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Saturday, April 30, 2016 Rajab 23, 1437 AH HIGHER OIL LIFTS OUTLOOK: Page 12 US, eurozone GULF TIMES infl ation expectations BUSINESS diverge German banks see no quick pick up Opec oil output near in Iran business

Reuters January in return for the Berlin Islamic Republic complying with a deal to curb its nuclear ambitions. Restoring German banks’ German Economy Minister record high in April financial ties with Iran will Sigmar Gabriel will co-chair take time given debt owed an economic conference Supply rises by 170,000 produce Murban crude. Of the to Berlin and transparency with Iranian counterpart Ali bpd to 32.64mn bpd; Iranian countries that reduced output, concerns, the head of the Tayyebnia in Tehran May supply rises further after the largest decline was in Ku- German banking association 2-3, and German companies sanctions lifted; output wait due to a three-day work- said yesterday, dampening see the event as a potential climbs in Iraq; UAE pumps ers’ strike which temporarily expectations days before a catalyst for doubling exports more as maintenance ends; more than halved oil output and business summit in Tehran. to Iran to €5bn. But the strike hits Kuwait output; curbed refi nery operations. Iran owes Germany about German government has said Nigeria, Venezuela supply Nigerian output fell due to €500mn ($569mn) under guarantees for exports to Iran falls the continued lack of Forcados so-called Hermes covers, will not be renewed as long as crude exports and a brief dis- a German government Tehran’s debt is not paid. Reuters ruption to shipments of another arrangement that protects A spokeswoman for the London stream, Brass River. Repairs on a German companies if foreign German economy ministry pipeline to the Forcados terminal debtors fail to pay. said yesterday both sides were will take until June, the govern- “Rebuilding ties with Iran holding “in-depth talks” on the pec’s oil output rose ment said. requires patience,” Michael issue and these could soon be in April to close to the Loading problems, power fail- Kemmer, head of banking concluded. Ohighest level in recent ures and other problems dented association BDB, told She added companies could history, a Reuters survey found Venezuela’s supply by an estimat- Reuters. “To begin with, the apply for Hermes export yesterday, as production in- ed 40,000 bpd. Oil services fi rm transactions regimen has to guarantees and a decision creases led by Iran and Iraq more Schlumberger is cutting activity work again before the next could be made immediately than off set a strike in Kuwait and in the cash-strapped nation, pos- step of financing projects can after an agreement. other outages. ing a threat to future output. take place.” Credit insurer Coface said Top exporter Saudi Arabia, Saudi Arabia kept output German industry has been this week there was a lack of however, made no major change steady compared with March, hoping for a surge in exports reliable information for doing to output, the survey found, sources in the survey said, even to Iran after international risk assessments on Iranian despite the kingdom hinting it though use in domestic power sanctions were lifted in corporate partners. could boost supply after Opec Supply from the Opec rose to 32.64mn barrels per day (bpd) this month, from 32.47mn bpd in March, plants is rising. Saudi produc- and non-member nations failed according to the survey, based on shipping data and information from sources at oil companies, the Opec tion was estimated at 10.15mn to agree to freeze output at a and consultants. bpd versus 10.18mn in March. meeting on April 17. “Exports are lower,” said a Oil has rebounded more than source who monitors Saudi out- 75% from a 12-year low in Janu- Brent oil set for biggest monthly gain in seven years put. “The month is not over yet ary to reach $48 a barrel, helped so let’s wait for the fi nal number, EU roaming charges by the freeze initiative and signs Reuters ... correlate with fundamentals,” said Hamza but that’s what I am seeing here that lower prices are starting to London Khan, senior commodity strategist at ING. “The and now.” curb higher-cost supply, despite fundamentals - high stocks, high production — Saudi oil output will edge up drop sharply today high inventories and other per- haven’t changed.” close to record highs in coming sistent reminders of a glut. Brent crude was heading for its biggest monthly Analysts polled by Reuters raised their average weeks to meet summer demand “The market is massively rise in seven years yesterday, touching 2016 forecast for Brent in 2016 to $42.30 per barrel, the for power but is unlikely to be AFP than an extra €0.05 per minute oversupplied,” said Eugen Wein- highs as a weak dollar and falling US production second consecutive month of increases. pushed to the limit and fl ood Brussels for calls, €0.02 per SMS and berg, analyst at Commerzbank tempered concerns about an excess of physical oil. Bank of America Merrill Lynch said in a note that global markets, Saudi-based in- 0.05 per megabyte of data. in Frankfurt. “This rally doesn’t A looming rise in Middle East output capped “non-Opec oil supply is indeed hanging off a cliff ”, dustry sources said. Currently, the cap is more have strong legs.” gains, but investor sentiment held the optimism and estimated that global output would contract Production may rise to around obile phone roaming than triple that at €0.19 per Supply from the Organisa- that has helped lift oil futures nearly 80% higher year on year in April or May for the first time since 10.5mn barrels per day (bpd) dur- fees in the EU will fall minute for calls, €0.06 per SMS tion of the Petroleum Exporting than January lows. 2013. ing summer, the sources said. Msharply today, the last and 0.20 euros per megabyte of Countries rose to 32.64mn bar- Brent futures were trading at $48.26 a barrel at A weakening dollar also supported oil by making Supply in April has held steady step before they are abolished data. rels per day (bpd) this month, 1351 GMT, up 12¢ from their last close. US crude dollar-priced crude cheaper for holders of other to slightly lower at about 10.15mn completely for Europeans next “We welcome the slashing of from 32.47mn bpd in March, ac- was up 57¢ at $46.60 a barrel, with both contracts currencies. bpd, said three industry sources year. roaming prices,” said Monique cording to the survey, based on hitting 2016 highs earlier in the session. There are growing risks that production in who monitor Saudi output. The European Union will Goyens, head of the European shipping data and information Investment bank Jeff eries said the market “is Opec member Venezuela could decline. Risk But Saudi-based industry scrap phone roaming charges Consumer Organisation. from sources at oil companies, coming into better balance” and would flip into consultancy Eurasia Group said the state was sources told Reuters that Riyadh outright on June 15, 2017 end- “Today’s consumers do not Opec and consultants. undersupply in the second half of the year. running out of cash to keep its oil pumps does not plan to dump more oil ing fees loathed by millions of understand why crossing a That almost matches Janu- But others warned that the rally was happening running. into the market if there is no de- holidaymakers and business border in Europe has to result ary’s 32.65mn bpd, when Indo- too soon, driven in large part by investors taking “Mounting problems will probably lead to a mand. travellers across Europe. in soaring phone and Internet nesia’s return as an Opec mem- speculative positions. decline of 100,000-150,000 bpd this year,” The sources said production “We’re in the home stretch costs,” she said. ber boosted production and “The issue is that we haven’t seen price rallies Eurasia Group said. would likely stay at 10.2-10.3mn now before the end of roaming The end of roaming charges output from the other 12 mem- bpd and could rise by some charges in 2017,” Andrus Ansip, is a key element of the EU’s ef- bers was the highest in Reuters 200,000-300,000 bpd in the the European Commission’s fort to create a far more unifi ed survey records, starting in 1997. ary. Tehran, which wants to re- However, some of the crude may depending on whether tankers hot summer months to around vice-president for the digital market in Europe, especially Opec output has surged since cover the market share it lost, has have come from storage, giving a loading at the end of the month 10.5mn. single market, said yesterday. for digital and communication it abandoned in 2014 its historic refused to limit its supply until it temporary boost to April supply, are treated as April or May. Ship- Opec meets on June 2 in Vi- “This is not only about Eu- services. role of cutting supply to prop up reaches pre-sanctions output. sources said. ments of Kurdish crude from the enna and may discuss the freeze ropeans saving money, this is The EU mooted plans last prices, led by higher supply from At 3.40mn bpd, Iranian out- Iraq, which saw the fastest north also rose. initiative again. However, Opec about bringing down barriers in year that would allow travellers Saudi Arabia and Iraq. put is within sight of the 3.50mn growth in production in Opec in Opec’s third-largest supply offi cials have been encouraged the digital single market”. to get online streaming services Iran saw the sharpest increase bpd it pumped at the end of 2011 2015, also raised output. South- increase in April came from the by the price recovery, which With yesterday’s change, like Netfl ix or BBC iPlayer when in production in April after West- before sanctions were tightened, ern exports have risen to what UAE, following the end of main- may take the urgency out of a European users travelling on abroad, something currently ern sanctions were lifted in Janu- according to Reuters surveys. may be a new record in April — tenance work on oilfi elds that renewed attempt to forge a deal. the continent will pay no more blocked. Libya outlines ambitious plans to restore oil output

Reuters An NOC offi cial in Tripoli told Reu- ers fi elds that will take between eight A UN-backed unity government’s and with setbacks,” Energy Aspects faction, Battalion 152, has said it is loyal London/Tripoli ters that at least 200,000 bpd of capac- months and several years to reopen. move to Tripoli last month raised hopes analyst Richard Mallinson told the to eastern military commander Kha- ity had been damaged in attacks on oil Infrastructure damage at the ports that Libya could restart idled fi elds and Reuters Global Oil Forum earlier this lifa Haftar, whose political allies have fi elds in the western Sirte basin, Libya’s could take years to repair and will de- reopen export terminals, and the NOC month. blocked the eastern parliament from ibya’s National Oil Corp has am- most prolifi c. lay the restart of the fi elds feeding to in Tripoli says it could quickly double The NOC hopes the unity govern- approving the unity government. bitious plans to restore output to It may take the NOC until late 2017 them. Another big factor is the cost of production to over 700,000 bpd, if po- ment can create a unifi ed security force The unity government said on Sun- Lpre-2011 levels after years of vio- or 2018 to bring those fi elds back to full the repairs. “All those plans depend on litical and security conditions stabilise. to protect oil infrastructure. day it feared further attacks on coastal lence and disruption, offi cials said. capacity, the offi cial said, if it can ordaff security. If proper and robust security The government is still struggling For now, security will depend on an infrastructure and oil fi elds, and that Oil output is now less than a quar- the repairs. at the oil facilities is not in place, then to gain clear support, especially in the array of armed factions including the it had received reports that these were ter of the 1.6mn barrels per day Libya The fi rst phase of a three-stage re- our plans will be in jeopardy,” the sec- east. A parallel NOC in the east export- Petroleum Facilities Guard (PFG), a threatened not only by Islamic State pumped before Muammar Gaddafi covery plan can be implemented within ond offi cial said. ed a shipment of oil independently for semi-offi cial corps that has blockaded but also by Gaddafi loyalists and Suda- fell in 2011, and the National Oil Corp three months, a second NOC offi cial Earlier this year, militants attacked the fi rst time this week, further com- ports and whose attempt in 2014 to ex- nese rebels. (NOC) in Tripoli hopes to ramp it up in Tripoli said, allowing fi elds like El Ras Lanuf and Es Sider, which can han- plicating the prospects for recovery. port crude independently was thwarted Financing could be a challenge in the swiftly with the backing of a new unity Sharara and Elephant, with a combined dle 600,000 bpd of crude exports. The “We are focused now on how to by US special forces. short term as Libya has been hard hit by government. capacity of around 430,000 bpd, to two terminals had been closed since resume oil production. In some plac- PFG leader Ibrahim Jathran says he falling oil prices and has had to bear the Full recovery could take years be- come back on stream. December 2014, after an attack on Es es, we’ll just have to open the valves,” supports the unity government and is double burden of a price crash and con- cause of shutdowns by disgruntled But other fi elds, including those that Sider. Sanalla told Reuters last week. “But ready to reopen the ports of Zueitina, strained output simultaneously. workers, political rivalry and attacks by have been directly attacked and others The latest assault left just 12 out of fi rst of all, we need to have stability.” Es Sider, and Ras Lanuf, and Sanalla has Sanalla has estimated the cost of Islamic State militants. that feed via pipeline to Libya’s larg- 32 storage tanks at the terminals opera- Industry sources do not expect pro- said the NOC would accept the PFG as lost production at more than $68bn Militants hit the al-Ghani, Mabrouk, est export terminals at Ras Lanuf and tional, NOC chairman Mustafa Sanalla duction to increase beyond 600,000 part of a future, national security force. for the past three years, and says Libya and Dahra fi elds in the Sirte basin over Es Sider, may take longer to bring back told Reuters in February. It may take bpd within the next few months. But the blockade and the PFG’s re- loses $30mn every day because of shut- a year ago, forcing the NOC to declare online, he added. NOC “many years” to rebuild dam- “If the new unity government is suc- fusal to allow storage tanks to be emp- downs. Security worries in some areas force-majeure on 11 fi elds, and there Phase two covers six to eight months aged “long lead items” at the ports, he cessful in asserting some control, then tied at threatened terminals have infu- mean the NOC has yet to assess the full have been further attacks since then. down the line while the fi nal phase cov- added. output should recover, but only slowly riated the NOC. Meanwhile a rival PFG cost to repair damaged facilities. Gulf Times 2 Saturday, April 30, 2016 BUSINESS

In China’s tougher drug market, minnows open back door for ‘Big Pharma’

Reuters China growth has stalled to low single- of a tie-up with a global industry leader robust. As well as acquisitions, partner- “Honestly, if you manufacture locally, political connections, an important ele- Shanghai digit pace from over 20% just four years to a company with a staff of around just ship deals are increasingly being sought test local and file local, that will give you ment to help attract funding and navigate ago as branded generics have lost their 25 people, which he founded himself in after, industry executives say. a time advantage,” the firm’s chief execu- complex regulations. shine. Shanghai five years ago. “A lot of firms are coming here to tap tive, Ge Li, told Reuters. “It’s as simple as Samantha Du, chief executive of Armed with Beijing funds and friends in “As a China biotech (company) we have “We were looking for assets around into a cost-eff ective way of doing drug that.” Shanghai-based Zai Lab, which has in- the right places, Chinese drug minnows the advantage of knowing policy, un- the world so that’s a really great match – development,” said Mireille Gillings, chief The tilt in strategy for the majors licensed cancer treatment drugs from are thriving, luring money from ‘Big derstanding the environment and being and I know this asset really well,” Li said. executive of US firm HUYA Bioscience comes as Beijing accelerates eff orts to Pfizer Inc and struck a partnership in Pharma’ majors struggling to restore the able to mobilise resources to get things Among his firms peers, interest in such International, which has scouts around promote a ‘Made in China’ drug industry. March with German pharmaceutical giant strong growth they once enjoyed in the done,” said Li Chen, 54, chief executive of tie-ups is growing. China hunting for drug development GlaxoSmithKline’s China head, Herve Boehringer Ingelheim, said her firm had world’s second-largest medicine market. Hua Medicine. Hua has a deal in place to The buzz around China’s healthcare breakthroughs. Gisserot, told Reuters late last year that “lots of government funding”. Chinese healthcare mergers and develop drugs including a diabetes treat- industry has helped it outstrip hotspots At the same time, other small firms Beijing was putting pressure on off -patent Du, 52, like Hua Medicine’s Li Chen, is a acquisitions nearly tripled last year to ment licensed from Swiss giant Roche like India to become the most active are keen to find overseas partners to generics, reining in prices and trying so-called “sea turtle” – one of China’s best more than $50bn, helped by giants like Holding AG. region in Asia for pharmaceutical tie-ups, push their drugs overseas. HUYA has to cut out low-quality drugs – positive and brightest, who has returned home GlaxoSmithKline and Eli Lilly and Co While firms like Hua can help global said Wei Zheng, healthcare analyst at BMI in-licensed a Chinese immunotherapy moves longer-term, but which created after studying and working overseas. tapping small biotech and research inno- drugmakers navigate complex regulatory Research. cancer treatment that is undergoing trials short-term challenges. She has served on various government- vators. The targets off er vital regulatory risks, speeding up approvals in treatment Chinese healthcare M&A last year in Japan and the US. “The only thing for pharma is that linked committees, she said, noting this know-how as Beijing builds a domestic areas like diabetes and cancer, they get surged to $54bn from $18.8bn the year Shanghai-based research firm WuXi some of the things will happen sooner had done nothing to harm the firm’s drug industry. something in return – access to what before, according to Thomson Reuters AppTec is one company that may fit that than others. Price erosion will likely be prospects. For Big Pharma, acquisitions, licensing Hua’s Li calls “good assets” and in some data, not including the value of numerous bill. It now employees around 11,000 peo- faster than the accelerated approval of “Over 18 months, we’ve raised around deals and joint ventures off er a back cases potential partners to sell their joint ventures and licensing deals. ple worldwide and said this month it was new medicines,” he said. $140mn and haven’t even spent the first door into a market where Beijing expects wares overseas. There have already been deals worth setting up a joint venture with US-listed Chinese partners bring an extra dimen- round,” she said. Her firm, founded in healthcare spending to rise to $1.3tn by For Li, a former Roche scientist, Hua’s more than $9bn this year, the data shows, Juno Therapeutics Inc to develop innova- sion: The domestic start-ups aren’t shy 2013, employs 30 staff in-house. “There’s 2020. The majors need the opening: their partnership deal brings the advantages showing demand for the assets remains tive cancer drugs – in China. about their government backing and plenty of money to spend.”

