LINGERING PAIN | Page 2 Pressure piles on Lebanon as IMF warns implosion accelerating

Sunday, July 5, 2020 Dhul-Qa’da 14, 1441 AH WIDER PRESENCE: Page 12 Ukrainian food GULF TIMES products occupying bigger share of Qatari market, says business BUSINESS council executive ‘Qatari banks focusing on digital platforms to Qatar is embracing drive demand, establish meaningful connections’ digitisation to advance By Pratap John Elgibali said the Covid-19 pandemic Business Editor has accelerated the trend towards digital banking as more consumers avoid trips to brick-and-mortar Mastercard has partnered with a branches in light of lockdowns and range of Qatari banks and financial social distancing measures. institutions to create a “smart and Banks are increasingly focusing the economy, says connected economy” for all, said on their digital platforms to drive Khalid Elgibali, division president- demand and establish meaningful Middle East and North Africa, connections, with the online and Mastercard. mobile experience becoming a “Our recent partnership with Qatar primary area of diff erentiation and National Bank marks an important competition. and historic milestone for our “Digital banking solutions will Mastercard executive strategic plans in Sudan and across increasingly need to focus on reducing Africa. Qatar National Bank is the first barriers for financial literacy and By Pratap John He noted, “The government of Qatar bank in Sudan to obtain an issuance achieving financial inclusion, which Business Editor is committed to embracing digitisa- licence from Mastercard. we believe, is the key to unlocking tion to advance its economy and fi rmly “We expect the partnership to inclusive growth in our region. We believes that the future of government contribute to the evolving payments have made a global commitment to atar continues to invest eff orts services in Qatar is also digital. This landscape in Sudan, leave a lasting empower 1bn people by including in building a smart economy by vision is at the heart of the public-pri- and positive impact on the economy, them in the digital economy by 2025. Qleveraging the power of digiti- vate partnerships we are forging in the and open new markets for us as we “Following on from Covid-19, we sation and is embracing it to advance country as well as our eff orts in grow- work towards including 1bn people in also expect banks to move away the national economy, said Khalid ing digital payments usage and accept- the digital economy by 2025,” Elgibali from purely transactional digital Elgibali, division president – Middle ance in Qatar.” told Gulf Times in an interview. solutions and design more advisory East and North Africa, Mastercard. “In particular, our proprietary Pay- He said, “We worked with Qatar products that off er deeper customer E-commerce, Elgibali noted, con- ments Ecosystem Design & Devel- Islamic Bank to launch the first engagement and better serve tinues to “show an upward tick and is opment (PEDD) methodology helps co-branded corporate credit card in people’s financial needs. This will also set to play an integral role in the governments systematically and ef- Qatar – an innovative and Shariah- mean moving away from legacy (GCC) region’s economic recovery post fectively assess and capture the poten- compliant payment solution for technologies and adopting more Covid-19.” tial of payment digitisation and over corporates and SMEs to manage their agile and scalable solutions, such as Covid-19 has transformed the way the last several years, we have worked purchasing, travel and entertainment cloud platforms and AI, or machine people want to pay, and this change is closely with the Qatari Government to expenses. Another notable learning. As a technology company, here to stay. Hygiene, safety and speed roll-out solutions that empower busi- partnership was with Ooredeo in we work closely with the public and have become the top priorities as social nesses and people to streamline opera- 2018 to launch Masterpass – a simple, private sector to advance innovation distancing continues to be encouraged tions, fi nd safer ways to pay, and ulti- convenient and trusted digital and digitisation to facilitate these across borders. mately improve their overall quality of payment service for faster and safe solutions and ensure a more “In fact, our consumer survey con- life.” shopping at thousands of retailers – connected future.” ducted in April revealed that 70% of Elgibali said a recent whitepaper online, in-app or in-store. Mastercard received a licence to respondents across MEA are now us- Mastercard published in May, “Cash- “We have also stayed true to our operate in Qatar in June 2012 and ing some form of contactless payment, ing out: Economic Growth through commitment to off er people priceless in 2013, opened an off ice in Doha citing safety and cleanliness as key Payment Digitisation” found that experiences by connecting them with as part of its eff orts to expand its drivers,” Elgibali told Gulf Times in an Khalid Elgibali, division president – Middle East and North Africa, Mastercard. countries that prioritise digitised pay- their passions. Our luxury off erings, presence across MEA. This followed interview. ment economies are better placed to “World Elite” and “World Elite a series of strategic partnerships Consumer insights like this have online, and banks are reshaping the online, driving the ease of adopting mitigate the associated adverse impact Exclusive” credit cards off er a range with Qatar’s leading financial led businesses to rethink and re-gear consumer reality to off er a tailored and contactless for consumers, and sup- of unemployment, fi nancial exclusion, of travel benefits to private banking institutions, and the launch of their customer off ering to ensure that seamless digital experience. porting the Qatari government in the fraud, theft, cost of cash, and corrup- customers, delivering a product that several notable initiatives including they’re reaching consumers where and As a “trusted” technology part- digitisation of government services. tion. complements the way they live and the Mastercard PayPass payments how they want, often online. ner to the various stakeholders in this “While these eff orts have always “Most recently, in light of Covid-19, travel, and reinforcing the universal programme, which enabled Industries across the board are tak- landscape, Elgibali said Mastercard is been core to Mastercard’s work in Qa- we worked with the central bank in truth that experiences matter customers to make payments by ing their businesses online: More res- “doubling down” on its eff orts in en- tar, the pandemic has undoubtedly Qatar to increase the cardholder veri- more than things. In Qatar, we have simply tapping their contactless taurants are turning to home delivery, suring that this transition to digital is demonstrated the importance of the fi cation limit from QR100 to QR300, launched the World Elite Credit card card, key fob or cell phone on a delivery aggregators are closing in on a smooth one. digital economy and its ability to en- allowing people to make higher value in partnership with QIB, Commercial point-of-sale terminal reader, Elgibali the demand, entertainment giants are “We are supporting SMEs as they sure sustainability and drive growth,” contactless payments without having Bank and Doha Bank.” added. off ering a slew of content to stream look to off er their goods and services Elgibali said. to touch the POS terminal keypad.” China’s early return to growth is a boon for global economy, says QNB

The Chinese economy, which is the earliest 2020 as a whole. Activity data continued QNB said and noted its analysis focuses on hit with the novel coronavirus, is now in the to improve in May, likely taking the level of two key aspects of the Chinese economy to vanguard of the economic recovery, QNB has output above that of 2019, for the first time better understand the depth of this nascent said in an economic commentary. since the pandemic erupted. However, growth recovery. Indeed, China is one of the few countries rates are still below of that in 2019. “We First, the Chinese authorities have returned to expected to see economic growth during expect a positive growth rate of 1.5% in 2020,” their tried and tested methods of economic stimulus via government spending on infrastructure investment. The People’s bank of China has lowered the official rate twice from 4.15% to 3.85% this year. Record high issuance of nearly RMB 1tn of special local government debt has boosted infrastructure fixed asset investment, which jumped to 11.6% in May, up from 4.6% in April. This has in-turn pushed up growth in fixed asset investment, up 3.9% in May from 0.6% in April. Similarly, industrial production growth improved to 4.4% in May from 3.9% in April. Indeed, particularly strong contributions from increases in steel and cement highlight how such infrastructure spending can directly boost industrial output. Broadly, the Caixin manufacturing PMI rose 1% in May, the first positive growth rate since the outbreak shock of Covid-19, up from -1.6% in May, a considerable improvement from the extensive lockdowns again. “We had not in April. 4.5% contraction in April. Moreover, the Caixin been expecting to see such widespread Second, the services sector is showing some services business activity PMI rose 4.4% in positive year-on-year growth until Q3, but of the most encouraging signs. Property May, a significant rebound from -18.6% in April. an increasing number of indicators suggests sales rebounded strongly, although growth “There are some reasons to remain cautious,” that China’s economy has already regained in new property remains more subdued and QNB pointed out. its pre-virus level, if not growth rate. From suggest that developers remain cautious. Car Export growth turned negative in May, which the Great Financial Crisis of 2008-09 to last sales have also rebounded strongly. Pent up suggest that external demand remains a drag. year, China has contributed to 42% of the demand is likely to have contributed to the In addition, a surge in cases due to an total global economic expansion in nominal rebound in sales. outbreak of Covid-19 in Beijing has sparked terms. “Moreover, China’s investment focused However, QNB noted “the strength of the fears of a second wave in China. However, growth model has driven strong demand for Station staff wear protective gear as they check the ID and health status of travellers before they rebound suggests that consumers are neither issue is unexpected. Countries all over commodities. Therefore, China’s early return enter the Beijing South Railway Station, after an outbreak of Covid-19, in Beijing on Friday. The becoming more willing and able to make large the world are easing lockdown measures as to growth is a boon for the entire global Chinese economy, which is the earliest hit with the novel coronavirus, is now in the vanguard of purchases once again.” they continue to learn how to better control economy and both emerging markets and the economic recovery, QNB has said in an economic commentary. More generally, services activity expanded 1% and manage the virus without resorting to commodity exporters in particular,” QNB said. Gulf Times 2 Sunday, July 5, 2020 BUSINESS

