The elephant in the meeting rooms at this week’s IMF-World Bank gathering in Washington has been the knife-edge US election and fears that a win by Donald Trump could decimate trade with China, upending global markets. Financial leaders made it clear they’re also less than impressed by President Xi Jinping’s recent stimulus blitz. US Treasury Secretary Janet Yellen said the measures failed to tackle the fundamental problems of overcapacity and weak domestic demand, while IMF director Kristalina Georgieva warned annual growth could drop to “way below” 4% without more reforms. A record number of defaults have hit bad debt issued by Chinese local governments’ financing vehicles, ensnaring investors who’d assumed the securities had an implicit guarantee from the state. In a sign Chinese authorities are opting to pace themselves cautiously, the People’s Bank of China kept its one-year policy rate unchanged after slashing funding costs by the most on record a month ago.
Hedge funds including Izzy Englander’s Millennium Management and Athos Capital are said to have lost money after the unexpected collapse of a deal involving two Chinese drugmakers. Millennium had a 5.1% stake in China Traditional Chinese Medicine Holdings, which had received a take-private offer from state-backed China National Pharmaceutical Group, known as Sinopharm.
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