<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892780-1622879513809-gettyimages-1233264637-AFP_9BD47B.jpeg" alt="" class="wp-image-406028" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892780-1622879513809-gettyimages-1233264637-AFP_9BD47B.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892780-1622879513809-gettyimages-1233264637-AFP_9BD47B-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892780-1622879513809-gettyimages-1233264637-AFP_9BD47B-140x80.jpeg 140w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Britain’s Chancellor of the Exchequer Rishi Sunak (center), U.S. Treasury Secretary Janet Yellen (right) attend the first day of the G-7 Finance Ministers Meeting at Lancaster House in London on June 4, 2021. Stefam Rousseau | AFP | Getty Images</figcaption></figure>



Finance ministers from the Group of Seven (G-7) advanced nations agreed on Saturday to back a&nbsp;<a href="https://www.cnbc.com/2021/06/05/g-7-nations-reach-historic-deal-on-global-tax-reform.html">minimum global corporate tax rate of at least 15%</a>.



U.S. Treasury Secretary&nbsp;<a href="https://www.cnbc.com/janet-yellen/">Janet Yellen</a>&nbsp;said such a global minimum rate would end “the race-to-the-bottom in corporate taxation” and “ensure fairness for the middle class and working people in the U.S. and around the world.”



Governments in major economies have for years faced the challenge of taxing large companies, such as tech giants&nbsp;<a href="https://www.cnbc.com/quotes/FB" target="_blank" rel="noreferrer noopener">Facebook</a>&nbsp;and&nbsp;<a href="https://www.cnbc.com/quotes/GOOGL" target="_blank" rel="noreferrer noopener">Google</a>, that operate across many jurisdictions.



A common practice among many multinational companies is to declare income — such as those from intangible sources like software and patents — in low-tax jurisdictions regardless of where the sales are made. That allows the companies to avoid paying higher taxes in their home countries.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="740" height="602" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892876-1623039392709-Corporate_tax_map.jpg" alt="" class="wp-image-406029" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892876-1623039392709-Corporate_tax_map.jpg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892876-1623039392709-Corporate_tax_map-300x244.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892876-1623039392709-Corporate_tax_map-98x80.jpg 98w" sizes="auto, (max-width: 740px) 100vw, 740px" /></figure>



The G-7 agreement feeds into a broader global effort to update tax rules around the world and will be discussed further at a Group of Twenty (G-20) meeting next month.



The Organisation for Economic Co-operation and Development or OECD, an intergovernmental group, has been facilitating negotiations on global taxation over the last few years. It expected a global corporate minimum tax rate would make up the bulk of the $50 billion to $80 billion in additional taxes that companies will end up paying,&nbsp;<a href="https://www.reuters.com/business/finance/what-is-global-minimum-tax-what-will-it-mean-2021-06-05/" target="_blank" rel="noreferrer noopener">reported Reuters.</a>



<h2 class="wp-block-heading" id="h-highest-and-lowest-corporate-tax-rates">Highest and lowest corporate tax rates</h2>



Generally, countries in Africa and South America impose higher corporate tax rates compared with many in Europe and Asia, according to data by Washington-based think tank Tax Foundation, the OECD and consultancy KPMG.



Many low-tax jurisdictions are small nations such as Bulgaria and Liechtenstein, the data showed.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="740" height="638" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892878-1623039482847-Highest_corporate_tax_list.png" alt="" class="wp-image-406030" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892878-1623039482847-Highest_corporate_tax_list.png 740w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892878-1623039482847-Highest_corporate_tax_list-300x259.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892878-1623039482847-Highest_corporate_tax_list-93x80.png 93w" sizes="auto, (max-width: 740px) 100vw, 740px" /></figure>



Around 15 countries do not impose a general corporate income tax, the data showed. That includes island nations such as Bermuda, Cayman Islands and British Virgin Islands, which are widely known as offshore “tax havens” — jurisdictions where large companies shift profits to in order to pay less taxes.



Those territories benefit from jobs created to serve multinational companies, such as legal and accounting services. Tax havens also make money from fees paid by large companies to create subsidiaries there.



Daniel Bunn, vice president for global projects at Tax Foundation, said low-tax jurisdictions facilitate investments in other countries with higher taxes.



