Carlos Ghosn ousted as Mitsubishi chairman; Draghi warns eurozone is slowing - as it happened

Graeme Wearden

from Economics | The Guardian on 2018-11-26 17:26 (#43PQN)

Mitsubishi has followed Nissan's lead, and voted to remove Carlos Ghosn from chairmanship after allegations of financial wrongdoing

5.47pm GMT

It's been a good day across European stock markets, despite the waves of political risk out there.

Italy's FTSE MIB has closed 2.7% higher, as the suggestions from Rome that it could compromise over its budget reassured traders (even though they were rather vague hints).

Optimism was the name of the game in trading on Monday as the FTSE joined its European peers rallying higher. As shoppers were taking advantage of Cyber Monday discounts, bargain hunters were also scouring global markets. On the FTSE, rebounding oil prices, boosting oil majors and a strong showing from financials overshadowed a drop in base metal prices dragging on the miners.

Banks put in a noticeably strong performance with the likes of HSBC, Royal Bank of Scotland and Barclays dominating the upper reaches of the FTSE. Banks surged thanks to a double whammy of Brexit optimism, following the signing off the Brexit deal by EU leaders, and the spill over effect from Italy potentially avoiding disciplinary procedures from Brussels.

Markets have responded positively to conciliatory comments from Italian government officials over the weekend and on Monday which suggest that the government might change its budget deficit target for 2019.

On Monday, the ten-year government bond yield in Italy fell by around 20 basis points from its close on Friday, leaving it just above 3.2%. The spread to German Bunds fell below 300 basis points, to its lowest level in around two weeks.

5.24pm GMT

Here's our news story on the GM job cuts, which are deeper than I first suggested:

4.28pm GMT

Shares in GM have jumped 5% as Wall Street welcomes its plan to close factories and cut jobs.

4.09pm GMT

Back at the European Parliament, Mario Draghi has urged MEPs to learn the lessons of the last eurozone crisis:

Draghi: The euro area needs a fiscal instrument to help maintain convergence in the face of large exogenous shocks.

Draghi: If we want to avoid repeating the mistakes of the past, completing the banking union and building an ambitious capital markets union are essential

3.52pm GMT

The US car industry has been hit with a blow - General Motors is cutting over 5,000 jobs, and closing three factories.

Bad news for workers, and hardly a sign that Donald Trump is bringing jobs back to America....

General Motors will close three assembly plants by the end of 2019, it said Thursday, including Detroit-Hamtramck, Lordstown in Ohio and Oshawa in Ontario.

Approximately 5,600 jobs are at stake: roughly 1,500 in Hamtramck; 1,600 in Lordstown; and about 2,500 in Oshawa.

2.47pm GMT

Over in New York, shares have opened higher after last week's truncated sessions (due to Thanksgiving).

The Dow has gained 1.3%, or over 300 points, in early trading.

U.S. stocks open higher https://t.co/WA7R2t6rlV pic.twitter.com/SUiJEEZmDt

2.43pm GMT

I think we can read between the lines here....

*DRAGHI DECLINES TO COMMENT ON ITALIAN BUDGET TALKS WITH EU

*DRAGHI: COUNTRIES WITH HIGH DEBT SHOULD REDUCE THEIR DEBT

2.32pm GMT

Mario Draghi has also called for eurozone government's to respect the eurozone's 'common rules'.

That's an unsubtle hint to Italy's government to adjust its 2019 budget, to avoid breaching EC deficit targets.

Draghi: We need to rekindle faith in our common rules and ensure that they are respected

*Stares at Rome* https://t.co/YyBrg28cg4

2.28pm GMT

Newsflash: the Eurozone's top central bank has warned that Europe's economy is slowing.

Testifying to MEPs, Mario Draghi, president of the ECB, flagged up that recent data have been "somewhat weaker than expected" [reminder: growth in the eurozone has slowed to just 0.2%].

"There is good reason to be confident that underlying inflation will gradually rise in the period ahead.

Recent developments confirm the Governing Council's earlier assessments of the medium-term inflation outlook."

Draghi: A gradual slowdown is normal as expansions mature and growth converges towards its long-run potential. Some of the slowdown may also be temporary.

Draghi at European Parliament: Data that have become available since my last visit in September have been somewhat weaker than expected

2.15pm GMT

We've not heard anything from Carlos Ghosn since he was arrested a week ago after landing in Japan.

But these photos give a glimpse of life at the Tokyo Detention Center where he's spent the last week, being questioned about claims he misused Nissan's funds and deliberately under-reported his salary to the Tokyo stock exchanges.

2.05pm GMT

Newsflash: Israel has raised interest rates, for the first time since 2011.

ISRAELI CENTRAL BANK RAISES BENCHMARK RATE TO 0.25%

1.53pm GMT

We have some grim, but unsurprising news for UK workers -- they've suffered the weakest real wage growth of any advanced economy in the last decade.