Angola’s new pledge to speed up oil output cuts fails to appease Opec+

Bloomberg pledging to comply with its quota and The Organisation of Petroleum Kazakhstan, have come under great London reduce production further between Exporting Countries and its partners pressure to stop cheating. All of July and September to compensate committed to cutting supply by about them promised to cut further in July, for the overproduction. 9.7mn barrels a day – about 10% of August and September not only to Angola is under intense pressure from Yet Angola later verbally backtracked global production – until at least the end meet their targets, but to compensate other Opec+ members to speed up its on its promise, and instead asked to of July to off set the collapse in demand for the over-production in May and oil output cuts, and the response from delay the compensation until October, caused by the coronavirus crisis. June. the African nation has so far failed to the oil diplomats said, asking not to be Yet countries including Angola, Iraq The Joint Ministerial Monitoring appease the group. named because the talks are private. and Nigeria failed to hit their output Committee, a group of Opec+ nations After strong lobbying from other In a letter dated June 30, which was targets in May. Their performance that oversees the production deal, nations, including a personal seen by Bloomberg, the country improved in June, but the trio were is due to hold a conference call intervention by Nigerian President softened this position somewhat. still short of 100% compliance, July 14-15 to assess each member’s Muhammadu Buhari, Angola sent a “Angola will do its best eff orts according to data compiled by compliance. letter this week saying it will try to to compensate the excess of oil Bloomberg. Despite the stumbles, overall do better, according to people with production of May until the end Cheating is as old as the Opec system implementation of the new curbs by knowledge of the diplomatic eff ort. of September 2020,” according to of production quotas, which goes Opec+ was strong in May, at 87%. Oil Yet other Opec+ members are still the letter, which was signed by Oil back to the mid-1980s. Academics prices have strengthened as a result pushing for a stronger commitment, Minister Diamantino Pedro Azevedo. call it the “free rider” problem: of the measures and a recovery in fuel said one off icial. That wasn’t enough for other countries, Someone benefits from everyone demand in nations such as China. A man fixes a sign with the Opec logo next to its headquarter’s entrance in Angola is among several members which are still pressing for a detailed else’s eff ort without contributing. In Brent crude has more than doubled Vienna (file). The Organisation of Petroleum Exporting Countries and its of Opec+ that failed to implement timetable for compensation cuts, said Opec, ministers call it the “Pinocchio” since late April to around $42 a barrel, partners committed to cutting supply by about 9.7mn barrels a day – about their agreed output cuts in May. Last one off icial. Angola has yet to respond problem. though it’s still down this year by 10% of global production – until at least the end of July to off set the collapse in month, it joined the other laggards in to the demand, the off icial said. The laggards, which also include almost 35%. demand caused by the coronavirus crisis.

Lebanon’s Pressure piles on Lebanon as IMF IMF talks on hold, warns implosion is accelerating says

Bloomberg Beirut fi nance

he International Monetary Fund minister warned Lebanon that its eco- Tnomic implosion is accelerating and told authorities to act urgently to Reuters pull the country back from crisis. Beirut The government led by Prime Min- ister Hassan Diab has come under mounting pressure to take steps that ebanon’s talks with the IMF could unlock billions of dollars in donor are on hold pending the start funds. Some offi cials have demanded a Lof economic reforms and new cabinet to make sure that happens. agreement on the Lebanese side on During a meeting with Lebanon’s a common approach for calculat- negotiating team on Wednesday, the ing losses, Finance Minister Ghazi IMF recommended the government Wazni said. Wazni will remain in quickly draft and approve a long- contact with the IMF until the awaited capital controls law and begin talks resume, he said in comments reforms of its ailing electricity sector, to Al-Joumhuria newspaper that a person familiar with the talks said. were confi rmed to Reuters by of- The Washington-based lender asked fi cial sources. the central bank, government and law- “What is being worked on to- makers to begin discussing how to best day is defi ning the losses and their distribute losses in the fi nancial sector size in all sectors,” Wazni said. “We based on fi gures provided by the gov- must come up with a unifi ed ap- ernment, said the person, who asked proach agreed upon with all po- to go unnamed because the meeting litical forces and in coordination wasn’t public. between the government and par- “The IMF has understandably asked liament...We must agree as soon as for a united front from the Lebanese possible.” side,” Finance Minister Ghazi Wazni Lebanon began talks with the told Bloomberg on Thursday, when IMF in May, hoping to secure aid to asked about the meeting. “Now is the tackle a fi nancial crisis considered time to come together and push these the biggest threat to the country talks forward.” since its 1975-90 civil war. The IMF didn’t immediately respond But the process got bogged to requests for comment. down by a row over the scale of the Lebanon has been in talks with the fi nancial losses that has embroiled IMF for a $10bn bailout to overhaul its the government, the central bank, economy after its local currency lost commercial banks and MPs from some 80% of its value on the black Lebanon’s main political parties. market. The government drafted what A parliamentary fact-fi nding it called a rescue plan that estimated committee said on Wednesday losses incurred by the central bank and losses in the system were between local lenders at 241tn pounds ($69bn), a quarter and half the amount set based on an exchange rate of 3,500 People walk along Beirut’s seaside Corniche (file). The IMF warned Lebanon that its economic implosion is accelerating and told authorities to act urgently to pull the out in a government recovery plan to the dollar, compared with the of- country back from crisis. that was submitted to the IMF. fi cial peg of 1,507.50. But the currency The IMF has said the govern- reached 9,500 per greenback this week. Liban, argues that a diff erent account- over how politicians were handling the to reach a middle ground. The central to sell dollars to traders of food and raw ment’s numbers appear to be about The central bank and the lend- ing approach shows a surplus rather crisis. bank, using what it has left of foreign- materials for the import-dependent the right order of magnitude. ers, the government’s main creditors, than a loss. Central bank governor Riad Salameh, currency reserves, is subsidising the economy. Reuters reported on Wednesday countered with estimates of their own. Lawmakers then tried to consoli- Finance Minister Ghazi Wazni and the import of wheat, medicine and fuel at The currency crash has reignited that several current and former Banks put forward a proposal for state date the fi gures to a lesser number, also head of the banking association met on the offi cial peg, and other food items protests and rioting. Last week, several Lebanese offi cials, diplomats, in- asset sales valued at $40bn so that the stalling talks with the IMF. The dis- Thursday and discussed ways to agree at 3,200 per dollar. It’s also launched ministers privately acknowledged that ternational offi cials, economists government could repay what it owes. array was exacerbated when two key on fi gures, a sign that offi cials and the an electronic foreign-exchange trading the currency chaos could push them and analysts agreed that the IMF The central bank, known as Banque Du economy offi cials resigned in protest main stakeholders have fi nally decided platform with licensed money changers out of power. talks were going nowhere.

Turkish central bank sees rise in Iraq to halve Basra oil exports in July, says shipping agent inflation after rate cuts paused

Bloomberg consecutive steps, leaving Turkey’s inflation- Istanbul adjusted rates among the lowest in the world. Meantime, Turkish policy makers and lenders are pumping money into the economy at the A pickup in Turkey’s inflation is becoming fastest pace in over a decade to contain the hard to ignore even for a central bank that fallout of the coronavirus pandemic, a move that spent almost an entire year cutting interest may risk further weakening the currency and rates. stoking inflation. The lira is one of this year’s five Faster cost increases for food and energy worst performers in emerging markets with a kept inflation accelerating for a second loss of about 13% against the dollar. month in June. Consumer prices rose an Policy makers believe they still provide a annual 12.6% after a gain of 11.4% in May, “reasonable” real rate of return based on more than the median of 12% in a Bloomberg projected price growth. In April, the central survey of 22 analysts. bank lowered its inflation expectations Turkey’s central bank, which said it expects for the end of this year to 7.4%, less than a a rise in the cost of raw food and energy in previous forecast of 8.2%. The monetary June, surprised by holding rates last week authority said last week that “demand-driven for the first time since governor Murat Uysal disinflationary eff ects” will become more took the job in July 2019. Policy makers pronounced in the second half. will likely raise their inflation forecasts While an improving economy may not in a quarterly report scheduled for later warrant more easing, economists at this month, according to Enver Erkan, an JPMorgan Chase & Co predict the central economist at Tera Securities in Istanbul. bank may cut rates one more time – by “We do not consider the decisions taken 25 basis points – but only once it’s more at the June meeting to be a major policy confident on the inflation trajectory in the change,” Erkan said by email. “But if the short term. inflation risks will remain elevated, this “Given the recovery in economic activity, indicates that the central bank does not have persisting risks to disinflation, already Flames emerge from flare stacks at the oil fields in Basra (file). Iraq will reduce crude oil exports from its southern terminals in July, mainly its much room to cut interest rates and rate cuts negative real interest rates, and ongoing Basra Light flows, in order to comply with Opec+ cuts after failing to meet its agreed quota in previous months, loading schedules from a are approaching the end.” capital outflows, the easing cycle may indeed shipping agent showed, reports Reuters. Planned exports of Basra Light and Heavy crude oil will be around 1.53mn bpd in July, down from the Until this month, the central bank delivered be over,” JPMorgan analysts including Yarkin 3.1mn bpd originally planned in June. Basra Light exports will fall to around 817,000 bpd in July from 2.24mn bpd in June while Basra Heavy will 1,575 basis points of easing in nine Cebeci said in a report to clients. fall to around 710,000 bpd from 833,000 bpd. Final exports for July could be higher, traders said, including due to a spillover of June cargoes. Gulf Times Sunday, July 5, 2020 3 BUSINESS