<a href="https://www.cnbc.com/2021/06/07/charts-show-highest-and-lowest-corporate-tax-rates-around-the-world.html#"></a>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="740" height="617" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892879-1623039565344-Lowest_corporate_tax_list.png" alt="" class="wp-image-406031" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892879-1623039565344-Lowest_corporate_tax_list.png 740w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892879-1623039565344-Lowest_corporate_tax_list-300x250.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106892879-1623039565344-Lowest_corporate_tax_list-96x80.png 96w" sizes="auto, (max-width: 740px) 100vw, 740px" /></figure>



So, applying a global minimum tax rate would increase the costs of those investments and could result in a “little bit of economic blowback,” he told CNBC’s “<a href="https://www.cnbc.com/asia-squawk-box/">Squawk Box Asia</a>” on Monday.



Bunn said many questions remain on how that minimum tax rate will be applied and which parts of corporate income to tax. He added that tax havens may not go away entirely.



“It’s unclear where things will settle in a few years,” he said. “There may still be opportunities for evasion or avoidance or different countries changing the rules in ways that are preferential to their jurisdictions.”

106892780-1622879513809-gettyimages-1233264637-AFP_9BD47B

These charts show the highest and lowest corporate tax rates around the world

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/105699541-1548401133335gettyimages-988165318.jpeg" alt="" class="wp-image-405873" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/105699541-1548401133335gettyimages-988165318.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/105699541-1548401133335gettyimages-988165318-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/105699541-1548401133335gettyimages-988165318-140x80.jpeg 140w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A smart phone with the icons for the social networking apps WeChat and others seen on the screen on June 29 2018 in Hong Kong, Hong Kong. S3studio | Getty Images News | Getty Images</figcaption></figure>



GUANGZHOU, China — If you were thinking about picking your nose or putting underwear over your head while livestreaming on WeChat, think again.



<a href="https://www.cnbc.com/quotes/700-HK" target="_blank" rel="noreferrer noopener">Tencent</a>&nbsp;runs&nbsp;<a href="https://www.cnbc.com/2019/02/04/what-is-wechat-china-biggest-messaging-app.html">WeChat, a messaging app that is used by over a billion people</a>. The app is an integral part of daily life in China and can be used for everything from payments to booking flights. Last year, Tencent launched a live broadcasting feature called “Channels.”



In a bid to clean up the platform, the Chinese technology giant published a list of dozens of common “violations” on its platform which it had found through monitoring Channels.



So-called “vulgar” content is prohibited. This includes any actions with sexual provocation such as “seductive lip licking” and focusing the camera on “sensitive” parts of the body. Spanking is also prohibited.



Fortune telling, picking your nose and putting underwear over your head are also not allowed.



Tencent also lays out items of clothing that can’t be worn which includes fishnet stockings. Women are not allowed to broadcast in just a bikini or wrapped in bed sheets or bath towels, according to Tencent.



Anyone displaying tattoos will also be in violation of WeChat’s rules.



Other violations include talking about politically sensitive content, allowing minors to host a livestream, and promoting content related to gambling.



Chinese technology giants are currently in the crosshairs of regulators in the world’s second-largest economy. Livestreaming is one area that the authorities have been watching closely as it boomed during the coronavirus pandemic.

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Tencent bans nose picking, spanking and other ‘violations’ on its WeChat livestreaming service

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106836977-1612792099253-gettyimages-1211442310-wm2_6890_2020030953941364.jpeg" alt="" class="wp-image-405868" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106836977-1612792099253-gettyimages-1211442310-wm2_6890_2020030953941364.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106836977-1612792099253-gettyimages-1211442310-wm2_6890_2020030953941364-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106836977-1612792099253-gettyimages-1211442310-wm2_6890_2020030953941364-140x80.jpeg 140w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Elon Musk, founder and chief engineer of SpaceX speaks at the 2020 Satellite Conference and Exhibition March 9, 2020 in Washington, DC. Musk answered a range of questions relating to SpaceX projects during his appearance at the conference. Win McNamee | Getty Images</figcaption></figure>



<a href="https://www.cnbc.com/quotes/BTC.CM=">Bitcoin’s</a>&nbsp;price fell Friday morning after&nbsp;<a href="https://www.cnbc.com/elon-musk/">Elon Musk</a>&nbsp;posted a tweet suggesting he’s fallen out of love with the world’s top cryptocurrency.



