 jets and leasing another 17 737s, according to JAL.

However, Airbus has gained traction in Japan’s narrowbody market, with ANA’s low-cost Peach unit operating A320s and JAL’s Jetstar Japan flying leased A320s.

“It’s a battle, keeping Japan,” Aboulafia said. Boeing “seems to have scored a victory here.”

(Reporting by Valerie Insinna in Washington, Rocky Swift and Maki Shiraki in Tokyo. Editing by Chris Reese and Mark Potter)

ZURICH (Reuters) -Switzerland’s financial market regulator FINMA defended its decision to impose steep losses on some of Credit Suisse bondholders on Thursday, saying the decision was legally watertight.

On Sunday, Switzerland announced a multi-billion franc rescue of Credit Suisse, which will see it taken over by UBS.

As part of that deal the Swiss regulator said 16 billion Swiss francs ($17.49 billion) of the lender’s Additional Tier 1 debt to be written down to zero, while shareholders received some compensation.

The decision that prioritised shareholders over AT1 bondholders rattled the $275 billion AT1 bond market, prompting a sharp fall in prices on Monday. Some Credit Suisse AT1 bondholders are seeking legal advice.

“The AT1 instruments issued by Credit Suisse contractually provide that they will be completely written down in a ‘viability event’, in particular if extraordinary government support is granted,” FINMA said.

“As Credit Suisse received extraordinary liquidity assistance loans secured by a federal default guarantee on 19 March 2023, these contractual conditions were met for the AT1 instruments issued by the bank,” it added.

Tier 2 bonds will not be written down, FINMA said.

FINMA Director Urban Angehrn said that “a solution was found on Sunday to protect clients, the financial centre and the markets”.

European regulators on Monday stepped in to say they would continue to impose losses on shareholders before bondholders – unlike the treatment of bondholders at Credit Suisse.

In a bid to boost confidence among bondholders, UBS said on Wednesday it would buy back 2.75 billion euros worth of debt it sold just days ago.

($1 = 0.9148 Swiss francs)

(Reporting by John Revill, Editing by Friederike Heine and Dhara Ranasinghe)

HONG KONG (Reuters) -The Hong Kong Monetary Authority (HKMA) on Thursday lifted its base rate charged through the overnight discount window by 25 basis points to 5.25%, hours after the U.S. Federal Reserve delivered a rate rise of the same margin.

Hong Kong’s monetary policy moves in lock-step with the U.S. as the city’s currency is pegged to the greenback in a tight range of 7.75 to 7.85 per dollar.

“The Fed’s rate-hike decision is consistent with market expectation, but there will continue to be considerable uncertainties on the interest rate path in the US,” HKMA said in a statement.

HSBC Holdings said it was leaving its best lending rate in Hong Kong unchanged at 5.625%.

The Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point but indicated it was on the verge of pausing further increases in borrowing costs after the collapse this month of two U.S. banks.

The Federal Open Market Committee policy statement also said the U.S. banking system was “sound and resilient”.

The HKMA said: “Individual banks in the US had exhibited financial health and liquidity problems recently, which might result in credit tightening.”

“It is too soon to assess how much this will further affect economic activities and influence monetary policy.”

The financial and monetary markets of Hong Kong continued to operate in a smooth and orderly manner, despite the volatility of overseas markets, and Hong Kong dollar interbank rates might remain at elevated levels for some time, the HKMA added.

Hong Kong overnight interbank offer eased further to 1.94905% on Thursday, down 44.9 basis points from Wednesday. On Tuesday the benchmark had spiked to a four-month high of 4.14286%, pointing to a cash squeeze caused by uncertainty ahead of the Fed’s policy meeting outcome and by seasonal demand for Hong Kong dollar funding.

The Hong Kong dollar weakened to 7.8490 per U.S. dollar on Thursday, extending a decline seen on Wednesday. It was down from a one-month high of 7.8355 reached on Tuesday.

(Reporting by Donny Kwok and Georgina Lee; Editing by Himani Sarkar and Bradley Perrett)

By Xie Yu, Clare Jim and Samuel Shen

HONG KONG (Reuters) -China Evergrande Group’s offshore debt restructuring proposal, a test of investor sentiment towards the cash-squeezed property sector, failed to impress because of its long repayment period and lack of enough sweeteners, creditors and analysts said.

Evergrande is the world’s most indebted developer with around $300 billion in liabilities. Its offshore debt restructuring, the country’s biggest such exercise, is aimed at saving it from a disorderly collapse.

