Embed Size (px)
Citation preview
Saturday, March 9, 2019Rajab 2, 1440 AH
BUSINESSGULF TIMES US economy
gains paltry 20,000 jobsin February
SLOWDOWN CONCERNS RISE: Page 12
China govtsupportsHuawei
US LAWSUIT | Page 3
Norway’s SWF to sell stakes in exploration, production fi rmsGovernment wants to cut reliance on oil and gas; stakes in integrated energy companies unaff ected by plan; minister says integrated firms can lead renewables shift; fund is built on revenues from domestic energy industry
ReutersOslo
Norway’s trillion-dollar sover-eign wealth fund, the world’s biggest, will sell its stakes in
oil and gas explorers and producers but still invest in energy fi rms that have re-fi neries and other downstream activi-ties, according to a government plan.
The proposal announced yesterday said the fund’s stakes in integrated companies, such as Royal Dutch Shell, ExxonMobil and other majors involved in everything from exploration to sell-ing fuel at the roadside, would not be sold.
The state, which has built its wealth on the back of North Sea oil and gas re-serves, also has no plan to sell its direct stake in Norwegian energy fi rm Equi-nor or its direct holdings in Norwegian oil and gas fi elds.
“The government is proposing to ex-clude companies classifi ed as explora-tion and production companies within the energy sector from the (fund) to reduce the aggregate oil price risk in the Norwegian economy,” the Finance Ministry said in a statement.
Energy stocks represented 5.9% of the fund’s equity investments at the end of 2018, worth about $37bn, fund data showed.
But much of that amount is invested in integrated fi rms rather than smaller, dedicated explorers and producers.
The fund’s shares in the 134 fi rms to be excluded have a value of about $8bn, the ministry said.
The fund said the shift would aff ect 1.2% of its equity holdings.
“Exploration and production com-panies will be phased out from the fund gradually over time,” the government proposal said, without giving a time-line for the divestment.
Among the fi rms aff ected are Cairn Energy, in which the fund held 1.92% worth $22mn at the end of 2018, Tul-low Oil, in which it held 2.1% worth $67mn, and Premier Oil, with 1.8% worth $12mn.
Those stocks would be replaced by investments in other sectors, broad-ly weighted in proportion under the
fund’s current mandate, the central bank’s deputy governor said in 2017, when the bank made its initial pro-posal.
The bank manages the fund.At the end of 2018, the fund’s equity
investments were split between the fi -nancial sector (23.7%), industrial com-panies (12.9%), technology (12.6%), consumer goods (11.9%), healthcare (11.4%), consumer services (10.8%), oil and gas (5.9%), basic materials (5.0%), telecoms (3.0%) and utilities (2.8%). The Finance Ministry said the list,
based on the FTSE Russell classifi ca-tion, was not fi nal.
For instance, Cheniere, which does not produce oil or gas, but operates gas liquefaction facilities, was featured on the list.
“It will take time to divest from those companies and in the end it could be a diff erent list,” a ministry spokeswoman said.
Parliament, which still needs to ap-prove the proposal, is expected to back the plan as the ruling centre-right coa-lition has a majority in the assembly.
The news added to pressure on en-ergy companies, whose shares have already slipped due to declining oil prices.
The proposal aims to make Norway’s wealth less vulnerable to a permanent drop in the price of crude, now the fund has increased its exposure to equities to 70% of its value from 60%. The central bank originally suggested excluding all oil and gas companies, including inte-grated fi rms.
But the government adjusted the proposal, saying major fi rms had the scale to shift to renewable energy.
“To exclude all oil companies would limit the fund’s opportunities,” Fi-nance Minister Siv Jensen said.
The decision to keep stakes in inte-grated fi rms drew criticism from those who want Norway to shift more de-cisively away from fossil fuel invest-ments.
Sony Kapoor, managing director of the think tank Redefi ne, said diluting the central bank’s plan “represents a victory of Big Oil lobbying over fi nan-cial prudence and common sense”. Greenpeace campaigner Martin Nor-man said the government’s decision “does not address Norway’s exposure to oil and we are not showing the world the way forward”. The opposition La-bour Party said it would back the gov-ernment, even though it argued for a tougher strategy.
“It’s not enough, but we should do this now and then we might see (what to do) in the future,” said Svein Roald Hansen, Labour’s fi nance spokesman, adding that the state was right to keep its stakes in Equinor and oilfi elds.
The fund invests Norway’s revenues from oil and gas production for future generations in stocks, bonds and real estate abroad.
Its investments in integrated fi rms at the end of 2018 included stakes of 2.45% in Shell, 2.31% in BP, 2.02% in Total, 0.99% in Chevron and 0.94% in ExxonMobil.
The Troll A natural gas platform, operated by Equinor, stands in the North Sea. The proposal announced by Norway’s sovereign wealth fund yesterday said the fund’s stakes in integrated companies such as Royal Dutch Shell, ExxonMobil and other majors involved in everything from exploration to selling fuel at the roadside, would not be sold.
Trump says won’t sign China trade pact unless it’s ‘great’AFPWashington
Optimism about a rapid resolution of the months-long US-China trade war was undercut by con-
fl icting comments out of Washington and Beijing, sending global stock markets on a downward slide yesterday.
President Donald Trump said he re-mains optimistic but will not agree to a pact with China unless it is a “very good deal.” And an economic adviser said Trump could walk away from the nego-tiations.
The economic superpowers have been locked in a trade battle since last summer, striking out with steep tariff s on more than $360bn in two-way trade, which is beginning to sap economic growth and business confi dence.
“I am confi dent but... if this isn’t a great deal, I won’t make a deal,” Trump told reporters as he departed the White House to visit tornado-damaged Ala-bama.
But he added, “We will do very well ei-ther way, with or without a deal.”
US and Chinese offi cials have said they
are making progress toward a resolution of the dispute but a US diplomat in Bei-jing said yesterday that an agreement was not imminent.
Washington is demanding deep struc-tural changes, including changes to how Beijing treats foreign investors and its own state-owned enterprises, and the deal is expected to require commitments on the Chinese currency and protections for American technology.
White House economic adviser Larry Kudlow acknowledged that Trump’s planned meeting at his Florida resort with Chinese President Xi Jinping — which offi cials said was expected to be held late this month to seal an agreement — could slip into April.
The more cautious tone, coupled with weak Chinese trade data showing plum-meting exports and imports, sent global stock markets falling.
And weak US employment data added to the pessimism, causing Wall Street to dive at the open, though it had recovered some ground ahead of midday.
Kudlow told CNBC that talks have “ad-vanced enormously,” echoing comments from Chinese Foreign Minister Wang Yi earlier yesterday.
But “you saw them walk away from North Korea and just saying that... it could apply to trade,” he said, refer-ring to Trump’s recent summit in Hanoi with the North Korean leader Kim Jong-un, which ended early and without an agreement.
“I don’t want to hang a timetable on this,” Kudlow said.
US Trade Representative Robert Light-hizer “is doing the best he can.”
“There may be a meeting in Florida, Mar-a-Lago between the two lead-ers, maybe late this month or early next month.”
He credited Trump’s tough negoti-ating strategy and “aggressive tariffs” for bringing Beijing to the negotiating table.
“We have them over a barrel,” he said.Terry Branstad, the US ambassador
to China, told The Wall Street Journal in an interview that preparations for a Trump-Xi meeting are not yet under way either.
“Both sides agree that there has to be signifi cant progress, meaning a feeling that they’re very close, before that hap-pens,” he said.
“We’re not there yet.”
BMW is biggest US automotive exporter by value for 5th yearReutersFrankfurt
Germany’s automaker
BMW AG said yesterday it
was the biggest US auto-
motive exporter by value
for the fifth consecutive
year, with exports totalling
over $8.4bn in 2018.
The company said it
exported 234,689 units of
its X model sport utility
vehicles and coupes from
its Spartanburg, South
Carolina, plant during
2018.
“Despite...the ongoing
uncertainty regarding
trade and tariff s, plant
Spartanburg is still posi-
tively contributing to the
US balance of trade,” said
Knudt Flor, president and
CEO of BMW Manufactur-
ing Co LLC. BMW’s US
export report comes at a
time when US President
Donald Trump has threat-
ened to saddle imported
cars and auto parts with
steep tariff s of up to 25%.
Automakers, however,
warn that such tariff on
imported cars and parts
would add thousands of
dollars to vehicle costs
and potentially devastate
the US economy as auto
companies cut jobs to
maintain profits.
“The remarkable partner-
ship between BMW and
South Carolina continues
to thrive, and this is evi-
dent by the fact that our
state remains the nation’s
leader in the export sales
of completed passenger
vehicles,” South Carolina
Secretary of Commerce
Bobby Hitt said.
Turkey caps state banks’ deposit rates for public institutions
ReutersAnkara
Turkey has imposed a cap on
the maximum interest rate that
public institutions can receive
on deposits at state banks, the
government said yesterday, in
a move aimed at further easing
the lenders’ costs.
Public institutions that oper-
ate budgets independent of
government control are obliged
to deposit all savings in state
banks.
Analysts said the latest cap,
announced yesterday in the
government’s Off icial Gazette,
would cut deposit rates by
around 1 percentage point on
average.
Turkey’s largest lender Ziraat
Bank holds around 20bn lira
($3.67bn) of public deposit
while Vakifbank holds 26.25bn
lira, the banks’ end-2018 finan-
cial statements showed.
A third, Halkbank, holds 11.6bn.
Under the new regulation, the
rate cap will be calculated using
a maturity-based rate of the
weighted average interest rate
applied to time deposits, the
Gazette said.
Meanwhile, Turkey’s lira weak-
ened yesterday, continuing its
decline due to worries over a
possible deterioration in ties
with Washington over Ankara’s
push to buy S-400 missile
defence systems from Russia.
It has lost some 3% so far this
year.
Yesterday, the lira weakened
to 5.4780 against the dollar
by 0718 GMT from Thursday’s
close of 5.4583.
“We don’t expect such a large
decline as last year (due to the
S-400 purchase),” said Serhat
Gurleyen, research director at
Is Invest.
A worker checks over a BMW on the line at the company’s plant in Spartanburg, South Carolina. BMW said it exported 234,689 units of its X model sport utility vehicles and coupes from its Spartanburg plant during 2018.
BUSINESS
Gulf Times Saturday, March 9, 20192
AFPBeijing
China’s exports and imports plummeted much more than expected in February, offi cial
data showed yesterday, adding to wor-ries about slowing growth in the world’s number two economy as it fi ghts a trade war with the United States.
Its politically sensitive trade surplus with the US narrowed to $14.7bn for the month from $27.3bn in January, data from China’s customs administration showed.
China’s total overseas shipments sank 20.7% on-year and imports fell 5.2%, much worse than the 5% and 0.6% drops forecast in a Bloomberg News poll.
“Today’s trade fi gures reinforce our view that China’s trade recession has started to emerge,” said Raymond Yeung of ANZ bank in a note.
“Looking ahead, we fi nd little reason to expect a rebound in the near term on the back of a sluggish global electron-ics cycle,” said Yeung, adding it would weigh on China’s fi rst-quarter GDP growth.
Recent economic data points to the diffi culties China faces with growth in the last three months of 2018 clocking in at 6.4%.
In January, an important barometer of prices in the country’s industrial sec-tor neared contraction territory while manufacturing activity saw its worst performance in three years in February.
China’s premier on Tuesday laid out a lower growth target of 6% to 6.5% this year in a report to the country’s annual parliamentary session underway in Bei-jing, down from 6.6% growth in 2018.
The government outlined major tax cuts, fee reductions and looser mon-etary policy to combat the slowdown.
Worries have grown about slow-ing global growth with the European Central Bank slashing its 2019 euro-zone growth and infl ation forecasts on Thursday, citing “uncertainties” around geopolitical risks and trade rows. However, analysts caution it is diffi cult to compare trends in China’s data at the start of the year due to the Chinese New Year holiday, which came in early February this year and can aff ect business activity.
China’s exports for the fi rst two months fell 4.7%, and imports were
down 3.1%, estimated Yeung of ANZ.US President Donald Trump – who
last month said he expected to hold a summit with President Xi Jinping in March – said Thursday the trade talks were “moving along pretty well”.
But his ambassador to China, Terry Branstad, told the Wall Street Journal on Friday that the two countries were not yet ready to bring Trump and Xi togeth-er for a summit and deal signing.
“We’re not there yet. But we’re closer than we’ve been for a very long time,” he told the Journal. Chinese Foreign Min-
ister Wang Yi said yesterday the two sides had made “signifi cant progress” recently and blasted hawks in Washing-ton who have advocated a “decoupling” between the two countries’ economies.
“To decouple from China is to decou-ple from opportunities, decouple from the future, and in a sense, to decouple from the world,” Wang said at a news conference in Beijing. Earlier in the week, Commerce Minister Zhong Shan told reporters “there is still lots left to do” in trade negotiations.
In a move that could help the nego-
tiations, China’s parliament will next week pass a new law regulating for-eign investment and barring the forced transfer of technology by foreign fi rms to Chinese joint venture partners.
The dismal trade data and a rare sell rating slapped on several high-fl ying Chinese stocks from a top brokerage sent the country’s roller-coaster stock market down sharply, with the bench-mark Shanghai Composite Index losing 4.40% yesterday. An end to the months-long US-China trade dispute would help China’s hurting exporters – shipments
to the US fell about 29% last month.Washington and Beijing last year ex-
changed punitive tariff s on more than $360bn in two-way trade but have re-cently indicated they are close to com-ing to terms. America’s trade defi cit with China hit a record $419.2bn last year, US data released this week showed.
China put its surplus at a lower but still record $323.3bn. US exports of soybeans, a crucial crop across vast ex-panses of the country, fell 18% for the year as the tit-for-tat tariff s sent Chi-nese buyers elsewhere.
China’s imports, exports tumble more than expected in February
An aerial view of a port in Qingdao, Shandong province. China’s exports and imports plummeted much more than expected in February, off icial data showed yesterday, adding to worries about slowing growth in the world’s number two economy as it fights a trade war with the US.
New foreigninvestment law to foster fair competition, says China
ReutersBeijing
China’s new foreign in-vestment law will help foster “fair competi-
tion” and create a transparent environment for foreign fi rms, a Chinese parliament offi cial said yesterday, as China and the United States work to resolve a bitter trade dispute.
The law has been fast-tracked for approval at the full session of parliament this month.
The law will replace existing regulations for joint ventures and wholly foreign-owned en-terprises and is designed to ease foreign concerns about China’s investment environment.
It will ban forced technology transfer and illegal government “interference” in foreign busi-ness practices, according to the latest draft.
Wang Chen, vice chairman of parliament’s standing commit-tee, told a full session of the leg-islature that the law “includes many stipulations that ensure domestic and foreign enter-prises are subject to a unifi ed set of rules and compete on a level playing fi eld”.
It will “create a stable, trans-parent and predictable market environment featuring fair com-petition”, he added.
The law also demonstrates China’s commitment to using reform and innovation to en-sure its foreign investment legal system develops and improves, Wang said.
The improvement of the in-vestment environment will help the country attract greater for-eign investment, he added.
“The state shall protect the intellectual property rights of foreign investors and foreign-invested enterprises, and en-courage technological co-oper-ation based on the principle of voluntariness and commercial norms.”
Some law experts and busi-ness consultants have expressed scepticism about how far the law would protect foreign fi rms’ in-terests, given a lack of rule of law in China.
The European Union Cham-ber of Commerce in China said in a statement late last month, shortly before parliament opened, that it appreciated the aim of trying to address foreign businesses’ concerns, but that problems remained.
Those include broad terms and vague language that require clarifi cation, with many of its articles reading more like policy commitments than legally bind-ing clauses.
“We are concerned that the drafting of the Foreign Investment Law is being squeezed between the nor-mal legislative process and the negotiation table with the US, in part to address the trade conflict,” said cham-ber president Mats Harborn.
China stashes away tonnes and tonnes of gold as tensions pick upBloombergSingapore
China expanded its gold reserves for the third straight month, strengthening the bulls’ case that central bank demand will remain elevated this year and putting Asia’s top economy on track to be the biggest buyer after Russia should its recent pace of accumulation be sustained.The People’s Bank of China increased holdings to 60.26mn ounces in February from 59.94mn a month earlier, according to data on its website.Last month’s inflow of 9.95 tonnes follows the addition of 11.8 tonnes in January and 9.95 tonnes in December, when buying restarted after a two-year pause.Russia leads the pack among central banks, taking in 274.3 tonnes in 2018.“Ongoing eff orts to diversify total reserves – away from the US dollar – has prompted gold purchases by the PBoC, which we believe will continue,” said Robin Bhar, head of metals research at Societe Generale SA.Most of these purchases by central banks “are aimed to increase assets having no counterparty risks, unlike US Treasuries,” Bhar said in an e-mail.Central-bank buying was a significant component of global bullion demand last
year, hitting the highest level in decades, according to data from the producer-funded World Gold Council.China’s decision to restart its purchases comes amid signs of slowing growth at home, and as policy makers in Beijing seek to strike a trade deal with Washington.Russia, which is “de- dollarising” its reserves, has bought more than 200 tonnes in each of the past four years, with the push funded by the almost total sale of its US Treasuries, according to the WGC.
‘Keep buying’
“China will keep buying on a regular basis, but we would not be surprised if there were months when they don’t,” said Ross Strachan at Capital Economics Ltd. “Overall, we would expect them to be the second-largest purchaser this year. The motivation will be to diversify their foreign-exchange reserves, and increase gold from its current very low percentage of these reserves.”While China’s gold holdings are the sixth-largest by country, they account for only 2.4% of its reserves, compared with more than 70% in Germany and the US, WGC data show.Central bank purchases are likely to be sustained in 2019 at the same level as last year amid elevated geopolitical tensions and less pressure on emerging-market
currencies, Goldman Sachs Group Inc said in a March 4 report.Kazakhstan added about 50 tonnes last year, and was joined by other countries including Poland, India and Hungary, which picked up smaller amounts.Gold fell in February after four months of gains as equity markets rose on signals a US-China trade resolution was in sight.Bullion for immediate delivery was at $1,293 an ounce yesterday, up 8% over six months.Goldman is among the bulls, predicting a rally to $1,450 over the next year.