China convertible Google, Temasek in talks bond hype sees $624bn hunt for each to invest in Tokopedia of this year’s 57 deals Bloomberg Singapore Bloomberg Beijing oogle and Temasek Hold- ings are in negotiations to join Ga funding round of between hunt for returns in China $500mn and $1bn for Indonesian e- is triggering the biggest commerce giant PT Tokopedia, ac- Astampede into converti- cording to people familiar with the ble bonds since before the global matter. fi nancial crisis. Tokopedia, the online marketplace Investors seized the chance backed by SoftBank Group Corp’s Vi- to take part in Shanghai Weaver sion Fund, has held talks with US In- Network Co’s bond sale in June, ternet giants including Facebook Inc, with the deal about 170,600 Microsoft Corp and Amazon.com Inc, times oversubscribed – the the people said. highest level since at least 2007, But Google and Temasek have been according to East Money Infor- more active in their negotiations and mation Co’s website. those talks may conclude in com- The average retail subscrip- ing weeks, they said, asking not to be tion amount for each of this identified because the discussions are year’s 57 deals through May was private. 4.41tn yuan ($624bn), Haitong America’s largest Internet corpo- Securities Co analysts wrote in a rations have looked increasingly to- recent note. wards Asia as growth in the US and That was about seven times Europe slows, seeking to tap the re- more than in the fi rst half of last gion’s rapidly growing smartphone- year, according to the analysts’ savvy population. data. Facebook is buying a stake in India’s After regulators last year Jio Platforms, while its WhatsApp moved to cool a frenzy for con- unit struck a deal last month to invest vertible bonds, China’s ultra- in ride-hailing and food delivery giant low interest rates and this year’s Gojek. Representatives for Tokopedia plentiful liquidity are again fuel- and Temasek declined to comment. ling demand. Google didn’t respond to an e-mail The increasingly speculative seeking comment. nature of the market is apparent The backing of Alphabet’s Google amid concern China may soon and Singaporean state investment witness its fi rst convertible- firm Temasek would mark a major bond default. boost for one of Southeast Asia’s big- Wild swings in some convert- gest e-commerce operators. ible bonds prompted closer reg- Tokopedia co-founder and chief Employees work in front of computers at PT Tokopedia’s off ice in Jakarta. Tokopedia co-founder and chief executive off icer William Tanuwijaya built the country’s most ulatory scrutiny earlier this year. executive officer William Tanuwi- valuable startup after Gojek after scoring early backing from SoftBank founder Masayoshi Son and Alibaba Group Holding co-founder Jack Ma. In two off erings sold on jaya built the country’s most valuable Thursday, YingTong Telecom- startup after Gojek after scoring early erg News in October. Tokopedia came id-19 pandemic, which is rapidly online purchases during widespread up.Indonesia has become a key bat- munication Co saw the book backing from SoftBank founder Masa- close to finalising its latest financing changing the online shopping land- lockdowns. tleground between the regional rivals: 114,100 times covered, while yoshi Son and Alibaba Group Holding this year before news emerged of a re- scape in the world’s fourth most pop- Singapore-based rival Shopee – a The country’s e-commerce market Shandong Dawn Polymer Co’s Ltd co-founder Jack Ma. cent data theft attempt that may have ulous nation. unit of Sea Ltd – is catching up, while is projected to expand from $21bn in notes were 90,175 times over- It now plans to list shares at home affected 15mn of its users, one of the E-commerce platforms are now Alibaba last month appointed a long- 2019 to $82bn by 2025, according to a subscribed, according to their as well as in another as-yet-undecid- people said. moving quickly to serve the millions time veteran to head up Lazada and recent study by Google, Temasek and fi lings late Thursday. ed location, Tanuwijaya told Bloomb- It was also held back by the Cov- of people forced to make their first “fight harder” as competition heats Bain & Co. “Convertible bonds meet the needs of the market amid de- clining bond yields,” said He Qian, a fund manager at HFT In- vestment Management Co, who says more companies will tap the S&P sees no imminent risk to Indonesia rating from debt plan market given the relatively cheap funding available. “For fi xed- income investors in the second Bloomberg defi cit with the central bank will weak- response to questions. “This is no dif- half of the year, it will be a key Jakarta en its independence and trigger rating ferent from the situation that the bank source of outsized returns.” Av- downgrades. faces in its ordinary course of mon- erage fi rst-day gains in April and The cost of protecting Indonesia’s etary operations.” May were 16% and 15% respec- he Indonesian government’s fi ve-year dollar bonds, or credit-de- For Moody’s, what will infl uence its tively, compared to 9.4% in the plan to sell billions of dollars of fault swaps, slid 14 basis points this rating decision will be “the duration fi rst half of last year, according Tbonds to the central bank to fi - week, the most in a month. and other binding constraints under to Haitong. nance a widening fi scal defi cit poses no The so-called burden-sharing plan which the measures are extended,” Investors typically bet on the immediate threat to the nation’s credit is under “tough discussion” by the Anushka Shah, a senior analyst in securities for potential gains on rating, according to S&P Global Rat- government and Bank Indonesia to Singapore, said in an e-mail. That “in the equity conversion. ings. S&P, which already has a negative ensure a prudent plan that maintains turn would determine the scope and When a company sells a con- outlook on Indonesia’s rating, makes both monetary independence and fi s- extent of their usage as a lever to in- vertible, existing shareholders no distinction between the debt issued cal integrity, a senior fi nance ministry crease fi scal expenditure beyond what have the right to participate in by the government, be it to the central offi cial said Friday. is deemed necessary for economic re- the deal to avoid dilution. bank or to commercial investors, in as- Under the defi cit fi nancing propos- covery and rehabilitation,” she said. And unlike most equity off er- sessing its fi scal impact, according to als, Bank Indonesia may buy bonds Indonesia is rated Baa2 at Moody’s, ings, the bonds don’t have lock- Kim Eng Tan, a sovereign analyst. worth 574.4tn rupiah ($40bn) to fund equivalent to S&P’s rating. up requirements. Moody’s Investor Service said sepa- the government’s pandemic response, While the stimulus measures an- That means insiders can sell as rately that infl ation is well-anchored according to the fi nance ministry. nounced by Indonesia’s government soon as the fi rst day of trading. in Indonesia and the credit outlook President Joko Widodo’s adminis- will have some eff ect on fi scal and debt Convertible bond off erings in would depend on debt duration and tration needs to borrow 1.65 quadril- metrics, the impact will not be mark- China are usually hundreds or other constraints. lion rupiah this year to fund a budget edly diff erent from the likely deteriora- even thousands of times over- “Unless there are material and un- defi cit of 6.34% of gross domestic tion in other regions, Shah said. subscribed given limited supply foreseen economic or fi nancial disrup- product and repay its debts. Southeast Asia’s largest economy compared to other types of se- tions, we do not believe that this plan While some economists have argued entered the crisis with comparatively curities, such as corporate bonds will aff ect the credit metrics more than the defi cit funding may impact infl a- strong fi scal buff ers, providing it some or stocks. we currently expect,” Tan said. tion and money supply in the long run, fi scal space to react, she said. Investors don’t have to pay the S&P recently downgraded its out- S&P’s Tan said the size of the program “Like many emerging markets glo- full amount of their bids until look on Indonesia’s BBB rating, the wasn’t large enough to materially af- bally, BI’s move towards unconven- after they get their allocation. second-lowest investment grade fect monetary operations. tional quantitative easing represents A key diff erence in this year’s score, because of the expected fi scal “The impact of infl ation, which one way for the government to fund frenzy is that smaller and lower- deterioration brought about by Cov- recently fell below 2%, will depend its wider borrowing requirements in rated issuers have dominated the A man walks past an entrance to the Bank Indonesia headquarters in Jakarta. Under the id-19. Indonesia’s currency tumbled partly on how much Bank Indonesia the wake of higher coronavirus-relat- primary market in the fi rst half, deficit financing proposals, Bank Indonesia may buy bonds worth 574.4tn rupiah ($40bn) 2.1% this week on concern the plan off sets the liquidity impact of its bond ed spending and stimulus measures,” prompting some caution from to fund the government’s pandemic response, according to the finance ministry. to split the cost of funding the budget purchases,” Tan said in an e-mailed Shah said. analysts. Wirecard’s missing executive and his alleged role in India deals