The billionaire Tesla CEO tweeted a meme about a couple breaking up over the male partner quoting Linkin Park lyrics, adding the hashtag #Bitcoin and a broken heart emoji.



Bitcoin fell nearly 6% to a price of $36,432 at around 3 a.m. ET Friday, according to data from Coin Metrics. Other digital coins followed suit, with No. 2 cryptocurrency ether dipping 7% to $2,600 and dogecoin — <a href="https://www.cnbc.com/2021/04/28/dogecoin-price-surges-after-tweets-from-elon-musk-and-mark-cuban.html">Musk’s favored crypto</a> — sinking almost 8% to around 36 cents.



Bitcoin has had a wild year, reaching a record high of more than $64,000 in April, only to then plummet to nearly $30,000 the following month. It’s now more than 40% off its all-time high, though still up almost 30% so far in 2021.



It’s not the first time Musk’s tweets about crypto have moved the market. In May, he said that Tesla would&nbsp;<a href="https://www.cnbc.com/2021/05/13/why-elon-musk-is-worried-about-bitcoin-environmental-impact.html">stop accepting bitcoin as a payment method</a>&nbsp;due to concerns over its energy usage, shaving hundreds of billions of dollars in value off the entire crypto market in a single day.



In a new note this week, <a href="https://www.cnbc.com/quotes/JPM" target="_blank" rel="noreferrer noopener">JPMorgan</a> said institutional investors were <a href="https://www.cnbc.com/2021/06/01/jpmorgan-says-big-investors-are-not-buying-the-bitcoin-dip-prices-could-fall-further.html">not buying the dip in bitcoin</a>, and suggested prices may have further to fall.



Bitcoin’s proponents view the digital currency as a store of value similar to gold, arguing it can act as a hedge against inflation as central banks around the world ramp up stimulus in response to the coronavirus crisis. But skeptics say bitcoin is a speculative bubble waiting to burst.



Thousands of bitcoin investors have descended on Miami this week for a conference dedicated to the cryptocurrency. Miami Mayor Francis Suarez is himself a believer in bitcoin, telling CNBC Thursday that the city is “actively looking at” paying employees in crypto.



“I think crypto is just fake money,” Andrey Kostin, chairman of Russia’s VTB Bank, told CNBC’s Hadley Gamble at the St. Petersburg International Economic Forum on Friday. “Somebody’s sitting somewhere mining and mining like in the Middle Ages and then using them.”



“No government will accept it because it’s not under any government regulations,” he added. “They can’t control it.”



Kostin alluded to several central bank initiatives to develop digital versions of existing money like the dollar, the euro, the Chinese yuan or, in Russia’s case, the ruble.



“It’s inevitable,” he said. “The whole world is moving to a digital world. And currency is not excluded from this process.”

106836977-1612792099253-gettyimages-1211442310-wm2_6890_2020030953941364

Bitcoin falls after Elon Musk tweets breakup meme

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106888428-1622028919907-gettyimages-1232967074-omarques_18052021_crypto_3-1.jpeg" alt="" class="wp-image-405806" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106888428-1622028919907-gettyimages-1232967074-omarques_18052021_crypto_3-1.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106888428-1622028919907-gettyimages-1232967074-omarques_18052021_crypto_3-1-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106888428-1622028919907-gettyimages-1232967074-omarques_18052021_crypto_3-1-140x80.jpeg 140w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Omar Marques | LightRocket | Getty Images</figcaption></figure>



LONDON — A “significantly high” number of&nbsp;<a href="https://www.cnbc.com/cryptocurrency/">cryptocurrency</a>&nbsp;firms are failing to meet U.K. requirements on preventing money laundering, the country’s financial services watchdog has warned.



Businesses offering crypto-related services are required to register with the Financial Conduct Authority. The regulator introduced a temporary licensing regime for firms whose applications haven’t yet been approved to allow them to continue trading.