‘First priority’
“Often the PBoC is more erratic in buying gold, unlike the Russian central bank in 2018,” Georgette Boele, senior precious metals and diamond analyst at ABN Amro Bank NV, said in an e-mail. “So I’m not expecting that they would buy every month. Their strategy appears to be diff erent than that of the Russian central bank. China’s first priority is to support the economy.”China has previously gone long periods without revealing increases in gold holdings.When the central bank announced a 57% jump in reserves to 53.3mn ounces in mid-2015, it was the first update in six years, and the start of increases nearly every month until October 2016.
Japan Q4 GDP revised up as investment reboundsReutersTokyo
The Japanese economy grew fast-er than initially estimated in the fourth quarter as capital invest-
ment staged a quick recovery from a se-ries of natural disasters in the previous quarter.
However, despite the upward revi-sion to growth, economists are likely to temper their optimism on the out-look given disappointing data on ex-ports and factory output and with the economy expected to weaken due to the Sino-US trade war.
Japan’s gross domestic product rose an annualised 1.9% in October-De-cember, more than the initial estimate
of a 1.4% expansion and the median estimate for a 1.8% increase, data from the Cabinet Offi ce showed.
That followed a revised 2.4% annu-alised contraction in the third quarter, which was the biggest decline in more than four years.
Economists warn that capital ex-penditure and overall economic growth are likely to weaken in the fi rst half of this year as exports dwindle and inventories pile up due to a slowdown in global trade.
“Capital expenditure did very well, but we see an increase in inventories in the fourth quarter that points to weak sales,” said Shuji Tonouchi, sen-ior market economist at Mitsubishi UFJ Morgan Stanley Securities. “Fall-ing exports will hit growth in the fi rst
quarter. The fi rst half of this year will be weak, but I don’t expect a reces-sion.” The revised fi gure translates into quarter-on-quarter growth of 0.5% in price-adjusted terms.
This is more than a preliminary reading of 0.3% and economists’ me-dian estimate of a 0.4%.
The capital expenditure component of GDP rose 2.7% from the previous quarter, marking the fastest expansion since January-March 2015.
That was slower than the median forecast for 2.8% but faster than the preliminary 2.4% expansion.
The value of inventories rose by ¥157bn ($1.41bn) in the fourth quar-ter, the second consecutive quarter of gains as inventories of raw materials and partially fi nished goods piled up.
Private consumption, which ac-counts for roughly 60% of GDP, rose 0.4% in the fourth quarter, less than the preliminary 0.6% increase.
Net exports – or exports minus imports – contributed minus 0.3 percentage point, unchanged from preliminary data. Domestic demand added a revised 0.8 percentage point to GDP, more than a preliminary read-ing of a 0.6 percentage point contribu-tion.
Separate data yesterday showed household spending rose 2% year-on-year in January, more than the median estimate for a 0.4% annual contrac-tion, which may ease concerns about domestic demand. Real wages in Janu-ary rose 1.1% year-on-year in January, matching the same pace of growth in
the previous month, the labour minis-try said yesterday.
The United States last year imposed tariff s on $250bn worth of goods im-ported from China, with Beijing hit-ting back with duties on $110bn worth of American products, including soy-beans and other commodities.
In a recent sign negotiations to re-solve the eight-month trade war were progressing, US President Donald Trump has delayed tariff s on $200bn worth of Chinese imports.
However, even if the two sides strike a trade agreement, the damage to glo-bal trade and Japan’s economy may take time to repair with uncertainty about trade policies hurting sentiment and disrupting manufacturers’ supply chains.
Customers are seen at a jewellery shop in Beijing. Gold fell in February after four months of gains as equity markets rose on signals a US-China trade resolution was in sight.
BUSINESS3Gulf Times
Saturday, March 9, 2019
ReutersNew Delhi
India’s bankruptcy court yester-day approved global steel giant ArcelorMittal SA’s bid for debt-
ridden Essar Steel, potentially ending months of court battles and opening the country’s steel industry to out-siders.
ArcelorMittal confirmed the National Company Law Tribunal (NCLT) had approved the takeover of the 10mn tonne steel plant of Es-sar Steel by itself and Japan’s Nippon Steel & Sumitomo Metal Corp, pav-ing the way for the first major foreign participation in India’s steel sector.
ArcelorMittal has been trying to enter India’s fast-growing steel market, which is dominated by local companies, for over a decade but bu-reaucratic hassles and land acquisi-tion woes stifled its bids.
“We welcome today’s pronounce-ment by the NCLT Ahmedabad,” ArcelorMittal said in a statement. “We hope to complete the transac-tion as soon as possible.”
Essar Steel, with debts of Rs50.78bn ($725.38mn), was among the so called dirty dozen – twelve large steel and other infrastructure companies which defaulted and were referred to India’s bankruptcy court in 2017.
The company became synonymous with the tardy pace of debt resolution by Indian banks saddled with billions of dollars of bad loans.
When a new bankruptcy law was introduced in 2016 by Prime Minister Narendra Modi, it was seen by inves-tors as a bold move which would ease lending pressure on banks and boost private investment.
However, three years later, most large cases are still languishing in the courts or yet to be resolved – bad news for Modi who is seeking re-election in a month’s time amid border tensions and growing discon-
tent due to high unemployment. The NCLT approved ArcelorMittal’s bid in October, even as Essar’s founders – the billionaire Ruia family – tried to hold onto the company, offering Rs543.89bn to clear its debts.
“We continue to believe that our
settlement proposal...is the most compelling one available to Essar Steel creditors,” Essar said in a state-ment yesterday.
“We are awaiting a copy of the NCLT order, and will take a call on next steps after examining the same,” the state-
ment added. The case between Arce-lorMittal and the Ruia family reached the Supreme Court in January, with Essor’s debt resolution process lasting around 600 days in total.
Local steel giant JSW Steel Ltd and mining conglomerate Vedanta Ltd
also bid for the western Indian steel plant.
ArcelorMittal said in October the company would pay a total of Rs-420bn ($5.73bn) towards Essar Steel’s debt and put another Rs80bn into operations and profitability.
India bankruptcy court clearsArcelorMittal’s Essar takeover
Asian LNG spot prices down over 30% since start of this year
ReutersLondon
Asian spot prices for liquefied
natural gas (LNG) dropped this
week for the eleventh week in
a row, and have now lost more
than 30% in value since the
start of the year.
Prices for April delivery to
northeast Asia are estimated at
$5.70 per million British thermal
units, $0.30/mmBtu below last
week.
That is the first time prompt
prices have fallen below $6.00/
mmBtu since early August 2017,
according to Reuters data.
Prices for May delivery are
estimated to be slightly higher
than for April, largely due to the
very weak prompt price, LNG
traders said.
In China, a return of industrial
demand after the Luna New
Year helped to draw LNG stocks
down slightly, sources said.
Inventories in Japan and
South Korea were still high.
Spot trade in the Far East was
almost non-existent this week,
sources said.
But there were plenty of
deliveries related to long-term
contracts or earlier purchases.
In the first eight days of
March, 18 cargoes were sup-
plied to China, eight more than
in the same period in February,
half of which the country was
on holiday, Refinitiv Eikon data
showed.
In Japan and South Korea,
the delivery pace was largely
stable in the first week of March,
compared with February.
Europe, India and Latin
America remain the focus for
LNG suppliers.
Shipments of US LNG have
gathered pace in March and
Europe is likely to receive more
US LNG volumes this month.
There are a number of off ers
from US suppliers for late March
deliveries to Europe at a signifi-
cant discount to the price at the
TTF, the Dutch gas hub, an LNG
trader said.
The Dutch front-month price
declined by around $0.30/mmB-
tu this week too. But there could
be an uptick next week.
“Our balance forecasts
indicate tighter conditions both
in the UK and on the Continent
next week which should pro-
vide support to gas prices next
week,” Refinitiv analysts said in
a weekly note.
“The main drivers are colder
weather and outlook for lower
LNG sendout.”
In India, prices are around
the same level as in the Far
East, sources said. “At some
point India will target the TTF
level; right now they pay a small
premium to that,” an LNG trader
said. India’s Gujarat State Petro-
leum Corp (GSPC) and Torrent
Power issued new buy tenders
this week.
“India will continue buying,
LNG is cheap and they have
space for more supply,” an
industry source said.
GSPC did not award its 12
cargo tender for delivery over
April 2019 to March 2020 due
to higher-than-expected off ers,
however, traders said.
In Latin America, Argentina’s
IEASA issued a new tender on
March 1 for 14 cargoes for deliv-
ery from May to September.
India’s bankruptcy court yesterday approved global steel giant ArcelorMittal’s bid for debt-ridden Essar Steel, potentially ending months of court battles and opening the country’s steel industry to outsiders.
Unlikely twins and differing fortunes: Malaysia’s Petronas and Indonesia’s PertaminaReutersJohor, Malaysia/Jakarta
On the southernmost edge of the Asian
landmass and on the shores of the busy
shipping lanes of the Singapore Strait,
Malaysia’s Petronas is starting up a state-
of-the-art petroleum processing hub, called
RAPID.
The huge complex in Malaysia’s Johor
province is currently testing its systems,
running crude oil through its fuel process-
ing units and labyrinth of pipes and
producing large exhaust gas fires from its
flare tower.
The flames are clearly visible for miles
around, including on Indonesian islands
just across the narrow strait. The 300,000
barrels-per-day (bpd) RAPID or Refinery and
Petrochemical Integrated Development will
come onstream around May.
Among other customers, it will sell fuel
to Indonesia, shining a spotlight on the con-
trast between Petronas and its Indonesian
peer Pertamina. Both are state-owned oil
companies that dominate the energy sector
in their own nations.
But their fortunes have markedly
diverged because Malaysia has allowed
Petronas to follow its own growth path,
while Pertamina is hobbled by Indonesian
government intervention and bears the
burden of a subsidy programme.
“Lots of people see Petronas and
Pertamina as twin companies. But that’s
not really the case. Petronas is very much
a commercial company, almost like an
independent oil company while Pertamina
is driven more by government policy
and agenda, a national oil company,” said
Andrew Harwood, research director for
Asia/Pacific upstream oil and gas at energy
consultancy Wood Mackenzie.
For Petronas, RAPID marks a milestone
as it prepares for a future with less crude oil
output while serving the region’s booming
fuel demand. RAPID, being built in collabo-
ration with Saudi Aramco, has cost around
$15bn and is one of Petronas’ biggest ever
investments. It is part of an even bigger
Pengerang Integrated Complex (PIC) being
developed by more than 50,000 workers
at an estimated cost of more than 100bn
ringgit ($24.61bn), and which will eventually
also include a deep-water oil and a liquefied
natural gas (LNG) import terminal.
Petronas declined to speak with Reuters
about the project’s details but has said
RAPID “will position Malaysia to capital-
ise on the growing need for energy and
petrochemical products in Asia in the
next 20 years... pushing our country into a
new frontier of technology and economic
development.”
Like Malaysia, Indonesia is struggling to
keep oil production up just as domestic fuel
demand soars.
Once a member of the Organisation of
the Petroleum Exporting Countries (Opec),
Indonesia has seen its crude oil output
dwindle from a peak of 1.6mn bpd in the
early 1990s to below 1mn bpd. It is now
Southeast Asia’s biggest fuel importer,
importing more than 400,000 bpd of last
year, at a cost of around $10bn a year at
current prices.
Little investment
Yet, the last time Indonesia built a major
refinery was around 25 years ago.
A Refinery Development Master Plan
(RDMP), launched in 2014 to double
refinery output to over 2mn bpd within a
decade, was confirmed last week by Per-
tamina’s chief executive Nicke Widyawati.
“Starting from 2021, we will invest
around $7bn per year as these refineries
(developments) are in progress,” Widya-
wati said. But many of Indonesia’s refinery
projects have suff ered set-backs, like the
delay in the upgrade of a refinery in the
central Java area of Cilacap from 348,000
to 400,000 bpd.
Due to be completed in 2021, it has been
pushed back to 2023.
Fajar Harry Sampurno, the deputy
minister for state owned enterprises, said
Cilacap’s delay was because the land for the
site had yet to be acquired.
Saudi Aramco has also expressed inter-
est in Cilacap, but Sampurno said “Aramco
is still waiting” to invest as it first wants the
land rights to be resolved.
Sampurno said such delays were causing
Pertamina “big losses.” But Pertamina itself
isn’t investing enough.
The company says its capital spending
target would be $4.2bn to $4.5bn this year,
down from an earlier target of $5.5bn.
On the other hand, Petronas raised its in-
vestment by 10bn ringgit ($2.46bn) to 55bn
ringgit in 2018, and spending is expected to
rise again this year.
Once RAPID is completed, Petronas
would likely start looking for a next big
development project, possibly as an
investment into overseas production or
even in form of corporate acquisitions, said
Harwood from Wood Mackenzie.
“No way” to net exports
The consultancy estimates Petronas,
which has invested far more than its Indone-
sian counterpart in exploration and acquisi-
tions, will produce 1.6mn barrels per day of oil
equivalent this year, which is a unit to describe
joint oil and gas production, against vs 0.8mn
barrels of oil equivalent by Pertamina.
Oil and gas reserves are estimated at
7.8bn barrels of oil equivalent for Petronas
and at 5bn for Pertamina by Wood Mac-
kenzie. Sampurno, the Indonesian deputy
minister, told Reuters there was “no way”
Indonesia could become a net oil exporter
again. He said Pertamina should expand
its refining capacity to meet booming
demand, emulating Petronas. But the
Indonesian state-owned major, described
by the government as an “agent of develop-
ment”, is struggling to keep up the required
spending to finance oil and gas production
and build the infrastructure to meet rising
domestic fuel consumption.
China supports Huawei’s bid for US legal redressReutersBeijing
The Chinese government’s top diplomat, State Councillor Wang Yi, said yesterday that China
supports Huawei Technologies’ bid for legal redress in the United States, add-ing that Chinese companies should use “legal weapons” and not be “silent lambs”.
The Chinese telecoms equipment maker has sued the US government, saying a law limiting its US business was unconstitutional, as Washington has sought to counter what it sees as China’s growing threat to US economic competitiveness and security.
The lawsuit marks another rift be-tween China and the United States, which spent most of 2018 slapping im-port tariff s on billions of dollars worth of each other’s goods.
In December, Huawei’s chief fi nan-cial offi cer Meng Wanzhou was ar-rested in Canada at the United States’ request and faces possible extradition.
Speaking at a news conference on the sidelines of China’s annual meeting of parliament, Wang said recent actions aimed at certain people and compa-nies were “deliberate political suppres-sion” and that the Chinese government would take “all necessary measures” to safeguards their interests.
“At the same time, we support rele-
vant companies and individuals to take up legal weapons to safeguard their rights and interests, and not be silent lambs,” Wang said. “What we must protect today is not only a company’s rights and interests, but the legitimate development interests of a country and its people,” he said.
By contrast, foreign fi rms in China
have long feared speaking out about unfair conditions, concerned they might be the target of political retri-bution and not have legal recourse due to the ruling Communist Party’s tight control of courts.
Huawei, a privately owned fi rm, has faced criticism around the world that it could be employed as an intelligence-
gathering arm of the Chinese govern-ment.
It has embarked on a public rela-tions and legal off ensive as Washington lobbies allies to abandon its products when building 5G networks, centring on a 2017 Chinese law requiring com-panies co-operate with national intel-ligence work.
Meng’s arrest quickly turned her into a central fi gure in a trade war between two economic superpowers.
To resolve the trade dispute, Wash-ington has demanded that China make substantial changes to its laws and practices to protect US intellectual property, end forced transfers of US technology to Chinese fi rms, curb gen-erous industrial subsidies and open the domestic market to US companies.
US President Donald Trump has said he would consider intervening in Meng’s case if it would help close a trade deal with China, and her law-yer has told a Canadian court that he has concerns the allegations against her have a political character, noting Trump’s comments.
But Huawei’s activities were under scrutiny by US authorities long before Trump initiated the trade war, accord-ing to interviews with 10 people famil-iar with the Huawei probes and docu-ments related to the investigations seen by Reuters.
People with knowledge of ongoing talks to end the trade war have told Re-
uters the two sides still have substan-tial work ahead to reach agreement on a way to ensure China follows through on any pledges.
Negotiations still could collapse if a deal cannot be reached on enforcement of these “structural” issues.
Chinese industrial policies, includ-ing its state-backed Made in China 2025 plan to fund and promote sectors including robotics, aerospace, clean-energy cars, have provoked alarm in the West, and are core to Washington’s complaints.
But over the past year, Beijing has publicly downplayed that programme, mindful of the backlash it had created.
Once a key talking point for Chinese offi cials, former fi nance minister Lou Jiwei told the South China Morning Post on Wednesday the tech development strategy has been a “waste of taxpay-ers” money.
Reuters reported in June 2018 that mentions of the plan had dropped sig-nifi cantly in Chinese state media.
Foreign business groups have criti-cised the plan as large-scale import substitution, and experts doubt China will shelve such ambitions even if it takes a softer line in promoting them amid talks with Washington.
Answering a question on growing tensions between China and the United States, Wang said that “substantive progress” had been made in those trade talks.
Visitors walk next to Huawei booth at the Mobile World Congress in Barcelona. The Chinese telecoms equipment maker has sued the US government, saying a law limiting its US business was unconstitutional, as Washington has sought to counter what it sees as China’s growing threat to US economic competitiveness and security.
BUSINESS
Gulf Times Saturday, March 9, 20194
ReutersTokyo
The Bank of Japan will likely maintain its view the export-reliant economy is expanding
moderately but warn of heightening overseas risks at next week’s rate re-view, sources say, as China’s slow-down and trade tension cloud the out-look.
Factories across the globe slammed on the brakes last month as demand was hit by the US-China trade war, slowing global growth and political uncertainty in Europe ahead of Brit-ain’s departure from the European Union.
Such weak signs have forced major central banks to pause in raising inter-est rates and cast doubt on the BoJ’s repeatedly-stated assessment that overseas economies “continue to grow steadily”.
Japanese policymakers were caught off guard by the unexpectedly big hit from softening Chinese demand.