Bloomberg Indian travel firm Goomo Orbit and al- across the globe, and establish what role Rupen Vikamsey is suing the fund for an a High Court in Mumbai – alleges that former owners at GI Retail who allege London leges Marsalek played a central role in ne- senior management figures played in advisory fee he says he’s owed for his Vikamsey and his partner Balasundaram they sold the company for a fraction gotiating that deal. A lawyer for Marsalek the events leading up to Wirecard’s in- work after the deal. Kumar were not compensated by EMIF of the price to EMIF weeks before the based in Munich declined to comment on solvency. Wirecard is also under scrutiny Marsalek was involved in negotiations for an “advisory services fee” which made Wirecard deal. A pair of Indian lawsuits allege Wirecard the cases or discuss his client. by authorities in jurisdictions including between Orbit and EMIF, the lawsuit the deal financially lucrative and was ulti- The Chennai case alleges Marsalek AG’s former chief operating off icer played A Wirecard spokesperson declined to Singapore, Germany and the UK. alleges. Wirecard has previously said it mately the determining factor for them to took part in exchanges that initiated the a central role in deals that were later comment. Meanwhile Marsalek’s wherea- Meanwhile, Mauritius authorities had no involvement in EMIF until it later sell most of Goomo Orbit to the fund. sale of Hermes to EMIF. mired in disputes over valuations and bouts are unknown. have started investigating a possible bought assets from the fund. Since Marsalek’s exit from Wirecard, GI Retail’s owners, brothers Ramu and unpaid fees. Authorities in the Philippines say he round-tripping case linked to Wirecard, Wirecard has never had any direct or Vikamsey filed an additional document to Palaniyapan Ramasamy, were themselves In one of the civil cases, the previous may have passed through the country be- according to a statement by regulators on indirect relationship with the fund other the court stating that EMIF was acting as sued in London over the deal by Hermes’s owners of Indian payments company fore boarding a flight to China on June 24. Wednesday. than negotiating the deal to acquire an intermediary for Wirecard to acquire minority shareholders. They said they Hermes I-Tickets Private Ltc, are suing However, they are also investigating The civil cases describe Marsalek as assets from EMIF, the company said in Indian companies. were compensated based on a purchase former COO Jan Marsalek alongside whether immigration documents showing linked to EMIF and allege that the execu- response to questions raised by online Vikamsey and his partner are not suing price of $40mn and should be paid using Wirecard over allegations it made false he entered the Philippines were fake, Dow tive was directly involved in negotiations portal the Foundation for Financial Jour- Wirecard. the higher valuation. Judges are currently claims about how much it paid to them at Jones reported on Friday. ahead of transactions that have since nalism about the Hermes deal. That case follows the suit filed last year debating whether the case should be the time. Wirecard was tipped into a full-blown been questioned by analysts over their Vikamsey filed a mediation application in Chennai, India against Wirecard, Mar- heard in Chennai. Marsalek, meanwhile, The suit alleges Marsalek took part in accounting scandal and filed for insol- opacity and discrepancy of valuations. in Mumbai in March – a step required in salek, EMIF and three other defendants remains out of sight. negotiations leading to the acquisition vency with a German court after disclos- Marsalek, was fired in June after Wire- commercial cases before they can be that’s centered on a dispute over how Philippines Justice Secretary Menardo of Hermes by a Mauritius-based private ing last month that €1.9bn ($2.1bn) were card disclosed about four fifths of its net seen by a court – reiterating the claim that much Wirecard paid for Hermes I-Tickets Guevarra told Bloomberg News he may equity fund called Emerging Market missing from its balance sheet. cash was missing from its balance sheet. he’s owed advisory fees from the EMIF Private Ltd in a 2015 deal. have passed through the country last Investment Fund in 2015. The lawsuits off er a glimpse into the There’s no suggestion of any personal deal. “I always felt like I was negotiating Wirecard said in public disclosures it week and government immigration The second case, for unpaid consul- complexity of the task facing investiga- responsibility for the shortfall on Mar- with Wirecard,” Vikamsey said in a phone paid more than $300mn for Hermes and databases show he arrived in Manila on tancy fees, is against the Mauritian fund tors trying to decipher the finances of salek’s part. EMIF bought Indian travel interview with Bloomberg News. invested in a smaller unit. June 23 before departing for China the EMIF, which acquired a majority stake in a company with divisions and interests firm Goomo Orbit in 2015 and its founder The suit – which is pending before The case was brought by Hermes’s next day. Gulf Times 4 Sunday, July 5, 2020 BUSINESS

Pakistan’s ECC okays China speeds up process K-Electric power of merging top 2 brokers tariff hike

Bloomberg Internews Beijing Islamabad

hina is speeding up the process he Economic Co-ordi- of potentially merging its two nation Committee (ECC) Cbiggest investment banks, in a Tof Pakistan approved an move that would create a $82bn power- increase in K-Electric’s power house and may spark a wave of consoli- rates of between Rs1.09 and dation among the country’s more than Rs2.89 per kilowatt-hour (kWh) 130 brokers. for diff erent tariff slabs. In the latest proposal, Citic Group, The ECC also approved the parent of China’s largest bro- Rs29.72bn for a cash assistance ker Citic Securities Co, will act as the package of Rs12,000 per ben- main buyer of a stake in CSC Finan- efi ciary to 3.725mn applicants, cial Co, the nation’s No 2, according to irrespective of provincial, re- people familiar with the matter. Citic gional and district quotas, un- Group would buy the stake from state- der the Ehsaas Emergency Cash controlled shareholder Central Huijin Programme. Investment Ltd, making it the largest The decision came after the shareholder and pave the way for a con- Poverty Alleviation and Social solidation of resources and operations, Safety Division told the ECC said the people, who asked not to be that 3.151mn applicants who had identifi ed as the matter is private. applied for assistance through While the details are still being fi nal- SMS were found eligible under ised, the Communist Party committees the approved criteria but these of Citic Securities and CSC, which are applicants could not be pro- key in deciding corporate strategy, have vided assistance on account of approved the blueprint, said the people. provincial/district quotas. Citic Group is now lobbying the State The meeting also decided Council for support before presenting to take up the issue of sale of the details to Central Huijin, they said. RLNG to domestic gas con- The deal is playing out against a sumers and pointed that it had backdrop of seismic change in the caused losses of over Rs73bn to country’s $1.2tn securities industry, SNGPL since July 2018 and was with the potential for major domes- creating another stream that is tic and foreign rivals entering the adding to circular debt. It was fray. Chinese regulators are discuss- decided that a small group of ing plans to allow the country’s big- ministers would be tasked with gest lenders to enter the securities discussing this issue and fi nding industry as China’s market opening to a solution. Wall Street’s giants raises urgency for One of the options tabled was local brokers to add heft to survive. to recover the shortfall as part of “Since 2018, China regulators have A man stands next to the reception desk at the Citic Securities headquarters in Beijing. Citic Group, the parent of China’s largest broker Citic Securities Co, will act as the tariff and charge from consum- been exploring a variety of ways to main buyer of a stake in CSC Financial Co, the nation’s No 2, according to people familiar with the matter. ers by increasing rates. push for the making of high-quality The ECC was told that the investment banks,” Essence Securities ing on mom and pop traders across the as alleged in media reports. Shares chairman Yi Huiman, said late last year Global banks and asset managers are sale of RLNG to domestic gas analysts led by Zhang Jingwei and Jiang country for much of their revenue. The of CSC Financial rallied for a second that it wanted to create investment ramping up investments in the world’s consumers at weighted aver- Zhongyu wrote in a note. “On the one market is also fragmented, with the day, gaining 11.7% in Hong Kong as of banks of an “aircraft carrier size” to second-largest economy even as po- age domestic tariff price on the hand they are bringing in strong for- top fi ve brokers capturing just about 1:39pm and extending this year’s in- compete with Wall Street, as well as to litical tensions between the US and SNGPL network had resulted in eign competitors and on the other they a third of the industry’s revenue, ac- crease to 68%. Citic Securities was up promote the international expansion China on the coronavirus outbreak and an accumulative revenue short- are promoting industry consolidation cording to Goldman research. 4.7%, after rising 10.5% on Thursday. of its own brokerage industry. a crackdown on Hong Kong escalate. fall of Rs73.84bn for the period and encouraging Chinese brokers to Representatives at Citic Group and Central Huijin, a unit of China’ sov- As part of the plan, the regulators JPMorgan Chase & Co was approved of July-2018 to April 2020. grow in size.” Central Huijin’s parent China Invest- ereign wealth fund, currently owns are mulling granting brokerage licenc- last month to take full ownership of The ECC was also briefed While it’s too soon to tell the fate of ment Corp didn’t immediately respond 37.37% of CSC Financial, while Citic es initially to some of the nation’s big- its China futures unit, while Morgan that the issue of RLNG revenue the top brokers, smaller fi rms are com- to requests seeking comment. Securities holds 6% in the fi rm. gest lenders, including ICBC and Chi- Stanley and Goldman were cleared to shortfall had arisen mainly be- ing under greater pressure to be win- Citic Securities said in a fi ling late Citic Securities has led a series of na Construction Bank Corp, on a pilot take majority control of their onshore cause of the price diff erential nowed out, they said. Thursday that it wasn’t aware of any acquisitions including a $2bn deal to basis, people familiar with the matter securities ventures in March. in domestic gas as 91% of the Taken together, the 131 Chinese bro- related information regarding press snap up smaller rival Guangzhou Se- said earlier this week. With competition heating up, some domestic gas consumers had kers have combined assets equivalent speculation about the possible acqui- curities Co last year. Still, the Beijing- Meanwhile, the opening up of the securities fi rms are raising capital to been paying an average monthly to one Goldman Sachs and less than sition of shares of CSC Financial by based firm generated 12.2bn yuan in nation’s $45tn fi nancial industry this expand traditional brokerage services bill of Rs121, which was many a third of Industrial & Commercial Citic Group. In a separate fi ling, CSC profit last year, a quarter of Gold- year to full foreign ownership will by building out a broader menu of in- times less than the price of im- Bank of China Ltd, the nation’s biggest Financial said it hasn’t convened any man’s. likely provide a fresh jolt to the sector, vestment banking services that require ported RLNG supplied to do- lender. They are also far from being meeting of the Party Committee to The China Securities Regulatory forcing consolidation and winnowing more capital, such as market making mestic consumers in the winter full-service investment banks, count- consider and approve the merger plan Commission, led by former ICBC out weak players. and margin fi nancing. months. Pakistan urged to make power and gas tariff adjustments for $6bn IMF bailout