The developer has $22.7 billion of offshore debt, all of which is deemed to be in default. The plan provided two main options to its dollar bondholders to recoup their investments.

Creditors can either swap all of their holdings into new notes with maturities of 10 to 12 years, or convert them into different combinations of new notes with tenors of five to nine years and equity-linked instruments.

Bondholders of notes issued by Evergrande’s offshore units will also be allowed to exchange their existing debt for new notes, which will start paying coupons from the fourth year after issuance.

The outcome of Evergrande’s debt revamp plan is likely to have a bearing on similar proposals being worked on by a string of other Chinese developers that have defaulted on repayment obligations in the last year.

An index tracking mainland-based property developers slipped 0.5% in early afternoon trading on Thursday, while the broader stock benchmark index added 1.3%. Trading in Evergrande shares remain suspended.

“Overall we are not very satisfied with it, since there is no more credit enhancement and the new tenors are too long,” Sunny Jiang, head of fixed income investment with Haitong International Asset Management Ltd, said of the Evergrande plan.

“If this plan gets passed, we worry it might set a bad example for other developers mulling their restructuring proposals, and it might be even more challenging for bondholders to recoup their investment,” he added.

Evergrande did not respond to a request for comment.

LACK OF FUNDING

Some bondholders have been pushing Evergrande to sweeten the restructuring deal with domestic assets, but Wednesday’s proposals did not include such terms.

A dollar bondholder, who was not authorised to speak to media, likened the debt restructuring plan to lending a bucket of rice to someone and being repaid with two grains a year.

More developers are likely to use the strategy of wearing out investors’ patience before offering a restructuring plan that is unfavourable to creditors, said an investor in Chinese property dollar bonds who no longer owns Evergrande bonds and was not authorised to speak publicly.

Another creditor said the proposal was built on assumptions including that Evergrande and its two Hong Kong-listed units could resume trading and sustain their businesses despite the lack of funding.

Evergrande said on Wednesday that additional financing of 250 billion yuan ($36.65 billion) to 300 billion yuan would be required as it resumes operations over the next three years.

China Evergrande New Energy Vehicle Group said on Thursday it might have to halt production of electric vehicles if it could not obtain fresh funding.

If Evergrande fails to push ahead with restructuring plan, the developer may have to face liquidation proceedings filed by an investor in one of its units in a Hong Kong court.

A representative of Evergrande’s winding-up petitioner Top Shine Global Ltd told Reuters on Thursday that the investment firm was still studying the proposal to see if it would support the plan or continue to push ahead with the liquidation request.

Evergrande, however, citing an analysis it commissioned, said the recovery for offshore creditors in a group-wide liquidation is expected to be less than $1.5 billion, a rate of 2.1% to 9.3% depending on the type of debt held.

($1 = 6.8220 Chinese yuan renminbi)

(Reporting by Xie Yu and Clare Jim in Hong Kong, Scott Murdoch in Sydney, Samuel Shen in Shanghai; Additional reporting by Jason Xue; Editing by Sumeet Chatterjee and Jamie Freed)

By Chen Lin

SINGAPORE (Reuters) – Singapore’s key consumer price gauge rose 5.5% in February, unchanged from January and lower than forecast, official data showed on Thursday, though while analysts said core inflation appeared to have peaked, prices remained at historic highs.

February’s core inflation rate – which excludes private road transport and accommodation costs – compared with a forecast in a Reuters poll of economists for a 5.8% increase in February.

Lower prices for services were broadly offset in the core inflation data by higher prices for retail, as well as other goods and utilities, the Monetary Authority of Singapore (MAS) said in a statement.

However, the inflation rate in February is still at the same level as in January, which was the fastest pace seen since November, 2008.

MAS has said core inflation was likely to stay at about 5% for the early part of 2023.

It has also projected a core inflation rate of between 3.5% to 4.5% in 2023, with headline inflation coming in at between 5.5% and 6.5%.

Headline inflation was up 6.3% year-on-year in February, compared with a forecast 6.45% increase in a Reuters poll.

While analysts said inflation in February was below their forecasts, there were divisions over the implications for a monetary policy review MAS will conduct in April.

“The inflation may appear high on year-on-year basis, but it has started to moderate more than expected in the past few months,” said MUFG analyst Jeff Ng, who expects no changes to MAS monetary policy in April.

Khoon Goh, head of Asia research at ANZ, said even though core inflation had peaked and should start to edge lower in coming months, MAS would still need to tighten policy in April.

“Inflation is still very high, well above the historical average…MAS will need to tighten further to ensure that inflation expectations remain well anchored,” he said.

