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Spring meetings

International Monetary Fund logo is seen inside the headquarters at the end of the IMF/World Bank annual meetings in Washington on Oct. 9, 2016.

Yuri Gripas/Reuters

Financial policy-makers from around the globe are preparing to convene – virtually of course – for the springtime meetings of the International Monetary Fund (IMF) and the World Bank. The Group of 20’s finance chiefs meet as well on April 7.

The IMF will give a snapshot of the economic scars from the pandemic, but it will also revise up forecasts for 2021 and 2022 growth.

The meetings will discuss a US$650-billion push to boost – and possibly reallocate – the IMF’s own currency, Special Drawing Rights, to support beleaguered economies.

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The agenda also contains debt-relief initiatives and questions on co-ordinating stimulus. Finally, governments and multilateral organizations may face pressure to alleviate vaccine inequality between rich and poor countries.

Archegos damage

888 7th Ave, a building that reportedly houses Archegos Capital, in New York on March 29.

CARLO ALLEGRI/Reuters

Dust is settling after the Archegos Capital Management LP meltdown, but discussions will continue around leverage, risk-taking and disclosures on Wall Street.

Shares in companies such as ViacomCBS Inc. and Discovery Inc. remain far below recent highs after the New York-based Archegos fund suffered a margin call, forcing banks to liquidate holdings.

Shares in banks exposed to the fund have been hit, in particular Credit Suisse Group AG and Nomura Holdings Inc., which were slower than rivals in exiting Archegos-linked positions. Shares in the duo are down around 20 per cent since last March 26.

But many lenders acted as brokers for Archegos and there are fears that collective write-downs could exceed US$6-billion.

Banks are benefiting from higher bond yields and steeper bond yield curves, but the forthcoming results season will shed light on their financial health. Goldman Sachs Group Inc. reports on April 14, Credit Suisse on April 22 and Nomura on April 27.

Shipping news

A view shows Ever Given container ship in Suez Canal in this Maxar Technologies satellite image taken on March 29.

MAXAR TECHNOLOGIES/Reuters

The 400-foot Ever Given container ship, which ran aground in the Suez Canal on March 23, has been dislodged. But a queue of ships – loaded ones headed for markets as well as empty ones returning to factories – will take some days to clear.

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The overall fallout may last weeks. Containerized goods worth almost US$10-billion traverse the Suez daily, so the delays add to pressures on supply chains already strained by roaring demand for electronics, clothing, factory equipment and commodities.

Several global retailers were affected, as well as auto companies’ just-in-time supply chains.

And if bottlenecks build at other ports, cargo rates and container shortages may rise further. The Baltic dry index, which tracks dry goods freight rates, is near 18-month highs while supramax freight costs – vessels around 50,000 deadweight tonnes – are approaching record highs.

Price pulse

This file photo taken on Nov. 23, 2019 shows rolls of aluminium at a factory in Zouping, China.

STR/AFP/Getty Images

After falling for much of the past decade, factory prices in China are going up, potentially exacerbating global inflationary pressures that have put bond markets on edge.

China is set to release the Producer Price Index for March on April 9. January brought the first annual price gains in a year while February saw the fastest rises since 2018. With manufacturers swamped by orders and facing higher commodity input costs, upward pressures continue to build.

AGMs and ESG

Exteriors of the new Regent Park RBC branch in Toronto in 2010.

Kevin Van Paassen/The Globe and Mail

A year of pandemic-linked suffering worldwide has left companies facing extra scrutiny from investors on how closely they adhere to environmental, social and governance (ESG) metrics.

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Expect more of this at forthcoming annual general meetings. The calendar includes Clariant AG and Zurich Insurance Group Ltd. on Wednesday, UBS Group AG, Royal Bank of Canada and Nokia Corp. on Thursday, and Rio Tinto PLC on Friday.

Executives will face investor warnings on executive pay and perks, climate, workers’ rights and diversity. BlackRock Inc. for instance has told companies to implement a “no deforestation” policy or face pushback from it at AGMs.

Some efforts are bearing fruit. Mining company Rio Tinto plans to back shareholder resolutions for emissions targets and for tougher measures against lobby groups that do not follow its climate goals.

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