RBI’s dollar ‘Mitsubishi Motors has cash buying to build reserves to weather mileage scandal ’ Reuters weakens Tokyo itsubishi Motors’ (MMC) market value rupee and Japanese orders have halved since it Madmitted last week to rigging fuel econo- my tests, but with more than $4bn in cash and low Bloomberg debt, the automaker should contain the potential New Delhi damages. The scope of its cheating also now seems more limited than at fi rst feared, improving the pros- ndia’s rupee resumed pects that one of Japan’s smaller automakers can monthly declines in April on survive a third scandal in recent years. Ispeculation dollar purchases That history of scandals though, could put its by the central bank to build the longer term survival at risk given the latest batter- nation’s foreign-exchange re- ing to its branding. In 2004, it was saved from col- serves weighed on the currency. lapse by other Mitsubishi companies. The stockpile grew by $6bn “The fi rm has repeated the same kind of wrong- in the four weeks ended April 22 doing, so the situation is not good,” said a govern- to an unprecedented $361.6bn, ment source who didn’t want to be named due to the latest Reserve Bank of In- the sensitivity of the issue. dia data show, as the authority The survival of companies like MMC highlights bought dollars to take advan- the diffi culty of shaking out weak players in a cut- tage of infl ows into local stocks throat industry if management avoids tough de- and bonds. Earlier this month, cisions to downsize, merge or liquidate, industry governor Raghuram Rajan cut observers say. the benchmark interest rate “This creates an environment where inertia is and pledged to end a prolonged the norm, which allows automakers which may funding squeeze in the fi nancial otherwise disappear to continue to survive for dec- system by infusing cash via bond ades,” said James Chao, Asia-Pacifi c managing di- repurchases. rector of research at IHS Automotive in Shanghai. “Market intervention is the Demand for Mitsubishi cars has weakened, par- key reason as the central bank ticularly at home, where the maker of the Outland- consistently mopped up dol- er SUV and Delica mini-van sold just 102,000 ve- lars from good infl ows after hicles in the year through March, half the number the policy” review, said Rohan it sold less than a decade ago. With annual sales of Lasrado, Mumbai-based head around 1mn vehicles, MMC is a minnow in the glo- of foreign-exchange trading at bal market, and has surrendered market share to RBL Bank. “It seems they favor rivals including Honda, Mazda and Hyundai. a gradual depreciation in the Shares in MMC rose more than 6% on Thursday necessary. Its shareholder equity to assets ratio, at ulent testing is evidence of a signifi cant problem in branded vehicles have lost market share. rupee, while adjusting for in- ahead of a market holiday, but are down 48% since 48%, has grown steadily. the company’s management and governance,” they Mitsubishi Motors produced 202,000 mini-ve- fl ation.” The currency slipped the company said it manipulated mileage test data “We’ve been building up our fi nances over the said. Analysts estimate MMC could have to pay hicles in the year to end-March, of which around 0.1% in April to 66.33 a dollar on four mini-vehicle models, wiping $3.7bn off its past 2-3 years,” managing director Yutaka Tabata close to $1bn to compensate Japanese mini-vehicle 144,000 were for Nissan. MMC has said it has in Mumbai, according to prices market value. said this week. “Our fi nancial structure is strong.” customers for ‘eco-car’ taxes and extra fuel costs. stopped making the four models aff ected by its test from local banks compiled by A nagging concern for investors had been MMC has prioritised bolstering its fi nances And, Nomura Securities analysts say, costs as- rigging. A year’s production halt could cost it up to Bloomberg. It rose 0.3% on Fri- whether MMC also rigged data for cars sold in since previous scandals involving hiding customer sociated with the non-compliant Japanese testing ¥250bn, analysts estimate, in addition to any com- day and was up 0.2% for the the US. While MMC sold fewer than 100,000 cars complaints and secret recalls led to the arrest of system may add an additional ¥24bn ($224mn) to pensation payments to Nissan for lost sales. week. The rupee had strength- there last year, it’s a more litigious marketplace former executives, and its bail-out. That may have the bill, resulting in a possible ¥150bn in extraordi- The next question MMC needs to answer is ened 3.3% in March, the most and could have meant signifi cantly higher dam- seen governance and compliance take a back seat. nary losses in the year to next March. whether its fuel economy claims for cars sold since September 2013, fol- ages. MMC says mileage ratings on its US vehicles S&P analysts, who placed MMC’s credit rating A slump in new car orders will be an additional elsewhere in Asia – accounting for a third of its lowing declines in January were correct. Mitsubishi’s balance sheet shows on negative watch, said they had thought the com- hit, and halting production of the eK Wagon and eK total – were legitimate. Asia, ex-Japan, sales have and February. It has dropped it has cash – ¥453.4bn ($4.23bn) – to cover po- pany’s restructuring and improved governance Space mini-vehicles, along with the Nissan Dayz risen from around a fi fth four years ago as MMC 0.3% in 2016 in Asia’s worst tential costs, and with debts of just ¥27bn and no following previous scandals had helped its per- and Dayz Roox will also bite. Making cars for Nis- focused on selling SUVs and trucks in emerging performance. outstanding term loans, it has room to borrow if formance. “However, we recognise that the fraud- san has been a driver for domestic sales as MMC’s markets. Taiwan economy shrinks more than expected in Q1

Reuters a sharp deceleration from the 2.18% and provide a fresh outlook. Taiwan Taipei rise in the final quarter of 2015. stocks fell more than 1%, pressured Iris Pang, a senior economist for by the weak data and losses in Greater China at Natixis in Hong overseas markets, but the local Taiwan’s trade-reliant economy Kong, said she has pencilled in an dollar ticked up. shrank more than expected in the additional rate cut for 2016 and Pang said more fiscal stimulus is first quarter as exports tumbled, now expects two more cuts to overdue. The new government won pressuring the new government to bring the policy discount rate to power in January, but only off icially come up with stimulus measures 1.25% from its current 1.5%. takes power on May 20. The and cementing views the central Policy is already loose after three outgoing government had rolled bank will cut interest rates again in cuts since September. out a modest T$4.08bn ($127mn) coming months. “That is not enough. Taiwan needs short-term plan late last year. The island’s economy is clearly to depreciate the currency,” Pang While Taiwan’s jobless rate has struggling to shake off last year’s said. remained under 4% despite the recession as prolonged weakness While the first quarter is a weak one long export slump, yesterday’s data in global demand weighs on Asia’s traditionally for Taiwan’s exports showed a worrying first-quarter exporters, even those such as of hi-tech goods, any chance of drop in capital formation - which Taiwan which sell popular, higher- a recovery in the current quarter includes those from government end products such as smartphones. looks touch-and-go. Apple Inc on and public works and private fixed The 0.84% contraction in gross Wednesday posted its first decline investment. domestic product (GDP) in in iPhone sales and a lower- It was the third quarter in a row January-March from a year earlier than-expected revenue outlook, that the economy has contracted was deeper than economists’ clouding the outlook for Taiwan’s on a year-on-year basis. It briefly expectations of a 0.6% fall, and technology giants which make a lot slipped into recession in mid-2015 followed a drop of 0.52% in the of the phone’s components. but managed some growth late in fourth quarter of 2015. Yuanta Investment Consulting the year. “Recovery momentum is still expects second-quarter GDP Governor Perng Fai-nan has said extremely weak,” statistics agency to continue to contract and is cutting interest rates may have off icial Sophia Wang said at a news forecasting a 0.3% year-on-year fall. limited impact given that Taiwan conference on Friday after the For 2016 as a whole, the Taiwanese is an export-driven economy, but preliminary data was released. house is expecting GDP to grow a lower rates could help reduce A construction worker climbs a scaff olding outside a shopping centre under renovation in Taipei. Taiwan’s economy is clearly On a seasonally adjusted, mere 0.3%. strains on trade-related businesses struggling to shake off last year’s recession as prolonged weakness in global demand weighs on Asia’s exporters, even those such annualised basis (SAAR), the The government will issue revised and fend off speculative “hot as Taiwan which sell popular, higher-end products such as smartphones. economy grew 0.76%, but that was GDP figures in two to three weeks money” inflows. Gulf Times Saturday, April 30, 2016 3 BUSINESS

Frontier Vietnam eyes step up to Chinese cities dive back emerging-market big leagues

