SLOWER PACE | Page 4 Fed shift ing to more cautious rate path

Sunday, December 9, 2018 Rabia II 2, 1440 AH OPEN FORUM FOR EMPLOYEES : Page 20 Qatargas holds 1st GULF TIMES post-integration BUSINESS Town Hall session

Industry development off ers many ‘opportunities to Qataris, residents’

By Peter Alagos continued thrust on off ering qual- training programme as an incubator Business Reporter ity education to youngsters has for the next generation of business tremendously helped in retaining leaders and decision-makers in Qatari talent to the land of oppor- Qatar’s emerging fi nancial services atar is strategically invest- tunities. The fact that Qatari econ- industry. ing “massive resources” to omy is witnessing boost from all the Moreover, the Qatar Institute for Qdevelop all its industries as a quarters has also substantiated this Public Finance (QIPF) is a Mena- key source of “opportunities esca- very situation,” he continued. wide initiative aimed at actively lation” for all its citizens and resi- Al-Horr stressed that “‘brain tackling knowledge gaps and shar- dents as the country strives to build drain’ is not an issue in Qatar.” Nev- ing expertise and best practice in a knowledge-based economy, Qa- ertheless, the QFBA has designed the public fi nance fi eld, al-Horr tar Finance and Business Academy its curriculum in such a way that it noted. CEO Dr Khalid al-Horr has said. prepares the youth to take right de- “Expanding our reach to include “Qatar recognises that a highly- cisions and paves the way for their higher education platforms, we skilled human capital is the foun- growth in Qatar specifi cally, he have joined forces with Northum- dation by which steady growth can stressed. bria University Newcastle to off er be attained. In order to support this “Our various programmes are Qataris and residents of Qatar the growth, we have been making ef- designed around the critical issues unique opportunity of enrolling in forts to raise the fi nancial services facing the business environment specialised international business industry standards and help organ- today and into the future,” al-Horr degrees from Northumbria. isations and professionals achieve emphasised. “Bringing Northumbria Univer- their learning and business objec- Al-Horr pointed out that the sity on board, alongside our spe- tives, thus aligned with Qatar 2030 QFBA’s programmes address the cialised programmes, provide us vision,” al-Horr told Gulf Times. challenges and opportunities for a great impetus to strengthen the “While there is no denying the professionals in the fi nancial serv- fi nancial development and educa- fact that immigration of highly- ices industry. Additionally, QFBA tion landscape of Qatar and make trained or qualifi ed people has has partnered with the Qatar Fi- youngsters future-ready to invest become a growing global concern nancial Centre Authority to launch in a better future for Qatar,” al-Horr today, but the Qatari government’s ‘Kawader’ – the academy’s unique added. Al-Horr: Focus on highly-skilled human capital. Gulf Times 2 Sunday, December 9, 2018 BUSINESS QNB Group strategy conference dwells on expansion plans

NB Group has recently held its ‘Strategy Confer- ence’ in Qatar with the attendance of its execu- Qtive management, general managers, and CEOs from across the group’s international network. During the two-day event, the attendees discussed a number of major topics, including the group’s busi- ness plans, remarkable performance, and the progress achieved throughout the year. Additionally, the conference also discoursed strategies to be implemented across the group’s international net- work to increase and sustain growth to achieve its vision of becoming a leading bank in the Middle East, Africa, and South East Asia by 2020. The conference showcased the group’s key strategic priorities, as well as the identifi cation of potential op- portunities available for QNB across its growing net- work. QNB Group is present through its subsidiaries and associate companies in 31 countries across three conti- nents providing a comprehensive range of products and services. QNB Group staff exceeds 28,000 operating through 1,200 locations, with a network of more than 4,300 ATMs. The conference showcased the group’s key strategic priorities as well as the identifi cation of potential opportunities available for QNB across its growing network

Commercial Bank closes $750mn syndicated senior Sasol renews membership unsecured term loan facility

Commercial Bank has successfully closed a three- year $750mn syndicated senior unsecured term with Al-Attiyah Foundation loan facility. The mandate was led by Bank of America Merrill nternational integrated chemi- Lynch and Mizuho Bank as joint co-ordinators and cals and energy company, Sasol, mandated lead arrangers. Iannounced yesterday the re- The syndication was launched at an initial newal of its membership with the value of $750mn. The transaction received Abdullah Bin Hamad Al-Attiyah strong interest from the market and closed International Foundation for En- significantly oversubscribed at a value of $975mn, ergy and Sustainable Development. demonstrating investor confidence in Commercial The renewal is part of Sasol’s in- Bank’s financial performance and management, as ternational eff orts to support sus- well the strength of the Qatari economy. tainable development. It cements Ultimately, the bank decided to close the facility at the strong relations and long- its original value of $750mn, reflecting its strong standing partnership between the liquidity position. two organisations as they look to- The proceeds from the facility paid a margin wards a sustainable future. of 100 basis points over Libor and will be used In line with the vision of the to replace a pre-existing facility and used for foundation’s chairman, HE Ab- Commercial Bank’s general funding requirements. dullah bin Hamad al-Attiyah, the Commercial Bank Group CEO Joseph Abraham foundation’s ongoing relation- said, “The oversubscription by over 25% and ship with Sasol helps to contrib- the top name banks as lead participants in ute to a greater understanding of the syndication shows the confidence of the energy sustainability and energy international banking and investor community in markets. the strength of Qatar’s banking system. The Al-Attiyah Foundation is “Commercial Bank is executing well on its the leading independent energy strategic plan, which is recognised by the market and sustainable development and has a strong track record of international fund think-thank in Qatar and has be- and debt issuance, reflected in the quality and come highly-respected by energy geographical diversity of the participating banks. leaders both internationally and in I would like to thank our joint co-ordinating banks Qatar. and other partners for their support in making this Dr Ibrahim Ibrahim, the vice transaction such as success.” chairman of the Al-Attiyah Foun- Other than the joint co-ordinating banks, dation, said, “We thank Sasol for its Australia and New Zealand Banking Group continued support for energy sus- The membership renewal is part of Sasol’s international eff orts to support sustainable development Limited, Barclays Bank PLC, Citibank NA, tainability and its involvement in Commerzbank Aktiengesellschaft, and Standard the Qatari and global community. president at Sasol, said, “HE Ab- world energy sector. We thank Al- sustainable development sector in by its initiative Accessible Qatar Chartered Bank joined the syndicate as “We look forward to a contin- dullah bin Hamad al-Attiyah’s Attiyah Foundation and look for- Qatar and the world. (AQ). The training helps partici- mandated lead arrangers. ued partnership as we endeavour achievements in the area of inter- ward to further co-operation in the Sasol has also worked with Al- pants understand international HSBC Bank Middle East Limited acted as lead to provide knowledge and insights national energy and sustainable future.” Attiyah Foundation to off er oil and accessibility standards, key ac- arranger, UniCredit Bank AG as Arranger and into global energy and sustainable development extend for more than As an international integrated gas companies in Qatar a training cessibility factors that should be Credit Suisse (Switzerland) Ltd, Doha Bank, development issues for the ben- 40 years. chemicals and energy company and workshop on accessibility aware- addressed when carrying out an Morgan Stanley, Erste Group Bank AG as lead efi t of members and the society at “Sasol is proud to carry on this a partner with Qatar Petroleum in ness and accessibility auditing accessibility audit, potential chal- managers. large.” legacy and to contribute to the de- the Oryx GTL venture, Sasol turns through the use of the auditing lenges the disabled might face, and Maurice Radebe, executive vice velopment of the society and the special attention to the energy and smartphone application launched the technical aspects of the audit. G20 ‘ever more important’ for global economic governance, says QNB

As large emerging market (EM) economies equal partners or part of the solution to the catch up and continue to grow faster than crisis originated in the advanced economies major advanced economies, the G20 dynamics rather than sources of financial problems. evolve, making it an ever more important The change in the status of the EM economies arrangement for global economic governance, within the G20 was and still is mostly QNB has said in an economic commentary. associated with their economic performance The recent detente in bilateral trade between and growing influence in both global the US and China, agreed last week during the activity and finance. While the G7 countries G20 Summit in Buenos Aires, is just the latest represented 73% of the nominal GDP of the expression of both the new dynamics and G20 (in dollar terms) when the forum was overall importance of the forum. created, this number has shrunk to 60% during “The G20 has indeed gone a long way from the peak of the GFC and now hovers around its origins in the late 1990s and is set to 50%. become even more central as global economic In contrast, EM economies increased their GDP convergence takes place. Our analysis focuses share within the G20 from the initial 15% to on the underlying economic factors behind the 25% in the peak of the GFC to the current 34%. G20 growing influence,” QNB said. Large Brics and MIST countries spearheaded The G20 is an international forum for the the way. governments and central bank governors of China, India, Indonesia, Turkey, South Korea some of the largest economies in the world, by the G7 countries to tackle international and Russia were the G20 growth champions deemed of systemic significance for the financial stability issues associated with the over this century. Under their leadership, international financial system. spillover of EM balance of payment and debt the Brics and MIST were able to expand Membership includes 19 countries and one crisis in the late 1990s. Back when the G20 respectively 8.6 and 2.4 times faster in nominal bloc, the European Union, represented by was created, EM economies were still seen as terms (dollar) than G7 countries. the European Commission and the European the most important sources of international The Brics currently represents around 27% of Central Bank. Member countries are comprised financial crisis. However, perceptions changed the G20 economies, while the MIST represents of the traditional G7 countries (Canada, France, significantly after the Great Financial Crisis nearly 5%. Germany, Italy, Japan, the UK, and the US), (GFC) of 2007-09, when the G20 was chosen Over the next five years, the International Brics countries (Brazil, Russia, India, China, as the preferred forum for a co-ordinated Monetary Fund estimates that the Brics and and South Africa), MIST countries (Mexico, response to the crisis. The status of the G20 MIST are going to continue to grow faster than Indonesia, South Korea, and Turkey), Argentina, has then changed and activities started the G7 economies. From 2019 to 2023, the Brics Australia as well as Saudi Arabia. to include a summit of heads of state or and MIST are expected to grow respectively Taken together, the G20 makes up more government. 2.2 and 1.8 times faster than the G7 economies, than 90% of the world economy. While this The 2009 G20 London Summit was a representing 31% and 6% of the G20 USD number has been stable since the official watershed moment for global economic nominal GDP, respectively. creation of the group in 1999, the economic co-ordination, as member states pledged to In short, QNB noted global economic clout of different countries within the group mobilise $1.1tn to support trade finance and convergence is expected to continue and has changed dramatically. Indeed, the international financial organisations. the importance of the G20 as a forum for strength of the G-7 has dwindled, while large Since then, the G20 evolved to become the governance is set to increase accordingly, EM economies, led by the Brics and MIST premier forum for discussing, planning and as key EM economies become systemically countries, have increased substantially. monitoring the global economy. Importantly, significant for financial stability and global Curiously, the G20 was initially conceived EM members of the G20 started to be seen as growth. Gulf Times Sunday, December 9, 2018 3 BUSINESS Huawei arrest seen keeping US-China LNG spat alive Opec cut throws wrench into record oil short selling streak