In January, Japan’s exports suffered their biggest decline in more than two years and factory output fell the most in a year as China-bound shipments tumbled.
Many in the BoJ expect Japan’s economy to emerge from the current soft patch in the second half of this year, when Beijing’s stimulus plans could lift Chinese demand and under-pin global growth, say sources famil-iar with the central bank’s thinking.
The BoJ is thus likely to maintain its assessment that Japan’s economy “continues to expand moderately,” though it may slightly modify the lan-guage to reflect heightening external risks, the sources say.
“Underlying data points to weak-ening growth that is hard to dismiss,” one of the sources said.
“But the BoJ needs to look more at upcoming data to judge whether the weakness would persist,” the source said on condition of anonymity, a view echoed by three other sources.
Any change in the BoJ’s economic assessment likely won’t trigger an immediate monetary easing, as risks to the outlook have not heightened enough to top up an already massive stimulus programme, the sources said.
At the two-day rate review end-ing on March 15, the BoJ is widely ex-pected to keep unchanged its pledge to guide short-term interest rates at mi-nus 0.1% and the 10-year government bond yield around 0%.
Nodding to heightening uncertain-
ty, the sources said, the BoJ may offer a bleaker view of the global economy than in January, when the central bank said it continued to grow steadily.
The central bank is also seen cutting its view on exports and output from the current assessment, which is that they are “increasing as a trend”, they said. The BoJ faces a dilemma.
Years of heavy money printing have dried up market liquidity and hurt commercial banks’ profits, stoking concern over the rising risks of pro-
longed easing. And yet, subdued in-flation has left the BoJ well behind other major central banks in dialling back crisis-mode policies, leaving it with little ammunition to battle the next recession.
Growing gloom over the global economy adds to the BoJ’s woes, as domestic demand could lose steam when a sales tax hike planned for Oc-tober hits consumers.
Former BoJ deputy governor Hi-rohide Yamaguchi, who retains close
contact with policymakers, warns that rising global uncertainties could push Japan into recession and force the central bank to ramp up stimulus.
Given its dwindling ammunition, however, the central bank won’t react immediately to small changes in the economy, he said.
“It will act only when the economy is hit by a severe downturn, and when the momentum for hitting its price target is broken,” Yamaguchi told Reuters.
BoJ seen keeping interestrate targets unchanged
Trucks are seen transporting containers from a pier in Tokyo’s port. In January, Japan’s exports suff ered their biggest decline in more than two years and factory output fell the most in a year as China-bound shipments tumbled.
Japan sees global growth risks persisting on trade war, China slowdownReutersTokyo
Downside risks in the global economy
are likely to persist over the medium to
long term, pressured by the Sino-US trade
war and a slowdown in China, Japan’s top
financial diplomat said.
Masatsugu Asakawa, vice finance minis-
ter for international aff airs, said he hoped
Washington and Beijing would resolve their
trade dispute by tackling not just trade is-
sues but China’s structural problems.
Asakawa’s comments came just days
after China set an economic growth target
of 6% to 6.5% in 2019, below the 6.6%
gross domestic product growth reported
last year.
“It’s inevitable for Chinese economy to
slow, with its potential growth lowering as
a trend,” Asakawa told Reuters.
“It is unlikely to falter greatly as there’s
room for authorities’ stimulus measures.”
Global trade has slowed over the past
year as Washington and Beijing have
been locked in a tit-for-tat tariff battle for
months.
US President Donald Trump said on
Wednesday that trade talks with China
were moving along well and predicted
either a “good deal” or no deal.
Asakawa said the trade war and China’s
slowdown meant the risks to global
growth remain over the medium to long
term, although the world economy is still
in recovery mode.
Asakawa said he wanted the world’s
two largest economies to address China’s
structural problems over intellectual prop-
erty, technology transfer and state-owned
enterprises.
Tokyo and Washington are set to enter
bilateral trade talks in the coming months,
with currency issues likely in focus.
Asked if Trump’s past criticism against
Japan for keeping the yen low through the
Bank of Japan’s “money supply” could tie
Tokyo’s hands in coping with a spike in the
currency, Asakawa said he saw no problem
as long as monetary policy is not targeting
currencies.
“G7 and G20 have constantly agreed
that excess currency volatility and
disorderly movement are undesirable for
economy and financial stability,” he said.
“Japan can act as appropriate based on
the G7/G20 agreement in case disorderly
moves like “flash crash” occurs in the
market.”
Asakawa took up his post in July 2015,
overseeing currency issues and interna-
tional aff airs such as G7 and G20 meetings.
He has become the longest serving top
financial diplomat, exceeding the previous
record set by BoJ governor Haruhiko
Kuroda, who served as vice finance minis-
ter for international aff airs for 3 1/2 years to
January 2003.
Under Japan’s chair, G20 finance minis-
ters and central bank governors will meet
in Fukuoka in western Japan on June 8-9,
followed by a leaders’ summit in Osaka on
June 28-29.
Japan hopes to deepen debate on
global imbalances, including widening in-
come gaps and the distribution of wealth,
as well as the management of fiscal and
monetary policies in the face of ageing
populations around the world, he said.
He added that Japan would lead the
G20 debate on free trade, adding that
the global body would lose its influence if
trade issues aren’t discussed in a compre-
hensive manner.
Asakawa justified Japan’s hefty current
account surpluses, running about ¥20tn
for a third straight year to 2018, which
mostly consist of income gains from over-
seas investment.
Japan’s current account surplus is in
part backed by a rise in savings for the
future as the population ages, he said.
“Japanese direct investment overseas
has helped create jobs in the United States
and Europe.”
Private sectorborrowing jumps 92% in PakistanInternewsKarachi
Private sector borrowing in Pakistan has jumped over 92% to Rs600.5bn ($5.35bn)
during July-February compared to Rs312bn in the same period last year, according to latest data released by the State Bank of Pa-kistan (SBP). The jump in bor-rowing comes at a time when SBP has raised interest rates to 10.25% from 5.75% in January 2018.
Conventional banks’ lend-ing doubled from Rs204.4bn to Rs409.8bn during the eight months whereas lending at Islam-ic banks also jumped to Rs90bn compared to Rs23.8bn last year.
Islamic banking arms of the commercial banks also increased their lending to the private sector reaching to Rs100bn compared to Rs84bn last year.
The bankers said that higher outfl ow to private sector is a re-sult of narrowing options for banks to park their liquidity add-ing that the government has also reduced long-term borrowings from banks, contrary to the trend in previous government which of-fered high return on investments.
With increase in infl ation, the interest rates have been rising but the private sector borrowing has continued unabated.
The high rates could be coun-terproductive for growth and ex-pansion of economy but the bor-rowing trend could likely result in higher economic growth for fi scal FY19. The numbers are encourag-ing for the government as private sector continues to borrow at a stronger pace despite steep rise in interest rates, said a senior banker.
However, he also warns that higher private sector borrowing, at the time of rising interest rates, could lead to an increase in non-performing loans with banks.
China commits $1bn for 20 social sector projects in PakistanInternewsIslamabad
A 13-member expert group from China has shortlisted around 20 projects for imple-mentation within a year in all the four prov-
inces and special areas – Azad Jammu and Kashmir and Gilgit-Baltistan – to be funded with Chinese grant under socioeconomic cooperation.
The Chinese government has agreed to provide up to $1bn grant for socioeconomic development and poverty reduction projects under the China-Pakistan Economic Corridor (CPEC) on the request of Pakistan Tehrik-i-Insaf government.
The socioeconomic development and poverty reduction initiatives were earlier part of the CPEC long-term plan.
The expert group, led by Du Zhenli, has been in Pakistan since February 26 to explore possible areas of grant assistance and held a wrap-up session at the Planning Commission.
The two sides agreed to select 20-23 projects in the fi rst phase which could be implemented in the fi rst year. For this, the two sides decided to priori-tise interventions where infrastructure was already in place, a senior offi cial said.
Therefore, it was agreed to have six burn centres across the country in four provinces and two spe-cial areas where space and infrastructure could be
made available at the existing hospital buildings so that Chinese grant could be utilised to install equipment and modern ventilators etc.
The project is easy to execute and can be com-pleted within few months since the infrastructure is already available in the hospitals.
Responding to a question, the offi cial said the burn centres already exist in major hospitals of Ka-rachi, Lahore and Peshawar and hence it was de-cided to have one in Hyderabad or Sukkur in Sindh, Bawalpur in Punjab and Dera Ismail Khan or Swat in KP. The centre for Balochistan will be developed in Quetta as patients with burn injuries were cur-rently being transported to Karachi.
Besides health sector, other projects for grant as-sistance were shortlisted in areas of water supply, education and fi sheries and agriculture.
The four provinces and AJK and GB had come up with more than 100 projects in various sectors but the two sides decided to focus on around two dozen with shortest possible gestation.
The expert group visited various parts of Punjab and KP and held meetings with other provincial governments in Islamabad as their fi eld visits to Sindh and Balochistan had to be cancelled owing to the closure of airspace.
The Chinese side would submit their input on project concepts and estimated costs on their re-turn to Beijing before fi nalising formal agreements for implementation, a senior offi cial said.
Asakawa: The trade war and China’s slowdown meant the risks to global growth remain over the medium to long term, although the world economy is still in recovery mode.
Pakistan govt decides to sell state lands to pay off debtInternewsIslamabad
The federal cabinet of Pakistan has allowed selling
of state land to pay off the government’s balloon-
ing debt that has already crossed over Rs27tn.
However, capacity constraints of the Ministry
of Privatisation and rigorous regulations may slow
down the sell-off process.
While chairing the federal cabinet meeting,
Prime Minister Imran Khan directed to set up
an Asset Management Cell at the Privatisation
Commission aimed at fast-tracking the process to
sell the real estate assets, according to the off icials
who attended the meeting.
It will be for the first time since its creation
about 30 years ago that the Privatisation Com-
mission will sell real estate that is owned by the
federal government ministries and departments
at a large scale.
It may be a risky venture, as valuation and
assessment of government land and build-
ings would not be an easy task at a time when
bureaucracy remains cautious due to the National
Accountability Bureau (NAB).
The PM also directed that each ministry and
division should send a list of at least three proper-
ties that are free and clear of all encumbrances to
the Privatisation Commission to put them on sale,
said the off icials.
The decision to sell the state land has been
taken to pay off the increasing public debt that
stood at Rs27.1tn as of end of January.
During the first half of this fiscal year, the federal
government spent 36% of its total budget on pay-
ing interest on domestic and foreign debt.
The plan faces obstacles in the shape of
weak capacity of the Privatisation Commission,
rigorous regulations that are aimed at ensuring
transparency, and a dispute over the ownerships
of properties between the federal and provincial
governments.
However, the prime minister has instructed for
the process to be fast-tracked and asked the Pri-
vatisation Commission to make it its top priority,
according to a cabinet minister.
The commission had already written to the
government departments to share the details of
their vacant properties.
As a result, it has received the details of more
than 45,000 properties, according to the off icials
of the Privatisation Commission.
However, the majority of these properties
were disputed. For instance, the Federal Board of
Revenue owns more than 4,600 acres of land at a
prime location in Karachi, however, except for 300
acres, the rest of the land is illegally occupied.
The secretary of the Ministry of Privatisation
gave a presentation to the federal cabinet on the
way forward and the ministry’s capacity to handle
such a gigantic task.
The cabinet was informed that the ministry was
ill-equipped to handle the job while requesting
the appointment of new off icers to run the Asset
Management Cell, said the off icials.
“The cabinet was briefed on the progress about
the identification of state-owned assets by all min-
istries and divisions,” according to a handout that
the PM’s Off ice issued after the cabinet meeting.
In one of the earlier meetings, PM Imran
constituted an Assets Management Committee
to oversee the sale process of the state land, the
government off icials.
Interestingly, Privatisation Minister Mohammad
Mian Soomro has not been made the chairman of
the committee. The committee, comprised of five
ministers, lacks experience.
Federal Minister for Maritime Aff airs Ali Zaidi
has been made the chairman of the committee.
Its other members include Communication
Minister Murad Saeed, Minister of State for Rev-
enue Hammad Azhar, Minister of Kashmir Aff airs
Ali Amin Gandapur and Special Assistant to Prime
Minister on Overseas Pakistanis Zulfi Bukhari.
Privatisation Secretary Rizwan Malik is also the
secretary of the Assets Management Committee.
The sources said that initially, the Privatisation
Ministry had refused to take the job and instead
proposed that the government should set up a
Land Development Authority through an Act of
the Parliament.
The proposal was opposed by the Ministry
of Law, which opined that only the Privatisation
Ministry has the mandate to sell state assets.
The Privatisation Ordinance mandates the com-
mission to restructure and privatise state-owned
enterprises.
After coming into power, the Pakistan Tehreek-
e-Insaf (PTI) government has deleted over 55
entities from the active list of privatisation, limiting
it to only eight enterprises.
BUSINESS5Gulf Times
Saturday, March 9, 2019
CURRENCIESDOLLAR QATAR RIYAL SAUDI RIYAL UAE DIRHAMS BAHRAINI
DINARKUWAITI
DINAR
Markets sink as US, China and ECB fan global outlook fearsAFPLondon
World stock markets plunged yesterday as fears over the global economy were fanned
by weak US job creation fi gures, a Eu-ropean Central Bank growth forecast downgrade and data showing Chinese trade fell off a cliff last month.
A report showing US job creation ground to a virtual halt in February was just the latest warning of a lean road ahead after the ECB slashed its growth and infl ation forecasts and China un-veiled a growth target that would be its slowest in three decades.
Wall Street opened solidly down af-ter the jobs announcement, following the lead of markets in Asia and Europe that were struggling with their own swathe of downbeat results.
“It’s raining buckets leading up to, and following, disappointing Febru-ary payrolls report,” said Briefi ng.com analyst Patrick O’Hare.
US employers added just 20,000 net new positions in February, down from 311,000 in January — and far below the 173,000 economists had projected — according to a US Labor Department report.
CMC Markets analyst Michael Hew-
son said that while “disappointing on the headline number, (it) wasn’t a bad report with wages growth posting a new 10-year high of 3.4%, while the unemployment rate dropped to 3.8%.”
But he added “the recent rally in glo-bal equity markets appears to have run out of steam as investors start to take profi ts over concerns that the macro economic backdrop is much weaker than was thought”.
Asia’s markets earlier suff ered sharp losses after China revealed exports plunged more than 20% in February, while imports were also sharply down.
London’s FTSE 100 index closed down 0.7% at 7,104.31 points, while Frankfurt fell 0.5% at 11,457.84 points and Paris shed 0.7% at 5,231.22 points, extending Thursday’s ECB-fuelled losses.
The EURO STOXX 50 closed 0.8% down at 3,283.60 points.
The euro managed to rebound slightly after hitting a near two-year low after the the ECB news on Thurs-day. The ECB said eurozone interest rates would be stuck around historic lows until the year’s end at best, with the central bank boss, Mario Draghi, warning the region was “coming out of, and maybe we still are in a period of continued weakness and pervasive uncertainty”.
The raft of weak results came as the economic outlook has remained shrouded this year over Brexit, China’s slowdown, and the ongoing global trade war.
“It’s all set up to be a big week for sterling with little indication that (British Prime Minister) Theresa May’s Brexit deal will get through Parliament next week,” said CMC’s Hewson.
May will try to get her divorce deal over the line in the vote on Tuesday, just two and half weeks before the UK is set to exit the European Union.
“Given the current divisions in Parliament this still remains a high bar,” Hewson said, adding that Britain crashing out without a deal is “some-thing that markets don’t currently ap-pear to be pricing in.”
In commodities yesterday, oil prices were down more than 1% as the pros-pect of a global slowdown weighed on expectations for demand for the black gold.
The plunge also came as Norway said its sovereign wealth fund would divest its stakes in oil and gas.
Shares in oil giants ExxonMobil, Shell, BP and Total all fell more than 1% after the announcement, despite the Norwegian government saying the decision would not aff ect downstream operations such as theirs.
Pedestrians walk past the LSE Group off ices in London. The FTSE 100 index closed 0.7% down at 7,104.31 points yesterday.
Apple IncAmerican Express Co
Boeing Co/TheCaterpillar Inc
Cisco Systems IncChevron Corp
Walt Disney Co/TheDowdupont Inc
Goldman Sachs Group IncHome Depot Inc
Intl Business Machines CorpIntel Corp
Johnson & JohnsonJpmorgan Chase & Co
Coca-Cola Co/TheMcdonald’s Corp
3M CoMerck & Co. Inc.
