Bank valuations could rise by $7 trillion in five years, study finds


Global banks could boost their valuations by a combined $7 trillion in the next five years if they take major steps to promote growth and boost productivity, the Boston Consulting Group said in a report on Monday.

Lenders could roughly double their current valuations if they pursue growth and improved price-to-book ratios despite obstacles, the consultant said.

"The largest driver of pessimism about the banking sector has been the significant drop in profitability," BGC said.

About 75% of bank stocks had price-to-book ratios below 1 in 2022, while price-to-earnings multiples were almost half of 2008 levels. Meanwhile, shareholder returns on bank stocks have lagged those of major market indexes since the crisis, and the gap is widening.

Even if they invest in productivity and radically simplify their businesses, bank profits will remain under pressure from higher capital requirements and increased competition from newer players such as fintechs, BCG said.

Japanese firms expect China's 2024 economic prospects to remain grim


Japanese firms in China expect economic prospects in the world's second-largest economy to remain grim this year, according to a report from the Japanese Chamber of Commerce and Industry in China released on Monday.

About three-quarters of the 1,700 respondents in a survey said they expected the Chinese economy to worsen or to remain the same.

China is Japan's largest trading partner, and one of the biggest investment destinations for Japanese companies.

Despite the poor prospects and difficult operating environment, half of the companies surveyed still thought China was the most important market globally or among the top three most important in 2024.

Improvements in the Chinese business environment the companies hoped to see included fewer visa restrictions for Japanese citizens and lower labour costs, according to the report.

China acquires Nvidia chips despite US ban


Chinese military bodies, state-run artificial intelligence research institutes and universities have over the past year purchased small batches of Nvidia semiconductors banned by the US from export to China, a review of tender documents shows.

The sales by largely unknown Chinese suppliers highlight the difficulties Washington faces, despite its bans, in completely cutting off China’s access to advanced US chips that could fuel breakthroughs in AI and sophisticated computers for its military.

Buying or selling high-end US chips is not illegal in China and the publicly available tender documents show dozens of Chinese entities have bought and taken receipt of Nvidia semiconductors since restrictions were imposed.

Setback for Google in battle over $2.6-billion EU fine


Google should lose its court fight to topple a €2.4-billion EU fine for unfairly favouring its own shopping services, an adviser to the EU’s top court said.

Google “was leveraging its dominant position on the market for general search services to favour its own comparison shopping service by favoring the display of its results”, Juliane Kokott, an advocate general at the EU’s court of justice, said in a non-binding opinion on Thursday.

She suggested EU judges dismiss Google’s appeal of an earlier court ruling finding the same violations. The EU’s top court often follows such advice in its final rulings, which typically come several months afterwards.

EU competition regulators slapped Google with the fine in 2017 — a record at the time — for violating antitrust rules by favouring its own shopping service over those of its rivals