Bloomberg 2015. Longs slid 6.6%, while New York shorts jumped 14% to the high- est since July 2017. After Opec’s announcement, pec’s surprise output re- “people will start to be a lit- duction has wrong-foot- tle more comfortable deploying Oed short-sellers. net-length into the sector,” said Hedge funds cut bets on ris- Chris Kettenmann, chief energy ing Brent crude prices to the strategist at Macro Risk Advi- lowest in more than three years sors LLC. “Opec has basically in the week through Tuesday as said, we’ve got you, we’re going short positions increased for a to take down production.” 10th straight time, the longest Ahead of Opec’s deal, ob- streak on record. Then on Friday, servers were also focusing on Opec and its allies surprised the how tense the market has been. oil market with a bigger-than- Implied volatility for second- expected cut, sending futures month West Texas Intermediate surging and leaving money futures hit a 2016-high late last managers pressed to unwind month before slowly creeping their bearish wagers. lower. “Now that we’ve seen this Volatility at these levels is fundamental shift in the mar- “untenable for not only mar- ket, I would expect there to be ket participants, but industry good support down at these participants needing to deploy The arrest of a top Chinese technology executive means the tariff war that ensnared liquefied natural gas may not have reached a cease-fire, according to the developer prices levels and lead those capex into next year,” said Ket- of a US project to export the fuel, Bloomberg reported. Liquefied Natural Gas Ltd has been cautioned by prospective Chinese buyers of supply from the terminal it plans newly established shorts to tenmann. “Opec is doing what to build in Louisiana “that things are not resolved” on the trade front, chief executive off icer Greg Vesey said in an interview on Friday. The potential purchasers’ start covering,” said Ryan Fitz- they should do, managing vola- comments came after Canada said the US is seeking to extradite Huawei Technologies Co chief financial off icer Wanzhou Meng over potential violations of sanctions on maurice, an energy strategist at tility to attract capital back to Iran. The snag comes just days after Chinese off icials were said to have started preparing to resume imports of US LNG and soybeans as President Donald Trump touted a Rabobank. the sector.” breakthrough in talks between the two nations. After much back-and-forth But, some remain sceptical between producers in Vienna, that the deal is enough to make Opec and allies agreed to collec- a dramatic change in the oil tively cut production by 1.2mn market. bpd, with the group shoulder- “A fair question the market ing 800,000 bpd. Saudi Arabia has to ask now is, will this be had previously said a 1mn bpd enough?” said Rob Haworth, cut was the likely scenario. The who helps oversee about $151bn agreement will be reviewed in at US Bank Wealth Manage- April. ment in Seattle. “Are there Hedge funds’ net-long posi- enough signs that this $50- Shale will take Opec cut tion – the diff erence between $55 price range is low enough bets on higher Brent prices and to limit the growth of US shale wagers on a drop – declined 19% production so 1.2mn barrels is to 136,466 contracts, ICE Fu- enough, and will it be enough tures Europe data show for the in the face of what we see as a week ended December4. That’s slowing global economic envi- but no longer needs it the least bullish since August ronment?”

Bloomberg analyst at RS Energy Group who sees the Houston US pumping an extra 1mn bpd in 2019. “The full pace and capability of the US industry is not yet completely appreci- Total denied Brazil S shale’s response to Opec’s de- ated” by Opec and its allies, Nieboer said cision to cut supply and boost in an interview. “Everybody is still catch- Uprices: We’ll take it, but we don’t ing up to how effi cient this industry has off shore drilling need it. become.” In 2014, the US oil industry’s fate Oil producers in the US are “breath- seemed to rest in the hands of Opec min- ing a sigh of relief” as a result of the Opec licences in Amazon Reef isters who were fl ooding the market with agreement, said Saudi Arabia’s oil minis- cheap oil in a push to obliterate them. ter Khalid al-Falih said at a news confer- Now, the group is in full retreat, agreeing ence in Vienna on Friday. Low oil prices Bloomberg promised more resource explo- to cut output to keep their own econo- are “not good for the US economy,” al- Rio de Janeiro ration in the Amazon – takes mies healthy even as US production con- Falih said, adding that America now has office on January 1. tinues to surge. “more at stake” alongside Saudi Arabia Total won the licences during The move came in a week in which oil because US oil output has increased. otal SA was denied per- Brazil’s 11th oil round in 2013 in fell to near $50 a barrel, a price that four In 2014, wells drilled in the Permian, mission to drill fi ve deep- partnerships with BP Plc and years ago would have panicked US drill- home to a third of US output and the Twater blocks in the Ama- state-controlled Petroleo Bra- ers. But since then, shale explorers have world’s fastest-growing major oil fi eld, zon Reef off Brazil’s coast over sileiro SA. The company will an- cut costs, boosted fracking effi ciency and needed a price of $86.10 a barrel to turn biodiversity concerns. alyse documents sent by Ibama made wells longer and more productive. a 30% profi t, according to Calgary-based The Brazilian Environment and decide on the next steps, ac- The result: Break evens for a 30% profi t RS Energy Group. Now that fi gure is $45 a Agency, known as Ibama, said cording to an e-mailed response have been almost halved to just $45 a barrel, giving producers incentive to drill on Friday that oil exploration in to questions. barrel in the prolifi c Permian Basin. at current prices. The story is similar sto- the area could threaten sea life in “Ibama did the right thing “The shale industry can now thrive in a ry for the Eagle Ford in south Texas and case of a spill. Plus, documents in denying Total its licence to $50 oil world,” David Deckelbaum, a New An oil pump is seen operating in the Permian Basin near Midland, Texas. Break evens the Bakken in North Dakota. presented during the fi ve- year drill,” said Thiago Almeida, a York-based analyst at Cowen & Co, said for a 30% profit have been almost halved to just $45 a barrel in the prolific Permian Opec and their allies, including Russia, assessment failed to ensure an climate and energy campaigner by phone. The Opec decision to support Basin. met in Vienna on Thursday and Friday. adequate emergency plan would for Greenpeace Brazil. “More prices over $50 in the US “underwrites The agreement they made was to remove be in place, the agency said. than 2mn Amazon Reef defend- most of the industry.” dustry became a net exporter for the fi rst $50-a-barrel oil. They exclude corpo- 1.2mn bpd from the market, with Opec The denial comes three ers from all around the world US oil producers are now generating time in 75 years. rate expenses and land acquisition costs, itself shouldering 800,000 barrels of the weeks before President-Elect stood up against Total’s reck- 11.7mn barrels of oil a day, about a third To be sure, the breakevens compa- which can be substantial. Still, they re- burden. Following the announcement, oil Jair Bolsonaro – who has less plans to drill for oil near this more than in 2014, with almost half the nies often cite don’t necessarily mean main strongly indicative of the “drill or in New York jumped by as much as 5% to strongly criticised Ibama’s unique and biologically signifi - number of rigs. And last week, the in- producers will be pumping big profi ts at no drill decision,” said Ian Nieboer, an $54.22 a barrel. environmental licensing and cant area.” Saudi oil premium drops to 15-year low as fuel profits crash

Bloomberg returns by producing dirty fuel oil than from Singapore cleaner naphtha for the first time in more than a year, data compiled by Bloomberg show. Concern over falling petrochemical Saudi Arabia’s crude pricing in the world’s consumption is said to be dragging down biggest oil market is reflecting tumbling prices of the so-called light distillate, while profits from making cleaner fuels in Asia. stockpiles swell in the regional trading hub State-run Saudi Aramco slashed the in Singapore. premium of its Extra Light grade to its The gasoline refining margin in Asia was Heavy crude to the lowest since 2003, data at a discount of 14 cents a barrel to Brent compiled by Bloomberg show. When lighter crude on Tuesday, according to PVM Oil varieties of oil are refined, they typically Associates data. It had dropped to 66 cents yield more of relatively clean products such on November 28, the biggest discount since as gasoline and petrochemical ingredient 2011. naphtha. The market for such fuels has been In China - one of the key markets where mired in a glut over the past two months. Saudi Arabia is seeking to reassert its While the world’s biggest oil exporter cut crude dominance - refineries are doubling pricing on all its grades for January sales down on processing to boost diesel output to Asia in a bid to take back market share aimed at heating millions of homes this lost to the likes of Russia and the US, the winter, and therefore contributing to an significant reduction in the premium for increase in supplies of other products such its lighter varieties shows the kingdom is as gasoline and naphtha. The nation has probably taking into account the shrinking also raised its total fuel-export quotas by margins in the region for cleaner fuels as 12% for 2018 in a move that would allow well as focusing on tackling competition more seaborne sales. from other sellers. The premium of Saudi Arab Light crude, “Gasoline and naphtha are dying and which yields more light as well as middle- margins still haven’t reached their worst,” distillate fuels such as diesel, over Arab Fereidun Fesharaki, chairman of industry Heavy for January sales to Asia also shrank consultant FGE, said in an interview in to the smallest since November 2009, data Singapore. “In Asia, Saudi prices are compiled by Bloomberg show. based on purely product yields and the “Saudi is facing more competition now and A picture taken on June 23, 2008 shows a flame from a Saudi Aramco oil facility known as “Pump 3” in the desert near the oil-rich area of Khouris, 160km competition they see from the outside.” the US competition becomes much bigger east of the Saudi capital Riyadh. State-run Aramco has slashed the premium of its Extra Light grade to its Heavy crude to the lowest since 2003, data Oil refiners in Asia are fetching better next year,” FGE’s Fesharaki said. compiled by Bloomberg show. Gulf Times 4 Sunday, December 9, 2018 BUSINESS