The MAS tightened its monetary policy four times last year, including in two surprise moves.

(Reporting by Chen Lin in Singapore; Editing by Ed Davies)

By Lucy Craymer and Wayne Cole

WELLINGTON (Reuters) -A top New Zealand central banker on Thursday said interest rates were clearly in contractionary territory and causing a welcome slowdown in demand in the economy, though it was not yet clear that inflation expectations were under control.

Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway said the 450-basis-point rise in the official cash rate (OCR) over the past 18 months was still “percolating” through the economy and would likely further weigh on consumer spending.

At 7.2%, inflation in New Zealand is near a three-decade high and well above the central bank’s target bank of 1% to 3%. Also, short term inflation expectations in the first quarter remained just above 5.5%, according to RBNZ data.

“On balance, our measures of neutral interest rates – the interest rate that is neither stimulatory nor contractionary – indicate the OCR is now comfortably above neutral and having the desired contractionary effect,” Conway said.

But he added that if inflation expectations did not fall, the central bank would need to do more work through interest rates to bring those expectations down. It would also need to do more work through “the real side of the economy”, he said, without elaborating on that point.

Conway spoke at the KangaNews-ANZ New Zealand Capital Markets Forum in Wellington.

The central bank has lifted the OCR from 0.25% in October 2021 to 4.75% and signalled it plans further increases. It has said it is trying to engineer a shallow recession to slow demand. Fourth-quarter GDP fell 0.6%.

Conway said there were welcome signs that demand was slowing but, given recent weather events and the ongoing impact of the pandemic, forecasting the economy was very challenging right now.

“We’re starting to see signs of people cooling their jets,” he said. “It’s pretty lumpy; it’s bouncing around.”

(Reporting by Lucy Craymer and Wayne Cole; Editing by Christopher Cushing and Bradley Perrett)

By Lewis Krauskopf

NEW YORK (Reuters) – The end of the Federal Reserve’s bruising rate hiking cycle may be in sight, yet investors are finding plenty to worry about when it comes to the U.S. stock market.

In its first meeting since the collapse of two U.S. banks this month and the downfall of ailing European lender Credit Suisse, the Fed on Wednesday raised interest rates by a quarter of a percentage point and indicated it was on the verge of pausing further increases in borrowing costs.

It was a message long awaited by many investors, after the S&P 500’s fall by nearly a fifth last year as the Fed launched its most aggressive monetary policy tightening cycle since the 1980s. Yet some fear the rapid rises in rates are only starting to ripple through the U.S. economy, and remain wary of jumping into stocks amid banking sector turmoil, a downbeat outlook for corporate profits and a looming recession.

“Macroeconomic policy and the outlook for the economy is more complicated than it was two weeks ago,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial, who is holding a lighter than normal equity allocation.

“In that highly uncertain environment, you need to navigate it by being a little bit more cautious and a little bit more defensive,” he said.

Stocks fell on Wednesday, with the benchmark S&P 500 closing down 1.65% after swinging between gains and losses during Fed Chairman Jerome Powell’s press conference following the meeting. The Nasdaq Composite lost 1.6%. 

Adding to the market unease were comments from Treasury Secretary Janet Yellen, who told lawmakers on Wednesday that the Federal Deposit Insurance Corporation (FDIC) was not considering “blanket insurance” for deposits arising from recent strife in the sector.

Banking industry stress could trigger a credit crunch with “significant” implications for an economy that Fed officials projected would slow even more this year than previously thought, Powell said.

Analysts at Capital Economics, who believe a recession is likely this year, wrote: “While … the exact impact of the banking turmoil is uncertain, we are now more confident that the Fed’s forecasts for economic growth will prove too optimistic.”

Meanwhile, though the Fed’s latest policy statement no longer said that “ongoing increases” in rates would likely be appropriate, Powell said that inflation remained well above the Fed’s goal and that policymakers were unlikely to cut rates this year, an outlook at odds with that of many investors.

Futures markets are now pricing a Fed funds rate of around 4.25% by year-end, compared with the range of 4.75% to 5% that took effect on Wednesday.

“Sure equities would like a Fed pivot or a point that the Fed would slow down rate hikes, which I think is what they got,” said Charlie Ripley, senior investment strategist at Allianz Investment Management, who has recently increased his allocation to cash. “Powell also said he doesn’t view that rate cuts are plausible at some point this year, so this whole higher-for-longer theme is likely what’s playing out.”

UNCERTAIN OUTLOOK

Stocks have been resilient this year in the face of uncertainty, with the S&P 500 up 2.5% since the end of 2022.