The FCA said Thursday that it had pushed back the deadline for the so-called Temporary Registration Regime from July 9, 2021, to March 31, 2022.



“A significantly high number of businesses are not meeting the required standards under the Money Laundering Regulations resulting in an unprecedented number of businesses withdrawing their applications,” the FCA said in a statement.



“The extended date allows cryptoasset firms to continue to carry on business whilst the FCA continues with the robust assessment being undertaken.”



Just five crypto companies are currently registered with the FCA. Those include Tyler and Cameron Winklevoss’ Gemini and British start-up Ziglu. There are dozens of applicants sitting on the Temporary Registration Regime list.



Cryptocurrencies like&nbsp;<a href="https://www.cnbc.com/bitcoin/">bitcoin</a>&nbsp;have long been dogged by worries over their use in illegal activities like money laundering and cyberattacks. That’s because the people transacting them don’t reveal their identity. Officials have also warned about the speculative nature of crypto assets.



In January, the FCA issued a&nbsp;<a href="https://www.cnbc.com/2021/01/11/crypto-investors-risk-losing-all-their-money-uks-fca-warns.html">stark warning to cryptocurrency investors</a>.



“Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money,” the regulator said.



“If consumers invest in these types of product, they should be prepared to lose all their money.”



The FCA reiterated its stance Thursday, warning that many cryptocurrencies are “highly speculative and can therefore lose value quickly.”



Bank of England Governor Andrew Bailey — who was previously chief executive of the FCA — last month gave a&nbsp;<a href="https://www.cnbc.com/2021/05/07/bank-of-englands-bailey-crypto-investors-risk-losing-all-their-money.html">similar statement</a>. Cryptocurrencies “have no intrinsic value,” he said, adding: “Buy them only if you’re prepared to lose all your money.”

106888428-1622028919907-gettyimages-1232967074-omarques_18052021_crypto_3-1

Many cryptocurrency firms are not meeting money laundering rules, UK watchdog warns

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106891537-1622685480788-gettyimages-1233019661-CHINA-HENAN-COMMODITY_EXPO_FAIR_CN.jpeg" alt="" class="wp-image-405730" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106891537-1622685480788-gettyimages-1233019661-CHINA-HENAN-COMMODITY_EXPO_FAIR_CN.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106891537-1622685480788-gettyimages-1233019661-CHINA-HENAN-COMMODITY_EXPO_FAIR_CN-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106891537-1622685480788-gettyimages-1233019661-CHINA-HENAN-COMMODITY_EXPO_FAIR_CN-140x80.jpeg 140w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Visitors purchase products from Russia at the 8th China characteristic commodity expo fair in Sanmenxia, central China’s Henan Province, May 20, 2021. Xinhua News Agency | Xinhua News Agency | Getty Images</figcaption></figure>



China’s services sector expansion slowed in May, a private sector survey showed on Thursday, with weaker overseas demand and increased costs putting pressure on businesses.



The Caixin/Markit services Purchasing Managers’ Index (PMI) fell to 55.1 in May, down from 56.3 in April but still well in expansionary territory. The 50-mark separates growth from contraction on a monthly basis.



The survey attributed part of the slowing expansion to a fall in overseas demand as Covid-19 cases abroad hurt business activity. A gauge of export orders slipped into contraction.



The Caixin PMI contrasts with an official survey released earlier this week, which showed activity in China’s services sector expanded at a faster pace in May.



Though slower to recover from the epidemic than manufacturing, a gradual improvement in consumption has stimulated activity in China’s services sector, which includes many smaller and private companies.



Growth in total new orders slipped and services firms increased their staffing levels for the third straight month, but at a slower pace, the Caixin survey showed.



Inflation pressures worsened with input costs rising at a sharper rate in May and reports of more expensive raw materials, energy, staff and transport, the survey found. Even though firms were able to raise selling prices for the 10th straight month, the increases have yet to catch up with the inflation in input costs.



“Services supply and demand continued their upward trends for the 13th consecutive month, though both expanded at a slower pace than in the previous month,” said Wang Zhe, senior economist at Caixin Insight Group, in a statement accompanying the data release.



“Inflationary pressure was enormous as price gauges continued to rise. Both the measures for input costs and the prices service providers charged rose to their highest points of the year.”