According to the International Labour Organization, Britain ranked bottom of a group of nine wealthy nations for its pay performance since 2009.

1.45pm GMT

Carlos Ghosn was a uniquely powerful business chief - chairing three car companies under the Nissan-Renault-Mitsubishi alliance.

Indeed, he was hailed as a popular hero in Japan before his arrest last week.

"Mitsubishi's move to dismiss Carlos Ghosn as chairman is the result of another significant corporate governance failure under the watch of a super boss.

"It follows his arrest and subsequent firing as chairman of Nissan and raises important questions over board oversight in companies that operate across different jurisdictions and, importantly, use unconventional corporate structures.

1.18pm GMT

Back in the UK, the search for the face of Britain's new 50 note has moved forwards (a little).

The Bank of England has released a lengthy list of suggestions from the public, since it invited nominations for a worthy, deceased scientist.

We've published the eligible names received in the first week of the new #50poundnote character nomination period: https://t.co/2gwWHd6jZi

This covers the first 114,000 nominations, to date we've received 174,112 nominations! Three weeks left to #ThinkScience... pic.twitter.com/TW9EYgx5iS

12.01pm GMT

While Mitsubishi was meeting to dismiss Carlos Ghosn, Nissan's new interim chairman was updating staff on the situation.

At a 45-minute meeting attended by hundreds of staff at the firm's Yokohama HQ and broadcast internally to other sites, Saikawa stressed that the scandal should not affect day-to-day operations.

Saikawa, who rose through the Nissan ranks under Ghosn's wing, has already spoken of his "great resentment and dismay" at the allegations.

11.29am GMT

Christian Stadler, professor of strategic management at Warwick Business School, has predicted that more heads may roll...

"It is not surprising that Mitsubishi has followed Nissan in sacking Carlos Ghosn, he may not be the only person to lose his job over this scandal.

"It will be interesting to see whether any Nissan executives are forced to resign as well. It seems implausible that they did not know about his incredibly lucrative financial arrangements.

11.22am GMT

Mitsubishi have released a statement to the Tokyo stock market, confirming that Carlos Ghosn has been dismissed as chairman.

They say that "it is considered difficult" for Ghosn to do the job, following the allegations of financial misconduct at Nissan.

10.57am GMT

Losing two chairmanships in a week is bad enough, but Carlos Ghosn also face the possibility of a decade behind bars -- IF the allegations of financial misconduct are proved in court.

Our Japan correspondent Justin McCurry explains:

Carlos Ghosn has been sacked as chairman of Mitsubishi Motors, a week after the disgraced auto tycoon was arrested over allegations that he underreported his income by millions of dollars - a crime that carries a possible 10-year prison sentence.

Seven of the eight members of the board of Mitsubishi, part of an industry alliance created by Ghosn that also includes Renault, held an extraordinary meeting on Monday to decide his fate, days after Nissan sacked him as chairman.

10.33am GMT

Ghosn's case is an early test of Japan's new corporate whistle-blowing laws.

These laws are meant to make it easier to tackle crimes such as tax evasion and bribery, by offering more lenient sentences to insiders who report such crimes.

Nobuo Gohara, a former prosecutor and now lawyer at Gohara Compliance and Law Office in Tokyo, believes the legal grounds for Ghosn's arrest are murky.

"I think it's a common procedure for prosecutors to collect enough hard evidence and consult with legal authorities, but this time around it was not clear what the hidden payment was," Gohara said at a news conference at the Foreign Correspondents' Club of Japan in Tokyo.

Is Nissan's former Chairman Carlos Ghosn really guilty of financial misconduct? Former prosecutor claims the evidence presented in his case and circumstances of his arrest are murky and Ghosn may be a victim of Japan's new plea bargaining system. https://t.co/YJkgEb3LIT

10.15am GMT

Here's Associated Press's take on Ghosn's dismissal from Mitsubishi today:

The board of Japanese automaker Mitsubishi Motors, which is allied with Renault and Nissan, voted Monday to dismiss Carlos Ghosn as its chairman after his arrest last week, citing a lack of trust.

Prosecutors arrested Ghosn on Nov. 19 on suspicion of under-reporting his income by $44 million over five years. Nissan Motor Co. ousted him as its chairman last week, saying an internal investigation found Ghosn abused company money and assets.

10.03am GMT

Motoko Rich of the New York Times points out that Carlos Ghosn hasn't actually been charged by the authorities, after a week of questioning.

Another chairmanship gone: Mitsubishi Motors removes Carlos Ghosn as chairman as he remains in detention, under questioning, but not yet charged with any crime

Ghosn Gone? Update

Renault: No
Nissan: Yes
Mitsubishi:

Ghosn sacked as Mitsubishi Motors chairmanhttps://t.co/ETXA6VBXuY pic.twitter.com/6U9NtPuoJd

9.54am GMT

Over the weekend, more allegations of financial misconduct by Carlos Ghosn appeared in the newspapers.