Bloomberg Hanoi into debt to fuel growth Vietnam says it’s on track to attain the holy grail of emerging-market status, which would put its Reuters fledgling capital markets on the radars of the Shanghai world’s biggest asset managers. Index provider MSCI isn’t so sure. All of MSCI’s criteria for emerging-market ith a nod from Beijing, classification are expected to be met as soon as China’s local govern- the end of 2016, Nguyen Son, head of market de- Wments have embarked on velopment at the State Securities Commission, a massive new round of off -balance said in an interview in Hanoi. The “most diff icult” sheet debt fi nancing, underpinning remaining obstacle is to alter foreign-exchange a fragile pick-up in the economy policy to improve the ease of fund flows, he but raising red fl ags on fi nancial said. Raman Subramanian, managing director stability. of equity research at MSCI in New York, isn’t The increased borrowing for an convinced, saying the country is not yet on the economy already swimming in debt watch list for emerging-market inclusion. adds to concerns about growing Vietnam has grown faster than its Southeast bubbles in certain major asset class- Asian neighbours in recent years, but its econ- es, such as real estate and commodi- omy is still dominated by state- owned banks ties, and a bond market seeing a rise and its stock market is only around a quarter the in corporate defaults. size of that of the Philippines. The United Arab Economists say increasing public Emirates and Qatar – the last two countries to sector investment – most of it fi - be promoted to emerging-market status by New nanced locally with debt – is behind York-based MSCI – saw their benchmark share improvements in China’s economy. gauges jump by at least a third in the 12 months First-quarter GDP rose at the weak- following their addition in June 2013. est pace in seven years, but other “If it happens, it will definitely be a real game data suggested growth was picking changer,” said Attila Vajda, the Ho Chi Minh up in March. City-based managing director of Project Asia “With new infrastructure projects Research & Consulting, a Singapore-based eff ectively all funded by debt and advisory firm. “It will attract a diff erent type of in- more consumer mortgages, the vestor: the big guys so to speak.” Vietnam has a leverage problem and risks on the stock market capitalisation of $64bn, compared fi nancial sector are rising,” Credit with $250bn in the Philippines and $373bn in Suisse analysts wrote in a research Thailand. An emerging-market ranking requires report. Local government fi nanc- “significant” openness to foreign ownership ing vehicles (LGFVs), which Chi- and ease of capital flows, as well as minimum nese cities use to circumvent offi cial levels of liquidity and market value, according to spending limits, raised at least 538bn MSCI’s website. yuan ($83bn) in bonds in the fi rst “We haven’t heard anybody across the globe quarter, up 178% from a year earlier telling us that Vietnam should be there, into the and the highest quarterly issuance emerging-market pool,” said MSCI’s Subrama- since June 2014, Everbright Securi- nian. “It’s not even there yet” and needs to go ties said, quoting fi gures from pri- through a whole process to get there, he said. vately held fi nancial data provider the government raised the percent- tors as a rising number of corpo- China’s struggling Northeast. “De- will help fi nance a 1.2bn yuan ath- The benchmark VN Index of Vietnamese WIND. age of project fi nancing that can be rate defaults - including by some fault risks are low.” The latest local letic culture park, including a ho- stocks closed up 1.1% in Hanoi yesterday, while Issuance in March alone was funded with debt,” said Yang Zhao, non-LGFV state firms with weaker government debt binge has raised tel, shopping street, and a 103,000 the dong strengthened 0.1% to 22,280 a dollar. a monthly record of 287bn yuan chief China economist at Nomura in backing - undermines confidence funds for a variety of projects from sq metres (1.1 mln sq feet) stadium Certain industries including securities firms ($44.3bn). Hong Kong, helping spark the fl urry in company debt. parking lots to renovations of tourist and gym complex – roughly twice were opened up to 100% foreign holdings last China’s planning agency, the Na- of LGFV deals. Defaults have been on the rise this attractions in obscure regions. the size of Europe’s largest soccer year. There are another 18 sectors including tional Development and Reform “If they continue on, the debt-to- year, including in industries, such as Most new issues posted in April stadium that is home to Barcelona transport, construction and real estate where Commission, declined to comment GDP ratio could actually go up quite steel, that suff er from over capacity. on the website of China’s main bond football club. off shore investors can take a degree of owner- on the sharp rise in LGFV issuance. rapidly. I don’t think the policy is “Managers are increasingly con- clearinghouse funded pipelines, or The bonds carry an AA rating, the ship subject to certain conditions. Most of the LGFV debt in the fi rst sustainable, and you’ll see policy- cerned about corporate bond credit water treatment systems and, more third highest credit rating, with the Some of the country’s many state-owned quarter was made up of so-called makers slow down the pace of (cred- quality and so they’re getting back worryingly, housing projects. rater citing strong local government companies are also proceeding with partial enterprise bonds, which the NDRC it) easing in a quarter or two.” into government or quasi-govern- “There are some parts of the support as part of its rationale, even privatisation plans. Vietnam Meat Industries oversees. Much of China’s huge debt over- ment debt,” said a director at a for- country where (housing) inventories though Jinsha County Construc- Ltd sold a 14% stake to the public in March and Beijing had been trying to move hang from the global fi nancial crisis eign buy-side money manager in have come down enough for new tion’s ratio of operating income Vietnam National Shipping Lines and Mobile LGFV debt on to municipal bal- was generated by these same LGFVs Shanghai. construction to make sense,” Ro- before line items over interest pay- Telecom Services Co are planning initial public ance sheets via the 2014 creation which – in addition to funding le- Yields on three-year AA-rated sealea Yao of Gavekal Dragonomics ments due has fallen sharply. In 2012 off erings later this year. of a municipal bond market. But gitimate infrastructure – became LGFV bonds, which in mid-2015 wrote in a research note. it was 57 times interest payments A merger of the Hanoi and Ho Chi Minh City policymakers retreated from this in infamous for building ghost cities were higher than regular enterprise “But there are also parts of China due and in 2014 it was less than two stock exchanges, which was first announced the middle of 2015, easing borrow- and roads-to-nowhere as local of- bonds, now trade 30 basis points where inventories are still rising times. in 2012, is expected to be completed by early ing restrictions as economic growth fi cials took advantage of crisis level cheaper. Enterprise debt is a catego- - and construction is nonetheless Calls to the head of Jinsha County 2017, said the commission’s Son. A composite stumbled. ultra-low borrowing rates. ry of the market mainly used by state picking up, probably because of Construction fi nance department index will be built and products such as covered Consequently, LGFV issuance in This helped push China’s debt- affi liated borrowers. state-directed spending.” went unanswered. warrants as well as a derivatives market will the fi rst quarter of 2016 was nearly to-GDP ratio to more than 240% at “It’s easier to raise money right In southwestern Guizhou, one of After the wave of LGFV deals, ris- be added in 2017, he said. The government 60% as large as the municipal bond the end of 2015, estimates from the now, after all LGFV bonds are basi- China’s poorest provinces, Jinsha ing yields suggest some investors would like to partially float the merged bourse, issuance meant to replace it, up Bank for International Settlements cally half government bonds,” says County Construction and Invest- are starting to grow cautious amid although this won’t happen until after 2020, said from just 37% in the fourth quarter show. Li Xiangdong at the Qinhuangdao ment Co Ltd, an LGFV, sold 800mn a broader selloff in Chinese bonds. Son. The exchange and bigger listed companies of 2015, central clearinghouse and Despite the concerns flagged by Development Investment Holding yuan of seven-year bonds on April About $15bn in debt issuance has are also publishing more information in English, brokerage data shows. analysts, LGFV bonds are prov- Group Co, an LGFV owned by the 27. been delayed in April, including by he said. “In the second half of last year, ing relatively attractive to inves- coal port city of Qinhuangdao in Among other projects, the funds several LGFVs. US Steel accusations As Japan electricity reform kicks groundless: Baosteel off , Germany serves as warning Reuters circumventing trade duties by false Shanghai/Manila labelling. China’s commerce ministry on Reuters account for nearly a third of the power Wednesday urged the ITC to reject Tokyo/Frankfurt mix, but the capacity glut has cut hina’s Baosteel Group said US Steel’s call, saying there was “no wholesale prices by 70% since 2008. yesterday that accusations factual basis” for intellectual prop- This drove down costs for the coun- Cby US Steel Corp against erty disputes over China’s steel ex- our weeks into Japan’s power try’s chemical, automobile and other the company, including that it had ports to the US. market shakeup aimed at boost- industries, but slashed revenues for stolen commercial secrets, were The US, European Union and oth- Fing choice and energy security, major utilities. groundless and vowed to protect its ers last week called for urgent action the utility at the centre of the 2011 nu- Smaller businesses and households, legal rights. to address global steel overcapacity, clear crisis has borne the brunt of con- however, have been hit with steep re- China’s second-biggest steel- after China and other major steel sumer defections, with nearly 470,000 tail costs in order to fi nance renewable maker and the world’s fourth is the producing nations failed to agree on users switching electricity providers. subsidies, while industry enjoys a raft fi rst Chinese steel producer to re- measures to tackle an industry cri- The move underscores the anger at of exemptions. Japan, too, has posted spond to US Steel, which launched a sis. Tokyo Electric Power (Tepco), opera- explosive growth in subsidised renew- campaign this week to halt imports Britain in particular has been hit tor of the wrecked Fukushima power able energy, particularly solar, since from China. hard as its largest producer Tata station, but has helped provide a solid preferential rates were introduced in “In particular, the charges claim- Steel has announced plans to pull start for the government’s eff orts to 2012. Solar now meets as much as 10% ing that Baosteel stole commercial out of the country, threatening spur competition in its power sector. of power demand. secrets from US Steel is rootless 15,000 jobs. Japan’s reforms mark the biggest Critics say subsidies must be rolled speculation and subjective assump- Anger towards China has grown liberalisation since Germany’s over a back fast to avoid the creation of a tion, and could even be described as since last year as its steel exports decade ago. Their ultimate success, renewables capacity glut that erodes an absurd statement,” Baosteel said surged to a record 112mn tonnes, however, will depend on avoiding some wholesale power prices and, with in an emailed statement. but a domestic steel price rally could of the pitfalls that still dog the German Men work around an electric pole in Urayasu, Tokyo. Four weeks into Japan’s it, revenues for conventional power “Baosteel has not and will nev- help limit shipments this year as power market including high retail power market shakeup aimed at boosting choice and energy security, the utility plant operators. er steal to obtain technology,” the producers sell more at home. prices, weakened former state utilities, at the centre of the 2011 nuclear crisis has borne the brunt of consumer “When renewables are 3% of the company said, adding that it had Baoshan Iron & Steel, the listed and high use of coal. defections, with nearly 470,000 users switching electricity providers. power mix, they need support pay- consistently focused on original unit of Baosteel Group, said the Sparked by the 2011 earthquake and ments, but when they reach 20%, you research and technology improve- rapid increase in Chinese steel prices tsunami which highlighted problems suppliers, according to the national of subsidised green energy that gutted have to make the change towards sup- ment. may deter government eff orts to in transferring electricity across re- grid monitor OCCTO, and wholesale its big utilities. porting capacity only by competitive “The charges in the application curb overcapacity in the sector in the gions and led to the shutdown of nu- trading volumes on the Japan Electric “They are very cognizant of what means,” Peter Reitz, chief executive of violate the spirit of justice and fair- short term by prompting once-shut clear reactors, the reforms are part of Power Exchange (JEPX) surged, albeit has happened in Germany. They have Germany’s EEX , told Reuters. ness and were also disrespectful and mills to restart. Prime Minister Shinzo Abe’s plans to from a tiny base. been in there, they met government In Germany, renewable subsidies, besmirching to Baosteel and its re- “This will slow the reduction in boost an economy in the doldrums. “The number of customers switch- offi cials and industry practitioners,” taxes and other government levies ac- search staff ,” it said. overcapacity, but with mills reopen- From April 1, the government ended ing is encouraging and the pick-up O’Sullivan said. “I think the chances counted for 54% of retail power prices “Baosteel will protect its legal ing and supplies rising and the gov- regional monopolies that were formed in JEPX activity levels is also wel- of success are 50/50 at this stage.” last year, and within that supporting rights in accordance with related ernment strengthening monitoring after World War Two, opening up retail come news as building capacity in the Japan and Germany’s power mar- feed-in tariff s was the biggest single international regulations and laws.” on real estate and futures, steel pric- gas and electricity markets to compe- wholesale market will be key to en- kets share many similarities – de- item totalling €24bn ($27bn). US Steel on Tuesday fi led a com- es will fall,” Baosteel board secretary tition. It hopes the changes will help suring success in liberalised markets,” clining demand, subsidies for renew- In Japan, government sanctioned plaint with the International Trade Zhu Kebing told a separate online create a thriving wholesale market, said Tom O’Sullivan of energy consul- able energy, a dormant or declining preferential rates for renewable en- Commission (ITC), calling on regu- briefi ng. driving down prices for industrial and tancy Mathyos Japan. nuclear sector, and energy-intensive ergy supplies added about ¥1.3tn lators to investigate dozens of Chi- Zhu attributed the spike in steel retail customers alike. However, Japan needs to avoid the industries. ($11.7bn) to electricity bills in the nese producers and their distribu- prices to previous big production In the fi rst month of the new mar- problems that beset Germany’s lib- Germany’s experience, however, year through March, double the year tors for allegedly conspiring to fi x cuts, low inventories and an improv- ketplace, more than 740,000 Japanese eralisation, particularly a collapse in has reaped mixed results. Huge sub- earlier, according to the industry prices, stealing trade secrets and ing Chinese economy. retail electricity users switched to new wholesale power prices due to a fl ood sidies mean renewable energy sources ministry. Gulf Times 4 Saturday, April 30, 2016 BUSINESS

Hong Kong home prices Casino to sell Big C Vietnam fall for 6th straight month to Central Group for $1.1bn

Reuters Reuters Hong Kong Paris/Bangkok

ong Kong’s home prices posted their asino is to sell its Big C Vi- sixth consecutive month of decline in etnam business to Thai con- HMarch, government data showed, with Cglomerate Central Group for housing supply expected to hit a record high €1bn ($1.1bn) including debt, giv- over the next few years. ing the French retailer further res- Home prices fell 3.5 points from February pite from a debt pile that pushed its and 21.3 points from a year earlier, according credit rating to junk. to a government index published by the Rating Casino, facing weak markets in and Valuation Department yesterday. Brazil and fi erce competition in Home rents also recorded their sixth con- France, has said it aimed to raise secutive decline, but fell a more modest 0.6 around €4bn this year by selling off points from February and 6.7 points from a businesses in Thailand and Vietnam year earlier. plus the sale of real estate assets in Data from Hong Kong’s de facto central Latin America. bank, the Hong Kong Monetary Authority, Casino will make €920mn from showed the number of homes worth less than the sale, which will take the total their purchase price rose sharply in the fi rst raised from asset sales to €4.2bn, quarter to 1,432 cases with an aggregate val- the company said. ue of HK$4.9bn ($631.64mn) as of March 31, The retailer was criticised in HK$195mn of which was unsecured. December by US activist investor At the end of December there were only Muddy Waters, which said Casino 95 such cases with an aggregate value of was “dangerously leveraged” and HK$418mn, HK$12mn of which was unse- Standard & Poor’s in March cut its cured. Hong Kong has one of the most expen- credit rating to junk. sive property markets in the world and ana- Casino has rejected the criticism, lysts have been forecasting a 10 to 15% decline pledging to cut debt using proceeds in home prices this year amid government from disposals, and promising im- cooling measures, higher US interest rates and proved profi ts and cash fl ow in its China’s economic slowdown. A slump in stock main French market. markets on the mainland has also dampened “This is another piece of good property investments in Hong Kong. news for Casino. We estimate the Data from Hong Kong’s Transport and deleveraging plan to add €6 per Housing Bureau yesterday showed the city’s share to Casino’s valuation” Bern- private housing supply was on track to hit a stein analyst Bruno Monteyne said record high of 92,000 units in the coming in a note. Seafood is displayed for sale at the Big C supermarket in Hanoi. The supermarket’s Vietnam sales represented a multiple of 1.8 times net sales for 2015. three to four years. Casino shares rose about 2% in Housing supply consists of completed but early trading, bucking a 1.5% fall in by Reuters earlier yesterday, will give Kim, 49% owned by Central, for the ing deals that could top Vietnam’s The Big C Vietnam sale repre- unsold units, those under construction and the benchmark CAC 40 Index. They Central access to Big C’s 43 stores in Big C deal, Central Vietnam said in a record $4bn worth of M&A deals sented a multiple of 1.8 times net where construction may start at any time. were up 1.03% by 1130 GMT. Vietnam and 30 malls that gener- statement. achieved last year.. sales for 2015. Last year, TCC agreed A large number of units remained unsold as Central, controlled by the ated turnover of €586mn in 2015. The two Thai rivals have been ex- Casino, which entered Vietnam to buy the Vietnam cash and carry of the end of March. There were 1,000 com- Chirathivat family with interests It marks Central’s most signifi cant panding into Southeast Asian mar- over 18 years ago, is retreating from wholesale business of Germany’s pleted but unsold units from developments in real estate and retail, beat TCC overseas acquisition since buying kets in search of growth. They are Asia as part of its plans to cut debt Metro Group for 1.3 times net sales. completed prior to 2014, another 1,000 from Group of Thai tycoon Charoen Siri- assets in Europe, including the 2011 betting on Vietnam’s demographics which totalled €6.1bn at the end of HSBC advised Casino on the sale, projects completed in 2014 and 3,000 from vadhanabhakdi to take a majority purchase of Italian department store and hedging against political and 2015. In February, Casino sold its while Citigroup and Deutsche Bank projects completed last year, the data showed. stake in hypermarket operator Big chain La Rinascente. economic uncertainty back home. stake in Thai hypermarket opera- advised Central, people familiar In the fi rst three months of the year, another C Vietnam, people familiar with the Central will team up with Viet- Through supermarkets, malls, tor Big C Supercenter for €3.1bn to with the matter, who declined to be 1,000 units had accumulated. matter said. The deal, fi rst reported namese electronics fi rm Nguyen dairy and beer, they are pursu- TCC, which outbid Central. identifi ed, said.

Australia coal prices Ambani’s fi nancing costs climb as asset sales stall plunge as Colombian