The Caixin China General Composite PMI came in at 53.8 in May, weaker than 54.7 the previous month.

106891537-1622685480788-gettyimages-1233019661-CHINA-HENAN-COMMODITY_EXPO_FAIR_CN

China’s services activity growth slows in May: Caixin PMI

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/elvira-1-820x547.jpg" alt="" class="wp-image-405662" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/elvira-1-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/elvira-1-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/elvira-1-120x80.jpg 120w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/elvira-1-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/elvira-1.jpg 1024w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption><a href="https://www.google.com/url?sa=i&amp;url=https%3A%2F%2Fwww.flickr.com%2Fphotos%2F151590013%40N04%2F35142732392&amp;psig=AOvVaw0X83P5MbE5cSLGQOkCM8Rj&amp;ust=1622721252620000&amp;source=images&amp;cd=vfe&amp;ved=0CAkQjhxqFwoTCNjO1Jzy-PACFQAAAAAdAAAAABAD"> Elvira Sahipzadovna Nabiullina</a>: Russia&#8217;s Central Bank Govenor Photo via Flickr </figcaption></figure>







As the economy moves online, digital currencies will be the future of financial systems, according to Russia’s central bank governor, Elvira Nabiullina.



There is a need for fast, cheap payment systems, and central bank digital currencies can fill that gap, she told CNBC’s&nbsp;<a href="https://www.cnbc.com/hadley-gamble/">Hadley Gamble</a>&nbsp;in an exclusive interview.



“I think it’s the future for our financial system because it correlates with this development of digital economy,” she said.



Moscow published a&nbsp;<a href="http://cbr.ru/eng/analytics/d_ok/dig_ruble/" target="_blank" rel="noreferrer noopener">consultation paper on a digital rouble&nbsp;</a>in October<a href="http://cbr.ru/eng/analytics/d_ok/dig_ruble/" target="_blank" rel="noreferrer noopener">,</a>&nbsp;and aims to have a prototype ready by the end of 2021. Pilots and trials could start next year, Nabiullina said.



That could be a concern for the U.S., according to a former U.S. Treasury official, Michael Greenwald.



“What alarms me is if Russia, China, and Iran each creates central bank digital currencies to operate outside of the dollar and other countries followed them,” he told CNBC’s Hadley Gamble on Wednesday. “That would be alarming.”WATCH NOWVIDEO09:59Why central banks around the world want to get into digital currencies



Central bank digital currencies are not the same as cryptocurrencies, such as bitcoin. They are issued and controlled by authorities, and the value of one digital rouble will equal one cash rouble, t<a href="http://cbr.ru/eng/analytics/d_ok/dig_ruble/" target="_blank" rel="noreferrer noopener">he Bank of Russia said last year.</a>



Cryptocurrencies were illegal in Russia until last year, and still cannot be used to make payments.



“We will go step by step, because it’s [a] very difficult, technological, legal … project,” Nabiullina said.

elvira

Digital currencies are the future for Russia’s financial system, central bank governor says

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106809301-1607611223955-gettyimages-1224905082-AUSTRALIA_ABC_BULLION.jpeg" alt="" class="wp-image-405552" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106809301-1607611223955-gettyimages-1224905082-AUSTRALIA_ABC_BULLION.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106809301-1607611223955-gettyimages-1224905082-AUSTRALIA_ABC_BULLION-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106809301-1607611223955-gettyimages-1224905082-AUSTRALIA_ABC_BULLION-140x80.jpeg 140w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Workers pour gold from a crucible into a mold at the ABC Refinery smelter in Sydney, New South Wales, Australia, on Thursday, July 2, 2020. David Gray | Bloomberg | Getty Images</figcaption></figure>



LONDON — Cryptocurrencies are an alternative to&nbsp;<a href="https://www.cnbc.com/quotes/@HG.1">copper</a>&nbsp;— not&nbsp;<a href="https://www.cnbc.com/quotes/@GC.1">gold</a>&nbsp;— when it comes to hedging against inflation, according to Jeff Currie, global head of commodities research at Goldman Sachs.