Internews proved, there are still some pending is- But after the pandemic began, all eco- tural reforms for cash bleeding power Islamabad sues, such as tariff adjustments of gas nomic fundamentals changed and the sector, autonomy to the central bank, and power, strengthening of regulatory IMF provided $1.4bn facility under a strengthening of regulatory regimes and regime, autonomy of the State Bank of rapid fi nancing instrument. fi scal consolidations at sustainable lev- ven after approval of the budget Pakistan, fi scal consolidation and way The period of the third review was els,” said offi cial sources. for 2020-21 from the parliament, forward for achieving these on a sus- January to March 2020. When IMF’s resident chief in Pakistan Ean IMF-sponsored programme of tainable basis,” top offi cial sources con- The fourth review period was April- Teresa Daban Sanchez was contacted, Workers stand behind boxes waiting to be loaded onto outbound $6bn for Pakistan hangs in the balance, fi rmed. June 2020. she said, “The IMF team and Pakistani trucks at the Amazon Inc fulfillment centre in Bengaluru. The Indian for which Islamabad will have to comply One of the options for reviving the Pakistani authorities subsequently authorities remain closely engaged with government is working on the latest e-commerce policy for at least with tariff adjustments on electricity and IMF process is skipping the third review made last ditch eff orts to convince the the view to bringing the second review two years amid calls to reduce the dominance of global tech giants gas as well as undertake reforms to reach and clubbing the second and fourth re- IMF for clubbing second and third re- of the EFF (Extended Fund Facility) to a like Amazon.com, Alphabet’s Google and Facebook. a staff level agreement on the completion views under the IMF programme. views and submitting its plans before the positive conclusion. of the second review. The second review period was at end Fund’s Executive Board within this on- There is no interaction envisaged with The IMF programme is stalled at the December 2019, for which the IMF team going month. the press during the discussions,” she moment and diff erent options are under had visited Islamabad in February 2020, “It seems that the IMF is so far un- added. Pakistani side offi cials were also consideration to revive it and put it on just ahead of outbreak of Covid-19, and willing to club second and third reviews contacted and it was found that no one Amazon, Google face track. a staff level agreement had also been without Pakistan undertaking tariff ad- was willing to talk about matters on the tough rules in India’s “Although the budget has been ap- reached. justments and moving towards struc- record. e-commerce draft India needs policy certainty to woo investors: US group

Bloomberg through video conference. “Board rooms Policy flip-flops in the e-commerce Bloomberg Promotion of Industry & Internal New Delhi are saying that if they are getting into a sector and cancellation of contracts by Bengaluru Trade. The proposed rules would geography they want to make sure that southern state of Andhra Pradesh last year also mandate government ac- consistency on policy side, and transpar- following change in local government sent cess to online companies’ source India needs predictable tax and investment ency is there.” wrong message to investors. ndia’s latest e-commerce pol- codes and algorithms, which the policies to emerge as an alternative for Prime Minister Narendra Modi has been Rules have been tightened for e- icy draft includes steps that ministry says would help ensure businesses moving out of China due to the separately looking to lure businesses as commerce sector which is dominated by Icould help local startups and against “digitally induced biases” trade war, the head of a group representing countries from the US to the UK are consid- Walmart Inc and Amazon.com Inc. impose government oversight on by competitors. The draft also American companies said. ering diversifying supply chains away from India jumped 14 places to 63 in the how companies handle data. talks of ascertaining whether e- The group, which counts Lockheed China amid trade disruptions caused by World Bank’s rankings on ease of doing The government has been commerce businesses have “ex- Martin Corp, Boeing Co, and Caterpillar Inc the coronavirus pandemic. business but continues to be overlooked in working on the policy for at least plainable AI,” referring to the use among others as its members, has been While Beijing’s moves to exert more favour of manufacturing powerhouses like two years amid calls to reduce the of artifi cial intelligence. pushing for clearance of Chinese-origin control over Hong Kong and its handling of Vietnam despite its 1.3bn-people consumer dominance of global tech giants India’s roaring digital economy, goods held up at Indian ports by customs its minority Muslim Uighurs push countries market, the biggest in Asia after China. like Amazon.com Inc, Alphabet with half a bn users and growing, authorities, who have increased scrutiny of to consider trade measures, companies are Even at the peak of the US-China trade Inc’s Google and Facebook Inc. is witnessing pitched battles in imports from China after a deadly border unlikely to abandon the Chinese market standoff , a Nomura Holdings Inc report said Under rules laid out in a 15- everything from online retail and clash between the two nations last month. completely. nations including Vietnam, Malaysia and page draft seen by Bloomberg, content streaming to messag- As relations between the neighbours “They will keep on manufacturing in Thailand were among the clear winners of the government would appoint ing and digital payments. Global worsened, New Delhi banned 59 Chinese China for China,” Aghi said. “They may look the trade tensions while India was among an e-commerce regulator to en- corporations lead in each of these apps, including TikTok which had over at China plus one strategy.” those least likely to gain from import sure the industry is competitive segments, while local startups Modi: Looking to lure businesses as 200mn of Indian users. While an increased alignment with the substitution. with broad access to informa- have sought help from a sympa- countries from the US to the UK are “It is predictability that is critical,” Muke- US opens up opportunities for India, doing “It is important to understand that they tion resources. The policy draft thetic government that recently considering diversifying supply chains sh Aghi, president of the US India Strategic business in the country continues to be will not come to India just because it is a was prepared by the Ministry banned dozens of apps backed by away from China. Partnership Forum, said in an interview tough for foreign investors. potential market,” Aghi said. of Commerce’s Department for Chinese technology giants. Gulf Times 10 Sunday, July 5, 2020 BUSINESS

he Qatar Stock Exchange gest contributor to the overall trad- QSE Index and Volume (QSE) Index increased by 26.9 ing value, accounting for 29.3% of Tpoints, or 0.29%, during the the total trading value. ERES was week, to close at 9,211.89. Market the top value traded stock during capitalisation increased by 1.85% the week with total traded value of to reach QR534.6bn compared to QR485.5mn. QR524.9bn at the end of the previ- Trading volume increased by ous week. Of the 47 listed compa- 37.2% to reach 1.7bn shares versus nies, 28 companies ended the week 1.3bn shares in the prior week. The higher, while 19 fell. Ezdan Holding number of transactions rose by Group (ERES) was the best perform- 10.8% to reach 45,571 transactions Weekly Market Report ing stock for the week, with a gain versus 41,137 transactions in the pri- of 32.7%. On the other hand, Al Kha- or week. The real estate sector led leej Takaful Insurance (AKHI) was the trading volume, accounting for the worst performing stock with a 40.2%, followed by the banks and decline of 6.9%. financial services sector compris- Source: Qatar Exchange (QE) Masraf Al Rayan (MARK), Ezdan ing 20.4% of the overall trading vol- Holding Group (ERES) and Milaha ume. ERES was the top volume trad- (QNNS) were the primary contribu- ed stock during the week with total Weekly Index Performance tors to the weekly index gain. MARK traded volume of 449.5mn shares. was the biggest contributor to the Foreign institutions ended the index’s weekly gain, adding 29.2 week with a change in direction; Source: Qatar Exchange (QE) points to the index. ERES was the they net sold QR65.3mn versus second biggest contributor to the net buying of QR0.7mn in the mentioned gain, piling 19.9 points prior week. Qatari institutions re- on the index. Moreover, QNNS add- mained positive with net buying ed 17.9 points to the index. of QR153.8mn versus net buying of Trading value during the week in- QR24mn in the week before. For- creased by 49.5% to reach QR2.6bn eign retail investors remained neg- versus QR1.7bn in the prior week. ative with net selling of QR9.8mn The banks and financial services versus net selling of QR0.8mn in sector led the trading value dur- the prior week. Qatari retail inves- ing the week, accounting for 33.6% tors remained bearish with net sell- of the total trading value. The real ing of QR78.7mn versus net selling Source: Bloomberg estate sector was the second big- of QR24.1mn the week before. Source: Qatar Exchange (QE)

DISCLAIMER

This report expresses the views and opinions of QNB Financial Services Co WLL One Person Company (“QNBFS”) at a given time only. It is not an off er, promotion or recommendation to buy or sell securities or other investments, nor is it intended to constitute legal, tax, accounting, or financial advice. We therefore strongly advise potential investors to seek independent professional advice before making any investment decision. Although the information in this report has been obtained from sources that QNBFS believes to be reliable, we have not independently verified such information and it may not be accurate or complete. Gulf Times and QNBFS hereby disclaim any responsibility or any direct or indirect claim resulting from using this report.