Microsoft CorpNike Inc -Cl B
Pfizer IncProcter & Gamble Co/The
Travelers Cos Inc/TheUnitedhealth Group Inc
United Technologies CorpVisa Inc-Class A Shares
Verizon Communications IncWalgreens Boots Alliance Inc
Walmart IncExxon Mobil Corp
171.82
107.62
421.99
131.87
50.82
120.10
112.97
54.36
193.92
180.66
134.68
52.42
136.58
102.75
44.76
178.61
200.18
79.27
109.69
84.61
40.35
98.01
130.60
238.02
123.66
146.43
56.22
59.78
97.24
78.79
-0.39
-0.22
-0.13
-0.70
-0.92
-1.51
-0.91
-0.29
0.60
-1.01
-0.50
-0.34
-1.20
-0.21
-1.15
-1.06
0.16
-1.47
-0.63
-0.76
-2.51
-0.55
-0.68
0.56
-0.64
-0.27
-0.14
-0.02
-0.22
-1.71
1,779,650
93,382
196,919
302,928
1,490,673
347,898
353,154
589,092
190,283
239,448
185,340
1,473,548
537,838
917,989
1,003,776
186,746
92,987
587,168
2,157,469
248,100
1,711,354
436,846
43,562
384,369
168,269
377,117
663,420
787,529
403,715
1,113,011
DJIA
Company Name Lt Price % Chg Volume
Anglo American PlcAssociated British Foods Plc
Admiral Group PlcAshtead Group Plc
Antofagasta PlcAuto Trader Group Plc
Aviva PlcAstrazeneca PlcBae Systems Plc
Barclays PlcBritish American Tobacco Plc
Barratt Developments PlcBhp Group Plc
Berkeley Group Holdings/TheBritish Land Co Plc
Bunzl PlcBp Plc
Burberry Group PlcBt Group Plc
Coca-Cola Hbc Ag-DiCarnival PlcCentrica Plc
Compass Group PlcCroda International Plc
Crh PlcDcc Plc
Diageo PlcDirect Line Insurance Group
Evraz PlcExperian Plc
Easyjet PlcFerguson Plc
Fresnillo PlcGlencore Plc
Glaxosmithkline PlcGvc Holdings Plc
Hikma Pharmaceuticals PlcHargreaves Lansdown Plc
Halma PlcHsbc Holdings Plc
Hiscox LtdIntl Consolidated Airline-Di
Intercontinental Hotels Grou3I Group Plc
Imperial Brands PlcInforma Plc
Intertek Group PlcItv Plc
Johnson Matthey PlcKingfisher Plc
Land Securities Group PlcLegal & General Group PlcLloyds Banking Group Plc
London Stock Exchange GroupMicro Focus International
Marks & Spencer Group PlcMondi Plc
Melrose Industries PlcWm Morrison Supermarkets
National Grid PlcNmc Health Plc
Next PlcOcado Group Plc
Paddy Power Betfair PlcPrudential Plc
Persimmon PlcPearson Plc
Reckitt Benckiser Group PlcRoyal Bank Of Scotland Group
Royal Dutch Shell Plc-A ShsRoyal Dutch Shell Plc-B Shs
Relx PlcRio Tinto Plc
Rightmove PlcRolls-Royce Holdings PlcRsa Insurance Group Plc
Rentokil Initial PlcSainsbury (J) Plc
Schroders PlcSage Group Plc/The
Segro PlcSmurfit Kappa Group Plc
Standard Life Aberdeen PlcDs Smith Plc
Smiths Group PlcScottish Mortgage Inv Tr Plc
Smith & Nephew PlcSpirax-Sarco Engineering Plc
Sse PlcStandard Chartered Plc
St James’s Place PlcSevern Trent Plc
Tesco PlcTui Ag-Di
Taylor Wimpey PlcUnilever Plc
United Utilities Group PlcVodafone Group Plc
John Wood Group PlcWpp Plc
Whitbread Plc
1,982.80
2,249.00
2,136.00
1,899.50
921.20
478.00
414.70
6,291.00
466.20
158.82
3,098.50
605.80
1,723.80
3,905.00
595.20
2,439.00
535.20
1,840.00
216.25
2,580.00
4,090.00
121.90
1,701.00
4,790.00
2,364.00
6,425.00
3,046.00
354.00
579.80
2,037.00
1,173.00
5,272.00
803.80
296.80
1,517.40
601.00
1,695.00
1,726.00
1,615.00
626.40
1,618.00
539.80
4,520.00
946.60
2,627.00
724.00
4,766.00
131.50
3,089.00
234.70
902.20
268.30
61.96
4,635.00
1,850.00
266.10
1,757.00
180.70
226.10
876.10
2,562.00
5,098.00
1,055.00
5,595.00
1,522.00
2,245.00
819.80
6,198.00
257.10
2,332.50
2,343.00
1,647.50
4,110.50
498.00
888.80
511.40
354.20
224.50
2,545.00
660.00
660.80
2,122.00
238.85
337.90
1,423.00
485.00
1,456.50
6,930.00
1,206.00
610.00
1,002.50
2,058.00
229.70
779.40
179.85
4,182.50
861.60
137.22
547.00
858.20
4,877.00
-2.47
-0.71
2.30
-3.92
-4.20
0.50
-1.03
0.53
-1.29
-2.13
0.70
0.20
-0.10
0.13
-0.50
-0.77
-1.02
-1.13
-0.21
0.04
-0.07
-0.65
-0.06
-0.56
-0.04
-1.38
-0.03
0.71
-0.17
0.20
-1.92
-0.08
2.87
-2.03
0.53
-12.13
1.01
0.52
0.94
0.35
-0.43
-2.60
-0.24
-1.15
-0.38
-0.58
-1.43
0.00
-0.80
-0.55
-0.35
-0.85
-0.31
0.06
0.27
-1.59
-1.84
-1.66
-0.83
1.04
-3.54
-0.70
0.05
-0.80
-2.40
-0.22
-0.34
0.81
-1.31
-1.25
-1.43
-0.78
-0.82
0.36
-1.24
-0.08
1.06
-1.23
-1.93
-0.45
0.89
-1.76
-0.95
-3.29
-0.80
-0.86
-0.14
-1.07
-0.50
-1.34
-0.59
-0.10
-1.96
-1.94
-0.03
1.49
-0.14
1.18
-1.01
-1.06
0.68
2,423,664
344,847
431,165
1,076,270
1,255,485
1,090,361
5,005,295
726,340
2,123,083
33,326,985
1,947,191
1,322,417
3,732,115
87,219
2,108,102
547,076
22,876,052
347,528
6,668,374
236,384
272,068
8,459,842
685,323
111,982
956,154
50,014
2,356,539
1,200,470
1,015,363
471,969
607,639
98,350
867,608
19,988,188
2,968,893
15,320,600
321,395
210,226
2,931,114
10,365,636
172,866
4,408,054
105,304
786,701
509,523
2,149,504
175,851
4,613,468
135,532
1,851,512
668,640
8,246,413
42,190,825
191,553
730,171
3,800,739
608,324
6,121,301
2,873,283
4,166,067
668,119
73,256
598,641
198,373
3,198,470
495,273
562,956
514,019
8,410,792
5,228,402
3,153,490
2,204,885
2,756,570
2,726,641
1,313,395
1,222,410
1,348,137
4,950,936
493,397
715,322
980,973
362,457
5,282,283
3,643,876
198,516
1,840,306
608,736
103,932
1,283,555
2,474,869
1,030,337
148,564
8,525,201
1,830,291
3,039,415
1,303,858
724,490
45,955,299
936,888
1,242,743
352,169
FTSE 100
Company Name Lt Price % Chg Volume
Hitachi LtdTakeda Pharmaceutical Co Ltd
Jfe Holdings IncSumitomo Corp
Canon IncNintendo Co Ltd
Eisai Co LtdIsuzu Motors Ltd
Unicharm CorpShin-Etsu Chemical Co Ltd
Smc CorpMitsubishi Corp
Asahi Group Holdings LtdKeyence Corp
Nidec CorpNomura Holdings Inc
Daiichi Sankyo Co LtdSubaru Corp
Ntt Docomo Inc
3,154.00
4,506.00
1,848.50
1,550.50
3,130.00
29,665.00
9,173.00
1,444.00
3,504.00
8,910.00
36,590.00
3,094.00
4,612.00
66,160.00
13,095.00
412.20
4,258.00
2,618.50
2,498.50
-2.44
-0.79
-1.99
-1.43
-1.63
-2.67
-1.23
-2.79
-0.20
-1.80
-3.05
-0.74
-2.62
-1.64
-2.20
-3.13
-1.25
-2.75
-1.26
3,595,700
7,132,200
2,742,800
5,475,700
4,223,100
2,021,600
1,503,200
2,866,000
1,078,200
2,178,800
335,800
4,549,100
2,721,600
403,400
1,116,700
16,397,400
2,206,500
4,143,600
5,978,400
TOKYO
Company Name Lt Price % Chg Volume
Sumitomo Realty & DevelopmenSumitomo Metal Mining Co Ltd
Orix CorpDaiwa Securities Group Inc
Softbank Group CorpMizuho Financial Group Inc
Central Japan Railway CoNitori Holdings Co Ltd
T&D Holdings IncToyota Motor Corp
Hoya CorpSumitomo Mitsui Trust Holdin
Japan Tobacco IncOsaka Gas Co Ltd
Sumitomo Electric IndustriesOno Pharmaceutical Co Ltd
Ajinomoto Co IncMitsui Fudosan Co Ltd
Daikin Industries LtdToray Industries Inc
Bridgestone CorpSony Corp
Astellas Pharma IncJxtg Holdings Inc
Nippon Steel & Sumitomo MetaSuzuki Motor Corp
Nippon Telegraph & TelephoneSompo Holdings Inc
Daiwa House Industry Co LtdKomatsu Ltd
West Japan Railway CoMurata Manufacturing Co Ltd
Kansai Electric Power Co IncDenso Corp
Dai-Ichi Life Holdings IncMazda Motor Corp
Mitsui & Co LtdKao Corp
Sekisui House LtdOriental Land Co Ltd
Secom Co LtdTokio Marine Holdings Inc
Aeon Co LtdFanuc Corp
Daito Trust Construct Co LtdOtsuka Holdings Co Ltd
Resona Holdings IncAsahi Kasei Corp
Kirin Holdings Co LtdMitsubishi Ufj Financial Gro
Marubeni CorpMitsubishi Chemical Holdings
Fast Retailing Co LtdMs&Ad Insurance Group Holdin
Kubota CorpSeven & I Holdings Co Ltd
Inpex CorpSumitomo Mitsui Financial Gr
Ana Holdings IncMitsubishi Electric Corp
Honda Motor Co LtdTokyo Gas Co Ltd
Tokyo Electron LtdPanasonic Corp
Fujitsu LtdEast Japan Railway Co
Itochu CorpFujifilm Holdings Corp
Yamato Holdings Co LtdChubu Electric Power Co Inc
Mitsubishi Estate Co LtdMitsubishi Heavy Industries
Shiseido Co LtdShionogi & Co Ltd
Recruit Holdings Co LtdJapan Airlines Co Ltd
Nitto Denko CorpKddi Corp
Rakuten IncKyocera Corp
Nissan Motor Co Ltd
4,306.00
3,121.00
1,562.00
553.00
10,310.00
170.10
24,765.00
13,805.00
1,234.50
6,531.00
7,085.00
4,088.00
2,795.50
2,226.00
1,478.50
2,271.00
1,682.50
2,646.00
12,380.00
754.10
4,305.00
5,063.00
1,698.00
535.50
1,928.00
5,208.00
4,706.00
3,953.00
3,401.00
2,590.00
8,387.00
17,600.00
1,607.00
4,511.00
1,605.00
1,221.50
1,724.00
8,568.00
1,709.00
12,505.00
9,479.00
5,227.00
2,239.50
18,315.00
14,275.00
4,605.00
484.80
1,214.50
2,519.00
559.50
765.70
800.10
52,210.00
3,271.00
1,529.50
4,535.00
1,048.00
3,834.00
3,988.00
1,316.50
2,991.50
3,019.00
14,410.00
980.00
7,539.00
10,510.00
2,000.00
4,994.00
2,908.00
1,703.00
1,909.50
4,446.00
7,684.00
6,648.00
2,971.00
3,922.00
5,673.00
2,609.00
928.00
6,160.00
911.50
-0.92
-2.71
-2.44
-1.69
-1.95
-1.39
-0.84
-1.57
-5.00
-0.80
-0.81
-2.99
-0.75
-1.29
-2.31
-0.31
-1.32
-1.21
-2.02
-1.71
-1.35
-3.17
-1.51
-1.42
-1.38
-2.56
-0.82
-2.97
-1.82
-2.52
-0.02
-2.65
-2.07
-2.72
-4.78
-2.40
-1.20
-1.04
1.42
0.72
-1.26
-2.52
-2.67
-1.32
-2.73
-2.58
-3.18
-2.96
2.27
-2.25
-2.16
-1.39
-2.25
-1.83
-1.89
-0.31
-1.78
-3.21
-1.07
-2.52
-1.79
-0.40
-3.64
-0.77
-0.26
-1.04
0.00
-1.13
-1.39
-2.15
-1.14
-1.90
-0.80
-2.12
-3.48
-2.34
-3.41
-1.62
-2.21
-2.70
-0.81
TOKYO
Company Name Lt Price % Chg
Ck Hutchison Holdings LtdHang Lung Properties Ltd
Ck Infrastructure Holdings LHengan Intl Group Co Ltd
China Shenhua Energy Co-HCspc Pharmaceutical Group Lt
Hang Seng Bank LtdChina Resources Land Ltd
Ck Asset Holdings LtdSino Biopharmaceutical
Henderson Land DevelopmentAia Group Ltd
Ind & Comm Bk Of China-HWant Want China Holdings Ltd
Sun Hung Kai PropertiesNew World Development
Geely Automobile Holdings LtSwire Pacific Ltd - Cl A
Sands China LtdWharf Real Estate Investment
Clp Holdings LtdCountry Garden Holdings Co
Aac Technologies Holdings InShenzhou International GroupPing An Insurance Group Co-H
China Mengniu Dairy CoSunny Optical Tech
Boc Hong Kong Holdings LtdChina Life Insurance Co-H
79.90
19.04
64.35
63.15
18.54
13.22
188.50
29.80
62.85
6.56
44.45
75.00
5.88
6.09
129.60
12.42
14.12
91.30
37.80
58.15
90.95
10.62
47.60
101.30
80.90
24.70
92.85
32.25
20.55
-1.84
0.42
-0.62
-1.25
-3.94
-2.94
-0.79
-2.45
-1.72
-3.53
-1.00
-2.09
-3.13
-2.56
-0.46
-0.80
-3.29
-1.83
-1.18
0.95
-2.15
-5.18
-3.64
-2.88
-2.94
-2.56
-1.43
-1.83
-3.97
7,392,590
7,008,787
2,205,488
4,627,463
32,836,221
45,300,782
1,489,064
28,463,507
5,815,854
41,210,839
2,937,548
27,344,600
451,712,402
8,253,636
3,825,458
18,154,347
95,187,624
1,309,045
13,962,429
4,262,798
2,803,054
70,195,956
11,514,855
5,146,163
61,133,785
6,616,236
8,678,437
12,895,529
123,104,637
HONG KONG
Company Name Lt Price % Chg Volume
Citic LtdGalaxy Entertainment Group L
Wh Group LtdHong Kong & China Gas
Bank Of Communications Co-HChina Petroleum & Chemical-HHong Kong Exchanges & Clear
Bank Of China Ltd-HHsbc Holdings Plc
Power Assets Holdings LtdMtr Corp
China Overseas Land & InvestTencent Holdings Ltd
China Unicom Hong Kong LtdLink Reit
Sino Land Co
11.80
51.60
7.11
18.04
6.53
6.44
266.60
3.61
64.25
54.00
45.75
27.80
347.00
9.15
87.55
14.52
-1.17
-3.10
-1.80
0.22
-2.83
-3.01
-1.84
-2.70
-0.93
-0.37
2.01
-3.14
-2.31
-3.48
-1.96
-1.63
31,547,957
17,229,909
30,940,411
13,786,760
52,197,860
180,068,054
6,030,242
633,067,293
56,524,305
4,073,001
10,280,698
11,234,807
25,866,691
59,546,612
8,578,862
3,409,720
HONG KONG
Company Name Lt Price % Chg Volume
Adani Ports And Special EconAsian Paints Ltd
Axis Bank LtdBajaj Finance Ltd
Bharti Airtel LtdBharti Infratel Ltd
Bajaj Auto LtdBajaj Finserv Ltd
Bharat Petroleum Corp LtdCipla Ltd
Coal India LtdDr. Reddy’s Laboratories
Eicher Motors LtdGail India Ltd
Grasim Industries LtdHcl Technologies Ltd
Housing Development FinanceHdfc Bank Limited
Hero Motocorp LtdHindalco Industries Ltd
Hindustan Petroleum CorpHindustan Unilever Ltd
Icici Bank LtdIndiabulls Housing Finance L
Indusind Bank LtdInfosys Ltd
Indian Oil Corp LtdItc Ltd
Jsw Steel LtdKotak Mahindra Bank Ltd
Larsen & Toubro LtdMahindra & Mahindra Ltd
Maruti Suzuki India LtdNtpc Ltd
Oil & Natural Gas Corp LtdPower Grid Corp Of India Ltd
Reliance Industries LtdState Bank Of India
Sun Pharmaceutical IndusTata Steel Ltd
Tata Consultancy Svcs LtdTech Mahindra Ltd
Titan Co LtdTata Motors Ltd
Upl LtdUltratech Cement Ltd
Vedanta LtdWipro Ltd
Yes Bank LtdZee Entertainment Enterprise
342.15
1,382.35
733.40
2,768.30
308.70
305.50
2,955.70
6,616.95
367.35
539.95
234.90
2,615.05
21,871.05
349.65
807.05
1,009.05
1,884.05
2,128.20
2,740.35
195.55
249.85
1,701.60
370.60
702.00
1,518.00
712.35
148.70
292.00
286.40
1,238.90
1,339.40
670.15
6,967.70
152.20
150.40
187.00
1,267.10
281.20
454.95
507.85
2,022.70
811.35
1,053.20
181.20
881.75
3,972.00
172.35
257.70
232.30
455.10
0.37
-0.94
-0.05
1.22
0.34
-0.05
1.23
0.28
-0.90
-0.26
-0.04
-2.45
1.62
1.60
-0.39
-2.46
0.20
0.08
0.38
-2.52
0.34
-0.22
-0.05
-2.37
-0.87
-1.47
-1.00
0.65
-1.14
0.14
-0.96
-0.25
-0.87
4.10
-1.09
-0.08
-0.25
-0.20
0.90
-2.55
0.47
0.38
0.95
-4.28
1.11
1.51
-2.10
-4.15
0.26
-0.85
SENSEX
Company Name Lt Price % Chg
WORLD INDICESIndices Lt Price Change
GCC INDICESIndices Lt Price Change
Dow Jones Indus. AvgS&P 500 Index
Nasdaq Composite IndexS&P/Tsx Composite Index
Mexico Bolsa IndexBrazil Bovespa Stock Idx
Ftse 100 IndexCac 40 Index
Dax IndexIbex 35 Tr
Nikkei 225Japan Topix
Hang Seng IndexAll Ordinaries Indx
Nzx All IndexBse Sensex 30 Index
Nse S&P Cnx Nifty IndexStraits Times Index
Karachi All Share IndexJakarta Composite Index
25,344.61
2,735.44
7,374.09
15,931.31
41,199.21
94,566.70
7,123.80
5,238.46
11,465.54
9,137.60
21,025.56
1,572.44
28,228.42
6,287.08
1,631.65
36,671.43
11,035.40
3,195.87
28,520.20
6,383.07
-128.62
-13.49
-47.38
-125.20
-442.63
+226.53
-33.75
-29.46
-52.26
-112.30
-430.45
-29.22
-551.03
-57.14
+0.76
-53.99
-22.80
-33.61
-137.26
-74.89
Doha Securities MarketSaudi Tadawul
Kuwait Stocks ExchangeBahrain Stock Exchage
Oman Stock MarketAbudhabi Stock MarketDubai Financial Market
9,781.18
8,479.16
4,774.70
1,408.92
4,112.92
4,914.39
2,594.52
-103.03
-55.00
+10.52
-1.91
-40.50
-62.80
-31.61
“Information contained herein is believed to be reliable and had been obtained from sources believed to be reliable. The accuracy and completeness cannot be guaranteed. This publication is for providing information only and is not intended as an off er or solicitation for a purchase or sale of any of the financial instruments mentioned. Gulf Times and Doha Bank or any of their employees shall not be held accountable and will not accept any losses or liabilities for actions based on this data.”