Insiders claimed that Nissan had made donations to a foreign university attended by one of his daughters, and also funded family trips.

Ghosn has been telling investigators that he did not commit any wrongdoing. His close aide Greg Kelly, who is also under arrest in the same case, has told an individual who met him in detention that Ghosn's "executive remuneration was properly listed in the financial statements" submitted to the authorities.

Kelly is also quoted as saying that he "did not receive illicit instructions" from Ghosn, according to those related to the case.

9.44am GMT

Mitsubishi's CEO (and new interim chairman) Osamu Masuko has told reporters that sacking Ghosn was "an agonising decision," but a necessary one to "protect the company".

9.41am GMT

The decision to remove Ghosn from the chairmanship was unanimous, Mitsubishi says.

9.37am GMT

Newsflash: Japanese automaker Mitsubishi has sacked chairman Carlos Ghosn, a week after the car magnate was arrested over allegations of financial misconduct.

Mitsubishi's board acted four days after Nissan also voted to remove Ghosn, who is accused of misusing company funds and under-declaring his salary.

BREAKING: Nissan-Renault partner Mitsubishi Motors Corp.'s board votes to dismiss Ghosn as chairman after his arrest.

Ghosn's ouster marks the end of his chairmanship of Japanese automakers, just two years after he was praised for bringing a steadying hand to Mitsubishi Motors following a cheating scandal in 2016.

CEO Osamu Masuko will become temporary chairman, the automaker said.

9.31am GMT

Just in: German business morale has fallen again, for the third month running.

IFO, the Munich-based thinktank, reports that its business morale index dropped to 102.0, from 102.9 in October, and lower than expected.

"Sentiment among German businesses weakened further this month.

Companies scaled back their assessments of the current business situation albeit from a high level. Their business expectations also clouded over."

#Germany's IFO - We see signs that the German economy is clearly cooling: There are increasing signs that there could be an economic turnaround

9.19am GMT

Here we go again... Cyber Monday 2018: guide to the best UK deals and offers https://t.co/WVNvh1f1O8

9.12am GMT

There's no sign of a Brexit Bounce in the City this morning, after EU leaders signed off the UK's withdrawal agreement yesterday.

The pound is still bobbing in the $1.28 zone against the US dollar, as traders ponder whether Britain will avoid crashing out of the block without a deal in four months time.

8.51am GMT

Shorter-dated Italian government debt are strengthening sharply this morning.

The yield (or interest rate) on Italian two-year bonds has fallen to 0.7%, from 0.95% on Friday. That's a big move, suggesting Italy is seen as a less-risky investment.

8.38am GMT

European stock markets are roaring back!

Italy's FTSE MIB has jumped by 3%, following Matteo Salvini's conciliatory comments on the budget, led by financial stocks.

Comments from Italian deputy PM Matteo Salvini on Sunday, hinting that the country's controversial 2.4% budget deficit could be lowered, came after reports of a meeting between Prime Minister Giuseppe Conte and European Commission President Jean-Claude Juncker on Saturday night.

These signs of progress were like catnip for good news-hungry investors, explaining the over-sized reaction of the European indices.

8.23am GMT

A junior Italian government minister has also hinted that the 2019 budget could be tweaked, to address Brussels' concerns.

Armando Siri, a transport ministry undersecretary, told the Il Messaggero newspaper that:

"In order to save the budget and avoid an increase in market turbulence ... a small fine-tuning (of the deficit target) could be considered,"

8.20am GMT

Italian banking shares have surged by almost 5% in early trading, as relief ripples through trading floors in Milan.

8.12am GMT

Italian bonds are rallying this morning, on hopes of a breakthrough in the long-running budget battle with Brussels.

"I think nobody is fixated on this, if there is a budget which makes the country grow, it could be 2.2 percent or 2.6 percent."

#Italy 10y risk spread over Germany drops <300bps as Italy's Dep PM Salvini has showed willingness to change 2019 budget deficit target in interview where he said nobody is fixated on 2.4% deficit target. "If there is budget which makes country grow, it could be 2.2% or 2.6%." pic.twitter.com/ngY2bAuoiw

8.02am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Theresa May has a difficult task ahead of her as she has to sell the withdrawal agreement to her own party. The EU over the weekend made it very clear that it is a take it or leave it situation in relation to the deal.

Prime Minister May will struggle to get fellow Conservatives to support her as many pro-Brexit and anti-Brexit MPs don't like the deal she struck. There are questions about what would happen in the event of the deal being voted down - it would open up the possibility of a no-deal Brexit.

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