—— US Nonfarm Job Growth Slows; Ant Group Fined $984 Million; State Street Defaults on Irvine Office Loans; Samsung Forecasts 96% Profit Drop; Hong Kong Relaxes Mortgage Loan-to-Value Ratios; Birkenstock Prepares IPO; Black Workers Account for 90% of US Job Losses
1. US Nonfarm Job Growth Slows
The US Bureau of Labor Statistics reported today that nonfarm payrolls increased by 209,000 in June, the smallest gain since late 2020, while the unemployment rate edged down to 3.6%.
Although job growth has moderated, wage gains remain stronger than the Federal Reserve would like, making another interest rate hike at this month’s meeting highly likely.
Healthcare, government, and construction saw the biggest job increases, while retail, transportation, and warehousing sectors lost workers.
Job growth came in below expectations, but wage growth remains too high, virtually guaranteeing a Fed rate hike.
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2. Ant Group Fined $984 Million
The People’s Bank of China (PBOC) announced today that it would fine Ant Group a total of $984 million (¥7.12 billion), ending a regulatory probe that lasted more than two years.
PBOC said Ant Group violated consumer protection laws and failed to meet anti-money laundering requirements.
Due to the long-running investigation, Ant’s IPO plans were derailed in 2020. With the probe now concluded, Ant is expected to restart growth initiatives and possibly revive its IPO.
Ant stated that it has completed all required regulatory rectifications; today, Alibaba shares surged.
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3. State Street Defaults on Irvine Office Loans
The Real Deal reported that Boston-based real estate investment firm State Street missed payments on $81 million in loans tied to two office buildings in Irvine, California.
The properties include 18101 Von Karman Avenue, totaling 893,000 square feet. Although First Foundation leased 70,200 square feet last year, WeWork prematurely terminated a 75,000-square-foot lease earlier this year.
The loan, which matured in March, was granted a 60-day extension, but State Street still could not make the payments.
The missed payments come as office leasing continues to struggle nationwide.
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4. Samsung Forecasts 96% Profit Drop
Samsung Electronics expects its second-quarter operating profit to plummet 96% to $460 million, its lowest in 14 years, due to a glut of memory chips dragging prices down.
Samsung and rivals have recently cut production to stabilize prices, and analysts expect chip prices to bottom this quarter and recover next year.
Samsung shares fell 2% today but remain up nearly 30% year-to-date.
Samsung aims to capitalize on the AI boom by producing more AI-related hardware.
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5. Hong Kong Relaxes Mortgage Loan-to-Value Ratios
The Hong Kong Monetary Authority announced that starting Friday, it will raise loan-to-value (LTV) ratios for mortgages, marking the first easing of mortgage rules since 2009 to revive the property market.
Hong Kong home prices have fallen 13% from their 2021 peak and may drop another 5% later this year.
Bloomberg analyst Patrick Wong said developers may need to cut new home prices to boost sales, while rising mortgage rates could make buyers more cautious.
Higher LTV ratios mean lower down payments, improving housing affordability.
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6. Birkenstock Prepares IPO
Sources revealed that iconic German sandal brand Birkenstock is considering an IPO and other strategic options, with a potential valuation exceeding $6 billion.
Parent company L Catterton is working with Goldman Sachs and JPMorgan on a listing that could happen this year or next.
Founded nearly 250 years ago, Birkenstock expanded into the US in 1966 and recently collaborated with luxury brands such as Dior, Manolo Blahnik, and Valentino.
Two years ago, LVMH’s founder’s family office invested in Birkenstock; the founding family retains ownership stakes.
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7. Black Workers Account for 90% of US Job Losses
The US Labor Department reported that in June, the number of unemployed Black workers rose by 267,000 since April, accounting for 90% of the total 300,000 increase in joblessness.
The Black unemployment rate climbed to its highest level since August 2022 and remains nearly twice the 3.1% white unemployment rate.
Historically, Black workers are among the first impacted during economic downturns. After reaching a record low in April, the Black-white employment gap has begun widening again.
Hispanic and Asian American unemployment rates also rose to 4.3% and 3.2%, respectively.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.