– Greece: Third bailout to start Thursday. If all goes according to plan, Greece is set to receive the first chunk of its third bailout on Thursday. The package, worth up to 86 billion euros ($95 billion), will help the country avoid an outright financial collapse.
Germany and all the other countries that use the euro currency have agreed in principle to bail out Greece. But this time they’ll have to do it without the direct financial support of the International Monetary Fund — at least for now. The IMF participated in the last two bailouts that were worth 233 billion euros ($257 billion). But now it’s monitoring the situation from the sidelines.
The managing director of the IMF, Christine Lagarde, says her organization won’t get involved until Greece receives «significant debt relief» from creditors, saying that it’s unrealistic for Greece to repay all its debts without extra help.
– China blasts: Insurance costs could top $1.5 billion. A series of explosions that left hundreds dead and injured in China is about to set off a wave of insurance claims. While the full impact remains to be seen, initial insurance claims could reach $1.5 billion, according to an estimate by Credit Suisse.
Chinese insurers across numerous sectors — property, casualty and life — will be impacted by the blasts, Credit Suisse analysts wrote in a research note. «Many international insurers will [also] be impacted as they either insure multinationals directly or provide reinsurance coverage to the Chinese insurers.»
– Cheap oil drags down Russia’s ruble. The Russian ruble has hit a new six-month low against the dollar, as Moscow struggles with tumbling oil prices and economic sanctions. The currency plunged 1.3% to 65.7 rubles per dollar in the early hours of Monday. It has since recovered to 65.5 per dollar.
Russia’s central bank stopped buying foreign reserves in July, hoping to prevent the ruble from falling further. But it didn’t help — the ruble has dropped 44.8% against the dollar in the last year and 12% in the last month.
The currency has been hit hard by the collapse in oil prices. That’s because around half of Russia’s government revenue comes from the oil industry. The country’s budget is based on the assumption it could sell its oil for $50 per barrel or more. But oil is now trading below $42 a barrel, just a year after reaching $115 last summer.
– China sparks a commodities plunge… again. Oil and copper led a gauge of commodities to a 13-year low on speculation of an ongoing fuel glut and more headwinds for China’s economy. Traders are also doubting the government will step in to prop up equities, sending the Shanghai Composite Index to its steepest drop in three weeks.
Emerging-market assets and currencies from Russia to Australia also sank. One investor sees an end in sight to the commodity rout: Harris Associates has been snapping up shares of Glencore over the last few weeks. With a 4.5 percent stake worth about $1.6 billion, Harris is now Glencore’s fourth-largest shareholder.
– A surprise gain in U.K. inflation. The pound strengthened against all 31 major peers after U.K. inflation unexpectedly gained pace. Economists expected the headline reading to stay at zero, but it rose to 0.1 percent, mostly thanks to lighter-than-usual discounts on clothes in this year’s summer sales.
A core measure of price growth jumped to the highest in five months — to 1.2 percent from 0.8 percent — higher than the 0.9 percent reading predicted by economists. Inflation is still well below the Bank of England’s 2 percent target, but policymakers want it that way in the short term because of the sterling’s strength and the oil rout.
– China’s Richest Traders Are Fleeing Stocks as the Masses Pile In. The wealthiest investors in China’s equity market are heading for the exits.
The number of traders with more than 10 million yuan ($1.6 million) of shares in their accounts shrank by 28 percent in July, even as those with less than 100,000 yuan rose by 8 percent, according to the nation’s clearing agency. While some of the drop is explained by falling market values, CLSA Ltd. says China’s rich have taken advantage of state buying to cash out after the nation’s record-long bull market peaked in June.
Investors with the most at stake are finding fewer reasons to own Chinese shares amid weak corporate earnings and some of the world’s highest valuations. “The high net worth clients are the ones who moved the market,” Francis Cheung, the head of China and Hong Kong strategy at CLSA, wrote in an e-mail. “They tend to be more savvy.”