Fed wants you to know: It’s shifting to more cautious interest rate path

Bloomberg she said continued gradual hikes were likely to Washington be appropriate “over the next year or two.” While noting that a robust labour market, consumer spending and fiscal stimulus are The Federal Reserve is ready to shift off a keeping the economy strong, Fed off icials are mechanical pace of interest-rate increases every also pointing to a growing list of downside quarter and that could mean a slower pace of risks. tightening next year. Brainard cited the UK’s deliberations over Brexit That was the message from Fed governor and Italy’s debt trajectory. In the US, businesses Lael Brainard, speaking on the final day are reporting uncertainty about trade policy before off icials enter a blackout period for and the implications that may have for supply public comment ahead of their December chains. That could weigh on capital spending, 18-19 meeting. She was hammering home she said. an argument her colleagues have also Fed Board vice chairman Richard Clarida communicated in recent weeks. said central bankers globally should still be “The gradual path of increases in the federal concerned about disinflationary forces. funds rate has served us well by giving us “In recent decades, the asymmetry has been time to assess the eff ects of policy as we toward disinflation forces,” Clarida said in have proceeded,’’ Brainard said on Friday at an interview with Bloomberg Television on a conference in Washington. “That approach December 3. Asked about the price impacts remains appropriate in the near term, although of globalisation, he said that “we are in a the policy path increasingly will depend on how world where central banks, including the Fed, the outlook evolves.” are focused on keeping inflation away from Fed off icials have left little doubt that they disinflation.” intend to raise the benchmark lending rate Fed off icials are also aware that the economy range a quarter point later this month. The is overshooting their estimates for potential economy is strong and continues to generate growth and full employment. That’s an upside jobs, and inflation is around their 2% target. risk, which is why they haven’t signalled yet They are not flustered by volatile financial that think an extended pause in rate hikes is markets and consequent tightening of financial The US Federal Reserve building stands in Washington, DC. Fed off icials have left little doubt that they intend to raise the benchmark lending rate appropriate. There is also lots of anecdotal conditions, or a slowing in rate-sensitive sectors range a quarter point later this month. The economy is strong and continues to generate jobs, and inflation is around their 2% target. evidence reaching their 12 regional reserve of the economy such as housing. banks about worker shortages and higher Brainard continued to make that point, implying 70% odds of a move. The outlook for monetary policy works with a lag. Speaking in “They are reclaiming flexibility,’’ said Priya Misra, wages, according to the latest Beige Book report deflecting a softer-than-expected November next year has been cut to less than one increase. Dallas on November 14, chairman Jerome Powell head of global rates strategy at TD Securities released on December 5. payroll report earlier on Friday to focus on the With the Fed’s benchmark policy rate moving said this risk management approach is like LLC in New York. “It isn’t necessarily dovish, but “We knew this day would come,” said Carl underlying trend of job creation over the past nearer to the bottom of the range they consider walking slowly through a dark room cluttered there is a shift in the messaging.’’ Tannenbaum, chief economist at Northern Trust three months, which she called “well above’’ the neutral – neither slowing nor speeding up with furniture. Brainard’s remarks on Friday underscored Corp in Chicago, referring to the Fed’s strategy pace necessary to absorb new entrants. growth – the goal now is to preserve the That analogy points to policymakers feeling that pivot because her use of the phrase “near shift. “Having closed most of the ground Investors widely expect a hike at the December expansion and not break it. their way through the near-term data, and, if term” was a clear change in tone compared to a between zero and neutral, the last few steps are meeting, with pricing in futures markets The job is more diff icult than it sounds because they have to, pausing from time to time. speech she gave September 12 in Detroit, when going to be the most freighted.”

Bloomberg QuickTake Q&A Fed’s fight for control of its key interest rate

By Alexandra Harris off icials use a range of policy tools to exert New York control over it and thereby influence the direction of the broader economy. 3. How does that work? If a ship crossing a wide and placid harbour yaws so far that it almost hits the channel Diff erently than it traditionally did. Before markers, its captain might want to have the 2008, the Fed used a playbook based on the rudder adjusted. That’s what the Federal fact that those reserves were in short supply. If Reserve is attempting to do as the fed policy makers wanted the fed funds rate to fall, funds rate inches closer to the top of the the New York Fed’s Open Markets desk would central bank’s target range. Yet even after an buy government securities from depository unprecedented change to one of its key policy- institutions. That increased their reserves, setting tools in June, the gap between the fed meaning they had more to loan out, which in funds rate and the upper bound of the range turn meant lower rates. If it wanted the rate continues to narrow, and is once again at its to rise, the desk would sell securities, draining smallest in almost eight years. That potentially reserves and prompting banks to charge more sets the stage for further adjustments in to lend out what they had left. the months ahead as policymakers look to 4. What about now? tighten control over what is arguably the most important interest rate in the world. In response to the financial crisis, along with 1. What’s going on? cutting rates, the Fed bought trillions of dollars of bonds in a program known as quantitative the Fed funds rate back down to the IOER 7. Didn’t the Fed already make an to.” Others, such as Credit Suisse Group AG In December 2015, the Fed responded to easing. It paid for the bonds by creating vast level. They created another mechanism, called adjustment? analyst and former US Treasury adviser Zoltan improving economic conditions by raising new bank reserves. With all that money on the overnight reverse repurchase agreement Pozsar, aren’t so sure. He sees the adjustments interest rates that it had cut to near zero during hand, banks had far less need to borrow from facility, to act as an interest-rate floor. Yes. At their June 12-13 meeting, off icials as a short-term solution to a longer-term the financial crisis. It set a target range for the each other overnight, meaning that the Fed’s 6. Why is the fed funds rate rising lowered the rate they pay on excess reserves problem that could eventually require changes fed funds rate of 0.25% to 0.5%. Since then it’s old tools of adding to or reducing reserves toward the top of the band? relative to the upper bound of the target range to the Fed’s operating framework. increased the range another seven times, to 2% had less impact, forcing monetary authorities by 5 basis points. They did this by boosting 9. Can they just keep lowering the to 2.25% currently. For most of that time, the to come up with another way to influence the No one is 100% sure. But a prevailing theory, their target range by 25 basis points while IOER rate indefi nitely? eff ective fed funds rate – the average of what eff ective rate. Enter the interest on excess one supported by Fed off icials in minutes of increasing the interest on excess reserves rate borrowers in the market actually paid – rested reserves (IOER) rate. their September policy meeting, is that elevated by only 20 basis points, to 1.95%. But given that Almost certainly not. Should the Fed make comfortably near the range’s midpoint, just like 5. What’s the IOER? Treasury-bill supply - and a corresponding the fed funds rate keeps edging higher, Wall another adjustment this year, it would put the it’s supposed to. But since the beginning of the increase in yields - is contributing to the Street is wagering they’ll be forced to act again. gap between IOER and the rate on the Fed’s year, fed funds has been creeping higher, now Starting in 2008, Congress allowed the Fed benchmark’s rise. That has pushed other key In fact, trading in fed funds futures suggests overnight reverse repo facility at 15 basis sitting just five basis points below the top of to pay banks for the surplus cash they store overnight rates higher, especially in the market markets now see another adjustment as all but points. Further tightening in the IOER spread the range, at 2.20%. at the central bank. As Fed off icials prepared for repurchase agreements. As these other assured by year-end. relative to the RRP rate could create “extreme 2. What is the fed funds rate? for “lift off ,” they realised that IOER could be short-term assets became more attractive 8. Will it work this time? stress” for banks in terms of liquidity, according a useful tool for managing rates. In theory, alternatives to lending reserves to other banks, to Michael Cloherty, the head of US interest- It’s the rate at which big banks make overnight if the fed funds rate were to climb above the the availability of funding has lessened, putting The Fed would seem to think so. At his rate strategy at RBC Capital Markets. Off icials loans to each other from the reserves they IOER rate, firms would withdraw reserves and upward pressure on the eff ective fed funds rate. September post-meeting press conference, may only be able to tweak the IOER rate two keep on deposit at the Fed. Because it’s the lend them to other financial institutions at that Some strategists also believe that the central chairman Jerome Powell said the rising fed more times – including a December adjustment basis for everything from credit card and higher rate. But that increase in the supply of bank’s balance-sheet unwind is also starting to eff ective rate is “a problem we can address – according to strategists at Bank of America auto loan rates to certificate of deposit yields, reserves available for loans would then push have an impact. with our tools, and we’ll use them if we have Corp. Gulf Times Sunday, December 9, 2018 15 BUSINESS Russia may inject Singer’s Elliott said more money into Promsvyazbank

Reuters touch the bank its senior Moscow management is not expected to be affected. to build Bayer stake The finance ministry, ussia may inject which has been pushing for more money into higher dividends from state RPromsvyazbank to help entities including Sberbank the bailed-out lender in its and VTB, suggested earlier new role serving the coun- this year that VTB may pay try’s defence industry, Dep- less in dividends as it needs uty Finance Minister Alexei to boost capital to meet glo- in breakup push Moiseev told Reuters. bal capital rules. Russia’s central bank took The central bank wants Bloomberg today if it hadn’t done the deal, over Promsvyazbank (PSB) Russian banks to implement New York Markus Manns, a fund manager last year from main owners so-called Basel III rules, at Union Investment, said on Dmitry and Alexei Ananyev which require lenders to Friday before the Elliott stake in one of a number of bail- set aside capital as a buffer illionaire Paul Singer’s became public. That’s because outs aimed at cleaning up a against possible shocks, to Elliott Management Corp Bayer would have missed the fragmented banking sector prove their strength. Bhas built a stake in Bayer wave of consolidation in agri- hit by bad loans and Western VTB has increased its capi- and wants the German drugs culture companies, Manns said. sanctions. tal by 300bn roubles to help and chemicals conglomerate to “Today the discussion would The authorities then de- meet the rules and plans to consider splitting in two, ac- be totally diff erent,” Manns said. cided to turn PSB into a amass the remaining 150bn cording to people familiar with “We probably really now would bank focused on the defence roubles next year, its chief the matter. be talking about whether it industry, transferring to it executive Andrey Kostin has The activist investment fi rm makes sense to sell crop science loans to the military made by said, while also asking for the wants the company’s manage- and split up the company.” banks such as state-control- rules to be relaxed. ment and board to evaluate The best strategy for Bayer led Sberbank and VTB, Rus- Moiseev said the state did breaking Bayer into separate could be to split crop and health sia’s biggest two lenders. not plan to boost VTB’s capi- pharmaceutical and agrochemi- care, Wimal Kapadia, a London- This should help to protect tal directly, but that the bank cal makers, the people said, ask- based analyst with Sanford C both defence firms and banks would meet Basel III require- ing not to be identifi ed because Bernstein & Co, said in a note in should the United States fol- ments by adjusting its divi- the information is private. No October. “Management recep- low through on threats to im- dend payment ratio. meetings between Elliott and tion to this strategy remains un- pose more sanctions. “The central bank and Bayer have yet taken place, the clear.” Russia has already injected VTB will calculate how much people said. The biggest concern would be 25bn roubles into PSB this of the additional capital is Elliott has held shares in Bayer if Bayer were to try to “fi x” the year. needed (to meet Basel III for more than a year, the people The headquarters of Bayer in Leverkusen, western Germany. Paul Singer’s Elliott Management has built pharmaceutical unit after 2020 “I do not exclude that rules) and dividends will be said. There is no guarantee the a stake in Bayer and wants the German drugs and chemicals conglomerate to consider splitting in two, with a large acquisition that as more (defence) busi- calculated based on that,” fund will push management for according to people familiar with the matter. would be “high risk, likely to be ness is being transferred to Moiseev said. a breakup, and it may instead competitive and therefore ex- PSB along with an increase “The plan is the following: choose to sell down its stake, revitalise its healthcare unit, the Bayer’s shares have declined Meanwhile, Bayer’s healthcare pensive,” Kapadia said then. in lending, we will have the year will be finished, the they said. company last week announced 38% this year, as its major divi- arm, which would rank as Eu- Elliott hasn’t yet crossed the to boost its capital more,” (VTB annual) profit calculat- Bayer shares closed up 1.7% plans to exit its veterinary arm, sions have been under pressure. rope’s fi fth-biggest drugmaker threshold of 3%, a hurdle above Moiseev said. He did not ed and it will be split between in Frankfurt trading after Reu- sell some struggling consumer- The chemicals unit is reeling by sales on its own, is facing its which German law requires in- provide any figures, saying the increase of the capital... ters fi rst reported that Elliott health brands and cut 12,000 from a US court verdict that own challenges. Bayer will begin vestors to reveal their position. that discussions were un- and dividend payout.” held a stake, giving the company jobs. glyphosate, the key ingredient in losing patent protection for two Elliott has taken stakes in Ger- derway. VTB plans to post a net a market valuation of €59bn After completing the Mon- Monsanto’s Roundup weedkiller, blockbuster drugs in the next man industrial giant Thyssenk- His boss, Finance Minister profit of around 170bn rou- ($67bn). santo acquisition, the company caused a former school grounds- fi ve years and has little under rupp and engineering fi rm GEA Anton Siluanov, said in Feb- bles this year. Bayer is facing courtroom is a “likely candidate for a split,”’ keeper’s cancer. development to compensate. Group. ruary that PSB would receive The bank paid 44% of its risks and operational challenges Bloomberg Intelligence ana- A judge in October reduced The Monsanto deal has absorbed It has also jousted with the up to 1 tn roubles in defence net profit in dividends on the after completing the $63bn ac- lysts Christopher Perrella and the damages to $78.6mn from resources that could otherwise likes of Hyundai Motor Group, sector loans, mainly from last year’s results, or around quisition of Monsanto Co this Michael Shah said November 29 $289mn, but Bayer couldn’t per- have been used to strengthen where it halted a restructuring Sberbank and VTB. 45bn roubles in total. It is not year to transform itself into the in a note. suade her to set aside the deci- health care. plan, and Vivendi SA, which it Information about PSB ex- clear how the dividend plan world’s biggest maker of seeds Representatives for Elliott sion. There are more than 9,300 Bayer is probably better off defeated in a battle for control ecutives has not been made might affect minority share- and agrochemicals. Seeking to and Bayer declined to comment. other plaintiff s. with Monsanto than it would be over the board of Telecom Italia. public, so if new sanctions holders, if at all. For Europe chip stocks, business cycle returns with a vengeance

