Finance

BHP CEO expects a turnaround in China’s property sector in year ahead

Published

3 months ago

August 27, 2024

The company logo adorns the side of the BHP gobal headquarters in Melbourne on February 21, 2023. – The Australian multinational, a leading producer of metallurgical coal, iron ore, nickel, copper and potash, said net profit slumped 32 percent year-on-year to 6.46 billion US dollars in the six months to December 31. (Photo by William WEST / AFP) (Photo by WILLIAM WEST/AFP via Getty Images)

William West | Afp | Getty Images

BHP CEO Mike Henry said he expects China’s property sector to rebound in the upcoming year on the back of favorable government policies.

While acknowledging that the country’s property sector is a “weak point” for steel demand, Henry is optimistic about the suite of measures the Chinese government has announced recently.

“The government has enacted policies recently that are meant to support the property sector… We expect that we could see a turnaround in the property sector in the year ahead,” Henry said.

In recent months, China has rolled out a slew of measures aimed at stabilizing the country’s property sector, which once purportedly accounted for about 25% to 30% of the country’s GDP. For example, Beijing scrapped the nationwide minimum mortgage interest rate and reduced the minimum down payment ratio for first-time buyers to 15%, compared to 20% previously.

In May, the central bank also announced it would allocate 300 billion yuan ($42.25 billion) to financial institutions to lend to local state-owned enterprises for purchasing unsold apartments that have already been completed.

On Saturday, China’s minister of housing Ni Hong said that there is still “great potential and room” for China’s property sector to expand as the country continues to urbanize and demand for good housing continues to grow.

BHP reported a 2% climb in its annual underlying profits on Tuesday, attributing the growth to “solid operational performance and higher commodity prices in key commodities.”

Henry noted, however, there is still “a bit of volatility” with respect to China’s steel demand, which has been under pressure from the property sector.

But the CEO said there are still other sectors in China that contribute to steel demand that are growing quite healthily, such as infrastructure, shipping and automobiles.

Australian shares of BHP were 1.97% higher in Tuesday trading.

Finance

Visa & Mastercard execs grilled by senators on high swipe fees

Published

8 minutes ago

November 19, 2024

Business Finance News

The Senate Judiciary Committee convened on Tuesday for a hearing on the alleged Visa–Mastercard “duopoly,” which committee members from both sides of the aisle say has left retailers and other small businesses with no ability to negotiate interchange fees on credit card transactions.

“This is an odd grouping. The most conservative and the most liberal members happen to agree that we have to do something about this situation,” committee chair and Democratic Illinois Sen. Dick Durbin said.

Interchange fees, also known as swipe fees, are paid from a merchant’s bank account to the cardholder’s bank, whenever a customer uses a credit card in a retail purchase. Visa and Mastercard have a combined market cap of more than $1 trillion, and control 80% of the market.

“In 2023 alone, Visa and Mastercard charged merchants more than $100 billion in credit card fees, mostly in the form of interchange fees,” Durbin told the committee.

Durbin, along with Republican Kansas Sen. Roger Marshall, have co-sponsored the bipartisan Credit Card Competition Act, which takes aim at Visa and Mastercard’s market dominance by requiring banks with more than $100 billion in assets to offer at least one other payment network on their cards, besides Visa and Mastercard.

“This way, small businesses would finally have a real choice: they can route credit card transactions on the Visa or Mastercard network and continue to pay interchange fees that often rank as their second or biggest expense, or they could select a lower cost alternative,” Durbin told the committee.

Visa and Mastercard, however, stand by their swipe fees.

“We consider them incentives, some people might consider them penalties. But if you can adopt new technology that reduces the risk and takes fraud out of the system and improves streamlined processing, then you would qualify for lower interchange rates,” said Bill Sheedy, senior advisor to Visa CEO Ryan McInerney. “It’s very expensive to issue a product and to provide payment guarantee and online customer service, zero liability. All of those things, and many more, senator, get factored into interchange [fees].”

The executives also warned against the Credit Card Competition Act, with Sheedy claiming that it “would remove consumer control over their own payment decisions, reduce competition, impose technology sharing mandates and pick winners and losers by favoring certain competitors over others.”

“Why do we know this? Because we’ve seen it before,” Mastercard President of Americas Linda Kirkpatrick said, in reference to the Durbin amendment to the 2010 Dodd-Frank Act, which required the Fed to limit fees on retailers for transactions using debit cards. “Since debit regulation took hold, debit rewards were eliminated, fees went up, access to capital diminished, and competition was stifled.”

But the current high credit card swipe fees for retailers translate to higher prices for consumers, the National Retail Federation told the committee in a letter ahead of the hearing. The Credit Card Competition Act, the retail industry’s largest trade association wrote, will deliver “fairness and transparency to the payment system and relief to American business and consumers.”

“When we think of consumer spending, credit card swipe fees are not the first thing that comes to mind, yet those fees are a surprisingly large part of consumer spending,” Notre Dame University law professor Roger Alford said. “Last year, the average American spent $1,100 in swipe fees, more than they spent on pets, coffee or alcohol.”

Visa and Mastercard agreed to a $30 billion settlement in March meant to reduce their swipe fees by four basis points for three years, but a federal judge rejected the settlement in June, saying they could afford to pay more.

Visa is also battling a Justice Department lawsuit filed in September. The payment network is accused of maintaining an illegal monopoly over debit card payment networks, which has affected “the price of nearly everything,” according to Attorney General Merrick Garland.