2,578,300
1,759,800
9,021,500
9,079,600
7,035,200
184,222,200
478,800
302,100
4,354,700
5,716,800
1,445,500
2,989,300
5,360,500
1,461,700
2,573,100
1,836,300
1,910,100
4,667,200
1,713,000
5,427,400
2,970,100
9,633,100
10,236,200
22,728,200
3,368,500
2,395,100
4,033,100
1,272,400
2,713,300
6,782,700
642,200
1,670,800
2,000,900
2,839,700
9,398,000
4,376,800
6,325,300
1,898,700
7,371,900
959,600
1,163,200
4,302,000
4,052,800
1,700,700
588,300
1,730,000
19,427,800
5,099,100
4,616,800
88,906,500
7,678,500
9,240,700
1,447,900
1,845,500
4,848,600
3,650,400
5,804,100
9,358,000
1,572,700
6,912,800
5,781,800
1,497,800
2,202,700
12,129,800
837,000
934,700
9,715,000
1,903,300
2,176,700
1,860,900
5,460,100
1,712,100
2,434,500
1,826,300
6,971,000
1,709,600
1,422,800
10,221,400
11,939,100
2,411,900
14,095,200
2,265,000
524,331
7,744,794
1,178,087
4,002,947
2,175,387
754,427
144,867
2,812,574
2,618,767
12,803,612
684,806
195,792
2,717,482
1,267,215
1,588,047
1,845,737
1,763,365
674,840
10,050,458
3,780,260
1,419,614
16,143,455
10,113,206
966,595
7,193,994
16,049,350
12,681,454
5,961,633
1,051,433
4,868,283
3,877,059
486,432
28,885,977
17,986,042
3,493,857
6,040,052
19,943,319
5,040,326
6,504,847
2,031,071
1,437,045
2,179,863
28,012,914
1,780,245
253,766
5,797,559
27,344,869
23,233,663
4,199,115
Volume
Volume
Super Cryptic Clues
Weekly’s Solutions
Adam
Pooch Cafe
Garfi eld
Bound And Gagged
Sudoku is a puzzle
based on a 9x9 grid.
The grid is also
divided into nine (3x3)
boxes. You are given
a selection of values
and to complete the
puzzle, you must fill
the grid so that every
column, every row and
every 3x3 box contains
the digits 1 to 9 and
none is repeated.
Sudoku
Weekly’s Solutions
BUSINESS/LEISURE
Gulf Times Saturday, March 9, 20196
ACROSS: 1 Tackle 4 Bristles 10 Leaflet 11 Sincere 12 Sage 13 Pronounced 16 Ironed 17 Repairs 20 Rattled 21 Player 24 Three hours 25 Pots 27 Rissole 29 What for 30 Detonate 31 Starve.
DOWN: 1 Talks big 2 Change of air 3 Lily 5 Resented 6 Singularly 7 Lie 8 Steady 9 Storm 14 Carry too far 15 Settle across 18 Redolent 19 Preserve 22 Stored 23 Drawn 26 Fast 28 Set.
ACROSS1. A picnic site or what you have in it? (4,2,3)6. A good pastry, to be fair (5)9. Mention the right to free travel (5)10. Enlarge and have thoroughly decorated
(9)11. Making for the conduit to escape (10)12. Wrench from and drop (4)14. About the companion, is cut and dried (7)15. There are, by the way, lots of fools (7)17. Suppose, before you take up the piano (7)19. Meant not to appear in the act (7)20. ‘Bob,’ or is it ‘blob’? (4)22. Saved having to get Simone in to work
out a new code (10)25. Remove a cider poured out and order
tea (9)26. Talk, when there’s an opening, at speed
(5)27. A twin, though lighter (5)28. Say the girl is outside who gives the false
information (9)
DOWN1. Fight and that’s by no means all (5)2. Lost when one’s not studying (3,6)3. Rejected, you say, from beginning to end (10)4. Chose, or picked, a second before (7)5. Garment with a flavour of China about it,
perhaps (3-4)6. Appear to knock back with a low left (4)7. Thanks for the food, lady! (5)8. Speculated as to whether it was the rose I’d
transplanted (9)13. Reckon without yours truly! (5,2,3)14. The plumber’s castle in Spain? (4-5)16. What grandma makes in learning the newest
skill? (4,5)18. Sound surprised there’s no longer a demand
for something (7)19. Risks having the man caught up in the sand-
storm (7)21. Plan to talk right through (5)23. Wear for a lady doctor? (5)24. Want to go to central London, mum? (4)
As tech companies move in, can Austin keep itself weird?BloombergSan Francisco
Three years ago, Brin Chartier went to Austin, Texas, for the South by Southwest festival and
decided she wasn’t going to leave. The then 27-year-old Boston native found a job at a tech startup and moved there the following year. “I fell in love,” she said.
Lots of cities are trying to fashion themselves as the next Silicon Val-ley, but Austin is truly having a mo-ment. Its economy, population and list of high-profi le employers have all ballooned in recent years. Chartier is among a wave of Austin transplants, attracted by the mix of aff ordabil-ity, opportunity and eclecticism. “So many new people were moving in,” Chartier said. “It’s been wild. After a month or two, I was old news.”
Austin’s population increased 23% from 2010 to 2017, growing faster than any other US metropolitan region, and far outpacing the national rate of 5%, according to data from research fi rm Statista. It’s slated to expand the size of the downtown area by half, based on projects under construction or planned, according to Austin’s eco-
nomic development department. As a result, the city is becoming less aff ord-able and driving longtime residents out. In other words, it’s starting to look more like the Valley in less desirable ways, too.
One draw for businesses is the local tax incentive program, which takes into account job creation and environmen-tal impact. The technology industry is one of the biggest drivers of growth. And the city isn’t over-reliant on one employer– unlike, say, Arlington, Vir-ginia, which Amazon.com Inc plans to call its second home. In the past few years, Amazon, Apple Inc, Facebook Inc and Google have established large Austin outposts, and each recently sig-nalled plans to expand there.
Amazon spent $13.7bn to acquire Austin-based Whole Foods in 2017 and is leasing nearly half of a new tower under construction, according to a lo-cal report last month.
Apple’s presence in Austin is the biggest after its headquarters in Cu-pertino, California, and the company said it would invest $1bn in Austin to build an offi ce park capable of holding 15,000 additional employees, roughly double the current workforce there.
Juul Labs Inc, the San Francisco-based maker of a popular e-cigarette,
said it will open an offi ce in Austin for some four-dozen employees to start. The plans, which haven’t been previ-ously reported, would designate Aus-tin as the head of Americas for Juul.
South by Southwest, which kicks off today, serves as the city’s annual show-case.
Since the fi rst music festival in 1987, organisers have added fi lm screenings, a technology conference, video game competitions and political debates. This year will feature Democratic pres-idential candidates Elizabeth Warren and Amy Klobuchar, alongside acting lessons from Jodie Foster and an inter-
view with the founders of Instagram.A quasi-offi cial slogan of the city is
“Keep Austin Weird.”That a landlocked, lone liberal
stronghold in the country’s conserva-tive heartland became a tech hub is a suitably weird fact. Jeff Haynie, who has spent the last two decades starting tech companies in Atlanta and Silicon Valley, moved his family and his newest startup, Pinpoint Software Inc, from Mountain View, California, to Austin last year.
The company’s investors include Bessemer Venture Partners, Slack Technologies Inc and Bloomberg Beta, the venture capital arm of Bloomberg LP.
More aff ordable housing, a higher quality of life, relaxed business licens-ing rules and the absence of personal state income taxes convinced Haynie to come to Texas, he said.
The state climbed to become the third-most-popular place to start a new business over the last decade, from 20th, according to the Kauff man Foundation.
The recent migration of talent and a change in attitudes among VCs makes starting a tech company outside of the Valley more possible than ever, Haynie said.
Haynie has been coming to South by Southwest since 2009. He’ll spend the next week attending the festivi-ties and entertaining friends and old colleagues from the Valley. More than 75,000 people are expected to descend on Austin for the event.
“Some restaurants pay the whole year’s rent in just that week,” said Josh Baer, founder of a startup accel-erator located downtown. “It’s hard to say whether Austin made South By or South By made Austin.”
The tech infl ux has been good for Baer. His accelerator, Capital Factory, worked with more than 100 startups last year, up from fi ve in 2011. But he worries Austin could lose its cherished weirdness and replicate the urban woes of San Francisco, where high-earning tech professionals drove up the real es-tate market to extraordinary levels.
The median home price in Austin jumped 40% over the last fi ve years, exceeding the national average, ac-cording to Zillow. Traffi c is already a problem, and a population boom could put an even greater strain on transpor-tation and other infrastructure. “Art-ists can’t aff ord to live here anymore,” Baer said.
“The cool people are going off to live somewhere else.”
An attendee demonstrates a levitation device using a projector during the South by Southwest conference in Austin on March 12, 2018. The South by Southwest serves as the city’s annual showcase.
BUSINESS
Gulf Times Saturday, March 9, 20198
S Africa’s MTN to raise $1bn from asset salesReutersJohannesburg
MTN Group announced yesterday a $1bn di-vestment programme
over the next three years that will slim down Africa’s biggest mobile phone operator and re-focus it on high-growth markets on the continent and in the Mid-dle East.
Founded with Pretoria’s help after the end of white minor-ity rule in 1994, MTN has been one of South Africa’s biggest corporate success stories, but clashes with regulators in Ni-geria, Uganda and elsewhere have crimped growth.
Chief executive Rob Shuter, hired from Vodafone in 2017,
has drawn up a turnaround plan that includes shedding loss-making e-commerce as-sets and exiting countries where MTN has no prospect of reaching second position by market share.
At the same time, Shuter is pushing the company into mo-bile fi nancial services, music streaming and mobile gaming, betting on a burgeoning young tech-savvy population to off set falling prices for basic telecoms services.
“What we really want to say to the investment community is that we’ve got a company with very good growth prospects and a very specifi c plan to simplify and modernise the group,” Shut-er told Reuters.
As part of the review, the
South African company has agreed to sell its minority stake in Botswana’s Mascom for $300mn.
It sold its sole European unit in Cyprus last year.
Shuter has not named the countries that MTN was prepar-ing to exit, but his suggestion that it would focus on high-growth, stable geographies sug-gest smaller businesses in Libe-ria, Guinea, Guinea-Bissau, and worn-torn Syria, South Sudan and Yemen might be cut, ana-lysts said.
MTN said its investments in tower companies and e-com-merce platforms like African online retailer Jumia were valued at 40bn rand and would be sold over time as they were not long-term strategic assets.
“They are focusing more on telecoms, which is the business that they do, and they are try-ing to stay away from everything that distracts them.
I don’t think that’s a bad thing,” said Bright Khumalo, an analyst at Vestact in Johannes-burg.
In the last financial year MTN reported an 85% surge in headline EPS, the main profit measure in South Africa, to 337 cents.
However, the bottom line is still not at even half the level MTN reported in 2015, the year before it agreed to pay a $1.7bn fi ne in Nigeria for missing a deadline to cut off unregistered SIM card users.
The fi ne was reduced from $5.2bn after MTN made conces-
sions, including a promise to list its Nigeria unit. The fl otation of MTN Nigeria, which accounts for a third of MTN’s core profi t or EBITDA, is likely to take place by the end of June, the company said.
The unit has also been em-broiled in other rows with the Nigerian authorities.
It agreed to pay $53mn in De-cember to resolve a dispute with the Central Bank of Nigeria and is involved in a court battle with the Nigerian attorney general over $2bn in back taxes.
MTN has also faced run-ins with authorities in other coun-tries, including Uganda, where four senior executives were de-ported in recent weeks on ac-cusations of compromising na-tional security.
Brexit alarm sounds loudlyin Geneva as Toyota adds to warningsBloombergGeneva
Toyota Motor Corp has added its voice to warnings about potential Brexit fallout as the deadline for an agreement on the UK’s exit from the European Union looms less than four weeks away.Possible disruption to trade between Britain and the EU is Toyota’s “biggest concern,” the Japanese company’s Europe chief, Johan van Zyl, said in an interview with Bloomberg TV at the Geneva Motor Show.BMW AG, which moved forward a planned four-week production stop to coincide with the UK leaving the EU, would consider moving some Mini brand production from its plant near Oxford, England, it said in a statement, reiterating previous comments about contingency planning. The company is also stockpiling parts, CEO Harald Krueger told reporters on the sidelines of the event.“We’re working with several scenarios,” Krueger said.“If Brexit is delayed, we’re going to plan flexibly, delay some plans, but we’ve also stocked up our parts in case of a disruption in our supply chain.”The German company has between two days and a week’s worth of supply, depending on the part, he said.A no-deal Brexit is a danger and would force Mini to weigh moving production out of the UK, board member Peter Schwarzenbauer told Sky News earlier. “We at least
have to consider it,” he said. “We cannot absorb 10% costs on top of it.”The latest warnings from the global car industry come after Honda Motor Co said it would shutter its UK plant and Ford Motor Co warned of catastrophic consequences in a no-deal split from the EU, although that extreme scenario appears to be off the table for now.UK Prime Minister Theresa May has promised Parliament that it will be able to vote to extend the exit deadline until the end of June should a deal not be reached, and EU off icials signaled they would be open to an extension.Meanwhile, two of May’s ministers traveled to Brussels to seek concessions to help win Parliament’s backing for her divorce deal.In the run-up to Brexit, carmakers with British operations have been trying to limit the pain. Nissan Motor Co reversed an earlier plan to build the X-Trail sport utility vehicle in northern England, while BMW, which makes the iconic Mini and Rolls-Royce cars in the UK, said it could move manufacturing elsewhere if tariff s and border checks disrupt business.“We can’t prepare any more than we have” for Brexit, BMW’s purchasing chief, Andreas Wendt, said in an interview in Geneva, adding that the German company is committed to the UK market long term.BMW buys about €700mn ($793mn) worth of parts in the UK, compared with components worth 2bn euros that it imports into the country, Wendt said.
Pedestrians pass an MTN Group telecommunications store at the Clearwater Mall in Johannesburg. MTN chief executive Rob Shuter has drawn up a turnaround plan that includes shedding loss-making e-commerce assets and exiting countries where MTN has no prospect of reaching second position by market share.
BUSINESS9Gulf Times
Saturday, March 9, 2019
Emerging equities, currencies tumbleReutersLondon
Emerging market stocks and currencies tumbled yesterday to about three-week lows, hurt by abysmal Chinese export data, which heightened fears of a slowing global economy and left investors in the developing world lining up at the exits.Data showing the manufacturing giant’s exports fell 20.7% in February pointed to a further slowdown in China and spurred market participants into scaling back risky bets to pile into safe havens such as Japan’s yen.“While the Lunar New Year holidays resulted in large swings in the trade data, the moderation trend in China’s export is clear,” wrote UOB Economist Ho Woei Chen and Market Strategist Quek Ser Leang in a note, adding the data is starkly diff erent to the 24.4% export growth seen in the same period last year.MSCI’s index of developing world stocks fell 1.3% in its worst performance in close to three months, bogged down by sliding equities in index heavyweight China.Chinese blue-chips dropped 4% while stocks on the Shanghai Composite fell 4.4%. Their more liquid peers in Hong Kong were not spared as they clocked their worst day since early 2019 with a 1.9% slide.MSCI’s emerging market currencies index slipped 0.3% to wipe away all
gains made over the last two-and-a-half weeks, with China’s yuan sinking to a two-week low.Commodity powerhouse South Africa’s rand was 0.2% softer, while a 0.7% fall for local stocks set them on course for their lowest closing level in more than two weeks.Turkish stocks fell 0.8%, while the lira continued its decline due to worries over a possible deterioration in ties with Washington over Ankara’s push to buy S-400 missile defence systems from Russia.Russian stocks did not change hands on account of a holiday.In emerging Europe, Romania’s leu and Poland’s zloty weakened against the euro.Central and eastern Europe’s economies generally rely on exports to the eurozone and data showed industrial orders in Germany, the zone’s top economy, unexpectedly fell in January.The European Central Bank cut its growth forecast on Thursday and announced a new round of cheap loans to banks, deepening investors’ concerns about the outlook for the global economy.Hungary’s forint was an exception in the region, firming 0.2% against the common currency after data showed core inflation in February quickened to a six-year high.The data heightened the possibility of Hungarian borrowing costs being lifted off all-time lows, where they have been for more than two-and-a-half years.
Rupiah drops most in eight monthsBloombergSingapore
The Indonesian rupiah slid the most in eight months, leading losses among Asia’s emerging-
market currencies, amid rising con-cern global growth is slowing. Indo-nesia’s central bank said it intervened to limit a sell-off in the currency and local bonds.
The rupiah tumbled as much as 1.4%, the biggest intraday drop since June, to hit a two-month low of 14,335 per dollar. Yields on Indonesia’s 10-year bonds climbed seven basis points to 7.96%.
Emerging-market assets fell across the board in Asian trading after the European Central Bank cut growth forecasts on Thursday, and China’s export data released yesterday was worse than economists estimated. The risk-off sentiment is bolstering the dollar and pushing down the ru-piah, Bank Indonesia said.
“A synchronised decline for the Asian markets is expected into the end of the week, underpinned by the gathering of growth concerns seem-ingly manifesting across all regions,” said Jingyi Pan, market strategist at IG Asia Pte in Singapore.