Reuters Mirabaud Securities in London. 2019. “The market is saying: I don’t technology equity research at Credit analysts on the chip sector’s near- semiconductor industry that lives and Frankfurt The downturn has wiped a quarter off believe you,” said Andrew Gardiner, Suisse in London. term prospects, reflecting broader dies by volumes; record profits and the Stoxx Europe Semiconductor Index an analyst at Barclays in London.”It’s “The earnings cut has not been material uncertainty about the impact of the margins; and headwinds in autos and since it peaked in June, curtailing a run the classic reaction of semiconductor — but people are marking down the US-China trade war and slowing global industrials,” said Campling, listing his Investors who bet on European in which the benchmark rose nearly investors in a downturn.” multiples they are prepared to pay to growth. concerns. semiconductor stocks to profit threefold from early 2016. Slowdowns in the North American, own these stocks.” Some, like David Mulholland at UBS, The only European sector stock to buck from innovations being packed into Continuing declines in the European Chinese and European autos markets More specialized players, like British have lowered earnings outlooks while the negative trend has been Dialog smartphones and advanced vehicles Purchasing Managers Index, which have triggered a series of profit optical wafer maker IQE, have been keeping a more positive view on Semiconductor, which designs power- are facing the grim reality that both reflects weakness in Germany’s world- warnings from carmakers. caught out by Apple’s warning last shares in companies like Munich-based management chips used in the Apple industries are hitting a rough patch at beating car industry, suggest that the That’s painful for Europe’s two month of slower holiday sales. Infineon, a maker of high-end power iPhone. the same time. share-price slide may have further to biggest chipmakers, Germany’s “The last two years have been chips, which he continues to rate a Dialog may be the exception that Escalating trade frictions between go. Infineon and the Franco-Italian extremely exciting. ‘buy’. Mulholland reckons that Infineon’s proves the rule: The Anglo-German chip the United States and China have Global chip sales growth is expected STMicroelectronics. The last two or three days haven’t,” business line supplying electric vehicles designer struck a deal in October to contributed to a sharp slowdown in the to slow to 2.6% next year from 15.9% in Autos account for two-fifths of deadpanned CEO Drew Nelson after is a “key underpinning” worth as much actually reduce its exposure to Apple car business, with some manufacturers 2018, trade group WSTS forecasts. revenues at Infineon, and 30% at STM. IQE said there would be a “material as half of the firm’s enterprise value. by swapping people and patents for now scrambling to cut costs. Revenues in the European market, at Executives from the two firms were reduction” in its financial performance. According to the company, a luxury car $600mn in cash. Meanwhile, the smartphone market is $44bn, are just below a tenth of the challenged by analysts on recent Yet he still gave an upbeat outlook, contains $750 worth of silicon. The company’s shares recovered on cooling after years of headlong growth, global total. quarterly results calls, with STMicro telling a recent Morgan Stanley Bears respond that with profits growth the back of that deal but are still down as even Apple grapples with weak Investors have heard blue-sky talk admitting to “soft market conditions conference that 3-D sensing technology and margins at historic highs there is by more than half from their peak, iPhone sales and an unpredictable from companies on their longer-term in China” and Infineon saying it saw a would become ubiquitous as it spreads precious little upside left, while slowing leaving value in the stock according to outlook. prospects — and hit the ‘sell’ button, “higher likelihood of a slowdown”. to the Android handsets that account car demand and Chinese industrial Mirabaud’s Campling. Dialog “could be “We are staring down both barrels,” said punishing those that miss forecasts or “They are struggling to quantify the for most smartphone sales. weakness weigh. “You’ve got a volume the baby that was thrown out with the Neil Campling, global TMT analyst with fail to off er a clear outlook going into impact,” said Achal Sultania, director of There’s little consensus among malaise in high-end smartphones; a bathwater”, he said. Gulf Times 16 Sunday, December 9, 2018 BUSINESS

he Qatar Stock Exchange (QSE) ing for 48.6% of the total trading value. QSE Index and Volume index gained 233.86 points, or The real estate sector was the second T2.26%, during the trading week biggest contributor to the overall trad- to close at 10,598.40. Market capitali- ing value, accounting for 16.6% of the sation increased by 1.2% to QR595.3bn total trading value. QNBK was the top versus QR588.4bn at the end of the value traded stock during the week previous trading week. Of the 45 listed with total traded value of QR207.4mn. companies, 34 companies ended the Trading volume decreased by 32.1% week higher, while nine declined and to reach 42.9mn shares versus 63.2mn two remained unchanged. Qatar Ger- shares in the prior week. The number man Co for Medical Devices (QGMD) of transactions decreased by 27.1% to Weekly Market Report was the best performing stock for the 24,782 transactions versus 34,001 trans- week with a gain of 14.8% on 308,785 actions in the prior week. The banks and shares traded only. On the other hand, financial services sector led the trading Qatar Cinema & Film Distribution Co volume, accounting for 36.7%, followed (QCFS) was the worst performing by the Real estate sector which account- stock for the week with a decline of ed for 28.3% of the overall trading vol- Source: Qatar Exchange (QE) 7.0% on 3 shares traded only. ume. Mazaya Qatar (MRDS) was the top Masraf Al Rayan (MARK), Qatar Is- volume traded stock during the week lamic Bank (QIBK) and Barwa Real with 5.7mn shares. Weekly Index Performance Estate Co (BRES) were the primary Foreign institutions remained bull- contributors to the weekly index gain. ish with net buying of QR234.7mn MARK was the biggest contributor to versus net buying of QR166.9mn in Source: Qatar Exchange (QE) the index’s weekly gain, adding 60.6 the prior week. Qatari institutions points to the index. QIBK was the sec- remained bearish with net selling ond biggest contributor to the men- of QR11.3mn versus net selling of tioned gain, tacking on 34.3 points to QR49.9mn in the week before. Foreign the index. Moreover, BRES contributed retail investors turned bearish with net 33.3 points to the index. On the other selling of QR19.7mn versus net buying hand, QNB Group (QNBK) deleted 22.6 of QR2.4mn in the prior week. Qatari points from the index. retail investors remained bearish with Trading value during the week de- net selling of QR203.6mn versus net creased by 40.0% to QR1.2bn versus selling of QR119.3mn the week before. QR2.1bn in the prior week. The banks Foreign institutions bought (net Source: Bloomberg and financial services sector led the basis) $2.4bn worth of Qatari equities trading value during the week, account- year-to-date. 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 general index closed up by 2.26% reversal formation (if breached downwards). from last week and closed at 10,598.40. However, the trend remains and intact. We TThe index has been creating a rising- keep our expected weekly support level to wedge price formation, which is a bearish 9,600 points the resistance at the 11,000 level.