Many investors’ portfolios remain light in equities, a market condition some view as a positive for stocks because of the potential for powerful buying when the market mood shifts. Deutsche Bank’s measure of aggregate equity positioning saw its biggest drop in 15 months last week, the bank’s strategists said in a March 17 note.

A drop in Treasury yields from recent highs has also given a tailwind to stocks, especially to big tech and growth names that are heavily weighted in the S&P 500. Yields move inversely to bond prices.

Still, some investors believe yields may head higher again. Sonal Desai, chief investment officer of Franklin Templeton Fixed Income, said she was skeptical about the recent rally in Treasuries, because inflation remained high.

“I think there’s more volatility to come, without a doubt,” said Desai, who expects the benchmark U.S. 10-year yield will rebound to 4% this year from its current 3.45%.

Corporate profits are another potential trouble spot, with S&P 500 earnings expected to post year-over-year declines in the first and second quarters after falling 3.2% in the fourth quarter of 2022, according to Refinitiv IBES.

That may not even fully reflect the fallout from a potential slowdown brought on by the banking crisis, should lending slow, as many analysts now expect.

“I don’t think the market is going off to the races,” said James Ragan, director of wealth management research at D.A. Davidson. “There is going to be some pressure on earnings going forward.”

(Reporting by Lewis Krauskopf; Additional reporting by Davide Barbuscia; Editing by Ira Iosebashvili and Bradley Perrett)

By David Shepardson

WASHINGTON (Reuters) -The U.S. Transportation Department (USDOT) on Wednesday urged rail tank car owners and hazmat shippers of flammable liquids to stop using tank cars like some in a Feb. 3 Norfolk Southern train derailment in East Palestine, Ohio and replace them with newer, safer tank cars.

USDOT’s Pipeline and Hazardous Materials Safety Administration (PHMSA) said in an advisory the Ohio incident demonstrated “DOT-111” and “CPC-1232” tank cars do not perform at the highest level of survivability during derailments and urged owners to use newer safer “DOT-117” cars.

The advisory cited preliminary data from the National Transportation Safety Board (NTSB) investigation that found significant issues in DOT-111 tank cars in the Ohio derailment while the DOT-117 cars performed well.

Rail safety legislation proposed in Congress would move up the deadline to 2025 to phase-out the older tank cars.

Norfolk Southern CEO Alan Shaw said at a Senate Commerce hearing on Wednesday the railroad supports the provision “for accelerating safer tank car standards”.

Commerce Committee chair Maria Cantwell introduced legislation in 2015 “to get rid of DOT-111s.”

Last month, Transportation Secretary Pete Buttigieg called on Congress to mandate owners of tank cars to expedite the phase-in of safer DOT-117 tank cars in advance of the congressionally mandated 2029 deadline.

NTSB chair Jennifer Homendy said at the hearing the date should be moved up to eliminate DOT-111 cars from hazardous material service.

The PHMSA advisory calls on shippers of flammable liquids “to voluntarily upgrade their tank car fleets to the newest, and safest, available tank car design authorized for flammable liquid service.”

The advisory added railroads should consider applying

requirements applicable to high-hazard flammable trains to trains with fewer tank cars carrying flammable liquids in DOT-111 tank cars.

“It is in the interest of safety and protection of

human lives and the environment to use the best available tank car, as well as to voluntarily adopt operational controls,” the advisory said.

(Reporting by David Shepardson; Editing by Chris Reese and Jacqueline Wong)

SEOUL (Reuters) -South Korea’s financial firms are facing little contagion risk from troubles at U.S. and Swiss banks, but some non-bank firms may have to contend with increased stress from the sluggish property market, the country’s central bank said in a report.

South Korean banks have been strictly supervised and their exposure to bonds and stocks stands at 18% of total assets, compared with 57% at recently collapsed Silicon Valley Bank, it said.

The sluggish real estate market, however, poses increased risk for some non-bank financial firms as their exposure to property financing has risen sharply in recent years, the Bank of Korea’s report said.

At credit financing firms such as credit card issuers, project financing loans and payment guarantees have climbed 433% over the past five years. For savings banks, which in Korea are classified as non-banks, that gain was 250% while at insurance companies it was 205%.

Housing prices across South Korea have fallen in each of the past nine months in the wake of aggressive monetary policy tightening both locally and globally to fight inflation.

The government has taken several steps to avert a hard landing for the property market. Its latest step announced on Wednesday is designed to help sharply reduce the tax burden on home owners.

(Reporting by Choonsik Yoo; Editing by Christian Schmollinger and Edwina Gibbs)