Bloomberg cargoes head to Asia Mumbai

he slow progress in Reliance Com- Reuters munications’ plans to reduce debt by Singapore/Seoul Tselling assets is costing billionaire Anil Ambani. India’s fourth-largest wireless operator Australian thermal coal prices for delivery in June faces higher fi nancing costs ahead of repay- have dropped to 10-year lows as Colombian miners ment deadlines in coming months, with start sending large volumes into Asia for the first time, yields on its dollar bonds rising in April for adding cargoes to an already oversupplied market. the fi rst time in three months. Moody’s In- Prices for coal cargoes delivered from Australia’s vestors Service, which changed its ratings Newcastle port by May 31 last closed at $46.60 per outlook to negative from stable earlier this tonne, their lowest since 2006. month, says a failure to refi nance could lead The slump comes just as other commodities such as to a multi-notch downgrade in the future. steel and oil enjoy rallies on the back of new investor “Persistent delays in the sale of assets have appetite. made the company’s metrics more vulner- In thermal coal markets, by contrast, an unusual new able,” said Nidhi Dhruv, a senior analyst at trade route has opened as low dry-bulk rates allow Moody’s in Singapore. The company has al- Colombian miners, who usually supply North America ready breached some debt covenants and will and Europe, to target Asia. continue to be dependent on waivers until the South Korea’s East-West Power utility (EWP) this month asset sales materialise, she said, declining to bought 260,000 tonnes of Colombian coal on free- say which covenants had been breached. on-board (FOB) terms for loading between June and Ambani, who announced plans including August, adding to another 410,000 tonnes already on selling cellular towers in December to help order. the company become net-debt free by March “We have currently got ordered 670,000 tonnes of coal 2017, hasn’t yet announced closure of any of from Colombia,” said a utility source familiar with the those deals. matter. Reliance Communications stock was “Currently Colombian coal is about $7-8 (per tonne) Asia’s worst performer in a gauge of telecom cheaper than the Australian coal and if this price trend shares last quarter and has lost a third of its continues, we are definitely willing to import more value in 2016. The company had net debt of from Colombia,” said the source, who declined to be Rs404.8bn ($6.1bn) as of December 31, com- identified. pany fi lings show. It has to repay $450mn this Colombian coal appearing in larger volumes in the quarter and $1.6bn by March 2017, according Pacific has helped push down Australian prices, to estimates by Moody’s. analysts said. Rajeev Narayan, a spokesman for Reliance “Coal supply in the Pacific has been rising for more Communications, didn’t reply to an e-mail than a month. Shipments from Colombia contributed and text messages seeking comments on debt to this,” said Georgi Slavov, head of energy, ferrous repayments, progress on asset-sale plans and metals and shipping research at brokerage Marex covenant waivers. Spectron. While the delays may result in negative Although he added that these shipments were part of rating actions, the company also referred to a bigger increase in supplies, including from Australia as RCom should be able to refi nance its debt, itself. according to Lucror Analytics, an independ- Pricing agency Platts reported that the 410,000 tonnes ent credit research fi rm. were ordered on a cost and freight (CFR) basis, while “I think lenders are willing to extend the the 260,000 tonnes came on a free on board (FOB) waivers,” said Trung Nguyen, a Singapore- basis. based credit analyst at Lucror. “There is lit- Platts said EWP paid $41 a tonne for the FOB cargoes tle scope for deleveraging using internal and $52 per tonne for the CFR supplies, making them cash fl ows. RCom will likely remain a rela- competitive against the Newcastle price of $46.60 a tively small telco with a highly levered bal- Reliance Communications stock was Asia’s worst performer in a gauge of telecom shares and has lost a third of its value in 2016. tonne, which are quoted on a FOB basis. ance sheet.” The yield on RCom’s 2020 dollar That’s still far less than its monthly imports of around bonds has climbed 12 basis points this month in December that it is in talks to merge with on RCom’s 2020 dollar bonds to ‘sell’ follow- decline in the broader S&P BSE-100 index. 5mn tonnes from Australia and 2-3mn tonnes from to 5.90%, data compiled by Bloomberg show. smaller wireless carrier Aircel but in March ing the delay. “Furthermore, the company Moody’s mentioned net worth, net debt- Indonesia. That compares with a record low of 5.67% on extended the initial 90-day exclusivity pe- hasn’t been gaining market share while the to-EBITDA and EBITDA- to-interest ex- But it’s a huge jump from Colombia’s typical monthly April 7, when Moody’s lowered the fi rm’s rat- riod for the discussions till May 22.At the top players are consolidating their positions.” pense as some of RCom’s debt covenants in supplies to South Korea of just 1,000 to 3,000 tonnes, ing outlook. In comparison, yields on Indian same time, potential delay in the rollout of RCom’s share of India’s billion-plus wireless a report in December. The wireless carrier and would bring its share of supplies there towards 7%. corporate notes in greenback have fallen 27 the fourth-generation wireless network by subscribers’ market dropped to 9.9% in Feb- continues to have a weak liquidity profi le, Colombian miners are having to look to new markets basis points since March 31 to 4.14%, accord- Anil’s elder sibling and India’s richest man ruary from 11.1% in August 2015, according to and remains reliant on recurring covenant as consumption in Europe and North America is ing to Bank of America Merrill Lynch indexes. Mukesh Ambani, could be deferring the data from the regulator. It reported net sales waivers from banks due to its high leverage, stalling due to the rise of renewables, improving Ambani and other founders owned 59.1% rental income RCom expected from its pact of Rs52.3bn for the quarter ended December, Moody’s wrote in an April 13 report. energy eff iciency, and because of the US shale boom of the company as of March 31, stock ex- with Mukesh’s fi rm. The commercial launch down from Rs53.6bn a year earlier. “Had the tower deal progressed on the which has made natural gas highly competitive there. change data show. of Reliance Jio Infocomm’s services may be While RCom’s shares have jumped 15% in original timeline, it would have closed in The extension of the Panama Canal, almost completed, RCom in December said it signed a non- pushed to December, The Economic Times April as India’s government approved of the the quarter ending June, alleviating the refi - will further boost Colombian coal exports to Asia. binding pact to sell its cellular towers across reported last month. fi rm’s airwave-sharing pact with Reliance nancing pressures,” said Dhruv of Moody’s. “It will lower the freight costs and make the Colombian India to private equity fi rms Tillman Glo- “The delay in the sale of towers is credit Jio, the gains have come after a 43% slump “Now, even when the fi nal tower deal is an- coal more attractive to us and other countries in Asia,” bal Holdings and TPG Asia. The deal was negative and a cause of concern,” said Nguyen in the previous three months. The stock is nounced, it’ll take another six months to the Korean utility source said. to be ratifi ed by January 15. RCom also said of Lucror, which lowered its recommendation down 35% in 2016, compared with a 1.3% close.” Gulf Times Saturday, April 30, 2016 5 BUSINESS