<a href="https://www.cnbc.com/2021/05/31/economy-can-handle-the-sharp-rise-in-inflation-market-bull-ed-yardeni.html">Inflation is rising as the global economy</a>&nbsp;recovers from the effects of the Covid-19 crisis as central banks keep monetary policy historically loose and demand outstrips supply on multiple fronts. The U.S. Federal Reserve’s preferred inflation gauge, the&nbsp;<a href="https://www.cnbc.com/2021/05/28/pce-price-index.html">core personal consumption expenditure index</a>&nbsp;published Friday, increased 3.1% in April from a year earlier, exceeding expectations.



Gold and crypto have been&nbsp;<a href="https://www.cnbc.com/2020/05/07/paul-tudor-jones-reportedly-buys-bitcoin-as-an-inflation-hedge-compares-crypto-to-70s-gold-trade.html">deemed as hedges against rising prices</a>, with&nbsp;<a href="https://www.cnbc.com/2021/05/18/cryptocurrencies-are-close-to-reaching-a-big-milestone-versus-gold-by-one-wall-street-firms-count.html">crypto bulls in some cases championing bitcoin</a>&nbsp;as a modern-day replacement for bullion. Inflation hedges aim to protect the investor against a fall in the purchasing power of money due to rising prices.



Gold prices have risen almost $200 since the beginning of April to hit a four-month high, fueled by a weakening U.S. dollar and an increase in demand on the back of rising inflation expectations.



Meanwhile, cryptocurrencies have been on a wild ride.&nbsp;<a href="https://www.cnbc.com/quotes/BCH.CB=">Bitcoin</a>, for instance, is up more than 25% year-to-date, but down more than 25% over the past three months.



Speaking to CNBC’s “Squawk Box Europe” on Tuesday, Currie said investors should see digital currencies not as a substitute for gold when looking at inflation hedges, but rather noted their similarities to copper.



“You look at the correlation between bitcoin and copper, or a measure of risk appetite and bitcoin, and we’ve got 10 years of trading history on bitcoin — it is definitely a risk-on asset,” Currie said. He noted that both bitcoin and copper act as “risk-on” inflation hedges, compared to gold, which is viewed as a safe haven, or “risk off.”



Copper surged to all-time highs in mid-May before suffering a sharp decline towards the end of the month, only to rebound again last week.



“There is good inflation and there is bad inflation. Good inflation is when demand pulls it, and that is what bitcoin hedges, that is what copper hedges, that is what oil hedges,” Currie said.



“Gold hedges bad inflation, where supply is being curtailed, which is … focused on the shortages on chips, commodities and other types of input raw materials. And you would want to use gold as that hedge,” he added.



<h3 class="wp-block-heading" id="h-anticipated-inflation-and-rate-hikes">‘Anticipated’ inflation and rate hikes</h3>



Meanwhile, in a note Monday, Goldman Sachs suggested that commodities broadly remain the best inflation hedge for investors looking for protection from a potential downturn.



In the note, Currie’s commodities research team noted that since stocks price in forward expectations for earnings and growth, they are a good hedge of “anticipated inflation.” However, once inflationary expectations become imminent enough to suggest central banks may be forced to hike interest rates, equities cease to be as useful as an inflation hedge, they argued.



“Commodities are spot assets that do not depend on forward growth rates but on the level of demand relative to the level of supply today,” the note said.



“As a result, they hedge short-term unanticipated inflation, created when the level of aggregate demand is exceeding supply in the late stages of the business cycle.”

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Why Goldman’s top commodity analyst sees copper as an alternative to crypto

LONDON — A group of some of the world’s most powerful oil producers will likely agree to continue increasing their output at a meeting on Tuesday, analysts say, as oil prices climb amid growing optimism over fuel demand.



International benchmark&nbsp;<a href="https://www.cnbc.com/quotes/@LCO.1">Brent</a>&nbsp;crude futures traded at $71.15 a barrel on Tuesday morning, up around 2.7%, while&nbsp;<a href="https://www.cnbc.com/quotes/@CL.1">West Texas Intermediate</a>&nbsp;crude futures stood at $68.61, for a gain of more than 3% and the contract’s highest level in more than two years. Oil prices have climbed more than 30% this year.