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, December 9, 2018 17 BUSINESS

Scepticism grows in China’s export and import China over renewed growth falls in November US soybean

Reuters purchases Beijing Bloomberg Beijing hina reported far weaker than expected November exports and Cimports, showing slower global here’s growing scepti- and domestic demand and raising the cism in the Chinese soy- possibility authorities will take more Tbean industry that the US measures to keep the country’s growth trade truce will lead to a fl urry rate from slipping too much. of imports by commercial buy- November exports only rose 5.4% ers. While China’s state-owned from a year earlier, Chinese customs companies may start buying data showed yesterday, the weakest American beans for national performance since a 3% contraction in reserves, commercial crushers March, and well short of the 10% fore- who usually control the lion’s cast in a Reuters poll. share of purchases are unlikely Analysts say the export data showed to jump back in until the 25% re- that the “front-loading” impact as taliatory tariff on the US legume fi rms rushed out shipments to beat is gone, brokers and traders told planned US tariff hikes faded, and that Bloomberg. export growth is likely to slow further “Who would dare to buy?” as demand cools. said Jeff rey Xu, general manager The customs data showed that an- at Overseas China Investment nual growth for exports to all of China’s Co, a soybean broker based in major partners slowed signifi cantly. Hong Kong. “China could pur- Exports to the United States rose chase today, and Trump may 9.8% in November from a year earlier, change his mind the next day.” compared with 13.2% in October. President Donald Trump and To the European Union, shipments A cargo ship is seen at a port in Qingdao in China’s eastern Shandong province yesterday. China’s export growth slowed last month weighed down by slowing global Chinese counterpart Xi Jinping’s increased 6.0%, compared with 14.6% demand and trade tensions with the United States, according to off icial data. pledge last weekend to work to- in October. Exports to South Korea fell ward a deal in the next 90 days from a year earlier, while in October goods to 25% from 10% on January “China talks are going very well,” while the annual decline in October industrial exports over the coming led to a three-day rally in Chi- they rose 7.7%. Import growth was 3%, 1.The November trade numbers came Trump said on Twitter, without pro- was only 1.8%. For trade with all coun- months. cago soybean futures. But prices the slowest since October 2016, and a out less than a week after Presidents viding any details. In a note, analysts tries, China’s surplus was $44.74bn Typically there is a six-month lag have since tapered off , as US fraction of the 14.5% seen in the poll. Donald Trump and Xi Jinping agreed to at Haitong Securities in Shanghai said for November, compared with fore- between the value of industrial export grain traders and lenders wait to Imports of iron ore fell for a second a 90-day truce delaying that tariff hike “Growth in shipments of Chinese goods casts of $34bn and October’s surplus of orders and currency movements.” be convinced that an agreement time, refl ecting waning restocking de- as they negotiate a trade deal. on US 200bn tariff list has started to $34.02bn. Economists in recent months have is really imminent. mand at steel-mills as profi t margins November’s China numbers might pull back, indicating that frontloading On Thursday, the US reported that its pencilled in a deterioration in China’s At least one crusher echoed narrow. add a sense of urgency. Stirring fears of eff ects may be starting to recede.” global trade defi cit in October jumped export outlook in 2019, factoring in this sentiment. An offi cial at “The sluggishness in imports and a reignition of trade tension, the daugh- “Now with US and China agree- to a 10-year high, and that the defi - higher US tariff s on a wider range of a private processor, who de- exports is in full swing,” said Wang Jun, ter of Huawei Technologies’ founder, a ing not to escalate trade tensions any cit with China surged 7.1% to a record Chinese goods. Chinese policymakers clined to be identifi ed, said they chief economist of Zhongyuan Bank in top executive at the Chinese technol- longer, China will start purchasing US $43.1bn. are expected to off er more policy sup- wouldn’t risk rushing to buy US Beijing. ogy giant, was arrested in Canada on agricultural goods, which may narrow Economists say one factor helping port and deliver more support meas- beans, especially given Ameri- The soft imports “show a relatively December 1 and faces extradition to the China-US keep up Chinese exports this year is ures if domestic and external condi- can cargoes are taking longer to signifi cant pullback in domestic de- United States, threatening to drive a trade surplus in the future,” they that the yuan has weakened more than tions continue to deteriorate. be cleared by Chinese authori- mand”, he added. wedge between the US and China. said. China’s November trade surplus 5% against the dollar, helping to make China’s central bank has cut the ties – even if they were pur- In recent months, Chinese exports US President Donald Trump on Fri- with the United States was a record Chinese products more competitive amount of cash that banks must hold chased before the trade tensions had expanded robustly, which econo- day sounded an optimistic note about $35.55bn. The October surplus was abroad. as reserves four times this year, as poli- increased. An example is the mists said refl ected front-loading of trade negotiations with China as his top $31.78bn. Jonas Short, head of the Beijing offi ce cymakers seek to steady the slowing vessel Star Laura, which is wait- cargoes before a now-postponed plan economic advisers downplayed friction But China’s imports from the US in of brokerage Everbright Sun Hung Kai, economy amid the trade war with the ing near Qingdao for unloading to hike US tariff s of $200bn of Chinese from the arrest of Meng Wanzhou. November fell 25% from a year earlier, said the weaker yuan “should boost United States. since arrival early last month, according to Bloomberg ship- ping data. “Crushers are taking a wait- Tencent Music executive accused and-see attitude and are not in a rush to buy,” said Jiang Boheng, of defrauding early investor an analyst with Luzheng Futures Pakistan setting up digital Co, a brokerage based in Jinan in China. “It seems they can man- Bloomberg information that would have revealed the age without it.” Hong Kong true value of Ocean Music, Guo sold his The fundamentals are also shares” while Xie proceeded to build the working against purchases. Chi- platform for traders company into a “streaming giant,” accord- na’s hog farmers will increase A Chinese investor accused the co- ing to the filings. slaughtering ahead of the lunar Internews has helped South Korea to save $3bn talising 75% of documentation by president of Tencent Music Entertainment The arbitration is before the China New Year when pork demand Karachi annually while its documentation and 2021-22. At present, Pakistan clears an Group, which could fetch as much as International Economic and Trade Arbitra- typically rises, Jiang said. At the customs cost has gone down to $70 import consignment in an average of 11 $1.23bn in an IPO this month, of using lies tion Commission. In it, Guo is seeking a same time, pig stockpiles will be per 20-foot container. days at a cost of $726. On the contrary, and threats to get him to sell his stake in a return of parts of his equity stakes and kept low for fear of African swine akistan has kick-started the It has helped Singapore to save $1bn Korea clears one consignment in just company that eventually became part of compensation for the gains he might have fever that’s spreading across the process of establishing an inte- annually and improve its ranking to seven hours at a cost of $342. China’s largest music-streaming service. realised, according to court documents. country. Both will hurt soymeal Pgrated digital platform named number 2 in trading across borders. Similarly, Pakistan clears an export The investor made the claim in an ar- “Historical financial documents and demand and prices, said Jiang. the National Single Window (NSW) Similarly, Costa Rica has reduced the consignment in an average of fi ve and a bitration proceeding in China against the information possessed by Tencent Music’s Monica Tu, an analyst at to facilitate traders in fi ling import time for documentary compliance half days at a cost of $474. As opposed company, co-president Guomin Xie and banking advisers could be highly relevant to Shanghai JC Intelligence Co, said and export documents at one place from 27 hours to 2 hours and its ex- to this, Korea clears the consignment others, and he repeated it Wednesday in a Guo’s claims,” Tai-Heng Cheng, an attorney a 10-15 percentage point tariff instead of 42 places and reduce the ports have increased 22.4%. in just 14 hours with $196 cost. US lawsuit seeking documents from four for Guo, said in a statement. The suit seeks cut could allow crushers to break consignment clearance time at ports He elaborated that the informa- “Pakistan’s current government is underwriters of Tencent Music’s initial information from underwriters including even based on current domestic to hours from days at present. tion and communications technol- very much supportive of establishing public off ering. The online-music arm of Deutsche Bank, JPMorgan Chase & Co, Bank soymeal prices. While crushers “The new system will cut annual im- ogy (ICT)-based platform would the system but a great political will is Tencent Holdings, China’s largest social- of America Corp and Morgan Stanley. may be willing to take shipments port and export cost by $800mn if we connect 42 regulatory authorities, still required to make the NSW opera- media company, is planning to list in the Tencent Music, Deutsche Bank, JPMor- from the US in January and Feb- manage to improve the cross-border ministries and other departments tional,” Mohmand said. US on December 12. gan and Bank of America declined to com- ruary, how much they’ll import trading system by 3%,” Federal Board like the Pakistan Telecommunica- Singaporean consultancy fi rm In the arbitration, Hanwei Guo claims he ment on the litigation. Morgan Stanley depends on the crush margin, of Revenue’s (FBR) NSW Programme tion Authority (PTA), Ministry of CrimsonLogic has estimated the invested $26mn in an entity called Ocean didn’t respond to a request for comment. she said. Commercial buyers ac- Director Imran Mohmand said while Commerce, Oil and Gas Regulatory project cost at $163mn. “We will make Music in 2012 after repeated invitations Guo has flagged the case and his con- count for about 90% of imports. talking to a group of journalists at a Authority (Ogra), Pakistan Customs, the project operational at a very low from Xie, who he says promised the com- cerns to the US Securities and Exchange While crushers risk facing meeting organised by the FBR, Pakistan port authorities, customs agents and cost of around $50-60mn,” another pany would be profitable within two years Commission ahead of the IPO, according tight supplies early next year Customs and the World Bank. transporters. offi cial associated with the NSW said. and would go public in the US within three. to Greg Marose, a spokesman for the due to the halt in purchases “The benefi t of cost reduction will The traders will fi le import and FBR Member Customs Operations While the company received investments investor. The SEC declined to comment. from the US, usually the largest go to the private sector; the system export documents at the single plat- Jawad Agha said they had developed totalling $100mn, Guo says in his filing in Tencent Music, which competes with shipper at that time, a bump- is targeted to be made operational by form for one time only and not again a new version of the indigenously federal court in New York, he was told that products from Alibaba Group Holding and er harvest in Brazil will reach February 2022,” he said. and again. The 42 agencies, including developed paperless customs’ man- the business was failing and that he should NetEase, has been scooping up content. It the Chinese market as early as He pointed out that Pakistan’s banks, insurance, port and customs agement system called WeBOC (Web- sell his stake. Xie and his associates hired has deals in place to distribute songs from March, further cutting the ap- ranking had improved 29 notches to authorities will process the docu- Based One Customs). someone to threaten him with government artists including Beyonce and Taylor Swift peal of US beans, said Xu from 142nd place out of 190 economies ments on one platform. The new version off ers e-payment interference if he didn’t complete the sale, after signing up with some of the world’s Overseas China Investment. in the area of trading across borders, “We will digitalise all the 42 agen- solutions, speed up clearance of im- Guo alleges in court documents. largest record labels, including Universal “It might not matter for adding they were working on the sys- cies one by one to make the National port and export consignments at ports “Faced with threats, coercion and Music Group, Warner Music Group and state reserve purchases, but tem for the past 14 months. Single Window project operational,” and help improve customs offi cials’ intimidation, and denied access to the Sony Music Entertainment. why would others take such According to Mohmand, the system he said, adding it was aimed at digi- behaviour among other features. risks?” Xu said.