DJIA WORLD INDICES Company Name Lt Price % Chg Volume Indices Lt Price Change Dow Jones Indus. Avg 17,694.34 -136.42 Apple Inc 92.71 -2.24 35,044,864 S&P 500 Index 2,053.48 -22.33 Microsoft Corp 49.76 -0.29 20,861,938 Nasdaq Composite Index 4,755.43 -49.86 Exxon Mobil Corp 88.04 0.01 7,278,585 S&P/Tsx Composite Index 13,896.57 +10.14 Johnson & Johnson 111.68 -0.71 2,092,679 Mexico Bolsa Index 45,593.64 +64.71 General Electric Co 30.89 -0.03 10,252,539 Brazil Bovespa Stock Idx 53,811.83 -500.13 Procter & Gamble Co/The 79.91 0.19 2,854,272 Ftse 100 Index 6,241.89 -80.51 Jpmorgan Chase & Co 62.88 -1.14 5,696,914 Cac 40 Index 4,428.96 -128.40 Wal-Mart Stores Inc 66.72 -3.18 5,325,689 Dax Index 10,038.97 -282.18 Verizon Communications Inc 50.91 -0.22 4,168,959 Ibex 35 Tr 9,025.70 -243.30 Coca-Cola Co/The 44.67 0.09 3,704,152 Nikkei 225 16,666.05 -624.44 Pfizer Inc 32.53 -1.15 12,204,532 Japan Topix 1,340.55 -43.75 Chevron Corp 100.98 -1.39 3,674,387 Hang Seng Index 21,067.05 -320.98 Visa Inc-Class A Shares 77.26 -0.54 2,286,934 All Ordinaries Indx 5,316.00 +26.62 Home Depot Inc 132.75 0.02 1,490,680 Nzx All Index 1,297.93 +5.73 Walt Disney Co/The 102.73 -1.25 2,714,675 Bse Sensex 30 Index 25,606.62 +3.52 Intel Corp 30.15 -3.10 14,577,949 Nse S&P Cnx Nifty Index 7,849.80 +2.55 Merck & Co. Inc. 54.59 -2.06 4,851,406 Straits Times Index 2,838.52 -23.78 Cisco Systems Inc 27.21 -2.70 15,258,995 Karachi All Share Index 23,953.98 +144.01 Intl Business Machines Corp 144.75 -1.58 1,546,622 Jakarta Composite Index 4,838.58 -9.81 Unitedhealth Group Inc 130.05 -1.53 1,407,016 Mcdonald’s Corp 126.46 -1.14 1,872,001 Nike Inc -Cl B 58.26 -0.48 2,996,323 3M Co 167.04 0.02 570,469 TOKYO Boeing Co/The 133.98 -0.61 1,512,476 United Technologies Corp 104.04 -0.18 984,000 Company Name Lt Price % Chg Goldman Sachs Group Inc 163.35 -0.57 1,131,313 Rakuten Inc 1,220.50 -5.20 8,426,900 American Express Co 65.01 -1.26 1,958,456 Kyocera Corp 5,473.00 -0.45 3,656,600 Du Pont (E.I.) De Nemours 65.95 -0.69 706,419 Nissan Motor Co Ltd 1,000.00 -4.31 18,273,100 Caterpillar Inc 78.20 0.58 3,011,915 Hitachi Ltd 515.60 -3.95 36,683,000 Travelers Cos Inc/The 109.40 0.25 496,000 Takeda Pharmaceutical Co Ltd 5,262.00 -3.02 2,456,800 Jfe Holdings Inc 1,579.50 -6.87 10,151,300 Ana Holdings Inc 308.00 -1.09 17,535,000 FTSE 100 Mitsubishi Electric Corp 1,198.00 -2.12 15,343,000 Sumitomo Mitsui Financial Gr 3,413.00 -6.00 15,373,000 Company Name Lt Price % Chg Volume Honda Motor Co Ltd 2,992.50 -4.18 6,548,200 Fast Retailing Co Ltd 29,185.00 -5.79 1,499,200 Wpp Plc 1,596.00 -1.97 4,312,614 Ms&Ad Insurance Group Holdin 2,968.50 -5.73 2,190,600 Worldpay Group Plc 266.90 -1.44 7,041,153 The Sanofi logo is seen at the company’s headquarters in Paris. Sanofi shares slumped 5.4% yesterday after US biotech Kubota Corp 1,659.50 -4.19 6,579,800 Wolseley Plc 3,821.00 -2.40 697,197 company Medivation rejected an unsolicited $9.3bn bid from the French pharmaceutical maker. Seven & I Holdings Co Ltd 4,543.00 -1.67 3,560,400 Wm Morrison Supermarkets 191.10 -0.88 9,106,866 Inpex Corp 888.20 -3.02 7,419,100 Whitbread Plc 3,872.00 -3.49 869,925 Resona Holdings Inc 393.20 -6.60 24,806,800 Vodafone Group Plc 219.20 -2.10 55,691,436 Asahi Kasei Corp 759.70 -3.63 5,682,000 United Utilities Group Plc 939.50 0.21 1,444,677 Kirin Holdings Co Ltd 1,591.50 -5.72 4,171,900 Unilever Plc 3,054.50 -1.69 1,976,804 Marubeni Corp 586.10 -3.43 11,646,400 Tui Ag-Di 991.00 -3.22 1,284,850 Mitsubishi Ufj Financial Gro 520.10 -5.95 149,428,600 Travis Perkins Plc 1,848.00 -1.02 619,695 Mitsubishi Chemical Holdings 581.80 -3.21 8,464,000 Eurozone growth fails Tesco Plc 172.10 -0.69 21,965,892 Fanuc Corp 16,505.00 -9.93 3,608,600 Taylor Wimpey Plc 184.30 -1.50 9,762,641 Daito Trust Construct Co Ltd 15,495.00 -2.21 588,600 Standard Life Plc 326.10 -1.72 5,902,079 Otsuka Holdings Co Ltd 4,296.00 -2.21 1,159,600 Standard Chartered Plc 552.10 -3.24 9,353,453 Oriental Land Co Ltd 7,600.00 -1.80 1,760,600 St James’s Place Plc 867.00 -1.59 1,409,241 Sekisui House Ltd 1,931.50 -4.12 4,302,200 Sse Plc 1,510.00 -0.85 2,994,814 to stir stock markets Secom Co Ltd 8,445.00 -2.73 1,169,500 Smith & Nephew Plc 1,156.00 -1.11 2,526,108 Tokio Marine Holdings Inc 3,689.00 -5.00 2,851,300 Sky Plc 938.50 -0.58 3,528,310 Aeon Co Ltd 1,643.50 -1.29 3,878,700 Shire Plc 4,261.00 1.77 3,289,782 Bank of Japan decided against boosting pectations for any more hikes this year. Mitsui & Co Ltd 1,341.50 -2.72 10,271,400 AFP Severn Trent Plc 2,227.00 -0.13 643,032 stimulus to support its country’s own Among large European movers was Kao Corp 6,116.00 2.46 3,913,200 London Schroders Plc 2,514.00 -2.10 436,015 fl agging economy. Sanofi , whose shares slumped 5.4% Dai-Ichi Life Insurance 1,369.00 -5.78 9,991,300 Sainsbury (J) Plc 288.90 -0.99 4,363,546 Mazda Motor Corp 1,744.50 -3.75 17,899,200 Even data showing that the euro- after US biotech company Medivation Sage Group Plc/The 592.00 -0.08 2,647,833 Komatsu Ltd 1,906.50 -0.65 9,220,600 strong eurozone growth spurt zone economy expanded by a fast- rejected an unsolicited $9.3bn bid from Sabmiller Plc 4,185.00 -0.48 2,356,706 West Japan Railway Co 6,678.00 -1.27 1,388,500 failed to stir stock markets yes- er-than-expected 0.6% in the first the French pharmaceutical maker. Rsa Insurance Group Plc 459.10 -0.11 1,827,027 Murata Manufacturing Co Ltd 14,795.00 0.71 2,135,900 terday, as concerns about the quarter as cheap oil and credit made Sanofi vowed it would pursue a Royal Mail Plc 486.90 -0.53 1,724,792 A Kansai Electric Power Co Inc 977.20 -1.32 6,795,000 Royal Dutch Shell Plc-B Shs 1,786.00 -1.90 6,377,268 US economy gnawed at investor con- itself felt, failed to boost European hostile bid for the manufacturer of Denso Corp 4,251.00 -5.85 4,894,300 Royal Dutch Shell Plc-A Shs 1,779.50 -1.82 6,196,030 fi dence. markets. the high-priced, blockbuster prostate Sompo Japan Nipponkoa Holdin 2,940.50 -5.75 1,608,800 Royal Bank Of Scotland Group 230.00 -6.05 23,054,462 Daiwa House Industry Co Ltd 2,963.00 -4.42 2,510,900 London’s FTSE 100 was down 1.3% However, negative infl ation of 0.2% cancer medication Xtandi. Rolls-Royce Holdings Plc 669.50 -3.53 4,748,962 Jx Holdings Inc 470.60 -2.18 13,125,100 to 6,241.89 points, Frankfurt’s DAX 30 in April took the shine off those fi gures In the US, online giant Amazon Rio Tinto Plc 2,300.50 -1.24 5,033,724 Nippon Steel & Sumitomo Meta 2,339.00 -4.39 5,424,400 was down 2.7% at 10,038.97 points, for investors. jumped 9.5% after reporting a swing Rexam Plc 625.00 -1.11 2,006,545 Suzuki Motor Corp 3,075.00 -2.35 4,701,100 into profi t from a year ago for the fi rst Relx Plc 1,210.00 -0.41 3,770,015 Paris’ CAC 40 was down 2.8% at London’s FTSE 100 index of leading Nippon Telegraph & Telephone 4,864.00 -1.32 5,471,700 Reckitt Benckiser Group Plc 6,654.00 -1.50 1,146,374 4,428.96 points and Euro STOXX 50 stocks fell 1.3%, while the main indices quarter to $513mn, racking up a fourth Ajinomoto Co Inc 2,555.00 -3.26 2,325,900 Randgold Resources Ltd 6,770.00 3.75 601,959 was down 2.8% at 3,037.93 points at in Frankfurt and Paris were down close consecutive profi table quarter. Mitsui Fudosan Co Ltd 2,725.00 -4.82 7,239,000 Prudential Plc 1,347.50 -2.00 3,800,498 close. to 3.0%. Besides Amazon, online travel giant Ono Pharmaceutical Co Ltd 4,978.00 -2.26 5,147,600 Provident Financial Plc 2,914.00 -0.14 252,669 Daikin Industries Ltd 8,884.00 -2.99 1,796,000 A day after data showed the US Meanwhile, in late morning trading Expedia and LinkedIn, the professional Persimmon Plc 1,987.00 -0.60 1,032,607 Bank Of Yokohama Ltd/The 520.00 0.00 25,746,000 economy has expanded at its slowest the Dow was down 0.8%. online network, also beat earnings Pearson Plc 805.00 -1.17 3,086,484 Toray Industries Inc 926.70 -3.24 5,826,000 pace for two years, fresh data further The US Commerce Department said forecasts, Patrick O’Hare at Briefi ng. Paddy Power Betfair Plc 9,150.00 1.72 152,086 Astellas Pharma Inc 1,497.00 -3.51 7,667,100 Old Mutual Plc 185.50 -1.38 11,035,369 dampened sentiment as consumer on Thursday that the world’s number com noted. Expedia shares leaped 7.7% Bridgestone Corp 4,116.00 -3.27 3,507,200 Next Plc 5,085.00 -1.26 808,987 spending came in at a lower than ex- one economy grew 0.5% in January- and LinkedIn rose 1.9%. Sony Corp 2,778.00 -2.08 10,730,200 National Grid Plc 974.80 -0.02 5,769,812 pected increase of 0.1% in March de- March, almost half the pace expected, Heavyweight Apple continued to Hoya Corp 4,261.00 -2.14 1,443,500 Mondi Plc 1,308.00 -1.51 1,193,485 spite personal income rising by 0.4%. and the worst reading since 2014 as tumble after billionaire investor Carl Sumitomo Mitsui Trust Holdin 344.60 -7.86 36,705,000 Merlin Entertainment 431.50 -0.87 1,486,137 Japan Tobacco Inc 4,530.00 -3.86 3,640,400 Meanwhile, annual consumer infl a- consumer spending sputtered. Icahn announced Thursday he had sold Mediclinic International Plc 905.00 -0.39 786,097 Osaka Gas Co Ltd 396.80 -3.62 11,567,000 tion slid to 0.8% in March. The news seemed to justify the Federal his investment. Apple shares fell 1.6% Marks & Spencer Group Plc 423.50 -2.06 5,179,793 Sumitomo Electric Industries 1,345.00 -4.13 4,274,700 It also comes in a week during the US Reserve’s decision earlier this week not after suff ering a hefty 3.1% loss the London Stock Exchange Group 2,713.00 -1.24 432,775 Daiwa Securities Group Inc 646.20 -7.53 14,381,000 Lloyds Banking Group Plc 67.07 -1.53 159,480,652 held off raising interest rates and the to raise interest rates and to lower its ex- prior day. Softbank Group Corp 5,988.00 -3.47 7,526,900 Legal & General Group Plc 223.10 -1.80 15,430,066 Mizuho Financial Group Inc 167.80 -6.47 310,502,600 Land Securities Group Plc 1,132.00 -0.70 2,670,295 Nomura Holdings Inc 478.90 -10.05 55,466,400 Kingfisher Plc 363.90 -1.68 6,710,432 HONG KONG HONG KONG Daiichi Sankyo Co Ltd 2,601.00 -2.18 3,425,000 Johnson Matthey Plc 2,887.00 -0.45 374,332 Fuji Heavy Industries Ltd 3,716.00 -3.61 7,769,900 Itv Plc 225.20 -0.18 21,379,536 Ntt Docomo Inc 2,597.00 -1.63 5,979,100 Company Name Lt Price % Chg Volume Company Name Lt Price % Chg Volume Intu Properties Plc 304.30 -2.28 2,920,654 Sumitomo Realty & Developmen 3,245.00 -6.67 4,179,000 Intl Consolidated Airline-Di 525.00 -4.72 26,526,785 Aluminum Corp Of China Ltd-H 2.60 -2.62 16,005,944 Hong Kong & China Gas 14.48 -1.23 11,869,095 Sumitomo Metal Mining Co Ltd 1,252.00 -1.92 5,351,000 Intertek Group Plc 3,257.00 -1.15 319,528 Bank Of East Asia Ltd 28.25 -2.42 7,119,104 Hong Kong Exchanges & Clear 196.30 -0.96 5,074,067 Orix Corp 1,586.50 -3.85 8,006,900 Intercontinental Hotels Grou 2,729.00 -2.01 709,256 Bank Of China Ltd-H 3.17 -1.86 241,467,466 Hsbc Holdings Plc 51.80 -0.77 16,949,144 Asahi Group Holdings Ltd 3,509.00 -4.65 1,844,000 Inmarsat Plc 929.50 0.65 1,512,137 Bank Of Communications Co-H 4.91 -2.96 60,168,688 Hutchison Whampoa Ltd 0.00 0.00 - Keyence Corp 67,160.00 2.25 353,600 Informa Plc 654.50 0.00 1,566,149 Belle International Holdings 4.76 0.42 14,081,907 Ind & Comm Bk Of China-H 4.21 -1.41 215,101,781 Nidec Corp 8,185.00 -0.74 2,469,300 Imperial Brands Plc 3,718.50 0.84 2,206,986 Boc Hong Kong Holdings Ltd 23.25 -1.06 15,131,973 Li & Fung Ltd 4.81 -3.61 14,809,855 Isuzu Motors Ltd 1,195.50 -5.49 6,906,900 Hsbc Holdings Plc 452.50 -3.18 35,755,554 Cathay Pacific Airways 12.40 1.64 6,022,478 Mtr Corp 38.40 -1.03 3,109,785 Unicharm Corp 2,292.50 -3.33 4,682,500 Hargreaves Lansdown Plc 1,286.00 -0.54 451,281 Ck Hutchison Holdings Ltd 93.00 -1.27 9,844,458 New World Development 7.74 -1.78 8,303,808 Shin-Etsu Chemical Co Ltd 6,203.00 -4.83 2,388,700 Hammerson Plc 584.50 -1.10 2,304,033 China Coal Energy Co-H 3.68 -0.27 4,113,900 Petrochina Co Ltd-H 5.71 -3.55 166,494,168 Smc Corp 27,345.00 -4.65 385,200 Glencore Plc 162.90 4.12 77,382,619 China Construction Bank-H 4.99 -1.58 251,993,383 Ping An Insurance Group Co-H 36.65 -0.95 20,135,360 Mitsubishi Corp 1,863.00 -3.17 7,843,700 Glaxosmithkline Plc 1,459.00 -2.01 9,098,472 China Life Insurance Co-H 18.06 -1.95 49,652,190 Power Assets Holdings Ltd 73.95 -0.74 6,623,832 Nintendo Co Ltd 15,155.00 -8.26 2,191,000 Gkn Plc 278.70 -2.82 4,789,621 China Merchants Hldgs Intl 23.10 -1.70 2,550,598 Sino Land Co 12.22 -2.08 5,735,152 Eisai Co Ltd 6,835.00 -4.67 1,199,500 Fresnillo Plc 1,113.00 1.64 1,155,762 China Mobile Ltd 88.95 -2.73 12,836,362 Sun Hung Kai Properties 98.05 -0.96 3,907,797 Sumitomo Corp 1,170.00 -3.47 6,378,200 Experian Plc 1,251.00 -1.57 1,495,134 China Overseas Land & Invest 24.75 -1.00 15,646,874 Swire Pacific Ltd - Cl A 84.35 -1.23 1,198,922 Canon Inc 3,112.00 -2.84 8,687,900 Easyjet Plc 1,473.00 -2.77 1,781,302 China Petroleum & Chemical-H 5.53 -1.25 145,838,897 Tencent Holdings Ltd 158.90 -1.30 10,903,878 Japan Airlines Co Ltd 3,953.00 -2.03 2,339,800 Dixons Carphone Plc 425.20 -2.54 3,602,800 China Resources Beer Holdin 17.08 -1.84 5,159,751 Wharf Holdings Ltd 42.10 -2.66 3,570,685 Direct Line Insurance Group 361.90 0.78 5,478,446 China Resources Land Ltd 19.16 0.95 9,744,089 China Resources Power Holdin 13.14 -1.35 8,493,501 Diageo Plc 1,846.00 -1.63 3,271,402 SENSEX Dcc Plc 6,060.00 -1.30 120,231 China Shenhua Energy Co-H 13.12 -0.15 13,084,500 GCC INDICES Crh Plc 1,988.00 -2.17 1,720,068 China Unicom Hong Kong Ltd 9.16 -0.87 21,136,239 Compass Group Plc 1,219.00 -1.06 2,679,109 Company Name Lt Price % Chg Citic Ltd 11.36 -1.56 13,210,456 Indices Lt Price Change Coca-Cola Hbc Ag-Di 1,400.00 -0.64 372,610 Clp Holdings Ltd 71.75 -1.85 3,773,727 Doha Securities Market Zee Entertainment Enterprise 414.90 2.44 1,519,733 10,186.18 +26.66 Centrica Plc 238.40 -0.21 11,082,487 Cnooc Ltd 9.66 -2.33 79,729,770 Saudi Tadawul Yes Bank Ltd 942.95 -0.27 4,775,439 6,805.84 -14.46 Carnival Plc 3,397.00 -1.68 988,579 Cosco Pacific Ltd 8.26 -4.51 12,081,000 Kuwait Stocks Exchange Wipro Ltd 554.35 0.23 1,368,269 5,391.81 -37.59 Capita Plc 1,001.00 -0.89 1,363,649 Esprit Holdings Ltd 6.80 0.59 2,874,124 Bahrain Stock Exchage Vedanta Ltd 103.80 4.01 31,811,724 1,110.53 -1.64 Burberry Group Plc 1,189.00 -1.98 1,909,012 Fih Mobile Ltd 3.33 -1.48 3,676,163 Oman Stock Market Ultratech Cement Ltd 3,161.45 -0.25 234,967 5,942.72 +3.62 Bunzl Plc 2,039.00 -0.63 659,501 Hang Lung Properties Ltd 15.48 -1.78 7,556,840 Abudhabi Stock Market Tech Mahindra Ltd 486.15 1.25 2,409,516 4,543.53 -44.67 Bt Group Plc 443.20 2.06 23,042,486 Hang Seng Bank Ltd 141.00 -2.29 1,256,235 Dubai Financial Market Tata Steel Ltd 351.10 1.01 8,911,333 3,491.91 -15.04 British Land Co Plc 719.00 -0.76 4,168,507 Henderson Land Development 48.50 -3.00 4,457,799 Tata Power Co Ltd 70.50 1.81 5,148,107 British American Tobacco Plc 4,170.00 -0.38 2,656,366 Tata Motors Ltd 408.35 -0.73 6,910,281 Bp Plc 373.75 -2.24 37,424,854 Tata Consultancy Svcs Ltd 2,535.50 0.31 1,541,607 Bhp Billiton Plc 933.10 -1.33 14,010,131 Sun Pharmaceutical Indus 811.30 1.17 2,493,733 Berkeley Group Holdings 2,995.00 -2.32 915,434 “Information contained herein is believed to be reliable and had been obtained from sources believed to be reliable. The State Bank Of India 189.00 -1.59 23,661,292 Barratt Developments Plc 532.50 -1.30 2,901,431 Reliance Industries Ltd 982.70 -1.40 5,844,060 accuracy and completeness cannot be guaranteed. This publication is for providing information only and is not intended Barclays Plc 171.50 -1.66 61,835,021 Punjab National Bank 86.95 -1.42 10,621,047 as an off er or solicitation for a purchase or sale of any of the financial instruments mentioned. Gulf Times and Doha Bank Bae Systems Plc 477.30 -1.38 6,373,746 Power Grid Corp Of India Ltd 143.40 1.09 2,666,412 or any of their employees shall not be held accountable and will not accept any losses or liabilities for actions based on Babcock Intl Group Plc 947.50 -0.84 864,541 Oil & Natural Gas Corp Ltd 217.25 0.18 4,434,139 this data.” Aviva Plc 432.40 -1.08 8,239,518 Ntpc Ltd 139.30 1.57 4,193,959 Astrazeneca Plc 3,928.00 -0.80 3,052,334 Maruti Suzuki India Ltd 3,794.65 1.25 1,054,237 Associated British Foods Plc 3,064.00 -0.13 704,422 Mahindra & Mahindra Ltd 1,330.95 -1.01 945,928 Ashtead Group Plc 907.50 -1.84 1,884,211 Lupin Ltd 1,607.25 1.96 1,943,667 CURRENCIES Arm Holdings Plc 937.50 -2.85 6,267,324 Larsen & Toubro Ltd 1,254.60 -0.39 1,224,994 DOLLAR QATAR RIYAL SAUDI RIYAL UAE DIRHAMS BAHRAINI KUWAITI Antofagasta Plc 483.20 1.51 5,033,510 DINAR DINAR Kotak Mahindra Bank Ltd 717.15 2.24 1,541,706 Anglo American Plc 763.40 1.35 12,373,112 Itc Ltd 324.95 0.63 7,082,773 Admiral Group Plc 1,857.00 -0.48 560,108 Infosys Ltd 1,208.10 -0.09 2,612,198 3I Group Plc 473.60 -1.66 1,680,911 Indusind Bank Ltd 1,048.85 1.34 982,941 #N/A 0.00 0.00 - Idea Cellular Ltd 118.55 -6.28 16,337,130 Icici Bank Ltd 236.95 -1.31 70,485,363 TOKYO Housing Development Finance 1,088.45 0.27 4,299,733 Hindustan Unilever Ltd 867.90 -0.95 1,647,086 Hindalco Industries Ltd 96.35 -0.57 26,567,737 Company Name Lt Price % Chg Volume Hero Motocorp Ltd 2,897.40 -0.08 344,217 East Japan Railway Co 9,824.00 -2.25 1,437,100 Hdfc Bank Limited 1,132.35 1.65 1,549,482 Itochu Corp 1,415.00 -2.45 8,596,100 Hcl Technologies Ltd 750.30 -6.20 9,843,385 Fujifilm Holdings Corp 4,569.00 1.17 4,873,100 Grasim Industries Ltd 4,086.75 -0.75 28,771 Yamato Holdings Co Ltd 2,229.00 -3.94 1,782,300 Gail India Ltd 360.35 -0.78 808,795 Chubu Electric Power Co Inc 1,450.50 -1.49 2,394,000 Dr. Reddy’s Laboratories 3,088.70 0.17 414,970 Mitsubishi Estate Co Ltd 2,121.00 -5.02 7,811,000 Coal India Ltd 288.05 1.05 4,343,974 Mitsubishi Heavy Industries 397.50 -3.17 26,529,000 Cipla Ltd 537.00 1.66 1,015,968 Toshiba Corp 235.00 -3.81 60,918,000 Cairn India Ltd 145.15 1.54 2,226,944 Shiseido Co Ltd 2,485.00 -2.11 2,050,400 Bosch Ltd 19,664.00 -1.43 11,840 Shionogi & Co Ltd 5,643.00 -2.37 1,578,700 Bharti Airtel Ltd 363.60 -2.44 5,071,106 Tokyo Gas Co Ltd 485.10 -2.49 14,665,000 Bharat Petroleum Corp Ltd 978.00 1.58 626,525 Tokyo Electron Ltd 7,411.00 -0.64 1,852,800 Bharat Heavy Electricals 125.40 0.32 4,934,714 Panasonic Corp 994.40 -3.60 10,678,800 Bank Of Baroda 157.90 -1.65 8,775,040 Fujitsu Ltd 390.80 -3.74 16,837,000 Bajaj Auto Ltd 2,491.95 0.18 308,954 Central Japan Railway Co 19,435.00 -3.16 665,800 Axis Bank Ltd 472.40 0.93 11,413,852 T&D Holdings Inc 1,081.50 -6.89 5,000,700 Asian Paints Ltd 866.25 -0.78 1,009,015 Toyota Motor Corp 5,654.00 -3.27 14,674,200 Ambuja Cements Ltd 221.00 0.52 3,237,136 Kddi Corp 3,169.00 -1.77 8,738,800 Adani Ports And Special Econ 238.20 1.17 2,337,467 Nitto Denko Corp 6,036.00 -1.74 2,414,300 Acc Ltd 1,443.15 0.37 307,029 Gulf Times 6 Saturday, April 30, 2016 BUSINESS/LEISURE

Adam

Pooch Cafe

The headquarters of the photo sharing app SnapChat on the strand at Venice Beach in Los Angeles. Now SnapChat users are watching 10bn videos a day on the application, up from 8bn in February, according to people familiar with the matter.