Qatar Stock Exchange Top Five Gainers Top Five Decliners

Most Active Shares by Value (QR Million) Most Active Shares by Volume (Million)

Investor Trading Percentage to Total Value Traded Net Traded Value by Nationality (QR Million)

Technical analysis of the QSE index

he QSE index closed flattish, gaining closer to the lower side of the corrective 0.29% from the week before and fin- short-term uptrend. It is imperative for the Tished at the 9,211.89 level. The index general index to remain above the 9,000 to remains below its 200-day and is getting hold its ground.

Definitions of key terms used in technical analysis

andlestick chart – A candlestick chart is a price chart that displays the high, low, open, and close for a security. The ‘body’ of the chart is portion between the open Cand close price, while the high and low intraday movements form the ‘shadow’. The candlestick may represent any time frame. We use a one-day candlestick chart (every candlestick represents one trading day) in our analysis. Doji candlestick pattern – A Doji candlestick is formed when a security’s open and close are practically equal. The pattern indicates indecisiveness, and based on pre- ceding price actions and future confirmation, may indicate a bullish or bearish trend reversal. Gulf Times Sunday, July 5, 2020 11 BUSINESS

Old Mutual’s share price is focus in Zimbabwe’s currency war

Bloomberg Stock Exchange and stopped most mo- tion,” said John Robertson, an inde- into Old Mutual, using it as a proxy to Exchange, people familiar with the “There has not been any offi cial Johannesburg bile-banking transactions. Read more pendent economist based in Harare. the US dollar because of its off shore matter said, asking not to be identi- communication from authorities in on how security forces ordered the clo- “It’s what has created these distor- listings, pushing the Zimbabwe-listed fi ed because the talks are private. The Zimbabwe to Old Mutual,” the Johan- sure of the stock market tions.” The OMIR also feeds into the stock up 90% since the beginning of OMIR was the focus of various meet- nesburg-based company said in an he share price of one of Africa’s The OMIR is one of multiple ex- black-market Zimbabwe dollar rate, May. The shares in Johannesburg and ings on Monday between members of e-mail. “We have asked our local sub- oldest insurers is taking centre change rates Zimbabweans use daily to which the nation’s bourse uses, along London were little changed, resulting Zimbabwe’s stockbrokers’ association, sidiary to reach out to our stakeholders Tstage in Zimbabwe’s battle to navigate the nation’s myriad economic with the offi cial rate, to determine the in the implied rate doubling to 122 as the the stock exchange, the Securities and in Zimbabwe to try and understand the bring order to its chaotic foreign-ex- challenges, including annual infl ation value of stock prices. gap between the securities widened. Exchange Commission and the Treas- circumstances around ZSE closureand change system. of almost 800%. Old Mutual, founded in Cape Town Zimbabwe’s benchmark industrial ury, the people said. other related matters.” In the latest in a series of attempts to A perennial shortage of cash means in 1845, is not involved in determin- index has risen more than seven-fold Measures being considered include Discussions over the halting of trade stabilise its currency, the government anyone who has physical banknotes is ing the rate. Market participants take this year, reaching a record on June 24, suspending Old Mutual’s shares from on the stock exchange are ongoing and wants to eradicate the Old Mutual Im- able to negotiate exchange rates with the company’s share prices in South and giving the overall bourse a market the Harare-based bourse, having the the outcome is still uncertain, SEC plied Rate. The gauge, used by domes- brokers who pay the funds onto mo- Africa, the UK and Zimbabwe, convert value of about 229bn Zimbabwean dol- securities traded only in dollars, or chief executive offi cer Tafadzawa Chi- tic companies to determine the future bile-money platforms. The brokers each of them into the US dollar, which lars ($3.6bn). moving the listing to the Victoria Falls namo said by phone. Zimbabwe Stock cost of goods and services, calculates a can then sell the hard cash at an even should typically trade near par. None of the stocks in the 57-member Stock Exchange, a market that will Exchange CEO Justin Bgoni said that potential forward rate for the Zimba- higher rate. The fi nance minister, however, in index have declined this year as Zim- only trade in foreign currency once it the bourse would wait for guidance bwe dollar by measuring the diff erence That’s resulted in a widening gap March restricted trading in the shares babweans seek a haven from runaway opens later this year, the people said. from regulators. between Old Mutual Ltd’s share prices between the offi cial rate of 63.7 per of Old Mutual and two other compa- price increases and the weaker curren- Nick Mangwana, the government’s In comments at a briefi ng after a in Johannesburg, London and Harare. US dollar, and the amount at which it nies by making the stocks no longer cy, which has slumped to 63.7442 per spokesman, referred queries to the fi - cabinet meeting on Tuesday, the fi - The indicator is among many “con- trades on the streets of Harare, which fungible, or regarded as being equal US dollar after a 25:1 peg put in place nance ministry. Several calls and text nance minister said that stockbrokers trived phantom exchange rates” in use is now at 100. in value to those traded on other ex- since March was abandoned. messages sent to Finance Minister should assure their clients that their that “conspire to defeat fi scal policy,” “People have relied on making mon- changes, in a bid to prevent outfl ows Authorities now want to eliminate Mthuli Ncube and central bank Gover- investments in the stock market are the government said in a June 26 edict ey from buying and selling Zimbabwe caused by the dual listings. the OMIR before allowing any trad- nor John Mangudya seeking comment safe and that the bourse will reopen that halted trading on the Zimbabwe dollars, and not from any real produc- Despite the move, investors poured ing to resume on the Zimbabwe Stock weren’t answered. once investigations are complete.

Citi’s Brazil CEO works in near-empty tower Clouds may be parting handling loan surge