Mounting global worries have pun-ished emerging-market assets in re-cent weeks, seemingly drawing an end to a rally that started in December amid signs the Federal Reserve was turning dovish. Optimism is turning to caution as central banks from Eu-rope to Australia follow the Fed’s tilt, fuelling fresh jitters about the outlook
for growth. The rupiah’s decline is also “a bit of unwinding of a carry trade that’s happening right now across EM high yielders as a result of the risk-off situation,” said Sim Moh Siong, a cur-rency strategist at Bank of Singapore.
“It’s more of a broad risk-off situa-tion, moving on from what happened overnight, in terms of how the market interpreted the ECB move.” Bank Indo-nesia will remain in the market to stabi-lise the rupiah, Governor Perry Warjiyo said. The central bank will buy a “large amount” of government bonds, said Nanang Hendarsah, executive director for monetary management.
Below are some more comments from market analysts on the sell-off .
Marcus Wong, strategist at CIMB
Bank in Singapore: The dovish ECB decision has no doubt provided fur-ther propulsion for the dollar in the near-term, with EM currencies po-tentially in the crosshairs.
As the bellwether for EM sentiment, we may see some further rupiah weak-ness, though we do not expect to see” anything close to the EM rout seen in September or October 2018. As long as US Treasury yields remain range-bound around these levels, we expect foreign fl ows to remain in the EM Asia region
Sim Moh Siong of BOS: The ru-piah’s weakness “warrants a caution” even as it isn’t too dramatic. We are waiting for new catalysts to drive the market. Right now, it’s bit of a vac-uum and we won’t get any news till
the meeting between Trump and Xi on trade. Data meanwhile continue to point towards softening of global growth. So, I guess we are in a period of wait and worry.
Ha Keon-hyeong, economist at Shinhan Investment Corp in Seoul: Concerns over Indonesia’s fi scal pol-icy and upcoming presidential elec-tion, combined with the fear of global economic slowdown, are weighing harder on the rupiah compared to other emerging currencies.
Emerging currencies may get some support to strengthen in third quarter when the global economy is expected to rebound. Signs of economic up-turn will probably start to show in the middle to end of second quarter.
Asia markets plunge as ECB, China fanglobal outlook fearsAFPHong Kong
Asian markets tanked and the euro struggled to re-cover yesterday as the
European Central Bank’s de-cision to slash its growth and infl ation forecasts added to in-creasing pessimism about the global outlook.
The announcement — and an extension of stimulus — is the latest warning of a lean road ahead after China unveiled a tar-get for growth that would be its slowest in three decades and as the US Federal Reserve indicat-ed it will hold off any fresh rate hikes this year.
It also threw a spanner in the works for investors in the region — particularly Shanghai — who had been chasing a rally fuelled by optimism that China and the United States will hammer out a deal to end their trade war.
Adding to the selling pres-sure was data showing Chinese exports plunged more than 20% last month, while imports were also sharply down — both missing expectations by some margin.
While the fi gures were skewed by the Lunar New Year break, they highlight ongoing trou-bles in the world’s number-two economy, which is growing at its slowest pace for three decades.
“All these different variables are beginning to come together to paint a more dismal out-look for global growth,” Lind-sey Piegza, chief economist at Stifel Nicolaus & Co, told Bloomberg TV.
The ECB said interest rates would be stuck around historic lows until the year’s end at best, with bank boss Mario Draghi warning the eurozone was “coming out of, and maybe we still are in a period of continued weakness and pervasive uncer-tainty”.
Thursday’s news sent the euro into a tailspin to hit a near two-year low against the dollar, while equity markets across Europe and the US end-ed in the red.
Those losses continued in Asia, where Shanghai, which has surged about a quarter so far this year, shed 4.4%, while Hong Kong was off 1.9% and Tokyo ended 2% lower with better-than-thought growth figures unable to help the Nikkei 225.
Sydney sank 1% and Singapore 0.9%, with Seoul 1.3% off and Taipei 0.7% down.
In Tokyo, the Nikkei 225 closed down 2.0% to 21,025.56 points; Hong Kong — Hang Seng ended down 1.9% to 28,228.42 points and Shanghai — Composite closed down 4.4% to 2,969.86 points yesterday.
China stocks sink most in 2019 as rare sell rating stuns tradersBloombergBeijing
Chinese stocks tumbled the most in nearly fi ve months as traders took a rare sell rating from the nation’s
largest brokerage as a sign that the gov-ernment wants to slow down the rally.
The Shanghai Composite Index lost 4.4% to close below the key 3,000 point level yesterday. People’s Insurance Com-pany (Group) of China, which had be-come a poster child of the ramp-up in equities, saw its A shares sink by the 10% daily limit.
Citic Securities Co advised clients to sell the shares, saying they are “sig-nifi cantly overvalued” and could decline more than 50% over the next year.
The stock had surged by the maxi-mum allowed by the exchange for fi ve straight days.
“Such a sell rating must have been authorised by the regulators,” said Yang Wei, a fund manager at Longwin In-vestment Management Co. “The stock market is overheating, there is too much
speculation. Regulators want to see a slow bull market, not a mad bull market.”
Chinese stocks have been unstoppable this year, gaining the past eight weeks to beat every other national market in the world.
The government’s focus on economic growth, the new securities regulator’s less stringent take on fi nancial risk and optimism over China’s relationship with the US have combined to revive investor confi dence. The $1.8tn rally since Janu-ary has been so fast it triggered signs of overheating in all of the country’s major benchmarks.
PICC Group listed in Shanghai in No-vember, and the shares had almost quad-rupled through Thursday to close at 12.83 yuan. The “rational” price is between 4.71 and 5.38 yuan, Citic Securities ana-lysts including Tong Chengdun wrote in a note.
PICC Group’s Hong Kong-listed shares, which trade at a discount of about 74%, fell as much as 3.6% yesterday.
Goldman Sachs Group Inc and JPMor-gan Chase & Co also have negative ratings on the yuan-denominated stock. The
$65bn fi rm, which was the fi rst insurer to list on the mainland in seven years, had become the 11th most valuable company on the Shanghai Composite.
China’s new securities watchdog is removing many of the curbs designed to keep out speculators, signalling an end to the highly restrictive era that started when a boom in the country’s stocks turned to bust in 2015.
The resulting appetite for risk has sent the ChiNext, Shanghai Composite, Shenzhen Composite Index and CSI 300 Index all into bull markets and triggered a surge in turnover not seen in years.
“The market in China can never fi nd stability on its own, it’s either reaching for the sky or in the doldrums,” said Dong Baozhen, a fund manager at Beijing Ling-tongshengtai Asset Management.
“The government needs to be very adept and subtle in its words to moderate the market. If they stay aloof, risks will pile up.”
Losses extended yesterday after trade data showed China’s economy was weak-er than expected in February. Economists forecast both exports and imports would
shrink, although not by as much. It’s not the fi rst time a specifi c stock has been targeted by the state. In November 2017, China’s offi cial media singled out a rally in Kweichow Moutai Co, saying the shares should rise at a slower pace. The result was the liquor maker’s biggest one-day decline in over two years.
This time, it’s fi nancial stocks which have been some of the biggest benefi ci-aries of China’s soaring equity market.
Securities fi rms were among the big-gest losers yesterday – a Bloomberg in-dex tracking the stocks slumped 9.2%, paring its annual advance to 52%. Citic Securities fell by the 10% daily limit, the most on China’s large-cap gauge.
Turnover on China’s exchanges to-talled 1.18tn yuan ($176bn), the most since November 2015.
“This sell rating is like a depth charge for the market,” said Lin Qi, fund man-ager at Lingze Capital. “The unwritten rule is that a securities fi rm will not be short on the market, much less single out a specifi c company. Given the size and importance of Citic Securities, such a move is signifi cant.”
The Indonesian rupiah tumbled as much as 1.4% yesterday, the biggest intraday drop since June, to hit a two-month low of 14,335 per dollar
Sensex rises; rupee weakensBloomberg, ReutersMumbai
India’s equities benchmark
completed its longest stretch
of weekly gains since Novem-
ber with the measure tracking
regional peers lower yesterday
after the European Central Bank
downgraded the outlook for the
eurozone’s economy.
The S&P BSE Sensex advanced
for a third week, the longest
streak since the period through
November 16, data compiled by
Bloomberg show.
The gauge fell 0.2% to
36,671.43 yesterday, while the NSE
Nifty 50 Index also declined by a
similar amount.
Stocks from Sydney to Hong
Kong retreated after the ECB
dialed back its economic expecta-
tions. India’s equity market has
advanced as overseas investors
bought $519.2mn of shares this
month through March 6.
“Slowing growth in the devel-
oped world will see more inflows
coming towards markets like
India,” said Jitendra Panda, man-
aging director at Kolkata-based
Peerless Securities.
Eleven of the 19 sector
sub-indexes compiled by BSE
declined, paced by a gauge of
metal companies. Tata Motors
was the worst performer on
the benchmark gauge. Wipro
dropped 4.6% after 0.4% of
shares traded in a single block
deal. Advanced Enzyme Tech-
nologies surged 17% after 10mn
shares traded in 2 blocks.
Meanwhile the rupee slipped 15
paise to 70.15 against the US dol-
lar yesterday due to some buying
in American currency by banks
and importers.
The local currency, however,
opened the day at 70.10 against
the greenback.
Rupee gained for the third
successive session on Thursday
following strong fund inflows. The
currency advanced 92 paise over
the last three sessions.
The 10-year bond yield was
trading at 7.387% from its Thurs-
day’s close of 7.388%. Bond yields
and prices move in opposite
directions.
So far this year, the rupee
has declined 0.5% while foreign
investors have bought $2.62bn
in equity and sold $1.64bn in
debt market.
Investors look at computer screens in front of an electronic board showing stock information at a brokerage house in Shanghai. The Composite Index lost 4.4% to close below the key 3,000 point level yesterday.
BUSINESS
Gulf Times Saturday, March 9, 201910
UBS appeals IPO sponsor ban, tests HK crackdown on misconductReutersHong Kong
Swiss banking giant UBS Group AG is set to appeal against an un-precedented 18-month ban on
leading IPOs in Hong Kong, imposed, sources say, for its role in the listing of a fi rm which subsequently collapsed.
The case, which also involves Stand-ard Chartered, is a test of the Securi-ties and Futures Commission’s (SFC) increased scrutiny of IPO practices in a city where helping fi rms list is particu-larly big business for banks.
What is the case about?UBS, StanChart and UBS banker Cen
Tian are scheduled to appeal on Mon-day against disciplinary action taken by the SFC over alleged misconduct during a 2009 initial public off ering (IPO) that the two banks sponsored, or led. Details of misconduct or grounds for appeal have not been disclosed.
While UBS has not named the IPO in question and the SFC has not pub-licly confi rmed it, people with direct knowledge of the matter have said it was that of China Forestry. StanChart,
which closed its equity business in 2015, named the deal as China Forestry in regulatory fi lings since 2016.
The timber merchant raised $216mn in its IPO.
Just 14 months after listing, trading of its shares was suspended when its auditor, KPMG, discovered irregulari-ties. The company was subsequently liquidated.
UBS disclosed last year that the SFC proposed to fi ne it HK$119mn ($15.16mn) and suspend its sponsor licence for 18 months for its work on an unnamed IPO — an unprecedented punishment against a top bank in the city. The appeals will be heard by a three-person panel headed by a judge under the auspices of Hong Kong’s Se-curities and Futures Appeals Tribunal.
What is a sponsor and why is the SFC increase scrutiny?
Hong Kong IPOs need at least one sponsoring bank, which typically takes the lead in running the IPO and so col-lects a larger proportion of fees than banks listed only as bookrunners.
Sponsors must conduct due dili-gence to assess the company being listed, and are responsible for assuring
potential investors that its IPO pro-spectus is accurate.
Following a string of scandals among newly traded companies earlier this decade, the SFC tightened oversight.
“The SFC felt that there were too
many incidents of market misconduct, leading to an ever-expanding enforce-ment workload, and it was necessary to fi nd ways to regulate listing more ef-fectively,” said Peter Cheng, a partner at law fi rm Deacons.
The case under appeal is among a se-ries of actions taken by an increasingly proactive regulator, which in October said it had issued nine IPO sponsors with “decision notices” informing them of intended enforcement measures.
Last year, the SFC imposed fi nes of $7mn on Citigroup Inc for due dili-gence failures during its sponsorship of Real Gold Mining’s 2009 IPO, and $3mn on China Construction Bank In-ternational over its sponsorship of the failed 2014 IPO of seafood company Fujian Dongya Aquatic.
Last week, the SFC banned a former banker of China Merchants Securities Co (CMS) for his role in an unidentifi ed 2009 IPO, and said the case was related to ongoing disciplinary action against CMS and the deal’s co-sponsor.
In 2009, CMS joined UBS in spon-soring the $231mn float of China Metal Recycling, a now-liquidated scrap processor which in 2013 be-came the first firm to be wound up by the SFC itself.
Why does the Hong Kong IPO market matter?
IPOs are big business in the city, last year’s top IPO destination worldwide
with $36.3bn raised, Refi nitiv data showed.
Across the Asia-Pacifi c region, banks collected $5bn in IPO fees in 2018, according to data from Dealogic.
Equity deals — IPOs as well as sub-sequent share sales — accounted for an average 44% of all investment bank-ing fees region wide over the past dec-ade, compared with a global average of 26%, according to Dealogic.
UBS has done particularly well out of advising on IPOs.
It was a top 10 investment bank for IPOs in Hong Kong from 2009 through 2015, ranking fi rst in 2009 and 2012 in terms of the total value of the IPOs it advised on, Dealogic data showed.
However, the threat of suspension — imposed only after appeals have been exhausted — has already cost UBS, since any IPO candidate whose sole sponsor pulls out must begin the entire listing process again.
In 2016, UBS dropped to 20th in Dealogic’s league table, though by last year, it ranked eighth.
Among sponsors, UBS ranked 27th last year, sponsoring just one IPO.
A UBS advertisement is displayed on top of a commercial building in Hong Kong. UBS is set to appeal against an unprecedented 18-month ban on leading IPOs in Hong Kong, imposed, sources say, for its role in the listing of a firm whichsubsequently collapsed.
Japan coal deal may see quick outcome after chaotic 2018 talksBloombergHong Kong
A subdued thermal coal market
may help Japanese utilities and
Australian miners reach a rapid
resolution to annual contract
negotiations after turbulent
talks in 2018 almost killed the
traditional pricing system.
It may be easier for the two
sides to reach a deal smoothly
as the market is less volatile
than in 2018, according to UBS
Group AG, Clarksons Platou
Securities Inc and BMO Capital
Markets. Last year, spot prices
whipsawed through the heart of
the negotiating period, causing
talks to drag on and eventually
unravel before leaving utilities
with the most expensive con-
tract in six years.
“Given prices are a bit more
stable, I would imagine we
should be looking at a shorter
time frame” for a negotiated
deal, Colin Hamilton, London-
based managing director of
commodities research at BMO
Capital Markets, said by email. “I
don’t think you’ll see the same
bid-off er gap there was last
year.”
Top global coal supplier Glen-
core Plc and Tohoku Electric
Power Co, which typically lead
the contract talks, walked away
last year without a deal. The
Swiss giant eventually reached
an agreement with Japanese
minnow Shikoku Electric Power
Co at $110 a ton, securing a
contract that has traditionally
been used as a regional refer-
ence point.
Shikoku confirmed yesterday
it was already in negotiations
with Glencore for the new
contract. The miner, as well as
Tohoku, declined to comment.
Macquarie Group sees the
upcoming April-March contract
settled at $88 a ton, BMO
Capital Markets predicts $90,
while Clarksons sees a deal
being agreed at or above $95.
Australia’s off icial commodity
forecaster, the Department of In-
dustry, Innovation and Science,
forecast $89 a ton in its quarterly
report published in December.
Spot coal at the Australian
port of Newcastle, a regional
benchmark, have averaged
about $97 a ton during the first
quarter, compared with $100 in
the same period last year. Prices
closed at $97.60 on Thursday.
More importantly for this round
of negotiations, prices haven’t
been as volatile as last February to
July, when they slumped to a low
near $90 before unseasonably
hot weather in China pushed up
prices close to $118.
The significance of the an-
nual Japan contract has dimin-
ished over the years as supply
rose from Indonesia and South
Africa and China emerged as a
major buyer, while price assess-
ment services and and indexes,
which give real-time snapshots
of the market, have gained
popularity. Still, companies
including Japanese cement and
paper manufacturers, as well as
some Taiwanese power produc-
ers, rely on the annual deal to
set their own contracts.
China developers’ dollar junk bond euphoria seen having legsBloombergHong Kong
After the strongest start to a year since 2012, Chinese developers’ junk-rated bonds still off er value with fund managers saying stimulus policies and cheap valuations will keep fuelling the rally.Chinese high-yield notes denominated in dollars, mostly from developers, have handed investors a 6.6% return since January. The yield, which was at 9% on Wednesday, is still 100 basis points higher than the five-year average, according to an ICE BofAML index. The easing that’s been quietly going on over property curbs has also given investors confidence in this heavily indebted sector.It’s so far been a year of superlatives for Chinese builders. They sold a record amount of bonds onshore and off shore amid strong demand. The so-called subscription ratio for the notes issued by real estate companies in February hit the highest in 19 months, according to data compiled by Bloomberg using available deal statistics. The sector has benefited from “the absence of new macro concerns, well managed supply coupled with stable fundamentals,” said Alaa Bushehri, BNP Paribas Asset Management’s London-
based head of global emerging market corporates. “Our base case is that this supportive environment will remain. We expect markets to be able to absorb new issuance in the space.” Local authorities have introduced what Nomura Holding has called “stealth easing” in recent months, from allowing individuals to flip units faster to loosening home-buying prerequisite residency permits. The deepening economic slowdown and trade tensions with the US are prompting some city governments to loosen the screws, and China has signalled it may be open to further moves.