Garfi eld Snapchat’s user content fuels jump to 10bn daily video views

Bloomberg ers can decide whether to send their Facebook and Twitter don’t release San Francisco snap directly to friends, where it dis- statistics on what percentage of their appears after it’s watched, or post it users broadcast per day, instead fo- to their Snapchat Story, where it can cusing on metrics about visitors and he majority of people us- be viewed for 24 hours by a broader time spent. Facebook on Wednesday ing Snapchat’s application audience. said the average user spends 50 min- Tare making videos, fuelling a That design gives the company an utes a day on its apps, not including Bound And Gagged boom in watching them, the com- edge in a market where Facebook is WhatsApp. As of February, people pany is telling its investors. building a business quickly. The so- are sharing and creating three times More than a third of Snapchat’s cial networking leader, with 1.65bn more video than they were a year ago daily users create “Stories,” broad- users, started making live video a on Facebook, the company said. casting photos and videos from their priority this year, prompting people Facebook last disclosed its daily lives that last 24 hours, according to to create and share their experiences video views in November, saying it people familiar with the matter. Now in the news feed. Facebook has also had 8bn. But the companies measure users are watching 10bn videos a day said it may be willing to pay for live diff erently. On Facebook, videos au- on the application, up from 8bn in content. to-play and views are counted after February, said the people, who asked On Snapchat, “conversations are three seconds. On Snapchat, a view not to be identifi ed because the in- not only including a photo or vid- is counted as soon as someone starts formation isn’t public. eo, but are being started by them,” watching a snap. Snapchat is sharing the new Robert Peck, an analyst at SunTrust Snapchat, which last raised money stories statistic with investors to Robinson Humphrey, said in a re- at a $16bn valuation, has more than help explain that its app is focused port this week. “People’s behavior 100mn daily users who spend an av- on serving people who create and is changing so that photos are being erage of 25 to 30 minutes on the app broadcast content, not just con- used as speech instead of a reposi- each day, chief executive offi cer Evan sume it. The fi rst screen of the app is tory for memories.” Spiegel said in a February presenta- a camera, prompting users to share A Snapchat representative de- tion to bankers. About 60% of the what they’re seeing or doing. Us- clined to comment. daily users send snaps to friends.

Sudoku Cryptic Clues Quick Clues

ACROSS DOWN ACROSS DOWN 7. Jump the strongroom (5) 1. Being greedy is the way to get 7. Freight (5) 1. Fortuitous (10) 8. Two creatures used for ahead (10) 8. Exact (7) 2. Cost (5) waterproofing (7) 2. Take us back to a street that 9. Fragrant smoke (7) 3. Favour (4) 9. Envelopes from Italy (7) is smooth (5) 10. Arrogate (5) 4. Seem (6) 10. Great sorrow if Reg is 3. Man whose return would go 12. Star-gazer (10) 5. Commonwealth (8) upset (5) unnoticed (4) 15. Fierceness (10) 6. Reveal (7) 12. Objective individual in 4. Yearn for new praise (6) 18. Untruthful (5) 11. Diff icult (10) mail dispute (10) 5. Generosity from the capital of 19. Intricate (7) 13. Torpid (8) 15. Laughing uncontrollably Spain, it’s said (8) 21. Swift horse (7) 14. Raging (7) isn’t wrong, but irritates 6. Courageous Latvian? (7) 22. Forbidding (5) 16. Accompany (6) (2,8) 11. Please go out after autumn 17. Slumber (5) 18. Some revolving router and drop off (4,6) 20. Ponder (4) used in tiling (5) 13. Continue to claim it isn’t in 19. Common off icer (7) the sea (8) 21. Greek drink used as 14. Partners in corsets? (7) stainer, perhaps (7) 16. Brandy can go back after the Weekly’s Solutions 22. Wise man who picks first champagne (6) Sudoku is a puzzle Weekly’s Solutions based on a 9x9 grid. winners (5) 17. Eccentric way to start an old QUICK CRYPTIC The grid is also car (5) Across: 1 Disengage; 8 Out; 9 Across: 1 Chronicle; 8 Ore; 9 divided into nine 20. Man returning as another Retribution; 11 Secrete; 12 Ocean; Abandon ship; 11 Torpedo; 12 Up- (3x3) boxes. You are man (4) 13 Intact; 15 Reduce; 17 Force; 18 end; 13 Gleams; 15 Steppe; 17 Tamil; given a selection of Appends; 20 Impropriety; 22 Set; 18 Sea-bass; 20 Nutcrackers; 22 values and to com- 23 Resilient. Pea; 23 Allotment. plete the puzzle, Down: 2 Ire; 3 Noise; 4 Acumen; Down: 2 Hub; 3 Nudge; you must fill the 5 Epitome; 6 Consequence; 4 Censor; 5 Exhaust; 6 grid so that every 7 Stainless; 10 Taciturnity; 11 Copperplate; 7 Beardless; 10 Air column, every row and every 3x3 box Stiff ness; 14 Creeper; 16 Famous; terminal; 11 Tightrope; 14 Militia; contains the digits 19 Peril; 21 Ten. 16 Astral; 19 Ascot; 21 Run. 1 to 9 and none is repeated.

Gulf Times 8 Saturday, April 30, 2016 BUSINESS

Facebook plans new non-voting shares to keep Zuckerberg VW says emissions scandal at the helm

Reuters San Francisco bill could get much bigger Facebook announced on Wednesday it will create a new Sees ‘solid’ operating class of non-voting shares in performance in 2016; aiming for a move aimed at letting chief big improvement in VW brand executive off icer Mark Zuck- margins; no sales of brands or units erberg give away his wealth on agenda: CFO without relinquishing control of the social media juggernaut he Reuters founded. Wolfsburg, Germany The rejiggering of Facebook’s share structure, eff ectively a 3-for-1 stock split, follows the 31 olkswagen’s emissions test year-old’s announcement last cheating scandal could cost it December that he intends to Vmuch more than the $18bn ear- put 99% of his Facebook shares marked so far and it might have to sell into a new philanthropy project assets to foot the bill, the German car focusing on human potential maker said on Thursday. and equality. Europe’s biggest motor manufac- Also on Wednesday, Facebook’s turer, battling to rebuild its reputation stock jumped 9% in extended after admitting to cheating US diesel trade after the company’s first- emissions tests in September, said cost quarter revenue smashed Wall cutting and encouraging sales in China Street’s expectations. and Europe should help it deliver a sol- In a filing, the company said id operating performance this year. the plan was designed to keep But it warned of challenges ahead, as Zuckerberg at the helm of Fa- it strives to make big savings at its un- cebook, which it believes is key derperforming VW brand in the face of to Facebook’s future success, a union opposition and reform a highly sentiment shared by investors. centralised company structure blamed “Him staying intact and mov- for lax controls and delays to new mod- ing forward and guiding the els. company is critical. This is his The emissions scandal inevitably baby,” said Daniel Morgan, casts a long shadow. senior portfolio manager at While Volkswagen struck a deal last Synovus Trust Company, which week to buy back or fi x aff ected vehi- owns about $40mn worth of cles in the US and settle some legal dis- Facebook shares. putes there, it still faces US Justice De- Facebook plans to create a new partment fi nes as part of an expected class of shares that are publicly civil settlement and an ongoing Justice listed but do not have voting Department investigation that could rights. Facebook will issue two lead to criminal charges. Volkswagen CEO Matthias Mueller attends the annual news conference in Wolfsburg, on Thursday. Analysts have previously speculated Volkswagen might sell its trucks of the so-called “Class C” shares In its annual report published on business to raise funds, but Mueller told reporters that wasn’t under consideration for now. for each outstanding Class Thursday, Volkswagen said it could A and Class B share held by face “further signifi cant fi nancial lia- company, and in the strength of our brunt of the scandal, while upmarket UBS analysts said reviving the fully in place by the start of 2017, with shareholders. Those new Class bilities” and that “the funding needed business model, so we do not have as- brands Audi and in particular Porsche VW brand could be a key driver for a business strategy spelling out targets C shares will be publicly traded to cover the risks may lead to assets set sales on the agenda,” he told a press continued to fare well. Volkswagen’s shares, which are still and priorities through 2025 to be pub- under a new symbol. having to be sold,” without elaborat- conference to discuss 2015 results. “But The VW brand, which includes the down around 20% since the emissions lished in June. So, for example, someone who ing. we are of course thinking about ‘what Golf and Passat and is the group’s larg- scandal broke. They have a “buy” rat- The company plans in particular to held a single Class A share at Analysts have previously speculated if’ and in that sense we are preparing est by revenue, plunged to a €127mn ing on the stock, which was down 0.4% step up development of electric vehi- Wednesday’s closing price of Volkswagen might sell its trucks busi- ourselves.” loss in the last three months of 2015, at 1135 GMT. cles and digital services. Mueller said $108.76 would end up instead ness to raise funds, but chief executive Investors are also awaiting the re- compared with a €780mn profi t in the But the company faces a battle to cut he was in talks with third parties over with one Class A share and two Matthias Mueller told reporters that sults of an investigation by US law fi rm same period of 2014. The company cit- costs with its powerful trade unions, starting a new digital business, but Class C shares, each of which wasn’t under consideration for now. Jones Day into who was responsible for, ed weak markets in Russia and Brazil as which occupy about half the seats on declined to provide details, other than would be priced at $36.25. Finance chief Frank Witter added and who knew about, the emissions a contributory factor. its supervisory board. Mueller said on saying the talks did not involve either The plan must be approved there were no plans to sell any of the test cheating. The VW brand is in the midst of a Thursday Volkswagen was still aim- Apple or Google. by Facebook’s shareholders company’s brands or businesses and Volkswagen said last week the costs €5bn cost-cutting drive, and the com- ing to keep its core workforce, without Volkswagen also said long-term sav- at a meeting on June 20, but it believed it had made adequate pro- of the crisis drove it to a record loss last pany said on Thursday it expected mar- elaborating. ings from the closer collaboration of since Zuckerberg controls the visions to cover legal and regulatory year and it was slashing its dividend. gins at the brand to improve sharply to The company said an improved its MAN and Scania truck brands were company, its success is virtu- costs. Detailed results on Thursday showed 5.5-6.5% this year after falling to just business structure and increased effi - now expected to be as much as €1bn, up ally certain. “We believe in our multi-brand its mass-market VW brand bore the 2% in 2015. ciencies across its 12 brands would be from €850mn previously. Gulf Times Saturday, April 30, 2016 9 BUSINESS