China’s fund managers challenged as banks wade into industry

Bloomberg thorities’ grip on the fi nancial sector. haul China’s asset management indus- are partnerships between local banks Beijing However, concentration of money at try in November, 2017, after the sector and global affi liates. state fi rms could also force a rethink ballooned. These include ICBC Credit Suisse (a from private players such as BlackRock The market for wealth management joint venture between China’s biggest hina’s new rules for the wealth Inc, which is said to be seeking a mutu- products had tripled to more than $4tn bank and Credit Suisse Group AG), management units spun off al-funds licence in China. in a little over three years and, like CCB Principal, and Bank of China In- Cfrom its gigantic banks could “The new rules will intensify both mortgage-backed securities in the US, vestment, which includes BlackRock help them grab market share in the competition and cooperation be- WMPs had become key building blocks as the foreign investor. $15tn fund industry. tween banks and mutual fund firms,” of a shadow-banking system that ex- China’s mutual fund market has Regulations that took eff ect this said Wang Yifeng, Beijing-based re- isted largely off jumped 30-fold since 2004, when week removed minimum investment searcher at China Minsheng Banking The high capital-level required of- BlackRock’s local joint venture was set levels and permitted the entities to in- Corp Mutual funds have the benefit fers existing mutual funds time to en- up. A Hong Kong-based representative vest directly in stocks, putting them in of experience but banks have wider trench themselves in the market, said for BlackRock declined to comment on a position to claw business away from client bases and stronger service net- Zeng Gang, a researcher at the Chinese the company’s plans in China’s mutual other asset managers. Previously the works, he said. Academy of Social Sciences. funds industry. funds could only be directly invested About 20 Chinese banks, including Yang Delong, chief economist and “While banks’ wealth management in fi xed-income products, limiting the the four biggest state-owned lenders, investment manager at First Seafront units will bring more funds into the scope for returns. have announced plans to spin off their Fund, said bank subsidiaries may opt market, they will aggravate competi- The decision may have a two-fold wealth management units, with total to invest through existing money man- tion in the entire asset management impact: China’s big banks are con- registered capital of about 120bn yuan agers, so incumbents would still have a industry,” said Yang. “Those who can trolled by the government, so keeping ($18bn). role to play. deliver good performance and long- infl ows within this circle tightens au- Policy makers drafted plans to over- Some of China’s top mutual funds term returns will stand out.” Gulf Times 18 Sunday, December 9, 2018 BUSINESS

Chinese group to buy Wilson tennis racket maker for $5.2bn

Bloomberg enthusiasts. Amer’s portfolio Tokyo of well-known brands, includ- ing Salomon ski boots, Arc’teryx outdoor gear and Atomic win- Chinese investor group ter equipment, is an attrac- led by Anta Sports Prod- tive prospect for Anta ahead of Aucts reached a $5.2bn deal the coming Olympic Games in to acquire the maker of Wil- Asia. Beijing will host the Win- son tennis rackets and Louis- ter Olympics in 2022, providing ville Slugger baseball bats, as it a springboard for sales of skis seeks to bring high-end athletic and snowboards, while the 2020 equipment to China’s wealthy Summer Games in Tokyo will consumers. off er a showcase for other Amer The consortium, which in- brands. cludes Chinese buyout fi rm “We are excited to bring these FountainVest Partners, will off er premium international brands shareholders of Finland’s Amer and products to Chinese con- Sports Oyj €40 a share in cash, sumers, who increasingly seek or about €4.6bn. high- end products with out- The deal is the largest struck standing qualities and heritage by a Chinese acquirer for a Eu- in various niche and specialised ropean asset since China Invest- sports segments,” Anta Sports ment Corp agreed to buy Logicor chief executive offi cer Ding A Huawei sign is seen at its headquarters in Shenzhen. Off icials from major US companies voiced concerns about retaliation against American firms and their executives. Europe for almost $14bn in June Shizhong said in a statement. 2017, according to data compiled The off er price represents a by Bloomberg. 14% premium over Amer’s clos- Signifi cant minority investors ing stock price on Wednesday, in the consortium also include and is almost double Amer’s val- Chip Wilson, the billionaire uation a year ago. Amer shares founder of yoga-apparel retailer rose as much as 9.4% to €38.50 Lululemon Athletica Inc, and in Helsinki. Chinese internet giant Tencent Amer Sports was advised by Huawei arrest stokes Holdings. Goldman Sachs Group on the China has become a major fo- transaction, while Citigroup cus for makers of luxury prod- worked with Anta Sports, Foun- ucts, as companies target an in- tainVest and the group of buyers. creasingly wealthy middle class. “Under the ownership of the Athletic-goods companies such investor consortium, there is fears of China reprisals as Adidas AG are also seeking an opportunity to continue to to tap into a growing interest in deliver our strong sustainable healthy lifestyles among the na- profi table growth with further tion’s consumers. acceleration in our strategic Anta, China’s biggest athlet- priorities including soft goods, ic-apparel producer, is seeking direct-to-consumer and China,” acquisitions of well-established Amer Sports CEO Heikki Takala among US executives global brands as it works to in- said in the statement. crease its business overseas. The After completion of the deal, Reuters He asserted that there was “no discus- Iran, people familiar with the probe said. Marriot International Inc, Microsoft Chinese government is pushing the consortium plans for Amer Hong Kong/Shanghai sion on the record or behind closed doors The arrest has roiled global markets Corp and others. to expand in sports ranging from Sports to be operated independ- about the arrest of a top Huawei execu- amid fears that it could further inflame Nayak did not respond to a LinkedIn soccer to skiing, as well as the in- ently from Anta, with Takala and tive or about American companies oper- the Sino-US trade row. Risk consult- message seeking further comment. dustries that supply equipment other executives continuing to t a closed-door security meet- ating in China.” ants and analysts said that the arrest The second person with knowledge for competitors and weekend lead the business. ing of US companies in Singa- Meadows also said he was not at the could prompt Beijing to retaliate in of the event said the Huawei arrest and Apore, one topic was high on the meeting and could not say whether at- some form. potential fallout was a hot topic at the agenda: the arrest of a top executive tendees discussed China travel informally. “This will pressure a lot of Chinese of- meeting. at Chinese tech giant Huawei and the The discussions at the meeting un- fi cials to look strong in this dispute,” said A senior diplomat from the US embas- Hong Kong may slip into recession potential backlash on American firms derscore concerns rippling through Nick Marro, Hong Kong-based Asia ana- sy in Singapore gave opening remarks, operating in China. US businesses in the world’s second lyst at the Economist Intelligence Unit, but an embassy spokesperson said she in 2019, warns Deutsche Bank Officials from major US companies largest economy, already facing a deli- who added that technology companies left before any discussion. who attended the event, a scheduled cate balancing act amid a tense trade were particularly at risk. Asia-based risk consultants said they Bloomberg economists led by Michael meeting of the local chapter of the US standoff between Washington and “This could mean either taking a had seen a rise in the number of clients Hong Kong Spencer wrote in a note. “With Department of State’s Overseas Secu- Beijing. stronger stance on trade negotiations, or asking about the Huawei issue and po- export earnings slowing, this rity Advisory Council (OSAC), voiced The formal agenda for the meeting, taking a stronger stance on US tech fi rms tential concerns related to the impact on consumption outlook could concerns about retaliation against held at Google’s Asia-Pacifi c headquar- in China right now.” US fi rms in China. Hong Kong could experience a re- mean the economy experiences a American firms and their executives, ters in Singapore, included presenta- Asked whether there would be any re- Jakob Korslund, CEO of Singapore- cession in 2019 as the economy is recession.” two people with knowledge of the tions on economic crime and terrorism taliation against any foreign executives based consultancy Deutsche Risk, said hit by a cooling property market Hong Kong’s government meeting said. in the region. OSAC promotes “security in China, Foreign Ministry spokesman his fi rm had received a number of enquir- and the US-China trade war. forecasts growth to slow to 3.2% A number of attendees said their com- co-operation between American private Geng Shuang said on Friday China has ies in the last two days asking about the That’s according to economists in 2018 after expanding 3.8% last panies were considering restricting non- sector interests worldwide and the US always protected the lawful rights of for- risks of travelling to China. “For a few we at Deutsche Bank AG who flag year. essential China travel and looking to Department of State,” according to its eigners in China in accordance with the have advised postponing trips that were the property market as their main While Deutsche Bank doesn’t move meetings outside the country, one website. law. not time critical, telling clients to wait concern. They note Hong Kong expect a change to Hong Kong’s of the people added. But informal conversations among at- “Of course in China they should re- for the next few weeks to see the situa- has gone through five property exchange rate mechanism, a com- Security executives for companies in- tendees soon turned to possible risks in spect China’s laws and rules.” tion,” he said. cycles since mid-2003 and a sixth bination of very weak growth and cluding Walt Disney Co, Alphabet Inc’s China prompted by the arrest of Meng OSAC says it is made up of 34 private James McGregor, chairman of APCO downturn has begun as rising in- falling prices could stoke expecta- Google, Facebook Inc, and PayPal Hold- Wanzhou, the chief fi nancial offi cer and and public sector member organisa- Worldwide’s Greater China region, said terest rates drag on consumption. tions that the Hong Kong dollar ings Inc attended the meeting, according “heiress” of Chinese telecom network tions. It lists its events on its website, companies would likely err on the side of The German lender expects will be devalued, the economists to the sources and a LinkedIn posting by equipment giant Huawei Technolo- including the December 6 meeting in not sending executives to China for the a 15% property price decline by wrote. one of the attendees. gies Co, who was detained in Canada on Singapore. time being. “It’s all about avoiding risk, mid 2019 and warn the economy “A combination of very weak The companies all declined to com- December 1.The news of the arrest was There was also a separate listed because what do you do if somebody is will only have a tepid recovery growth and falling prices (not just ment or did not respond to requests for made public on Wednesday. meeting held in Shanghai on the same arrested?” he told Reuters, adding anxi- in 2020. property prices) could one day comment prior to publication. Meng, the daughter of Huawei’s day. Prashant Nayak, Disney’s Asia ety was also spreading among executives That is likely enough to push lead to a devaluation of the HKD. Following publication of this story, founder, was held at Washington’s re- Pacific director of corporate security, already in China. consumption growth below We expect at least one of those Google spokesperson Taj Meadows said quest as part of a US investigation of an posted about the Singapore meeting “People are joking about it a little bit zero before a weak recovery by conditions to be met next year,” in a statement that it “misrepresents” alleged scheme to use the global bank- on LinkedIn, tagging other executives and saying ‘maybe I should take an early the end of next year, Deutsche they said. what happened at the meeting. ing system to evade US sanctions against at Google, Facebook, Amazon.com Inc, Christmas trip home’.” China’s WuXi AppTec raises $1bn in Hong Kong listing Thyssenkrupp and Tata Steel near