For bond investors, builders’ cash-flow cushion may have increased, as land expenditure nationwide registered the slowest growth in three quarters in December, according to off icial data.There is also a case to be made for further rallies.Current credit spreads indicate an implied default rate at around 9%, higher than the historical average of 7.5%, according to AllianceBernstein. “Our analysis of underlying fundamentals suggest that the 2019 default rate will be lower than this historical average. So, there is room for some further performance,” said
Brad Gibson, head of Asia- Pacific fixed income portfolio management at the money manager.To be sure, there are risks in the fast debt buildup off shore given that dollar bonds costs are higher than local ones, S&P Global Ratings said in a report Wednesday.S&P also said that “future repayment adds further pressure to lower- rated, smaller developers that face significant debt maturities over 2019.” Australia & New Zealand Banking Group believes yield premiums on high-yield bonds over investment-grade ones have room to tighten by 20-25 basis points before
lurking deflation and spike in corporate defaults rock the boat. The bank advises investors to now rotate out of high yield into the quality state-owned names where the supply and demand dynamics are much stronger.For Jupiter Asset Management, Chinese property is high on its buying list.“Chinese authorities have enough fiscal and monetary tools at their disposal to manage a natural slowdown in the economy’s cycle, so real estate developers remain attractive,” Alejandro Arevalo, a fixed income fund manager at the firm wrote in a report.
Death of bond volatility has Pimco fearing for Europe’s economyBloombergLondon
Europe’s bond volatility is grind-ing to a halt, leading investors in-cluding Pimco to fear the region’s
economy and markets are spiralling to-wards their own version of Japan’s lost decade.
“There’s a strong probability that what happened in Japan two decades ago is currently unfolding in the euro-zone right now,” said Andrew Bosom-worth, a money manager at Pacifi c In-vestment Management Co.
“It probably means the Japanifi ca-tion of capital markets – lower yields for a longer time. Maybe forever.” Price swings in the European sovereign debt market are the most depressed in histo-ry, according to a Merrill Lynch index.
That has already helped push bench-mark German Bund yields to the low-est in two years and spurred record demand for the higher returns from riskier peripheral debt. As trading op-portunities dry up, money may contin-ue to be pushed into bonds, depressing yields further.
The moribund markets refl ect a re-gion undergoing a rapid deterioration in fortunes, with some economies fl irt-ing with recession, in a year supposed to see tentative monetary policy nor-malisation.
That leaves investors doubting the European Central Bank will be able to extricate itself from a negative interest-rate policy, mirroring Japan’s struggle to revive its economy from years of fl at-lining growth.
The Asian nation became the fi rst to cut borrowing costs to zero 20 years ago, eroding debt-price swings and trading volumes.
The low volatility trend was exacer-bated by the country’s central bank im-plementing a bond curve control policy
in 2016, limiting the range that 10-year yields could go either side of zero%. Markets responded by pushing down yields.
Pimco’s Bosomworth pointed to par-allels between Japan’s experience and the eurozone on the time it’s taking to clean up non-performing loans in the banking sector and on ageing popula-tions, an “elephant in the room” that
is leading to lower structural infl ation. That is likely to mean central banks keep rates low for decades, he said.
“If what we’re looking at through the demographic, banking sector lens is correct, then we may never have this turn in interest rates,” Bosomworth said. “And if we do, then we should just jump on it and fade it. It’s hard to see how an increase in yields can be
sustainable.” Other investors are also getting deja vu. While Japanese 10-year yields fell into negative territory in January, German Bund yields are now heading towards 0%, a level last seen in 2016.
Bank of America Merrill Lynch calculates a 76% correlation between the path of Japanese and euro-area bond yields.
“The collapse of bond volatility and convergence of European core bond yields to Japanese government bonds is a sign Europe is facing the risk of struc-tural low infl ation,” said Ben Emons, the managing director of global macro strategy at Medley Global Advisors.
A Merrill Lynch index for euro rates options volatility over three months touched the lowest on record last month.
The euro-dollar – the world’s most actively traded foreign-exchange pair – is on track to post its tightest quarterly range since the birth of the common currency two decades ago.
“While history is never meant to re-peat itself, it does seem to be coming close,” wrote Bank of America Merrill Lynch strategists led by Barnaby Mar-tin. “Interest rate vol in Europe has fallen to a record low and is yet again driving a conspicuous reach for yield.”
Traders betting on “lower-for-long-er” are fl attening both nominal and infl ation-linked yield curves in Europe, while bonds of historically riskier na-tions, such as Spain and Portugal, have rallied.
Those bonds off er some of the high-est “carry,” or larger coupon payments, that are a worthy investment should volatility stay low and political turbu-lence muted.
It’s also why the rally in Bunds may not be done yet. The securities pro-vided one of the few sources of returns for investors last year as the Federal Re-serve hiked and the bull-run in equities drew to an end.
“We have been in a trap for a long time and little chance of escape yet,” said Richard Hodges, a money manager at Nomura Asset Management. “Infl a-tion is benign, no matter how much quantitative easing has helped the ECB reach their target. As a fund manager we continue to have little choice but to buy fi xed income.”
The off ices of Pacific Investment Management Co (left) are shown in Newport Beach, California. Europe’s bond volatility is grinding to a halt, leading investors including Pimco to fear the region’s economy and markets are spiralling towards their own version of Japan’s lost decade.
BUSINESS11Gulf Times
Saturday, March 9, 2019
China’s supercharged imports fail to stir lead marketBy Andy HomeLondon
China imported 128,000 tonnes of refined lead last year, bringing the two-year cumulative total to 206,000 tonnes.The only precedent for this pace of import was 2009, when China soaked up 157,000 tonnes of refined lead.It’s a problematic comparison though, given lead prices and arbitrage were distorted back then by the global financial crisis and Beijing’s resulting rush to support its own producers.The import surge dried up in 2010 and China became a net exporter of refined lead to the rest of the world over the 2013-2016 period.The scale of imports since then is a clear sign there is a real physical shortfall in China, normally the sort of narrative to excite metals bulls.This being lead, however, you’d be hard pushed to discern even the faintest flicker of bullish enthusiasm in either the Shanghai or London futures markets.The London Metal Exchange (LME) lead contract is currently stable, but as long as China’s appetite remains this strong,
there could yet be a bull storm brewing.China is both the largest producer and consumer of lead, as is the case with many industrial metals.Lead’s dominant usage in automotive batteries leaves it exposed to the downturn in China’s automotive sector.Automobile sales dropped another 15.8% in January, marking the seventh straight month of decline in the world’s largest auto market.However, weak demand is being off set by even weaker production, China’s internal supply of lead suff ering a double blow over the last couple of years.Secondary production, using scrap lead as an input, is a major component of Chinese supply as it is everywhere else.It’s a sector that has come in for Beijing’s “structural reform” treatment with smaller operators being squeezed out in favour of more modern, larger plants using new technology to comply with increasingly tough emissions standards.The reform process will provide structure to a previously fragmented industry but it comes at the short-term cost of supply chain disruption.Primary producers, those turning mined concentrates into refined
lead, have not been spared the rolling environmental clamp-down taking place across China’s industrial landscape.But they have also had to face declining availability of concentrates, both domestic and imported.The International Lead and Zinc Group (ILZSG) estimates that China’s mined lead production fell by 3.4% last year, the second straight year of contraction.Mine production in the rest of the world grew by only a marginal 0.7% and the resulting tightness has taken its toll on China’s concentrates imports.These have fallen for three consecutive years.The bulk weight total was 1.23mn tonnes last year, down by 35%, or 672,000 tonnes, on 2015.Tightness in the raw materials section of the supply chain has travelled to the refined metal sector in China, with production, primary and secondary combined, falling by 1% last year, according to ILZSG.Visible inventory in China remains low with Shanghai Futures Exchange (ShFE) stocks totalling just 29,355 tonnes at the end of last week.There has been a small rebuild over the last couple of months but it has been
insignificant relative to the tonnage being imported.Low ShFE stocks may also reflect the current lack of trading interest in the Shanghai lead contract.Prices have done no more than shuff le sideways since the second quarter of 2018 and open interest touched a three-year low in January, from which it has barely recovered.Similarly in London, where LME three-month lead is the second-weakest performer in the base metals pack so far this year, opening up a wide discount of over $600 per tonne to sister metal zinc.Zinc is back on investors’ radar thanks to rapidly declining LME stocks and a realisation that more mine supply does not automatically mean more refined metal supply if there is a smelter bottle-neck.LME lead stocks, by comparison, have failed to transmit such a tradeable signal.At a headline level of 76,725 tonnes stocks are historically low and are down by 30,650 tonnes on the start of January.However, any clear-cut pattern has been broken by a slightly bewildering sequence of cancellations, reverse
cancellations and “arrivals”. LME lead stocks have a history of such ambiguity, much of which is down to the fact that what’s left in the LME warehouse system is increasingly old metal.Mass cancellations have often been followed by mass “arrivals” because physical buyers have baulked at the technical specifications of the metal, leaving the owner little choice but to place it back on LME warrant.Such stocks rotation, driven by warrant sifting, has been a defining feature of the LME lead market for several years but the resulting “noise” doesn’t help any coherent market narrative.ILZSG estimates the global refined lead market recorded a supply-usage deficit of 98,000 tonnes last year, following a 148,000-tonne shortfall in 2017.The cumulative deficit has, on paper, been large enough to absorb the preceding years of surplus and cause a significant drawdown in off -market, statistically invisible stocks.In this regard, lead’s fundamentals look similar to those of zinc, not entirely surprising given that most of the world’s lead concentrates come as a by-product from zinc mining.As with zinc, the consensus has
been that a new wave of mines will reinvigorate a depleted supply chain and push the global market into surplus.The zinc market seems to be currently reassessing this scenario as new mine supply fails to translate fully into improved metal availability.To date there has been no such reassessment of the lead market.ILZSG’s most recent forecast, in October last year, was for a switch to a 50,000-tonne surplus this year.But in April last year it was projecting a minimal refined market deficit of 17,000 tonnes in 2018.It dramatically revised that forecast in October, factoring in China’s increased imports, a key statistical component for calculating Chinese market balance.On current trends, ILZSG may have to revise this year’s balance again at its spring meeting. China’s lead imports in January were 25,800 tonnes, exceeding the total amount of metal imported between 2011 and 2016. If they carry on at this pace, even the somnolent lead market might start noticing.
Andy Home is a columnist for Reuters. The views expressed are those of the author.
Increase in demand for pound seen most against euroReutersLondon
With three weeks to go before Britain is due to exit the Eu-ropean Union, interest in
selling the pound against the dollar and euro is dwindling as currency traders bet that the worst-case scenario of a no-deal Brexit will be averted.
Overall positioning still implies a degree of caution about the outcome.
But with parliament expected to ex-tend the date of Brexit beyond March 29 rather than let Britain crash out of the EU without a transition period to minimise economic disruption, the pound has surged to multi-month highs in recent weeks.
It is up 7% against the dollar year-to-date, making it the world’s best
performing major currency. Various positioning gauges meanwhile indicate that selling sterling in anticipation of being able to buy pounds back later at a lower price — “shorting” — is becom-ing less popular.
According to the Commodity Fu-tures Trading Commission (CFTC), which measures changes in inves-tor positioning, speculators had a net $3.2bn short position on the pound versus the dollar on February 25.
That is half the $6.5bn hit in Sep-tember 2018 and well below the $4.84bn seen on December 21, before the US federal government shutdown.
CFTC off ers the most reliable and frequent update of investor positions though its data measures only a tiny fraction of the market.
CFTC data was unavailable for some weeks due to the shutdown, and while
fi gures are now trickling out, more up-to-date positioning indicators com-piled by banks and funds show short positions are gradually being washed out. BNP Paribas’s FX positioning tracker, for example, shows that on a scale of +50/-50, sterling ‘shorts’ were completely pared back in the week to March 4 for a score of plus 4, versus minus 5 the previous week.
The score had ended 2018 at -30 and was -18 in the week to January 21.
Separately, analysis by RBC Capi-tal Markets of third-party fl ows data shows pound buying surged in two distinct rounds recently, especially against the euro, FX quantitative trader Robert Turner said.
“We’ve seen a huge amount of in-terest in buying sterling through our positioning monitor recently,” Turner said. “Most of the interest is in play-
ing sterling strength versus the euro, rather than dollar.” The fi rst round was in the week of January 21 and the sec-ond occurred on one day, January 25, as markets ramped up expectations that a no-deal Brexit would be avoided.
Purchases eased off after that but picked up again last week, he added.
Investors had a small euro long po-sition versus the pound in early 2019 of +11%, swinging to a record short of -100% on February 27.
The current score is -78%, RBC said.Similarly, Nomura’s positioning
metrics indicate that net short sterling positions have declined to near their lowest levels this year, with a net short bet of less than $3bn.
At end-2018, net short positions amounted to $4.5bn. The sizeable drop in overall short pound positions gels with a reassessment of the chances of a
no-deal Brexit — major banks, includ-ing Deutsche and Goldman Sachs now assign just a 10-15% probability to that ‘worst-case’ outcome.
Investors are far from cheerful on the pound’s prospects, however — short positions at end-February, ac-cording to the CFTC, were well above a fi ve-year average of $2.7bn.
“There is a bit of optimism on the pound on hopes that a hard Brexit is avoided but the nature of any delay in the Article 50 process, or even an ac-ceptance of May’s deal, introduces new possibilities and risks for inves-tors to consider,” said UBS FX strate-gist Lefteris Farmakis.
Postponing the date of Britain’s planned departure or a tilt towards a softer Brexit than envisaged in May’s deal would open up the prospect of fresh negotiations between London
and Brussels, dampening any knee-jerk rally.
Caution is also evident in options markets where investors have reduced their Brexit hedging or speculative bets, but not fully, according to traders.
Another index, compiled by cur-rency fund Millennium Global Invest-ments, shows pound positioning at -0.9 on a scale of -5/+5.
It was -1.4 a week ago and around -1.7 a month earlier.
“Our positioning indicator shows positioning is still short as there is still a bit of uncertainty,” said Claire Dis-saux, Millennium’s head of global eco-nomics and strategy.
“The Parliament has ruled out a no-deal Brexit but there is still the risk of domestic instability, as we have seen the parties split and an election still possible.”
Bull market anniversary in Europe isn’t much excuse for a partyBloombergLondon
Let’s be honest, unlike their US peers, European stock investors don’t have much to celebrate on the 10-year birthday of the global equity bull run.Compared to the S&P 500, which is up 401%, including reinvested dividends, since March 2009, in dollar terms the Stoxx 600 failed to return even half that. Messy politics from Italy to Greece to the UK and Germany, the seemingly never-ending debt crisis, as well as failure of profit growth to catch up with the US made sure major investors stayed away from European stocks.“Every time it looks like things might turn for the better, there’s either a political issue or an economic hiccup,” said Brian Jacobsen, a senior investment strategist at Wells Fargo Asset Management, which oversees about $500bn in assets. “I think that has investors scared to commit capital to the region.It’s as though investors are adopting the philosophy of St Augustine towards Europe where they want to invest there, but not quite yet.” Seriously, why should investors bother with a complicated and divided region, when buying the Nasdaq or the Dow made things so easy? There are, however, a few exceptions to European equity laggards, and they might take you by surprise.Scandinavians did amazingly well, with the OMX Copenhagen 20 Index almost matching the S&P 500’s whopping rally with a 400% US dollar total return. There, the brewer Royal Unibrew surged about 7,000% and medical equipment maker Ambu jumped over 3,000% in dollar terms over the past decade.But before you run off to shop for the Danish stock
index, keep in mind that Novo Nordisk holds an almost 40% weighting in it, virtually making it a bet on a single stock.Lucky for them, the world’s biggest maker of diabetes drugs has rallied about 460% over the past 10 years. Norway’s OBX Index also didn’t disappoint with a 252% total gain and the OMX Helsinki 25 Index rose about 375%.So, who were the really big losers? Southern Europe, which was hit especially hard during the debt crisis, topped all the charts in this regard. The worst performer among major European indexes was Portugal’s PSI 20 Index with a net gain of just 14%. Telecom company Pharol SGPS SA is down almost 100% over the past 10 years and Banco Comercial Portugues, SA has a loss of about 90%.Spanish stocks also relatively missed out on the decade of big money-making as the IBEX 35 Index managed to squeeze out an average 8% total return every year over the period. Spain was struggling to recapitalize its banking system without external help and in 2012 had to be bailed out by the European Union. Reflecting the weakness in the country’s financial sector, Spain’s fourth-largest lender, Bankia SA, lost almost 100% and was the worst performer in the entire Stoxx 600, while Banco de Sabadell SA fell 60%.“Europe is not inherently uncompetitive as shown by the global performance of some of its companies but there is just a defensive mindset, and now an equivalent view is firmly embedded in global investors looking at Europe,” said Chris Bailey, a European strategist at Raymond James in London. “The US recapitalisation of the banks was more aggressive whilst in Europe all the government-level debt challenges held this back.The eurozone economy didn’t help itself by being late to apply stimulus.”
Intercontinental Exchange has big plans for itsDutch natural gas marketBloombergLondon
Intercontinental Exchange says its Dutch natural gas market has the po-tential to become a world beater in
energy trading.When the owner of the New York
Stock Exchange bought an energy bourse in Amsterdam seven years ago, the Neth-erlands was just one of several regional markets dominated by the UK.
But roles reversed as the region in-creased imports and utilities adopted contracts in euros to peg imports from Russia, Norway and far-fl ung places via liquefi ed natural gas tankers.
And with Brexit curbing UK activity, trade on the Dutch Title Transfer Facility, as the market is known, is surging.
Volumes have jumped 13-fold in the past four years on ICE Endex and TTF has cemented its position as Europe’s most important hub for the fuel.
But ICE, which took control of the Brent futures contract when it bought the International Petroleum Exchange in 2001, has loftier ambitions than that. The company is seeking to devel-op the market into a global benchmark akin to the crude marker, said Gordon Bennett, ICE’s managing director of utility markets.
And while the value of open positions on its gas market is today only about 5% of its Brent contract, volume is far from peaking, he says.
“It will become more important,” said Bert den Ouden, who founded the com-pany that sold its Endex unit in 2012 to ICE and is now managing director for en-ergy at consultant Berenschot Holding. “It was already clear at that point LNG would become very important.”