OPEC and its non-OPEC partners met via videoconference to discuss the next phase of production policy.



The Middle East-dominated group, which is responsible for over one-third of global oil production, is seeking to balance an expected upswing in demand with the potential for an increase in Iranian output.



The alliance, OPEC+, announced massive crude production cuts in 2020 in an effort to support prices when the coronavirus pandemic coincided with a historic demand shock.



In April, the group&nbsp;<a href="https://www.cnbc.com/2021/04/01/opec-to-decide-on-oil-production-policy-as-demand-concerns-persist.html">opted</a>&nbsp;to return 2.1 million barrels per day of supply back to the market over the May to July period, reflecting an optimistic outlook for improved mobility despite ongoing concerns about Covid worldwide.



OPEC+ is expected to reiterate this decision to gradually increase output during this week’s meeting.



“I think the event itself is going to be a nonevent. We expect them to basically reconfirm the plan that they laid out on April 1,” Jeffrey Currie, global head of commodities research at Goldman Sachs, told CNBC’s “Street Signs Europe” on Tuesday. “I think the bigger issue underlying this is: How are they going to deal with Iran?”



Iran&nbsp;<a href="https://www.cnbc.com/2021/05/26/iaea-chief-on-iran-nuclear-program-only-countries-making-bombs-are-enriching-at-this-level.html">is in discussions</a>&nbsp;with six world powers to revive its 2015 nuclear deal. The restoration of a deal could lead to more oil on the global market in coming months.



“It’s too early to give specific numbers around Iran,” Currie said. “So I think the best you can hope for in terms of how they are going to deal with Iran is the indication that they are willing to offset any increases in Iran. That could be the positive upside surprise coming out of this meeting.”



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/iran-flag.jpeg" alt="" class="wp-image-405555" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/iran-flag.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/iran-flag-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/iran-flag-140x80.jpeg 140w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption> The flag of Iran is seen in front of the building of the International Atomic Energy Agency (IAEA) Headquarters ahead of a press conference by Rafael Grossi, Director General of the IAEA, about the agency’s monitoring of Iran’s nuclear energy program on May 24, 2021 in Vienna, Austria. Michael Gruber | Getty Images News | Getty Images</figcaption></figure>



OPEC Secretary General Mohammad Barkindo&nbsp;<a href="https://www.opec.org/opec_web/en/6444.htm" target="_blank" rel="noreferrer noopener">said Monday</a>&nbsp;that he did not believe higher Iranian supply would be a cause for concern.



“We anticipate that the expected return of Iranian production and exports to the global market will occur in an orderly and transparent fashion,” Barkindo said in a statement.



<h2 class="wp-block-heading" id="h-iran-likely-to-act-constructively">Iran likely to act ‘constructively’</h2>



“I think everybody is expecting Iran to add a lot of volume. So beyond the July increase, they aren’t likely to come out with any commitment,” Amrita Sen, chief oil analyst at Energy Aspects, told CNBC’s “Squawk Box Europe” on Tuesday.



“We know that as demand rises, we will need more OPEC barrels, but I think Iran is going to be the big question mark for them,” Sen said.



OPEC+ initially agreed to cut oil production by a record of 9.7 million barrels per day last year as global fuel demand collapsed, before easing cuts to 7.7 million and eventually 7.2 million from January. By July, the group’s production cuts will be on track to stand at 5.8 million.



“The most consequential issue for OPEC+ over the short term relates to the potential rise of Iranian production as a result of the US and Iran returning to JCPOA compliance,” Eurasia Group analysts said in a research note, referring to the acronym for the nuclear deal: the Joint Comprehensive Plan of Action.



Analysts at the risk consultancy said it believed progress in successive rounds of talks made a return to the deal likely in the third quarter of 2021.



