Finance

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

Published

10 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.

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Swiss government proposes tough new capital rules in major blow to UBS

Published

3 days ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”