Bloomberg economy will be fully reopened by Sao Paulo August, “which today seems highly for dividend investors improbable.” With credit risk rising in Brazil, Citigroup Inc’s Sao Paulo building Citigroup shrank its proprietary- sits nearly empty these days but trading book in the country and for the 17th-floor off ice of Marcelo boosted its provisions for corporate- Marangon, who still makes the trek loan losses there, a move that every day to oversee what’s become contributed to a 3% reduction in on US stock market a surge in lending sparked by the first-quarter earnings from the Covid-19 pandemic. nation, Marangon said. But profit Reuters “It’s important for people to see margins expanded as the volume of New York me here,” Marangon, Citigroup’s credit, derivatives and trading for chief executive off icer for Brazil, clients increased and costs remained said in a phone interview, referring under control, he said. S companies are cutting their to video conferences he conducts. Citigroup didn’t reduce its workforce dividends less than investors He said working in the off ice helps in Brazil and has no plans to do so in Uanticipated, providing a poten- him “better communicate globally, the second half of the year. It’s yet tial boost to a stock market rally that manage the crisis, off er comfort to decide when it will start bringing has clashed with concerns over a recent to employees and understand the employees back to the off ice. surge in coronavirus infections. needs of our clients.” Marangon said the bank won’t S&P 500 companies are likely to see About 98% of Citigroup’s 2,000 rely solely on guidance from local an aggregate 2% decline in 2020 divi- employees in Brazil are working off icials, making its decision on dend payments, compared with analyst from home as the pandemic races criteria such as “the flattening projections earlier this year of around across the country, which is suff ering of the curve for new infections, 10%, according to S&P Dow Jones. the world’s second-highest case number of deaths, the availability That’s good news for income-seek- count, behind the US. The economic of hospital beds, among others.” A ing investors at a time when a series of fallout has been devastating, with crisis committee meets every day to rapid interest rate cuts by the Federal the bank’s economists predicting a discuss those matters, he said. Reserve has taken US Treasury yields 6.5% contraction this year. Citigroup CEO Michael Corbat said to near zero, sending market partici- In response, many large Brazilian in May that, unlike some of his pants further afi eld in search of steady companies have been trying competitors, he’s not considering payouts. to obtain “liquidity cushions,” the option of letting workers stay “We saw a devastating amount of Marangon said. Citigroup’s local loan at home permanently after the dividend cuts, but the second half of book jumped 30% in March from pandemic ends. The New York-based the year does look a bit better,” S&P three months earlier, and grew an bank has about 200,000 employees Dow Jones analyst Howard Silverblatt additional 5% in April, he said. around the world. said. Marangon’s goal as Brazil country Citigroup sold its retail division in US fi nancial markets are closed on off icer is to lead the unit and Brazil to Itau Unibanco Holding SA Friday for the July 4th holiday. On Citi’s strategy in Brazil, and in 2017 for an announced value of Monday, data fi rm IHS Markit reports Traders work on the floor of the New York Stock Exchange (file). US firms are cutting their dividends less than investors anticipated, “serve as a trusted partner for 710mn reais. its surveys of US business activity, providing a potential boost to a stock market rally that has clashed with concerns over a recent surge in coronavirus infections. large multinational corporations, The private-banking business, which while Walgreens Boots Alliance Inc re- public sector entities, high-net- wasn’t included in the deal, was ports quarterly results on Thursday and to historic lows has raised the allure of also been outperforming in the epi- Adding to uncertainty about future worth individuals and investment restructured to eliminate services US initial jobless claims are also due stock dividends, which are generally demic, including Johnson & Johnson, dividends, the Fed last week capped managers,” he said in 2017. such as local bank accounts and out that day. paid four times a year. Campbell Soup, General Mills, and big-bank dividend payments and Citigroup approved a credit line of credit cards. Citigroup also realigned S&P 500 companies slashed or sus- The gap between the S&P 500 divi- retailers Costco Wholesale Corp and barred share repurchases until at least as much as 750mn reais ($140mn) its strategy for the business to focus pended over $40bn in dividends in the dend yield and the 10-year Treas- Walmart. the fourth quarter after fi nding lenders to help rescue the nation’s power on higher-net-worth clients with second quarter, the deepest quarterly ury yield in March hit a high not seen Johnson & Johnson, which is among faced signifi cant capital losses when sector, part of a syndicated loan at least $10mn invested with the drop since 2009, according to S&P Dow since at least the 1970s, according to companies rushing to develop a coro- tested against an economic slump being organised by BNDES, the company. Jones. The cuts tapered off in the latter Datastream data, which does not go navirus vaccine, raised its dividend caused by the coronavirus pandemic. government development bank, The bank hired Itau’s wealth- part of the quarter as the US economy back further. Currently, the S&P 500’s in April. In June, Kroger and Target, Wells Fargo shares have fallen about 1% according to Marangon. management director, Eduardo began to rebound, fuelled by Fed stim- dividend is nearly 2%, compared with which have been seeing more business since late Monday after the bank warned The economic contraction and a Estefan Ventura, to lead its Brazil ulus and easing lockdowns across the the benchmark 10-year US Treasury’s with people staying at home, upped it would reduce its dividend as a result of government deficit estimated at 11% private-banking business, starting nation. 0.67% yield. their dividends. the Fed’s annual bank stress tests. Still, of gross domestic product could last month. The previous head, Cesar “The hope is that we have turned a Jake Dollarhide, chief executive of Over 40% of the United States has only three S&P 500 companies decreased end up being even worse, Marangon Chicayban, was named to oversee corner, but that is going to depend on Longbow Asset Management in Tulsa, now reversed or placed reopenings on or suspended their dividend payments said, considering that the figures Citi Private Bank for New York City the reopening of the economy,” Silver- Oklahoma, has been buying shares of hold, analysts at Goldman Sachs said in in June, while six companies upped their are based on predictions that the and Long Island. blatt said. The fall in Treasury yields dividend-paying companies that have a recent note. dividends, according to S&P Dow Jones.

Bloomberg QuickTake Q&A How German fintech darling Wirecard fell from grace

By Stefan Nicola and Sarah Syed aggressive acquisition of at least 18 Wirecard Bank, is not included in the a former financial-crime enforcer at Berlin/London companies, Wirecard outgrew Munich’s insolvency proceedings as it falls under the US Treasury, was hired to clean start-upscene to report 2.1bn euros the jurisdiction of German financial house. He told employees to expect a ($2.4bn) in revenue in 2018. That year, markets regulator BaFin, which has major restructuring that could include Until June, German payments company Wirecard replaced Commerzbank appointed a special representative to selling assets to salvage the company, Wirecard AG was a hot growth story AG in Germany’s 30-company DAX oversee it. according to people familiar with the that had shaken off allegations of stock index, alongside titans such 4. This was not a complete situation. accounting fraud. Then came the as Volkswagen AG, Siemens AG, and surprise then? 6. How much of a blow is this for admission that about $2bn of company Deutsche Bank AG. Germany’s establishment? funds had gone missing. The scandal 2. Why has Wirecard been Not really. The reports by the Financial led to the resignation and arrest of controversial? Times in 2019 raised questions about The whole aff air has turned into an the company’s former chief executive accounting practices at Wirecard’s units embarrassment for Germany and off icer Markus Braun, with the company The company got its start two in Singapore and other Asian countries. threatens to ensnare bullish analysts, filing for court protection from decades ago as a provider of financial Wirecard denied claims of irregularities lax auditors and inattentive watchdogs. creditors. More executives, banking services to the gambling and adult and called the reports baseless. Still, Concerns about Wirecard have taken off icials, auditors and even regulators entertainment industries, operating in the stock slid and investors placed so on increased urgency since it joined may become ensnared as the broad murky waters. While it’s now focused many bets that it would tumble further the DAX, an index that’s tracked by impact of Wirecard’s potential demise on more mainstream clients, Wirecard’s that BaFin stepped in to temporarily everyone from large pension funds rattles Germany’s financial industry. business model remains complex and ban short selling of Wirecard shares – a to private investors. BaFin has come 1. What does Wirecard do? it has had to defend its reputation step it had never taken for an individual under fire for its ban on short sales in repeatedly. 3. So what actually had led the company for more than a company. response to the FT allegations. The Wirecard is a developer of software The shares dropped after claims were happened? decade, resigned and Wirecard pulled 5. Who are the key players? agency’s President Felix Hufeld has and systems for online payments made in 2008 about accounting its financial results for fiscal 2019 and apologised, saying that BaFin was and fraud protection used across the irregularities and again in 2016 amid On June 18, auditor Ernst & Young the first quarter of 2020. Moody’s Braun turned himself in to Munich among institutions responsible for the internet, processing a customer’s fraud allegations, both of which declined to greenlight Wirecard’s Investors Service cut Wirecard’s credit police on June 22 as part of a probe into “complete disaster” because it didn’t card details and ensuring the funds Wirecard rebutted. But the critics long-delayed 2019 financial report, ratings six levels then withdrew them the company’s accounting practices. do a good enough job supervising. to cover a purchase are transferred never completely went away, with the sending its shares into a tailspin. The altogether. The company began talks Earlier that day, Wirecard fired Chief Economy Minister Peter Altmaier to the merchant. Its technology Financial Times publishing a series crisis deepened a couple of days with lenders and hired investment Operating Off icer Jan Marsalek, a warned that the revelations risked helps handle smartphone payment of articles in 2019 that accused the later when Wirecard admitted that bank Houlihan Lokey to come up with key strategist in the company and tainting the country’s reputation as a transactions, issue credit cards and company of improper accounting in 1.9bn euros it had reported as assets a financing strategy to keep operations a close ally of Braun, without giving reliable place of business and should be detect suspicious activity. Through the Asia and the Middle East. probably never existed. Braun, who going. Wirecard’s banking arm, a reason. Interim CEO James Freis, thoroughly investigated. Sunday, July 5, 2020 GULF TIMES BUSINESS

WEEKLY ENERGY MARKET REVIEW Oil falls as growing virus cases stoke fuel demand worries www.abhafoundation.org bankruptcy filing of US shale pioneer take more cargoes, in particular during Chesapeake Energy also supported the monsoon season. Abu Dhabi prices by raising expectations National Oil Co (ADNOC), Brunei’s LNG Oil production will decline. and Nigeria LNG all off ered cargos Oil fell below $43 a barrel on Friday for loading in August. In terms of buy as a resurgence of coronavirus cases Gas tenders, Pakistan LNG Ltd issued a new raised concern that fuel demand Asian spot LNG prices were stable last tender seeking a cargo for delivery in growth could stall, although crude week, with demand still sluggish in an September, after issuing a tender for was still headed for a weekly gain oversupplied market. The average LNG August delivery the previous week. on lower supply and wider signs of price for August delivery into northeast In Europe, June LNG deliveries economic recovery. The US reported Asia was estimated at around $2.20 per dropped by 32% from volumes in more than 55,000 new coronavirus million British thermal units (mmBtu), May and by 5.6% from June 2019, cases on Thursday, a new daily global the same level as the previous week. Refinitiv data showed, as gas stocks in record for the pandemic. The rise in Some Chinese buyers were on the Europe move close to full capacity. Gas cases suggested US jobs growth, which market and there could be gas demand storage sites in Europe are on average jumped in June, could suff er a setback. for air conditioning in Japan due to just over 80% full, according to Gas amid greater demand for cooling as the spread of the coronavirus have „ This article was supplied by Both benchmarks rose more than hot weather, but overall, buying was Infrastructure Europe data. the weather turned hotter. The August kept many businesses shut, cutting US the Abdullah bin Hamad 2% on Thursday, buoyed by strong subdued. In the US, natural gas futures rose last gas futures contract was up over LNG exports by half since the start of Al-Attiyah International Foundation US June jobs figures and a drop in Indian buyers were quiet as there is week, after a federal report showed a 17% on the week, settling at $1.75 per the year, with stockpiles filling fast and for Energy and Sustainable US crude inventories. US trade was not much capacity in Indian ports to smaller-than-expected storage build mmBtu. Prolonged lockdowns to curb expected to reach a record levels. Development. thinned by the Independence Day holiday. Brent also saw a weekly gain of 4%. Signs of economic recovery and a drop in supply after a record supply cut by Opec and allies have helped Brent more than double from a 21-year low below $16 reached in April. Opec oil production fell to its lowest in decades in June and Russian production has dropped to near its Opec+ target. Russian oil and gas condensate production fell to 9.32mn barrels per day (bpd) from 9.39mn bpd in May, nearing its agreed target. Moscow has pledged to reduce its output by around 2.5mn bpd to 8.5mn bpd to support oil prices. The deal does not include output of gas condensate, a light oil. Boosting recovery hopes, a private survey showed on Friday that China’s services sector expanded at the fastest pace in over a decade in June. The survey showed that the easing of coronavirus-related lockdown measures has revived consumer demand in China, although companies continued to shed jobs. The