“Over the medium term, OPEC+ will most likely adjust its policy to prevent the addition of Iranian barrels from derailing its market balancing strategy,” they continued. “Saudi Arabia will likely lean on Russia to better understand the scope of Iranian policy to work on adjustment plans. Iran would also probably act constructively as higher oil prices serve its own interests.”

iran-flag

Oil jumps to two-year high as OPEC and allies meet to decide production output

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106857628-1616445109133-gettyimages-1231864131-omarques_21032021_finance_2.jpeg" alt="" class="wp-image-405503" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106857628-1616445109133-gettyimages-1231864131-omarques_21032021_finance_2.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106857628-1616445109133-gettyimages-1231864131-omarques_21032021_finance_2-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/06/106857628-1616445109133-gettyimages-1231864131-omarques_21032021_finance_2-140x80.jpeg 140w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>In this photo illustration a Bitcoin logo seen displayed on a smartphone with stock market percentages in the background. Omar Marques | SOPA Images | LightRocket | Getty Images</figcaption></figure>



BEIJING — Two of China’s rivals to stock trading app Robinhood are looking to cryptocurrencies as a way to compete overseas.



The companies,&nbsp;<a href="https://www.cnbc.com/quotes/FUTU" target="_blank" rel="noreferrer noopener">Futu</a>&nbsp;and&nbsp;<a href="https://www.cnbc.com/quotes/TIGR" target="_blank" rel="noreferrer noopener">Tiger Brokers</a>, disclosed during earnings calls last month they are applying for licenses in Singapore and the U.S. that would allow local customers to trade digital currencies.



The move comes as cryptocurrencies such as&nbsp;<a href="https://www.cnbc.com/quotes/BTC.BS=-USS">bitcoin</a>&nbsp;have climbed back into the spotlight in recent months, while Chinese regulators have increased their efforts to limit speculation in the market. In the last few weeks, authorities issued&nbsp;<a href="https://www.cnbc.com/2021/05/19/bitcoin-btc-price-plunges-but-bottom-could-be-near-.html">new warnings against digital currency</a>&nbsp;trading and a&nbsp;<a href="https://www.cnbc.com/2021/05/26/major-china-bitcoin-mining-hub-lays-out-harsher-crackdown-measures.html">crackdown on bitcoin mining</a>&nbsp;— an energy-heavy computing process that allows participants to earn bitcoin.



But in the financial trading world, demand for cryptocurrencies is high as bitcoin’s price&nbsp;<a href="https://www.cnbc.com/2021/05/28/bitcoin-falls-below-36000-as-cryptocurrencies-slip-once-again.html">surged to record levels above $60,000, before dropping sharply to around $35,000</a>.



Robinhood, which&nbsp;<a href="https://www.cnbc.com/2018/01/25/stock-trading-app-robinhood-to-roll-out-bitcoin-ethereum-trading.html">launched</a>&nbsp;bitcoin and&nbsp;<a href="https://www.cnbc.com/quotes/ETH=">ethereum</a>&nbsp;trading in the U.S. in early 2018, has&nbsp;<a href="https://www.cnbc.com/2021/05/25/robinhood-nears-biggest-trade-of-all-an-ipo-after-wild-year.html">added 3 million customers a month</a>&nbsp;this year for its crypto business. In April, U.S.-based cryptocurrency trading site&nbsp;<a href="https://www.cnbc.com/quotes/COIN" target="_blank" rel="noreferrer noopener">Coinbase</a>&nbsp;debuted on the&nbsp;<a href="https://www.cnbc.com/2021/04/14/coinbase-to-debut-on-nasdaq-in-direct-listing.html">Nasdaq</a>.



“We do hear a lot of interest from our users across the world in terms of crypto. We have listened to that,” Arthur Chen, Futu’s chief financial officer, told CNBC last week. He said the company hopes to offer cryptocurrency-related products as soon as the end of this year.



Both Futu and Tiger Brokers got their start primarily from Chinese employees of major tech companies like Alibaba and Baidu. Since these companies are listed in the U.S., that&nbsp;<a href="https://www.cnbc.com/2019/03/20/chinas-tech-savvy-millennials-fueling-interest-in-trading-us-stocks.html">piqued their employees’ interest in trading stocks abroad</a>.



However, both companies are increasingly focused on markets outside mainland China. In addition to essentially banning yuan-bitcoin transactions, Beijing tightly controls capital flows out of the mainland.



Futu has gained 100,000 paying clients in Singapore less than three months since launching there in early March, Chen said. He said about one-fourth of new paying clients in the first quarter came from Singapore and the U.S.

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