Top international headlines: Microsoft and the metaverse

UK accounting regulator fines KPMG for audit failures, China cuts borrowing costs and more!

Japan’s exports and imports reached record highs in December, although the semi-conductor shortage remains a challenge for automakers like Toyota. China’s central bank cuts borrowing costs for the first time since April 2020 and Microsoft’s plans to acquire a legendary game publisher will see the tech giant become world number three on the gaming list. KPMG’s reputation takes another knock with a multi-million fine from the UK accounting regulator for audit failures.

Microsoft spends billions on the metaverse
Microsoft plans to buy Activision Blizzard for $68.7 billion (R1,053 billion), acquiring a legendary game publisher responsible for franchises like Call of Duty and World of Warcraft, but recently roiled by claims of sexual misconduct and discrimination, reports Bloomberg.

In its largest purchase ever, Microsoft will expand its own offerings for the Xbox console and push it into the fast-growing markets for mobile gaming and the metaverse. The deal, which would make Microsoft the world’s number three gaming company, also fits with CEO Satya Nadella’s strategy of focusing on content, community and cloud software.

China cuts borrowing costs
Against market expectation, China’s central bank has cut the borrowing costs of its medium-term loans for the first time since April 2020, to cushion any economic slowdown.

The People’s Bank of China (PBOC) said it was lowering the interest rate of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points to 2.85 percent from 2.95 percent in previous operations.

Thirty-four out of the 48 traders and analysts polled by Reuters last week predicted no change to the rates.

Britain’s inflation surges
Inflation in Britain rose faster than expected to 5.4 percent, its highest in nearly 30 years in December, intensifying a squeeze on living standards and putting pressure on the Bank of England (BoE) to raise interest rates again.

Economists polled by Reuters had expected a rise to 5.2 percent.

Financial markets now price in a more than 90 percent chance that the BoE will raise its main interest rate to 0.5 percent on 3 February. Last month it became the world's first major central bank to tighten policy since the start of the pandemic.

KPMG fined for audit failures
KPMG has been fined £3 million (R63 million) for failures during its audit of the Bargain Booze owner Conviviality and severely reprimanded in the latest blow to its reputation.

The accounting regulator, the Financial Reporting Council (FRC), found “a serious lack of competence” in KPMG’s 2017 audit of the company, which collapsed within nine months of the accounts being signed off, reports The Guardian.

Japan hits record export-import highs
Japan's exports and imports in December hit record highs in terms of their value in yen, as supply bottlenecks eased at the end of 2021 amid rising prices.

However, a persistent semi-conductor shortage remained a headache for Japanese firms such as auto manufacturer Toyota, which slashed its near-term output target this week, in addition to uncertainties around the Omicron variant, reports Reuters.