GECF joins debate Ukrainian food products on natural gas role hosted by UNECE occupying bigger share he Gas Exporting Coun- despite the current market en- tries Forum (GECF) joined vironment due to the Covid-19 Tother stakeholders from pandemic, the LNG industry is around the world on a discus- better placed than ever because sion on the role of natural gas in of its massive contribution to de- a sustainably-driven future, at carbonising the world, as well as an event organised by the United its long-term benefi ts to the so- of Qatari market, says Nations Economic Commission ciety and the environment. for Europe (UNECE). Focusing on the global policy The online dialogue, “99 orientations that might aff ect minutes of LNG – trends, devel- the future of the LNG market in opments, and innovative end- particular and gas market in gen- uses”, examined the need for a eral, Moghaddam said, “While business council executive “more vibrant” natural gas in- coal is still considered a critical dustry, more so than ever, due to source for energy security and By Peter Alagos is the 2019 total trade volume, the long-term benefi ts it brings aff ordability, particularly in Asia, Business Reporter which stood at “$90mn.” She to the society. coal development plans are being further said the fi gure is “the The session was organised by revised downward compared to largest” since the establishment the UNECE’s Group of Experts previous years amidst low elec- resent global challenges of diplomatic relations between on Gas and featured speakers tricity demand and rising avail- have created export op- the two countries. from the GECF and Interna- ability of alternative sources. P portunities for major “The recent cascade of posi- tional Gas Union in addition to There is, therefore, a real oppor- players in Ukraine’s agro-in- tive shifts in Qatar-Ukraine several UN Member States and tunity for coal to gas switching. dustrial sector whose prod- relations, as well as an oppor- leading gas companies from “Further, gas and LNG can ucts have taken a wide pres- tunity to reopen fl ights sounds Croatia, Germany, Indonesia, benefi t from the climate poli- ence in the Qatari market, an very inspiring for the QUBF the Netherlands, Nigeria, Nor- cies being pushed out now due to official of the Qatar-Ukraine team and our partners because way, Poland, Russia, Spain, and their competitiveness and align- Business Forum (QUBF) told it will most surely expedite our the United States. ment with UN’s Sustainable De- Gulf Times. eff orts in expanding both coun- The GECF was represented by velopment Goals (SDGs).” “Based on our food market tries’ economic horizons,” Re- Dr Hussein Moghaddam, senior The GECF is a regular con- expert’s review, this tumul- vina noted. energy forecast analyst at the tributor to the discussions of tuous time presented wider To achieve this target, Re- Secretariat, who presented the the UNECE Group of Experts opportunities for one of the vina said QUBF is work- latest data on Covid-19 impact on Gas. leading Ukrainian agro-in- ing towards maintaining an on LNG markets and outlined Its previous participation dustrial holding, which suc- e-dialogue with Ukrain- long-term prospects for this came at the 6th UNECE Ses- cessfully supplies its products, ian companies considered as fuel. He also spoke in relation to sion of Group of Experts on Gas, specifically eggs, to the Qatari potential delegates for the one of the key messages of the which was held in Geneva in market under the Avangardco ‘Qatar-Ukraine Trade and In- event, which postulated that March 2019. trademark, and occupying up vestment Forum’, which was to 40% of the local market postponed until October. share,” said QUBF founder and Similarly, she said QUBF is chairperson Dr Olga Revina. outlining new products and Earlier, Revina said QUBF projects to be included in its held strategic discussions with business portfolio for further in- UkraineInvest to outline the troduction on both markets. crucial segments for Qatar- The council is also exploring Ukraine investment potential. QUBF founder and chairperson Dr Olga Revina. opportunities to establish joint “These and other factors make collaboration among education- Ukrainian agribusiness an at- Tsivkach, chair of the board, pand their businesses in Ukraine. ment of capital, as well as visa- al institutions while facilitating tractive investment target. Our UkraineInvest. Ukraine’s main exports to free regime between Qatar and with Ambers Group Ukraine and infrastructure, energy, chemi- UkraineInvest is the govern- Qatar are agri-food and met- Ukraine.” Katara Centre for Amber inside cal, pharmaceutical, and other ment’s investment promotion als, said Revina, who noted that According to Dr Revina, a Katara – the Cultural Village on The Gas Exporting Countries Forum joined other stakeholders strategic sectors are likewise offi ce created in 2016 to attract Ukrainian exporters benefi tted “very signifi cant” overall indi- an exclusive ‘Seven Dimensions’ from around the world on a discussion on the role of natural gas open for Qatari investment and foreign direct investment and from “Qatar’s liberal tax sys- cator of robust bilateral dynam- Ukrainian ambers exhibition in a sustainably-driven future, at an event organised by the United trade opportunities,” said Sergiy assist existing investors to ex- tem, 5% import duty, free move- ics between Qatar and Ukraine planned for this autumn. Nations Economic Commission for Europe (UNECE). Deutsche Bank weighing acquisition of disgraced Wirecard Bank

Bloomberg Options include taking on pieces of Wirecard. Deutsche Bank may also be hit if avalanche of lawsuits and former chief ex- assistance should become necessary.” ments via its systems and lucrative con- Frankfurt Wirecard Bank or the unit in its entirety, Wirecard Bank were to file for insolvency. ecutive off icer Markus Braun was arrested, Insolvency administrator Michael Jaff e tracts with stores and online merchants. people familiar with the matter said, add- Germany’s deposit insurance scheme for though he is now out on bail. said on Wednesday that the assets he’s In addition to the earlier talks on a ing that the lender is still debating other private banks would have to make deposi- While Wirecard Bank isn’t part of the trying to sell are attracting interest from possible tie-up, the two financial firms had Deutsche Bank AG is weighing the acquisi- ways to help Wirecard Bank and hasn’t tors whole if the lender didn’t have enough bankruptcy proceedings, the parent numerous investors. others links. Deutsche Bank is part of a tion of all or part of disgraced Wirecard made a final decision. funds of its own to repay them. That could ceded control of funds last week after He didn’t say whether he intends to sell lending group of 15 banks that together AG’s bank, potentially throwing the Deutsche Bank had informal tie-up talks lead to higher contributions from the the financial regulator stepped in to Wirecard Bank as well, though said the are owed about 1.6bn euros, Bloomberg business a lifeline after one of the biggest with the scandal-hit fintech last Spring, scheme members, of which Deutsche Bank prevent the money from being deployed lender remains solvent. has reported. CEO Christian Sewing has corporate scandals in recent years. though it quickly broke off the preliminary is the biggest and highest paying. elsewhere. To fuel its growth, Wirecard had been been trying to shift the lender away from The Frankfurt-based lender is in touch discussions. Wirecard Bank – which sat at Wirecard filed for insolvency last “We are currently reviewing the pos- paying depositors attractive interest at a its reliance on trading income toward with regulator BaFin, Wirecard Bank’s the heart of the firm – could be valuable week after saying that almost 2bn euros sibility of providing Wirecard Bank AG with time when traditional banks increasingly a focus on processing payments for management board and administrators on to a potential acquirer because of its ($2.25bn) it previously reported as cash financial support,” Deutsche Bank said. started to pass on negative rates. companies, and he’s made the division possible further steps to help Wirecard’s relationship with credit card companies probably never existed, throwing the fu- “We are in principle prepared to provide This year, it began off ering a 0.75% responsible for the business – known as finance unit, a Deutsche Bank spokesman Visa Inc, Mastercard Inc and JCB Interna- ture of its banking and others businesses this support in the context of a con- interest rate via its Boon app, betting that Corporate Bank – the centerpiece of his said by e-mail, without elaborating. tional, which are also key to other parts of into doubt. The company faces a potential tinuation of business operations, if such more deposits will translate into more pay- large restructuring plan.