The fuel has since the 1960s been linked to US-dollar denominated oil in sales contracts, but the emergence of the Dutch market as the regional benchmark enabled utilities to seize more control over how they pay for the many billions of euros of gas imported every year.
Utilities from EON SE to Engie SA have
reworked contracts through arbitration with Russia’s Gazprom PJSC to insert links to European gas prices. New LNG deals are also increasingly referencing the Dutch market and TTF is now used in Asian trades, too.
And while the euro is gaining promi-nence in energy trading, less than a fi fth of the European Union’s €300bn ($339bn) annual oil and gas bill is priced in the regional currency.
The EU is trying to boost the use of the currency in everything from commodi-ties to foodstuff s and transport to make companies less prone to international disputes and easier to fi nance, the com-mission said in December.
ICE Endex is also making its market more attractive. The futures curve was in June extended by a year so that trad-ers can buy and sell as long as six years in advance.
That’s still short of the 10 years off ered in the US Henry Hub market, and Ben-nett expects to add even more contracts in the future to meet customer demand.
To be sure, about three quarters of
mainland Europe’s gas trades are still handled bilaterally between brokers, ac-cording to data published last month by Trayport, the main trading platform.
But a surge in LNG output from the Americas is providing a big opportunity for TTF. Almost a fi fth of European sup-ply has come from the US in the past three months, an unprecedented number.
And for US sellers, the two primary basins to supply are Europe and Asia, and the price diff erence between Asian spot and hub prices in Europe will shape where their volumes are directed, said Macquarie Group oil and gas analyst David Hewitt.
“The prevailing TTF price environ-ment this year will be an important focus for the global LNG sector,” he said.
Other hubs will remain contenders. US futures trade advanced about 6% to a record last year on CME Group’s Hen-ry Hub, based on aggregate monthly futures.
Transactions in ICE’s JKM contact in Asia rose to a record in January, but it’s a lot less liquid than its Dutch market.
ICE began off ering on March 4 options for its Japan-Korea Marker LNG (Platts) contracts, the exchange group said today in an e-mailed statement.
Having a global price for gas only makes sense if the various regional mar-kets are more integrated, according to Tor Martin Anfi nnsen, senior vice presi-dent for marketing and supply at Equinor ASA of Norway, Europe’s second-biggest supplier. “I think we are nowhere near that.” No one hub will “reign supreme,” he said.
And TTF’s position in Europe isn’t completely unassailable, according to both Macquarie and Equinor.
Germany’s plans to build out infra-structure with LNG terminals and a sec-ond pipe from Russia opening by the end of this year could spur more trade and potentially challenge the Dutch market.
Still, ICE’s Bennett isn’t too worried. Germany, while bigger in terms of con-sumption, remains much smaller than TTF in terms of traded volume. And it’s fragmented over several exchanges. “The horse has already bolted,” Bennett said.
BUSINESSSaturday, March 9, 2019
GULF TIMES
Widening Russia money laundering scandal hits European banksBloombergHelsinki
A money-laundering scandal in-volving Western fi nancial in-stitutions and the former So-
viet Union widened, sending shares of banks lower across the continent amid fresh reports that illicit money may have been handled by a large number of fi rms.
Raiff eisen Bank International AG led declines, dropping as much as 12% af-ter Bill Browder’s Hermitage Fund said the bank ignored warning signs that would have helped stop the laundering of funds from Russian criminal activity.
Dutch banks fell after a report that the three largest were used by a group labelled the Troika Laundromat to move cash from Russia.
Almost daily revelations are expos-ing the breadth of suspicious activity
that has enmeshed banks across the continent. With investigations under way in Baltic members of the Europe-an Union that once were Soviet states, the Nordic countries, the US, the UK and elsewhere, it may be months be-fore the full extent is uncovered.
A picture is forming of Nor-dic banks that, often via their Bal-tic units, became hubs for Russian criminals who channelled funds to the West. Nordea Bank Abp allegedly handled about €700mn ($793mn) in potentially dirty money, some of it linked to the death of Russian lawyer Sergei Magnitsky, according to Finn-ish broadcaster YLE.
Nordea chief risk offi cer Julie Galbo said in an interview that much of the allegations were already known public-ly and the bank was trying to establish whether any were new. Any suspicious behaviour would be reported to the authorities, she said. Separately, the
Guardian reported in the UK that an estimated $4.6bn was sent to Europe and the US from a Russian-operated network of 70 offshore companies with Lithuanian accounts.
The newspaper cited data on bank-ing transactions obtained by the Or-ganised Crime and Corruption Re-porting Project, or OCCRP, and 15min. lt, a Lithuanian website. The Guardian said there’s no suggestion that the end recipients of funds were aware of the original source of the money.
The two reports are part of a broader OCCRP investigation into the Troi-ka Laundromat. It’s the fourth such scheme that the group has uncovered with the help of news media. The oth-ers were the Proxy Platform, the Rus-sian Laundromat, and the Azerbaijani Laundromat.
Accounts at the three largest Dutch banks were used by the Troika Laun-dromat to move cash from Russia, ac-
cording to Dutch magazine De Groene Amsterdammer, which is part of the OCCRP journalist group.
About €43mn were paid to the Rabobank account of Dutch yacht builder Heesen for construction of two boats, the newspaper said, while approximately €190mn went through bank accounts at an ABN Amro unit that later became part of Royal Bank of Scotland.
All assets, data and clients of the unit became the legal responsibility of RBS in February 2008, according to an ABN Amro spokesman. Though it has the same name, the current ABN Amro is a completely diff erent legal entity than the one that sold the unit to RBS, the spokesman said.
ING Groep NV fell as much as 3.6% after the newspaper said an ING branch in Moscow kept working until 2013 with a client who it suspected of in-volvement in money laundering. ING
last year agreed to pay a record fi ne to settle charges related to failures in anti-money-laundering checks.
Offi cials for Rabobank and ING de-clined to comment.
In Austria, Raiff eisen Bank Inter-national’s predecessor “ignored sus-picions” that should have triggered reports to the authorities, thereby abetting the money laundering linked to the Magnitsky case, Hermitage said.
The fi ling lists payments totalling $634mn that went from accounts at Lithuania’s Ukio Bankas and Danske Bank’s Estonian unit to accounts at Raiff eisen Zentralbank Oesterreich AG, then the main owner of Raiff eisen Bank International.
Browder, an investor who has spent the past decade building cases against banks for laundering following the death in a Russian jail of Magnitsky, said more allegations will unfold.
A spokeswoman said the bank hasn’t
seen Hermitage’s fi ling yet, and pointed to past allegations by Hermitage that had been found by authorities to be baseless.
A probe of RZB by Austrian fi nancial regulators in 2010 found no evidence that the fi rm was involved in money laundering.
Browder said by telephone that the new fi ling contains information that wasn’t available then.
More than $889mn went from ac-counts at Deutsche Bank to accounts of the “Troika Laundromat” between 2003 and 2017, German daily Süd-deutsche Zeitung — also part of the OCCRP group — reported. Deutsche Bank, in written comments, said it always co-operates with authorities and regulators worldwide and said that as a correspondent bank it only has limited access to information about the customers of the respond-ent bank.
Telecom and real estate counters witness higher selling pressureQSE WEEKLY REVIEW
By Santhosh V PerumalBusiness Reporter
The Qatar Stock Exchange suff ered more than 330 points meltdown in its key index and about QR22bn in capitalisation this week as foreign institutions squared off their position.Telecom and real estate counters witnessed higher selling pressure this week, which saw Qatar tap the global debt market with $12bn bonds.Non-Qatari individuals were also net profit takers as the 20-stock Qatar Index plunged 3.27% this week which saw Doha Bank outlines its strategy to strengthen the technological platform to improve the operating costs by 5% in the next two years.About 69% of the traded constituents
were in the red this week which saw services and real estate sectors witness robust credit off take this January, leading to a more than 3% year-on-year jump in total domestic credit.Major losers included Industries Qatar, Ooredoo, Vodafone Qatar, Milaha, QNB, Doha bank, Alijarah Holding, Salam International Investments, Aamal Company, Qatar Electricity and Water, United Development Company, Ezdan and Gulf Warehousing this week which saw no trading of sovereign bonds.Nevertheless, Commercial Bank, Gulf International Services, Mesaieed Petrochemical Holding, Qatar Insurance, Doha Insurance and Nakilat were among the prime gainers this week which saw no trading of treasury bills.Islamic stocks were seen declining
slower than the other indices in the market this week which saw Qatar Electricity and Water Company disclosed that the “Siraj Solar Energy” project is expected to produce about 700 MW of electricity in the fourth quarter of 2021.The Total Return Index plummeted 2.25%, All Share Index by 2.73% and Al Rayan Islamic Index (Price) by 3.13% this week which as many as 2,124 Masraf Al Rayan bank sponsored exchange traded fund QATR valued at 0.05mn traded across five transactions.The telecom index plunged 4.63%, real estate (3.92%), industrials (3.05%), banks and financial services (2.68%), consumer goods (1.97%) and transport (1.28%); while insurance gained 1.45% this week which saw industrials, banking and realty segments together
account for more than 81% of total trade volume.The industrials sectors constituted 45% of the total volume, banks and financial services (19%), real estate (18%), telecom (8%), transport and insurance (4% each), and consumer goods (3%) this week which saw a total of 16,508 Doha Bank sponsored QETF worth QR1.66mn changed hands across nine deals.In terms of value, industrials’ share was 36%, banks and financial services (31%), real estate (11%), consumer goods (9%), telecom (6%), and insurance and telecom (4% each) this week.Foreign institutions turned net sellers to the tune of QR42.7mn compared with net buyers of QR112.86mn a week ago.Non-Qataris were also net sellers to the extent of QR13.95mn against net
buyers of QR6.63mn the week ended February 28.Domestic funds’ net buying weakened noticeably to QR56.17mn compared to QR94.08mn the previous week.However, Qatari retail investors turned net buyers to the tune of QR0.48mn against net profit takers of QR213.56mn a week ago.Total trade volume fell 32% to 33.06mn shares, value by 39% to QR961.79mn and transactions by 23% to 23,348 this week.The real estate sector’s trade volume plummeted 65% to 5.95mn equities, value by 64% to QR102.54mn and deals by 54% to 3,849.The consumer goods sector reported 63% plunge in trade volume to 0.88mn stocks, 63% in value to QR82.6mn and 44% in transactions to 1,352.
The banks and financial sector’s trade volume tanked 42% to 6.22mn shares, value by 51% to QR302.6n and deals by 19% to 5,150.The transport sector reported 25% shrinkage in trade volume to 1.45mn equities, 34% in value to QR34.46mn and 7% in transactions to 1,077.The insurance sector’s trade volume declined 23% to 1.19mn stocks, value by 28% to QR39.29mn and deals by 1% to 1,031.However, there was 17% surge in the telecom sector’s trade volume to 2.62mn shares but on 4% fall in value to QR57.94mn despite 5% higher transactions at 2,046.The industrials sector’s trade volume soared 12% to 14.74mn equities and value by 19% to QR342.36mn, whereas deals were down less than 1% to 8,843.
Dovish ECB fails to lift infl ation views; rate-hike bets pushed outMoney markets push back ECB rate-hike bets to late 2020; before Thursday, ECB and markets had bet on mid-2020 hike; long-term inflation expectations fall below 1.45%; ECB shifts rate guidance, cuts forecasts
ReutersLondon
Investors have pushed back expectations for a rise in eurozone interest rates to
late-2020 from mid-2020, in a sign that the European Cen-tral Bank will have to keep rates lower for longer than even the bank now anticipates.
There was also scepticism that the ECB would be able re-vive infl ation towards its near two-percent target long-term, with a key measure of infl ation expectations in the currency bloc hitting a two-week low yesterday.
The ECB on Thursday pushed out the timing of its fi rst post-crisis rate hike until 2020 at the earliest, cut its growth and infl ation forecasts and off ered banks a new set of cheap loans to support economic growth.
But investors do not be-lieve that the ECB will be able to meet even this target and pushed out their expectations on a rate rise even further into the future.
The diff erence between the overnight and forward Eonia interest rates — bank-to-bank interest rates for the euro area that provide some indication of how investors view the ECB rate trajectory — imply a 10-basis-point rate hike is now only fully priced in for late-2020.
Before the Thursday meet-ing, that fi rst rate hike had been anticipated around mid-2020.
Euribor interest rate futures, another gauge of market rate expectations, also pointed to a rate hike by December 2020.
“You can look at all these rates for an indication but they all give you the same answer — that there has been a push out in rate hike expectations to the end of next year,” said Ciaran
O’Hagan, rates strategist at So-ciete Generale.
“This is quite remarkable because just a few months ago we were looking at a rate-hike expectations for the middle of this year.”
Investors globally have reas-sessed expectations for cen-tral bank tightening because of weak economic data and concern about risks from trade wars and Brexit.
ECB chief Mario Draghi caught even dovish rate-setters off guard by pushing for un-expectedly generous stimulus after forecasts showed a large drop in economic growth, sources familiar with the dis-cussion told Reuters.
“There is reason to argue that the ECB would need to keep rates lower than beyond the guidance date because if you look at their inflation forecasts out to 2021, you would need some form of ac-commodation to reach these levels of growth,” said ING senior rates strategist Ben-jamin Schroeder.
In a further sign that the ECB’s new guidance had prompted investors to reassess the outlook for rates and infl a-tion, long-term infl ation ex-pectations fell back.
The fi ve-year, fi ve-year break even infl ation forward dropped to 1.45%, having traded as high as 1.51% earlier this week.
“There are people in the market who have just woken up to the fact that infl ation isn’t going anywhere soon,” said Chris Scicluna, head of eco-nomic research at Daiwa Capi-tal Markets.
He said that while the fi ve-year, fi ve-year forward rate was not an unreasonable read on fu-ture eurozone infl ation, it still looked “a bit strong.”
The measure is tracked closely by the ECB.
“Our infl ation forecast is weaker than the ECB,” said Sci-cluna. “Not only do we have a tepid euro area economy, but the US and China are slowing.
It will be very diffi cult for the ECB to shift infl ation much higher to 1.5% and beyond.”
US economy gains paltry 20,000 jobs in FebruaryJobless rate falls to 3.8% from 4.0%; average hourly earnings rise 0.4%
ReutersWashington
US job growth almost stalled in February, with the economy creating
only 20,000 jobs as construc-tion and retail payrolls dropped, which could raise concerns about a sharp slowdown in eco-nomic activity.
The job growth reported by the Labour Department yes-terday was the weakest since September 2017, but it probably understated the health of the labour market as other details of the closely watched employ-ment report were strong.
The unemployment rate fell back to below 4% and annual wage growth was the best since 2009.
In addition, data for Decem-ber and January were revised to show 12,000 more jobs created than previously reported.
Still, the economy that in July will mark 10 years of expansion, the longest on record, is slow-ing and the weakening job gains support the Federal Reserve’s “patient” approach toward fur-ther interest rate increases this year.
“The sharp slowdown in payroll employment growth in February provides further evidence that economic growth has slowed in the fi rst quarter,” said Michael Pearce, senior US economist at Capital Econom-ics in New York.”That adds weight to our view that the Fed will not be raising interest rates this year.”
Economists polled by Reu-ters had forecast nonfarm pay-rolls rising by 180,000 jobs last month and the unemployment rate falling to 3.9%.
The slowdown likely refl ect-ed the fading weather-related boost in the prior two months and workers becoming more scarce.
A stock market selloff and jump in US Treasury yields in late 2018, which tightened fi -nancial market conditions, were also likely factors.
About 390,000 workers
stayed at home in February be-cause of the bad weather, not much diff erent from previous years.
The length of the average workweek fell to 34.4 hours from 34.5 hours in January.
US stock index futures ex-tended losses and yields on US Treasuries plummeted after the release of the data.
The dollar held earlier losses.The moderation in hiring was
fl agged by fi rst-time applica-tions for jobless benefi ts, which were elevated in February.
Also, Institute for Supply Management surveys showed measures of manufacturing and services sectors employment dropped in the month, while the Fed on Wednesday reported “modest-to-moderate gains” in employment in a majority of the US central bank’s districts.
Though the economy grew 2.9% in 2018, its strongest per-formance in three years, it lost
momentum as the year ended.Retail sales, homebuilding,
business spending and exports all declined in December, setting the economy on a slower growth path.
Despite the weakness in hiring last month, the unemployment rate fell two-tenths of a percent-age point to 3.8% in February as federal government workers who were temporarily unemployed during a 35-day partial shut-down returned to work.
The longest shutdown in US history ended on January 25.
A broader measure of unem-ployment, which includes peo-ple who want to work but have given up searching and those working part-time because they cannot fi nd full-time employ-ment, dropped to 7.3% after hit-ting an 11-month high of 8.1% in January because of the govern-ment shutdown.
Average hourly earnings rose 11 cents, or 0.4%, in Febru-
ary, partly because of a calen-dar quirk, after gaining 0.1% in January.
That raised the annual in-crease in wages to 3.4%, the big-gest gain since April 2009, from 3.1% in January.
Overall, wage infl ation re-mains moderate.
A report on Thursday showed labour costs rising only 1.4% in 2018, the smallest gain since 2016, after increasing 2.2% in 2017.
Economists say employers have kept hiring at a strong pace despite low unemployment as more people returned to the la-bour force, including students, women and people who had dropped out to collect disability benefi ts.
They, however, say that source of labour supply is dwindling.
The labour force participation rate, or the proportion of work-ing-age Americans who have a job or are looking for one, was
unchanged last month at more than a fi ve-year high of 63.2%. Last month, employment at construction sites fell by 31,000 jobs, the biggest drop since De-cember 2013, after increasing by 53,000 in January.
The leisure and hospitality sector added no jobs last month after payrolls increased by 89,000 in January.
The manufacturing sector added 4,000 jobs in February af-ter hiring 21,000 workers in the prior month.
Retail payrolls fell by 6,100 jobs.
There were also job losses in the utilities as well as transpor-tation and warehousing indus-tries.
Government payrolls declined by 5,000 jobs last month.
Professional and business services employment increased by 42,000 jobs in February.
The education and health care sector added only 4,000 jobs.
A representative speaks with a job seeker during a career fair in Houston. The job growth reported by the Labour Department yesterday was the weakest since September 2017.