Reuters Referring to previous day’s guidance of Hong Kong HK$70, a source said, WuXi AppTec could have priced higher, but wanted to leave decision on steel JV board money on the table because of volatile Chinese medical tech platform WuXi markets this week. Reuters have previously said. Hans Fischer, AppTec raised $1.01bn in its Hong Kong Hong Kong is poised to become the London chief executive of Tata Steel’s Euro- listing, sources said, valuing the company world’s top IPO centre by volume this pean subsidiary, is also likely to join at $10.2bn in a deal that marks one of this year, with $33.2bn raised so far, Refinitiv the venture’s management board, year’s last big stock off erings in the Asian data shows. However, concerns over ermany’s Thyssenkrupp and the people said, adding it was un- financial hub. mounting trade friction between China India’s Tata Steel are close to clear how many seats the board Shanghai-listed WuXi AppTec priced and the United States and slowing growth Gdeciding who will lead their would have. its Hong Kong shares at HK$68 ($8.71) in the world’s second-biggest economy planned European steel joint ven- Thyssenkrupp and Tata Steel in apiece, at the middle of an indicated continued to weigh. ture, four people familiar with the June said the joint venture’s man- range of HK$64.1-HK$71.5, the sources Hong Kong’s benchmark Hang Seng matter said on Friday. agement board would consist of six told Reuters on Friday. index is down more than 12% this year. Settling on the venture’s leader- members, shared equally between That represents a discount of 25% to its Shanghai-based WuXi AppTec describes ship has been delayed by a strat- both groups. closing price of 79.99 yuan ($11.63) on itself as the largest pharmaceutical R&D egy crisis and change of CEO at the That number could be reduced to Thursday. services platform in Asia by revenue. German industrial conglomerate, four to give a more focused struc- It could raise up to $1.16bn if an over- The company had revenues of 4.41bn which has said it would split into ture to the entity, which will be allotment option is exercised within yuan ($641mn) in the first half of this two companies. called Thyssenkrupp Tata Steel, the a month of the start of trading, which year, versus 3.67bn yuan in the same The holdup has riled the Thys- people said. A decision will be an- would value the company at $10.3bn, period last year, according to its listing senkrupp workforce. A labour lead- nounced very soon, the people said. according to a term sheet seen by prospectus. er on Wednesday said there would Thyssenkrupp Chief Executive Reuters. The medical tech platform’s first-half be “trouble” if the matter was not Guido Kerkhoff said last month WuXi AppTec did not respond to Reuters profit surged 67% to 1.3bn yuan. WuXi resolved soon. a decision on the joint venture’s request for comment. AppTec intends to use the proceeds from Andreas Goss, head of Thyssenk- leadership would be made before This listing should serve as positive news the listing to expand capacity across rupp’s steel unit, is the front run- A logo of Thyssenkrupp is pictured at the company’s headquarters in Essen, Christmas. “The joint venture for Hong Kong, where many firms such as its units globally, invest in seven China ner to become chief executive of Germany. Thyssenkrupp and Tata Steel are close to deciding who will lead would have a two-tier manage- Meituan Dianping have sunk below their projects such as a Chengdu R&D campus the combined entity, which will be their planned European steel joint venture, according to people familiar ment structure comprising a man- initial public off ering (IPO) prices, while and set up a bio-analytical laboratory in Europe’s second-largest steelmaker with the matter. agement board and a supervisory others have scaled back their targeted San Diego, California, the prospectus said. after ArcelorMittal, the people said. board,” a Tata Steel spokesman said. fundraising amid jittery markets. It also intends to fund the acquisition The new company will have The unit’s adjusted operating ed on the stock exchange, which is “Both boards would have equal Bankers have been hoping for WuXi of contract research organisation around 48,000 workers and about profi t rose by 26% to €687mn over widely expected. representation from Thyssenk- AppTec and tech giant Tencent’s companies. €17bn ($19.4bn) in sales, with pro- the past fi nancial year. Signed in June, the planned entity rupp and Tata Steel,” he said, add- music arm, which launched its highly WuXi AppTec shares will begin trading duction facilities in Germany, the His appointment would further still needs European antitrust ap- ing further announcements will be anticipated US IPO of up to $1.2bn on in Hong Kong on December 13. Goldman Netherlands and Britain. strengthen Thyssenkrupp’s posi- proval, which is expected towards made “in due course”. When asked Monday, to help usher in 2019 on a Sachs, Huatai Financial and Morgan Goss, seen as well connected in tion in the 50-50 venture, which the end of the fi rst quarter of 2019. about the issue, a spokesman for positive note. Stanley are sponsoring the listing. the industry, has led Thyssenk- already includes a greater share of The groups might have to divest Thyssenkrupp referred back to rupp’s steel division since 2014. proceeds should the entity be list- assets to secure approval, sources Kerkhoff ’s remarks. Gulf Times Sunday, December 9, 2018 19 BUSINESS

Italy’s much-mocked fi nance chief may get last laugh on budget

Bloomberg Backed by establishment fi gures and groundwork for the deal that may avoid Angered by years of economic stag- Sergio Mattarella refused to name a have surfaced with some regularity Rome pressure from investors, Tria has been a showdown with the EU, according to nation, a wave of immigration from euro-sceptic, Paolo Savona, as fi nance since his fi rst month in the cabinet. quietly lobbying deputy premiers Mat- an adviser and longtime friend, Pas- North Africa and a general sense of minister. “I’m not masochistic, putting up teo Salvini and Luigi Di Maio to yield quale Lucio Scandizzo. decline, voters ditched the traditional Savona himself suggested Tria, with the budget to then resign after- taly’s populist rulers love to beat to EU demands they curb the spend- Italy is now “on the right path” to- parties in March’s election in favor of which was good enough to convince wards,” Tria said after one such report, up on 70-year-old fi nance minister ing plans that helped them get elected. ward crafting a solid budget, Moscovici Salvini’s anti-migration League and Five Star and the League, people famil- in October. IGiovanni Tria for resisting their ef- Their current budget foresees a 2.4% said Friday. “I want to avoid a crisis be- Di Maio’s anti-establishment Five Star iar with the matter said. A few weeks earlier, Di Maio all but forts to buck European spending rules. defi cit next year, which Brussels fi nds tween the European Union and Italy.” Movement. Their tussle with the EU The backbiting hasn’t been easy on ordered Tria to fi nd the money needed But the slight, unassuming econom- unacceptable, while Tria has been ar- Building on previous reports, Corri- has whipsawed fi nancial markets for the septuagenarian. In a text message to pay for the election promises of the ics professor, who’s been parodied as a guing for a maximum of 2%, accord- ere della Sera said yesterday that Tria is weeks. that Il Giornale newspaper said Tria political upstarts now running Italy. hapless hostage on TV, may get the last ing to two senior offi cials in Rome who increasingly isolated by coalition gov- The new government’s biggest test had sent a friend, the minister said he “Italians who are in diffi culty can’t laugh. asked not to be identifi ed discussing ernment partners. is its fi rst budget, which Salvini and can’t take the pressure of “being sub- wait,” the deputy premier said at the Despite frequent reports that Tria is private conversations. Tria, a fi rst-time minister in a coun- Di Maio need in order to start deliver- jected to one ambush after another” time. “A serious minister must fi nd the considering quitting in frustration at Television comic Maurizio Crozza try that’s had 66 governments since ing on their election promises. But a anymore. money.” the abuse he gets from coalition col- has picked up on Tria’s obvious iso- World War II, needs a thick skin - he’s spending push to pay for welfare ben- But he also said that he’s committed Tria isn’t alone in his defence of leagues, the minister is committed lation within the administration to a key representative of the career civil efi ts, lowering the retirement age and to a single objective: “saving the coun- political moderation. Flanking him to striking a compromise that will be portray him as a desperate, bumbling servants and political old guard trying tax cuts has been rejected by offi cials try.” When asked about that report in are several fi gures working behind the acceptable to populist leaders while minister who clearly doesn’t believe a to steer the country through the mine- in Brussels for violating the union’s Venice on Friday, Tria told reporters: scenes to keep Italy’s fi nances and its keeping Italy in good standing with the single word he’s forced to tell reporters. fi eld of a populist administration. budget rules. “There is no message.” relationship with the EU on a more European Union. But behind the scenes, the real fi - Tria’s advantage in negotiating is Back in May, when the new gov- Tria has repeatedly denied reports even keel – the likes of President Mat- Failure to reach a deal could roil fi - nance minister has been reaching out that “he never gets carried away by ernment was still being formed, Tria that he intends to resign either right tarella, Bank of Italy governor Igna- nancial markets and eventually lead to to European Economic Aff airs Com- emotions,” Scandizzo said. “He’s de- emerged as a compromise candidate away or after he gets a budget deal done zio Visco and Foreign Minister Enzo fi nes from the bloc. missioner Pierre Moscovici to lay the termined, calm and cold-blooded.” to resolve a standoff when President by the end of December. Those claims Moavero Milanesi.