CORPORATE RESULTS IAG posts €155mn operating profit in Q1; beats forecast

to most banks in Europe. While the STOXX Euro 600 Bank Index Michael Hewson, chief analyst at trading group CMC Markets. is down around 15% this year, Danske Bank shares have shed just “There is some good news in that the underlying business did 1.3%. Denmark and Sweden have introduced negative interest manage to post an operating profit of £421mn, but it does appear rates to spur their economies and inflation, making it more dif- that the recent market volatility and low interest rate environ- ficult for banks to make a profit. Danske Bank’s first-quarter net ment that has blighted the performance of its sector peers has profit of 4.9bn Danish crowns ($749mn), however, was virtually also hit” RBS, he added. flat compared to last year and well above analysts’ forecasts for BASF 4.3bn crowns. That contrasted with Swedish banks Nordea and SEB which both Chemical company BASF’s adjusted operating profit fell a less reported weaker-than-expected first-quarter operating profits on than expected 8% in the first quarter as cost cuts and rising Wednesday. orders in March in its industrial chemicals business helped off set “Danske Bank stands as the clear winner,” said Nykredit Markets’ a slump in oil and gas. chief analyst Ricky Steen Rasmussen. The world’s largest chemical company by sales reported earn- The bank’s share price jumped 4.3%, one of the top five gainers ings before interest and tax (EBIT), adjusted for one-off items, of on Europe’s Stoxx 600 index. €1.91bn ($2.18bn), compared with the average forecast for €1.73bn Danske’s market value is now on a par with several of the region’s in a Reuters poll of analysts. big lenders including Deutsche Bank and Standard Chartered, “In the first two months of the year, customers maintained a very and above Italy’s largest lender UniCredit. cautious ordering approach. In March, however, business picked The Danish bank said lending growth of 2% from a year earlier up in many of our divisions,” finance chief Hans-Ulrich Engel told and lower funding costs enabled it to off set pressure on margins analysts on a call on Friday. in the first quarter, but did not elaborate. It increased lending in Earnings at BASF’s basic petrochemicals division fell 36%, hurt Denmark, Finland and Norway and said it had cut costs. by lower prices and volumes. The market had been bracing for a Bankia plunge of almost 50%. BASF is under pressure from growing Chinese competition Spain’s state-rescued lender Bankia posted yesterday a 3.3% fall in chemical building blocks such as caprolactam, a precursor in first-quarter net profit due in part to lower interest rates and material for polymers in tyre cord, textile fibres and power tool fierce competition which hurt its margins. housings. The bank reported a net profit of €237mn ($268.7mn) during Continental the first three months of the year, below analysts’ forecasts of British Airways-owner IAG said it would trim its growth plans $1.46bn because of losses in and outside the US. As at Exxon, €246mn, according to a Factset poll. Continental is targeting higher profit this year, expecting a pick- this year to adjust for weaker demand in the second quarter, as profit plunged at Chevron’s refining division because of lower Net interest income, a measure of earnings on loans minus up in the automotive sector to help it to build on the stronger people flew less after the Brussels attacks and as oil weakness margins. deposit costs, dropped 16.7% to €577mn. demand for tyres and industrial parts that pushed up first-quarter and Brexit worries dented business travel. Telefonica “The bank remains strong in a challenging interest rate climate,” sales and earnings. IAG stuck to its forecast for 2016 profit. It said reaching that target Bankia chief executive Jose Sevilla said in a statement. Automotive business, accounting for about 60% of Continental’s would be helped by a plan to cut costs, excluding fuel, by about Spanish telecoms giant Telefonica said yesterday its net profit “Bankia’s eff iciency is very high and the low level of non-perform- sales, could gain “notable momentum” over the course of the 1% during the year. more than halved in the first quarter from same time last year ing loans has allowed us to set aside less provisions, which result year after currency eff ects and sluggish production by some car- For the three months ended March 31, IAG posted underlying op- when its results were inflated by the sale of its British operator 02. in earnings and profitability remaining stable,” he added. makers kept first-quarter growth in check, Chief Executive Elmar erating profit of €155mn, beating a consensus forecast of €145mn, The company reported a net profit of €776mn ($879.7mn) during Bankia’s bad debts as a percentage of total loans fell to 10.5% at Degenhart said yesterday. due to lower fuel prices and cost cuts. the first three months of the year, a 56.9% drop from the first the end of March from 10.8% at the end of January. Quarterly orders for electronic and other automotive com- IAG’s Chief Executive Willie Walsh said yesterday that the group, quarter of 2015. As part of a long and broad off ensive to push inflation in the ponents jumped by more than a third to break above €9bn whose portfolio also includes Iberia, Vueling and Aer Lingus, However Telefonica, one of the world’s top five telecoms groups, single currency area back up to levels that it considers to be ($10.3bn), it said. would cut its 2016 capacity growth to 4.9% from a previously still missed by a wide margin the median profit forecast of healthy for economic growth, the European Central Bank (ECB) Continental is now targeting an adjusted operating margin of planned 5.2%. €841mn of analysts polled by Factset. has slashed its key interest rates to new all-time lows. about 11%, compared with previous guidance of more than 10.5%, The Brussels attacks, which included a bombing in the departure Telefonica’s results in the first quarter of 2015 were boosted by One of its rates, the so-called deposit rate, has even entered it said ahead of Friday’s annual shareholder meeting in Hanover, hall of Zaventem airport and claimed 32 lives on March 22, had tax breaks related to the proposed $14bn sale of its British mobile negative territory—which means that the ECB eff ectively charges Germany. curbed travel appetite over the last six weeks, IAG said. phone operator O2 to Hong Kong conglomerate Hutchison banks for parking their cash with it overnight. Adjusted earnings before interest and tax (EBIT) rose 8.4% year “The trends going into the third quarter, however, appear to Whampoa. Amazon.com on year in the three months to March 31 to €1.1bn while sales were be back to normal,” Walsh told reporters on a call, saying he That deal is still dependent on Brussels giving the green light to up 3% at €9.85bn. expected the third quarter to be “strong”. the transaction following a competition enquiry. Amazon.com on Thursday reported profit and revenue that blew Devaluation of emerging market currencies against the euro, That period is when IAG tends to make its biggest profit as its Core operating income before depreciation and amortisation past analysts’ expectations, sending its shares soaring in after- including the Mexican peso, South African rand and Brazilian real, core European customer base goes on holiday. Walsh said the (OIBDA) dropped 6.7% to €3.38bn due in part to the lower value hours trading and demonstrating the growing market power of shaved more than 2 percentage points off quarterly sales, the Brussels attacks were having a “more pronounced” and “more of currencies in Latin America, a key region for the firm while its core retail business and new cloud services division. company said. extended” impact on travel demand than past shocks given how sales rose 6.6% to €10.78bn. The results are a sharp contrast to the disappointing fourth Expedia soon they had come after the Paris attacks in November. “The results are in line with our expectations for the year-end and quarter Amazon reported in January, which renewed worries The stock has lost 13% since January, underperforming Britain’s enable us to reiterate our guidance and the dividend of €0.75 per among some shareholders about the company’s comparatively Expedia, the world’s largest online travel services company by blue-chip index, which is flat. Some analysts have blamed risks share for 2016,” Telefonica’s new head Jose Maria Alvarez-Pallete thin profit margins. Shares of the world’s biggest online retailer bookings, posted a surprise quarterly profit as a string of acquisi- associated with Britain’s vote on EU membership on June 23. said in a statement. jumped nearly 13% to $679 in extended trading on Thursday. tions helped boost revenue. Embraer Vestas Amazon’s performance also assuaged concerns about a broader Shares of the company, which also beat revenue expectations, slowdown among tech and Internet companies after Apple, rose 11.7% to $119.50 in after-market trading on Thursday. Brazilian planemaker Embraer assured investors that its business Danish wind turbine maker Vestas Wind Systems yesterday Microsoft and Intel all reported disappointing earnings. Expedia last year embarked on an acquisition spree, buying its jet division should return to profitability this year after sharp reported a fall in sales and profits but cheered investors by an- “It did restore my faith,” said Dan Conde, an analyst at the Enter- rival Orbitz Worldwide for $1.3bn and Travelocity for $280mn. discounting dented first-quarter profits, dragging shares to their nouncing a record order backlog. prise Strategy Group, who keeps a close eye on Amazon’s cloud The company also moved to ramp up competition with apart- lowest in nearly two years. “Vestas delivered record high first-quarter order intake as well as business. ment-sharing startup Airbnb by purchasing vacation rental site Embraer reported a first-quarter profit of $104mn in securities our largest ever combined wind turbine and service order back- While Amazon displayed impressive growth for a company its HomeAway Inc for $3.9bn, its biggest acquisition. filing, reversing a net loss of $62mn a year earlier and beating an log,” chief executive Anders Runevad said in a statement. size - revenues rose 28.2% to $29.13bn - its Amazon Web Services Expedia plans to push HomeAway, which has primarily marketed average forecast of $60mn in a Reuters poll of analysts. Net profit plunged 38% to €35mn ($40mn), higher than a Bloomb- (AWS) cloud computing division was the highlight with revenues beach and ski rentals, into cities such as Paris and San Francisco However, Chief Executive Frederico Curado acknowledged the erg analyst consensus of 26mn euros, as revenue dropped four% climbing 64% to $2.56bn while operating income more than where Airbnb holds sway. executive aviation unit had an operating loss as it unloaded a to €1.46bn. tripled to $604mn. “The type of activity that we did last year was unprecedented half dozen Legacy 650 jets, which are built on an old regional The group said wind turbine orders in the first quarter rose 37% Even though operating margins fell at the unit compared to last (and is) unlikely that it would be repeated in 2016,” Chief Financial jet platform and have struggled to compete against newer measured by capacity from a year ago and that the order backlog quarter, as Amazon spends heavily to compete with rivals like Mi- Off icer Mark Okerstrom told Reuters in an interview. rivals. stood at €8.6bn as of March 31. crosoft and Google, they remain a healthy 27.9%. That compares However, the company was certainly not closed for business from Embraer’s large business jet deliveries during the rest of the year The combined backlog of wind turbine orders and service agree- to 28.5% last quarter, and 16.9% a year earlier. M&A, he added. will be concentrated in the freshly designed Legacy 450 and 500, ments was worth €18bn, up €3bn from the same period last year. Web services, launched 10 years ago, delivered more profit in the Acquisitions added about 28 percentage points to revenue helping to return the division to profitability, Curado told analysts “Free cash flow, although at negative levels, was in line with quarter than Amazon’s retail business. Research firms say AWS growth in the first quarter ended March 31, the company said. on an earnings call. expectations as we build up inventory preparing for a busy has more than 30% of the fast-growing cloud-computing market Revenue rose about 39% to $1.90bn, ahead of the average analyst Embraer shares fell 5% yesterday to their lowest levels since remainder of 2016,” Runevad said. and it remains far ahead of rivals including Microsoft and Google. estimate of $1.84bn, according to Thomson Reuters I/B/E/S. July 2014. The stock has dropped more than 30% this year as a The group reiterated an annual revenue forecast of at least €9bn, Amazon founder Jeff Bezos also touted the success of new Despite a strong first quarter, the company expects vast majority rebounding Brazilian currency hurts the profitability of Embraer’s and for a margin of 11% on earnings before interest, taxes and hardware products. “Amazon devices are the top selling products of adjusted EBITDA dollar growth to come in the back half of the export-focused business. special items. on Amazon,” he said in a press release, citing the Echo voice- year, CFO Okerstrom said on a post-earnings conference call. First-quarter revenue rose 24% on strong deliveries of larger CBOE Holdings response system and the Fire TV Stick. Exxon Mobil business jets, yet the surge was driven mostly by the unprofitable Amazon reported net income of $513mn, or $1.07 per share, for Legacy 650. Chief Financial Off icer Jose Antonio Filippo said the CBOE Holdings, operator of the largest US options exchange, the quarter ended March 31. The company had a loss of $57mn, or Exxon Mobil Corp, the world’s largest publicly traded oil producer, company was defending healthier profit margins on its newer reported a 17% rise in first-quarter profit, boosted by higher 12 cents per share, a year earlier. reported a higher-than-expected first-quarter profit yesterday as Legacy jets and the entry-level Phenoms. transaction fees. Analysts on average had expected a profit of 58 cents per share it slashed costs to off set plunging crude prices and weak refining Earnings before interest, taxes, depreciation and amortisation Fees from indexes accounted for 67.4% of total transaction fees, and revenue of $27.98bn, according to Thomson Reuters I/B/E/S. margins. rose 12% to $168mn, slightly below an average forecast of $175mn. which rose 20% in the quarter. Index options are traditionally Royal Bank of Scotland The results reflect the new reality for an oil industry hammered Imperial Oil CBOE’s highest fee-generating product. by a more than 60% drop in crude prices since 2014 that has The average rate paid per contract increased 19% to 40.5 cents Britain’s state-rescued Royal Bank of Scotland yesterday said net forced radical reductions in spending and personnel. Canadian integrated oil producer and refiner Imperial Oil re- from a year earlier, the company said. losses more than doubled in the first quarter owing to an excep- Exxon’s capital budget during the first quarter dropped 33% from ported a slightly bigger-than-expected quarterly loss yesterday, The company, which owns the Chicago Board Options Exchange, tional payment back to the government. a year earlier, reflecting a drive to survive a price downturn that hurt by continued weakness in global crude prices. said net income allocated to common shareholders rose to Losses after tax in the first three months of the year stood at has already cost the company a perfect credit rating. Imperial’s net loss was C$101mn ($81mn), or 12 Canadian cents per $49.2mn, or 60 cents per share, for the quarter ended March 31. £968mn ($1.4bn, €1.2bn), which compared with a net loss of Exxon reported net income of $1.81bn, or 43 cents per share, share, in the first quarter ended March 31, compared with net in- That compared with $42.1mn, or 50 cents per share, a year earlier. £459mn in the first quarter of 2015, RBS said in an earnings state- down from $4.94bn, or $1.17 per share, a year earlier. come of C$421mn, or 50 Canadian cents per share, a year earlier. Market volatility stemming from concerns about global economic ment. Analysts on average expected earnings of 31 cents per share, ac- The slump in global crude prices, which fell to 13-year lows of growth boosted transaction fees and pushed up the company’s Pre-tax profits came in at £421mn, up from £37mn. cording to Thomson Reuters I/B/E/S. around $26 a barrel in the first quarter and are still 60% below operating revenue by 13.6% to $162.3mn. However the bottom-line net figure was hit by RBS having to pay Shares of Irving, Texas-based Exxon rose 0.6% to $88.60 in mid-2014 levels, outweighed benefits from a weak Canadian Novo Nordisk the government almost £1.2bn in order to allow the bank to begin premarket trading. dollar. paying dividends again. Exxon Chief Executive Off icer Rex Tillerson cited the company’s Imperial and other Canadian oil producers record expenses in The world’s largest maker of diabetes treatments, Novo Nordisk, “An attributable loss of £968mn included payment of the final large size and cash flow for helping it weather the low prices. Canadian dollars, while the price of oil is tied to the US dollar, said yesterday that the US launch of ultra-long acting insulin Dividend Access Share (DAS) dividend of £1,193mn to the UK “The organisation continues to respond eff ectively to challenging making the weak loonie a positive factor at a time when oil prices Tresiba had been “encouraging” as it reported a drop in first government,” RBS said. industry conditions,” Tillerson said in a news release. remain persistently low. quarter profit. In morning deals following the results, RBS shares were among Production rose 2% to 4.3mn barrels of oil equivalent per day. The company’s adjusted loss was 15 Canadian cents per share, Net profit fell four% to 9.46bn kroner (€1.27bn, $1.45bn), reflecting the biggest fallers in London, losing 3.2% to 237 pence, with ana- Exxon’s oil and gas production arm lost money in the US during bigger than the average analyst estimate of 14 Canadian cents, one-off gains last year from the spinoff of its IT services arm NNIT, lysts pointing to the higher-than-expected net loss. the quarter. The company operates in North Dakota, Texas and according to Thomson Reuters I/B/E/S. but came in ahead of a Bloomberg analyst consensus of 9.15bn The capital’s benchmark FTSE 100 index was down 0.7% overall other parts of the country. Imperial shares were last down 0.2% on the Toronto Stock kroner. at 6,279.1 points. Internationally, profit at the oil and gas production arm fell 74%. Exchange at C$41.97 following the slight miss on market expecta- “We are pleased with the results during the first quarter of 2016 “The big question is whether there is light at the end of the tun- The company’s refining unit’s profit fell 45% due to weak margins, tions. where Victoza and Tresiba both delivered significant growth,” nel, and whether RBS has turned the corner, or whether the days unusual as these operations tend to perform better during peri- “The key diff erences relative to our estimates were lower-than- chief executive Lars Rebien Sorensen said in a statement. of over promising and under delivering are set to continue,” said ods of low oil and gas prices. expected realized pricing, higher product purchase expenses in The company said operating profit was expected to grow the upstream segment, partially off set by higher earnings in the between one and five% in Danish kroner this year, down from a downstream segment,” BMO Capital Markets analyst Randy Ol- previous forecast of four to eight%, due to currency eff ects. lenberger wrote in a note. “In the US, where Tresiba was broadly launched in January 2016, Chevron early feedback from patients and prescribers is encouraging and the product has achieved wide formulary coverage,” the group Oil and gas producer Chevron Corp yesterday posted an adjusted said. profit that fell short of Wall Street’s expectations, as its cost cuts While all regions had contributed to sales growth, the US market failed to fully off set low crude prices and weak refining margins. had been “the main contributor”, accounting for 64% of growth Like many of its peers, Chevron slashed spending during the measured in local currencies, it said. quarter in response to low crude prices, but the reductions were “Tresiba has had a nice start in the US market,” Sydbank analyst not as dramatic as analysts would have liked. Soren Lontoft Hansen told Danish news agency Ritzau. John Watson, Chevron’s chief executive, said the focus of the San “Not least since it has been priced slightly above the world’s best- Ramon, California-based company’s is boosting cash flow, which selling diabetes drug (Sanofi’s) Lantus, and Novo Nordisk is not dropped more than 50% in the first quarter. willing to give big rebates,” he added. “We are controlling our spend and getting key projects under Danske Bank construction online, which will boost revenue,” Watson said in a press release. Denmark’s biggest lender, Danske Bank, reported much better- Chevron reported a net loss of $725mn, or 39 cents per share, than-expected first-quarter results yesterday, outperforming its compared with a net profit of $2.57bn, or $1.37 per share, in the Nordic rivals as it weathered negative interest rates by snatching year-ago period. market share and cutting costs. Excluding one-time items, Chevron earned 11 cents per share. The results sent the bank’s shares up more than 4% as it easily By that measure, analysts, on average, expected 20 cents per beat analysts’ forecasts for both net profit and trading income, share, according to Thomson Reuters I/B/E/S. even though turmoil in financial markets helped trading income Chevron’s production fell slightly to 2.68mn barrels of oil equiva- fall by nearly half from last year. lent per day (boe/d). Danske’s relative resilience in the face of negative interest rates, The company’s oil and gas production arm swung to a loss of low oil prices and widespread market turmoil stands in contrast Gulf Times 10 Saturday, April 30, 2016 BUSINESS