Red-hot US jobs market drives some to seek cooler options

Reuters Minneapolis, for instance, re- New York ported that “labour availability was widely seen as the biggest obstacle to short-term growth.” hen Sean Luangrath Scarce labour pushes up wag- joined Pocatello, Ida- es, and “wage gains are likely to Who-based Inergy Solar continue rising through 2019,” a few years ago, the plan was to said Andrew Chamberlain, chief move the portable solar bat- economist at online jobsite tery maker to his home base of Glassdoor. Salt Lake City so he could build But, he said “it’s a very diverse it with easy access to Silicon wage picture across the US.” Slopes’ tech talent and venture And that has created openings capital. for some companies willing to But when the new CEO looked branch out. at the labour costs, he ditched A little over a year ago, execu- that plan and decided instead to tives at e-commerce company rely on labour drawn from local Fivestars realised they had a colleges and the nearby Idaho problem: the job market in San National Laboratory. Francisco was getting too hot, By next year he plans to double and the customer support staff People walk by the New York Stock Exchange (file). Fund managers from firms including ValueWorks, Sierra Investment Management and Federated Investors say they are the payroll to 50 employees as he they would need for their next looking at sectors that could snap back next year thanks to a combination of more attractive valuations and a decline in the dollar. moves the company’s manufac- bout of expansion were nowhere turing operations from China to be found. back to eastern Idaho. So they headed for El Paso, Laungrath says he likes being Texas. By October the online re- the relatively bigger fish in a tail marketing fi rm had hired 65 relatively smaller pool.”There’s employees in the border town, less competition for doing stuff about a quarter of their total like this in this neck of the workforce. Labour there is not woods.” only less expensive, explains vice Wall St fund managers But Luangrath’s decision also president of business operations refl ects the reality of a US labour Matthew Curl, but it is easier to market that is by some measures hire and keep people. the hottest in decades. In San Francisco, it had re- The national unemployment cently taken him two months to rate held steady last month at hire just one customer support 3.7%, a 50-year-low, fi gures re- agent, who then left within a brace for rally in 2019 leased by the US Labour Depart- week for a slightly better paying ment showed on Friday. job. Reuters the dollar pushed the S&P 500 up nearly “I don’t buy the thesis that the econo- ing by the European Central Bank and a And though job gains fell El Paso is “everything we’d New York 38% in 1995, while the US bond market my is slowing, but I do believe we are late resolution of US-China trade tensions short of expectations, at hoped: a stable labour market returned nearly 17% the same year fol- in the cycle. will derail the rally in the dollar this year. 155,000 in November they were with experienced people that lowing one of the worst fi xed-income We’re going into a period where in- That should improve margins for US still twice what some estimate is know what they are doing,” he ith bond and equity mar- bear markets in memory. vestors are getting a little fooled by the exporters. needed to keep up with popula- said. kets from the United States to “If you look out at the broader picture, headlines and avoiding names that have A Reuters poll of 60 currency analysts tion growth. El Paso’s average weekly wage Wemerging markets all on pace a lot of things are going right,” said Terri excitement,” he said. that ended December 5 forecast that the Wages are also up 3.1% na- grew 2.4% in the second quarter to lose money this year, investors have Spath, chief investment offi cer at Sierra As a result, Lemonides has increased dollar will be weaker against major cur- tionally in the 12 months to No- of 2018, to $733, US Labour De- not seen this much red on their screens Investment Management, citing strong his long exposure to companies that have rencies next year, with most of the de- vember, Friday’s report shows, partment fi gures show. since 1972, the last time no asset class consumer confi dence and other eco- sold off , including battered semiconduc- clines coming in the second half of 2019. though that masks much faster That compares to a 4.4% in- returned at least 5%. Yet fund manag- nomic indicators.”It’s easy to make a bull tor maker Micron Technology Inc, whose Linda Bakhshian, a portfolio manager growth in bigger cities, especial- crease in Salt Lake, to an aver- ers are fi nding things to like despite the case because the economy is humming shares are down 37% over the last six of several value-oriented funds at Feder- ly those with tech-heavy labour age weekly wage of $1,010, and recent market volatility, which sent the along just fi ne, but the market is nervous months, and iPhone maker Apple Inc, ated, said the recent stock market vola- pools. a 9% rise in Silicon Valley’s San Dow Jones Industrial Average down more because the headlines are really loud and whose shares are down nearly 23% over tility has made stocks, including Apple, Four of the top 10 counties Mateo, to an average weekly than 2% last week. no one likes the unknown,” she said. the last 3 months. JPMorgan Chase & Co, Walmart Inc and with the biggest wage gains in wage of $2,357. With growth like As they start to position their portfo- Part of the yield curve inverted this At the same time, Lemonides has in- Microsoft Corp more attractive at a time the second quarter of 2018 were that, more companies may try lios for 2019, fund managers, from fi rms week when yields on 5-year Treasuries creased his short position on defensive when the US economy continues to look in the greater San Francisco Bay to solve their hot labour market including ValueWorks, Sierra Investment dropped below those on both the 2- and stocks like consumer staples companies stronger than either Europe’s or China’s. Area, recent data from the US la- woes with a move to a cooler Management and Federated Investors, 3-year securities, a signal that has pre- Clorox Co and Church & Dwight Co Inc, Low oil prices, continued job growth bour department shows. spot like the El Paso desert. say they are looking at sectors that could ceded every US recession in recent mem- which have benefi ted from the market and strong consumer spending will likely And across the country many Indeed, the trend may al- snap back next year thanks to a combina- ory by between 15 months and 2 years. volatility. prolong the US economic expansion well labour markets are so tight it is ready be happening: early this tion of more attractive valuations and a Yet the long delay between a yield Chad Oviatt, director of investment past next year, she said. pinching companies’ growth, month Curacubby, a Berkeley, decline in the dollar. curve inversion and a full recession can management at Huntington National “If the markets were to close for the according to anecdotal data re- California-based startup that Such a rally in both fi xed income and still be a profi table time to invest, said Bank, said his fi rm has been increasing year today, people would go into 2019 leased by the Federal Reserve last automates billing for schools, equities markets would not be unprec- Charles Lemonides, founder of New its allocation to US large-cap stocks in thinking that there are more opportuni- week. announced it will open an offi ce edented. A 20% decline in the value of York-based hedge fund ValueWorks. anticipation that declining bond buy- ties given the valuations,” she said. The Federal Reserve Bank of in El Paso in January. Vanadium’s electric future hobbled by its industrial past

By Andy Home dependence on the steel sector. Supply This one-off demand boost is happen- slag production. Just to compound this London scarcity and the resulting price volatility ing just as China is weakening its own evolving supply challenge, Beijing has also are the two biggest hurdles to vanadium’s supply capacity as part of its drive to banned the import of four types of vana- potential bright electric future. introduce more environmentally friendly dium slag, cutting off around 4,500-5,000 ast year it was cobalt. The year Vanadium, named after the Norse god policies. Vanadium is a very elusive metal. tonnes of annual supply from Russia, before that it was lithium. This of beauty Vanadis, was only isolated in It took two “discoveries”, one by a Spanish- according to SP Angel. Lyear it is vanadium, another metallic form in the second half of the 19th Mexican mineralogist and a later one by Another potential source of supply, esoteric element of the periodic table century. a Swede before everyone accepted it was stone coal, is also being restricted by that is on a wild bull rampage. Vana- But its properties, particularly its capac- indeed a new element. China’s war on smog. Chinese regulators dium prices in China have more than ity to strengthen steel, were quickly ap- It is largely produced through the are refusing to issue permits to exist- tripled over the course of 2018, albeit preciated. Henry Ford’s Model T car used processing of magnetite iron ore, with ing stone coal producers and although with some recent softening from their the metal in its steel alloy chassis. around 73% of output coming in the form there is a collective attempt to upgrade early-November peaks. Adding just one kilogramme of vana- of a slag generated in the steel production processes to achieve lower emissions, the The share price of South Africa’s Bush- dium to a tonne of steel has the eff ect of process. The steel mills that produce it are short-term eff ect is to reduce even further veld Minerals, one of only a handful of doubling the strength of the steel. not the same ones that consume it. China’s vanadium production capacity. primary producers, has soared from less That explains why the steel sector ac- Rather, they have historically been the China’s moves both to boost demand than 10 pence per share at the start of the counts for just over 90% of global usage, higher-cost, lower-quality operators feed- and limit supply have created a perfect year to 42 pence currently. according to analysts at SP Angel. ing low-grade magnetite iron ore into their bull storm for the tiny vanadium market. Vanadium is the latest exotic metal to Given China’s dominance of global alloy mix. Exports from the country have dried up, feel the new energy heat. The vanadium steel production, it’s no great surprise that Precisely the sort of material that is be- stocks everywhere are falling and prices redox flow battery (VRFB) is a break- the country is the single largest user of ing used less by China’s steel producers as have been on a super-charged rally. through technology in energy storage, a vanadium. And it’s China that has laid the they favour higher-grade ore to maximise The market was already in an fast-growing component of the infrastruc- foundations for vanadium’s spectacular eff iciencies and reduce environmental 8,000-tonne supply deficit last year and ture needed to accommodate the global price rally this year. emissions. SP Angel expects demand to continue shift to renewable energy. The country has changed the specifica- will drive higher use of vanadium and tonnes per year, according to SP Angel, The gap between high-grade and low- exceeding supply through 2020. Vanadium’s problem, however, is that tions of high-strength rebar construction although the amounts involved are tiny, citing China’s Iron and Steel Research Insti- grade pricing has been a defining feature there is already a structural shortage steel to improve earthquake resistance. the cumulative impact will be to increase tute. That’s the equivalent of around 12% of the iron ore market this year but one „ Andy Home is a columnist for Reuters. of the stuff rooted in its historical co- The changes, just implemented, Chinese consumption by around 10,000 of global vanadium production in 2016. that simultaneously reduces vanadium The views expressed are those of the author. Sunday, December 9, 2018 GULF TIMES BUSINESS Qatargas holds its fi rst post-integration Town Hall session atargas has recently held its production and ensure readiness ising revenue by penetrating new ability Award’ for its Jetty Boil Off (FEED) and Barzan Pipeline Engi- fi rst Town Hall meeting at to operate, completing Qatargas markets; maximising customer Gas recovery facility, successfully neering, Procurement and Con- Qthe Qatar National Conven- Management Systems (QGMS) satisfaction, while retaining con- achieved the best process safety struction (EPC) contracts. tion Centre, almost a year into the integration and its eff ective im- tractual and financial perform- performance with zero high poten- The company signed a new long- successful integration of Qatargas plementation to maintain premier ance; and gaining competitive ad- tial (hipo) incidents, and completed term Sale and Purchase Agreement and RasGas. performance, and achieving Qatari- vantage through flexibility. the Zero Liquid Discharge Project in (22 years) with PetroChina and The annual Town Hall meetings sation targets through a skill-based The company’s 2018 achieve- Laff an Refi nery 2, which positively achieved new sales to Petrobangla, Amwaj signs are an open forum for employees to Qatarsation strategy, while attract- ments in a number of key areas, helps the environment. Bangladesh and Pavilion Gas, Sin- meet with Qatargas’ chief executive ing and retaining qualifi ed people to including safety, health, and en- As for the effi cient and reliable gapore. offi cer and the Management Lead- maintain optimum skills and expe- vironmental (SHE) performance; operations, the company’s LNG Regarding customer satisfaction, QR141mn, 5-year ership Team for discussions on the rience levels in the business. high calibre workforce; effi cient production this year was on tar- Qatargas maintained outstanding company’s performance, develop- The strategic goals also include and reliable operations; fi nancial get, while sustaining strong reli- fl exibility with no off -spec or late contract with ments, and strategic goals for the improving uptime availability, performance; and customer sat- ability performance of 97.6%. It deliveries. year ahead. reliability, and utilisation of the isfaction were also reviewed in the also achieved a very strong Laff an A question and answer session During the meeting, the Corpo- LNG plants to achieve full plant meeting. Refi nery reliability of 99.7% ahead followed in which Qatargas CEO Qatargas rate Planning Department outlined capacity and meet supply rights; In SHE sector, Qatargas main- of current year targets, completed Khalid bin Khalifa al-Thani and the the company’s strategic goals for enhancing and promoting reli- tained a “strong fl aring perform- three major shutdowns safely, and management team replied to em- Amwaj, a leading Qatari locations in Ras Laff an, the next fi ve years, which include ability culture across the organi- ance” ahead of the target, won awarded the North Field expan- ployee’s questions and enquiries on hospitality and facility Al Khor and Doha. expanding and sustaining LNG sation to drive efficiency; maxim- the prestigious ‘Qatar Sustain- sion Front End Engineering Design work-related matters. management service Amwaj chief executive provider and subsidiary off icer Ahmed Abdul of Gulf International Rahman al-Mulla Services, has been (pictured) stated, awarded a QR141mn, “Winning contracts five year contract through open bidding, by Qatargas “for the demonstrates that provision of off ice Amwaj is competitive waiters, cleaning and and endeavours pest control services.” to continue as the This project entails market leader in its the deployment of spear of its business almost 600 personnel providing the best in at various Qatargas class services.”

The annual Town Hall meetings are an open forum for employees to meet with Qatargas’ chief executive off icer and the Management Leadership Team.