Fallout hits China dollar High-speed trading backlash debt as $21bn yuan puts pressure on India’s Sebi sales pulled Bloomberg Mumbai Bloomberg Hong Kong ndia’s markets regulator is coming under increased pressure to improve hina’s offshore bonds Iits oversight of high-speed trading are suffering fallout after allegations of unfair access at the Cafter a selloff in yuan nation’s biggest equity bourse. notes prompted the scrapping The country’s top brokerage asso- of almost $21bn in domestic ciations are among a growing chorus of issuance. voices calling for the Securities and Ex- As defaults on local notes by change Board of India (Sebi) to take ac- state-owned companies caused tion after an investigation by one of its off erings to freeze in the world’s own advisory panels claimed that there second-largest economy, aver- may have been collusion between the age yields on Chinese dollar- National Stock Exchange of India and a denominated junk bonds have high-frequency trading fi rm. jumped 24 basis points to 8.15% The panel is pushing for Sebi to frame from a six-month low on April more detailed rules on HFT and punish 15, according to a Bank of Ameri- anyone found of wrongdoing, accord- ca Merrill Lynch Index. ing to a person with direct knowledge At least 114 local fi rms pulled of the matter. 133bn yuan ($20.5bn) of planned Sebi’s public silence on the inter- onshore note sales in the month nal report’s fi ndings - which were re- through April 27, according ported by Bloomberg and local media to Bloomberg-compiled data. this month - has added to a sense of Those cancellations are starting frustration among many local brokers to reverse a trend for Chinese and investors who say that insuffi cient companies to sell yuan bonds regulations on high- frequency trading and pay down dollar debt. have made India’s markets vulnerable “Now that you have onshore to abuse. defaults that are creating panic While Sebi has issued broad guide- among onshore investors, the lines dating as far back as 2012, crit- issuers tend to come to the off - ics argue they don’t do enough to ad- shore market,” said Warren Mar, dress how traders should connect to portfolio manager for emerging exchanges and how orders should be markets corporate debt at Mor- processed. gan Stanley Investment Manage- “India doesn’t have formal rules for ment, which managed $406bn of HFT,” Vaibhav Sanghavi, a managing A worker cleans glass of the Securities & Exchange Board of India building in Mumbai. India’s markets regulator is coming under increased pressure to improve its assets as of December 31. director and portfolio manager at Am- oversight of high-speed trading after allegations of unfair access at the nation’s biggest equity bourse. A 15-month rally in Chinese bit Investment Advisors, which runs US currency debt had been driv- India’s only onshore long-short fund tended the meeting. The rising share ed by claims from an unidentifi ed whis- Sebi has taken some steps to govern ANMI and the Brokers Forum, two en by a lack of supply as fi rms cut that has 10bn rupees in assets, said of algorithmic orders poses “systemic tle-blower, said it didn’t have enough computerised trading. The regulator of the country’s largest brokerage as- their off shore dollar bond sales in an interview. “Sebi will have to get risks,” the Reserve Bank of India said information to determine whether NSE has guidelines that stipulate that bro- sociations which together have 1,500 by 31% in the fi rst quarter and proactive.” last year. Sebi didn’t reply to e-mailed offi cials colluded with traders to give kers off ering algorithmic trading fa- members, are calling for a formal in- boosted cheaper onshore issu- The regulator is discussing what questions. An NSE spokesman didn’t them preferential access, and called for cilities must get their systems audited vestigation into the panel’s fi ndings. ance by 88%. steps to take with the Technical Advi- respond to an e-mail seeking comment. Sebi to investigate further. every six months. Sebi is planning to hire an external This month, US off erings sory Committee, said the person with The bourse will in the coming weeks Sebi joins its global peers, including The watchdog also fi xed steep penal- agency to advise it on ways to minimise roughly match issuance in April direct knowledge, who asked not to submit a detailed report to Sebi to the US Securities and Exchange Com- ties on trading fi rms that place a large risks in HFT trading, Mint reported on last year, while yuan fundraising be named because the discussions are counter claims that high-frequency mission, in facing criticism for being number of orders that don’t result into Thursday, citing two people it didn’t is being put on ice. The cycle of private. Sebi hasn’t decided on its re- traders gained unfair access, people slow to address alleged abuses by HFT actual transactions. identify. refi nancing couldn’t “last for- sponse, the person said. with knowledge of the matter said this fi rms. Yet market participants say some as- “If unfair access has been granted to ever,” said Raja Mukherji, Hong While Sebi Chairman UK Sinha met week. “The situation here is no diff erent pects of HFT are still too lightly regu- some brokers then clearly that is very Kong-based head of Asian credit with brokers in Mumbai on April 21, he The report by the Sebi’s advisory from the one prevailing in the devel- lated in Asia’s fourth-biggest stock concerning,” Derek McCole, head of research at Pacifi c Investment didn’t comment directly on the panel’s panel, which hasn’t been released, said oped markets, where HFT has come in market. The regulator doesn’t have dealing for Asia Pacifi c at Aberdeen As- Management Co. fi ndings, saying only that Sebi will en- that between 2012 and 2014, NSE han- for similar criticism,” Deven Choksey, rules on how lines should connect high set Management, which oversees about “You can make a conclusion sure a “level-playing fi eld,” according dled orders to trade on a fi rst-come, managing director at brokerage KR speed traders to their colocation facili- $428bn, said in an e-mail. “We can that if the real estate developers to Swatantra Kumar Rustagi, presi- fi rst-served basis, a design that made it Choksey Shares & Securities, a member ties and exchanges or how to distribute live with HFT as long as there is a level can’t issue bonds in the onshore dent of the Association of National prone to abuse. of the NSE and BSE, India’s second- and process orders sent to exchange playing fi eld and no preferential treat- market, they will come to the Exchanges Members of India, who at- The panel, whose work was prompt- largest exchange. servers, critics say. ment for faster data.” off shore market,” said Mukherji. China Aoyuan Property Group issued $250mn three- year notes with a 6.525% cou- pon this month, higher than the 5.8% the junk-rated builder pays on its same-maturity do- China stocks, bonds, yuan are a triple losing bet this month mestic notes. Fantasia Holdings Group Co raised 600mn yuan Bloomberg the biggest selloff in junk debt since the ments in stock- market funds fell by der pressure as infl ation increased Deutsche Bank’s Taylor forecasts selling off shore yuan bonds this Hong Kong data became available in 2014. Deut- 89bn yuan ($13.7bn) in April, according to the highest since mid-2014, while China’s economy will grow 6% this week at a 9.5% coupon, versus sche Bank is one bull looking to reduce to data from Shanghai-based research corporate notes are slumping amid a year, below the government’s target 6.95% on onshore notes sold in holdings of Chinese stocks on bets the fi rm Z-Ben Advisors. spate of defaults and a surprise move by range of 6.5% to 7%, and targets the September. or the fi rst time in two years, Chi- economy will fail to reach the govern- First-quarter earnings aren’t proving state-owned China Railway Materials yuan to fall to 6.9 a dollar by the end Ross Lee, a credit analyst at na’s stocks, bonds and currency ment’s growth targets and yuan de- much of a draw. Of the 171 Shanghai- Co to halt its bond trading this month of the year - implying a 6% drop from Bank of China Hong Kong, said Fare all a losing proposition. clines will accelerate. listed companies that have reported because of what the company called Friday’s level. property companies don’t face The Shanghai Composite Index “Clearly there was a turn in China,” three-month fi gures and are tracked “repayment issues.” The onshore currency was 0.1% much refi nancing pressure on dropped 2.2% in April, the yuan fell said Sean Taylor, chief investment of- by Bloomberg, 57% have missed ana- “We will defi nitely see more defaults weaker at 6.48 per dollar yesterday, af- dollar bonds until 2018 and 2019. 0.6% versus the dollar, while govern- fi cer for Asia Pacifi c for Deutsche Bank’s lyst expectations. PetroChina Co, the and diffi culties for corporates in issu- ter a plunge in the dollar late Thursday They have more than $14bn ment and corporate bonds tumbled, wealth-management unit in Hong Kong. biggest weighting on the benchmark ing new bonds,” said David Gaud, who prompted the central bank to strength- bonds due in each of those two with the fi ve-year sovereign yield rising “You’ve seen money in the A-share mar- gauge, posted its fi rst quarterly loss helps oversee $61bn as a fund manager en the fi xing by the most since a peg years, the highest on record, ver- 27 basis points. Even a sudden revival in ket going to property and commodities. since the company listed in 2000, while at Edmond de Rothschild Asset Man- was dismantled in 2005. A Bloomberg sus $9.5bn this year, according to the nation’s commodities markets is We’ve been adding risk in the last few China Life Insurance Co reported a 57% agement in Hong Kong. “Credit costs replica of the CFETS RMB Index, which Bloomberg data. looking fragile after frenzied specula- months and coming into the summer, we drop in net income. will go up and credit spreads will wid- measures the yuan against 13 exchange Evergrande Real Estate Group, tion prompted exchanges to take meas- will take it away and wait for opportuni- The bond market is also looking en. Your return is too low for your risk rates, dropped 0.2% to a 17-month low, the most indebted of 198 listed ures to cool trading. ties to add again. We are not yet ready for shakier than at the start of the month. in China.” defying government pledges of “stabil- Chinese builders, will have to re- The declines mark a reversal from China’s structural story because earnings The fi ve-year government yield has in- At least 103 Chinese fi rms post- ity” against the basket. pay $1.5bn of notes in 2018. March, when the benchmark equities haven’t come through.” creased from a six-year low of 2.47% on poned or scrapped 117.4bn yuan of “All markets are looking a little The high-yield property sec- gauge jumped 12% and the yuan ral- Investor interest in the world’s sec- April 1, while the Bank of America Mer- planned note sales this month through tired” after a good run in March, said tor will be negatively aff ected if lied the most since 2010 as new credit ond-largest equity market is waning, rill Lynch China Broad Market Index April 25. The yield premium on three- Andrew Clarke, Hong Kong-based the onshore bond market shut- surged. Improving data from industrial with turnover on the Shanghai Stock of total returns on yuan-denominated year AA- rated local bonds, considered director of trading at Mirabaud Asia. down continues and new sup- output to retail sales have led traders Exchange falling to levels last seen reg- debt has declined 1% from a record high junk in China, over government debt “People are taking money off the table ply fl oods the off shore market, to pare back bets for more stimulus, ularly in 2014 and a gauge of volatility on April 4. widened 43 basis points in April, the at all asset classes. We don’t need to Nomura Holdings said in an while rising credit defaults are fuelling dropping to a 12-month low. Invest- Government bonds are coming un- most since 2014. speculate for now.” April 25 note. How Shanghai trading is changing the physical nickel market

By Andy Home March last year, since when volumes and holders looking to settle their positions 250,000-300,000 tonnes of metal in London open interest have grown dramatically. with physical metal. bonded warehouse and mainland non- The contract hasn’t been totally im- So the exchange allowed the delivery of exchange storage. (“Nickel - More Funds mune from the cross-commodities feeding three brands of Russian nickel produced than Fundamentals”, April 26, 2016) Everyone’s talking about Chinese specula- frenzy of the last few weeks but activity by Norilsk Nickel. Much of it is tied into one form or tors. This year has seen an unprecedented has been on a fast upwards curve ever And in doing so, it altered both flows another of financing deal. This is nothing surge of trading volumes and open since the day of launch. and stocks of refined nickel around the new. Nickel has long been a favoured col- interest in Chinese markets as institutional Volumes already regularly exceed those world. Because Russian metal has been lateral commodity because of its relatively and retail investors pour money into com- on the London Metal Exchange (LME), flooding into China ever since. Imports high value. modities. which has dominated wholesale nickel from Russia jumped from 75,000 tonnes But it’s a moot question as to whether a Both the Shanghai Futures Exchange trading for many, many years. in 2014 to 194,000 tonnes in 2015 and local exchange delivery option has given (ShFE) and the Dalian Exchange are up- In March, for example, the ShFE were running at an annualised 295,000 the financing business an extra fillip by af- ping margin requirements and transaction contract traded around 10.76mn tonnes tonnes in the first quarter of 2016. fording lenders on the mainland an added fees to try and calm overheating contracts for nickel, even factoring in Chinese Chinese imports of refined nickel have level of security. such as steel rebar and iron ore. exchanges’ habit of counting both sides of always included some Russian material The Shanghai contract’s gravitational The stampede appears to have been a transaction in their volume figures. but this typically accounted for between pull on Russian nickel is altering both the halted with both prices and trading activ- On the LME, where volume figures are 45-55% of the total. composition of LME stocks and the physi- ity losing some of their recent froth. inflated by the exchange’s complex spread That ratio jumped to 64% last year and cal market premium structure. But the current trading frenzy shouldn’t structure, headline activity amounted to further to 68% in the first quarter of this Norilsk is the world’s largest producer distract from the growing global influ- 10.50mn tonnes. year and that in the context of sharply of full-plate cathode, a form of nickel that ence of China’s domestic commodity The Shanghai nickel contract has also commodity contracts in China in recent Indeed, so quickly did trading activity higher overall import volumes. has historically accounted for almost all exchanges. seen a steady build in market open inter- weeks. explode into life that the ShFE nickel con- Some of that metal has gone into ShFE- registered LME nickel inventory. In a market such as nickel the dramatic est, currently just over 707,000 tonnes. The take-away is that although Shang- tract almost immediately ran into trouble registered warehouses, where stocks have This is because full-plate has also rise of the ShFE is exerting an increasingly That’s still some way short of the LME’s hai nickel may be prone to the same day- in the form of a squeeze on shorts on the been trending ever higher. They currently historically been the cheapest form of powerful gravitational pull on physical 1.96mn tonnes but it’s noticeable that the trading investment crowd flooding other July 2015 contract. stand at just over 80,000 tonnes. refined nickel. units, causing ripples through the global Shanghai nickel contract hasn’t seen the local markets, its success is founded on The problem was that there were More has disappeared into off -market refined metal supply chain. wild swings in open interest that have bigger, more institutional players who are insuff icient stocks of the six Chinese good obscurity. David Wilson, analyst at Citi, Andy Home is a columnist for Reuters. The The ShFE launched its nickel contract in characterised some of the most frothy prepared to hold positions for longer. delivery brands to satisfy short position estimates that there is somewhere like views expressed are those of the author. Gulf Times Saturday, April 30, 2016 11 BUSINESS

Major EM currencies rise to 6-month high

Reuters week. “We still don’t expect London the Federal Reserve to move (US interest rates) any time soon, probably not this year, Russia’s rouble and Turkey’s lira so its party on for emerging lead a gang of top emerging markets,” said Aberdeen Asset market currencies to six-month Management portfolio manager highs yesterday as signals this Viktor Szabo. week that US interest rates are MSCI’s 23-country emerging likely to stay ultra-low cemented market stocks index was a third month of losses for the down 0.6% on the day. It has dollar. struggled this month following EM stocks were suff ering the a blockbuster 13% gain in eff ects of a heavy week for March. major markets like Wall Street In central, Europe Polish shares and Tokyo, but for currencies have fallen almost 3% this the mood remained resolutely week as the direction of the upbeat as the dollar’s slump new government and higher provided them with fresh interest rates than peers such as boost. Hungary continues to unsettle The Russian rouble was up at traders. 64.34 per dollar and set for an First time in more than a decade 11th week of gains, its longest the yields on Polish government winning streak in at least bonds are now higher than on three decades, as an ongoing Hungarian bonds. recovery in oil prices pushed it “Yes you could argue the higher ahead of a meeting of monetary policy is much looser, the country’s central bank. but never the less the higher Russian rates are expected to yield certainly reflects the much stay at 11%. higher political risk in Poland The front facade of the CME Group headquarters is seen in Chicago. Currency trading via CME, ICAP and Thomson Reuters Corp - three of the largest trading platforms - fell to Analysts said the rouble may now,” said Rabobank economist $538bn per day last month, from more than $669bn in September 2014, according to data compiled by Bloomberg. weaken towards the end of the Piotr Matys. day, however, as investors cut Ratings agency Fitch is their risk exposure ahead of a expected to publish its latest long weekend. Russia has May review of Kazakhstan and public holidays on Monday and Mozambique later in the day Tuesday. with the southern African Turkey’s lira, another ‘high beta’ state likely to be of particular EM currency, was up for a fifth interest. straight day at 2.8045 per dollar. It is in fiscal dire straits and has Currency trading’s 20% That was its highest since seen aid payments from the a spike in November, but World Bank, the International removing that, the loftiest since Monetary Fund and Britain August. suspended in the past two China’s central bank weeks after it emerged the strengthened its daily guidance government had failed to decline raises spectre rate for the yuan too and by the disclose as much as $1.35bn most on the record, reflecting in loans taken out by state the major shift in dollar this companies. of fl ash-crash future

Bloomberg jumped 2.6% in less than three minutes surveyed the foreign-exchange market in change - have less incentive to enter New York after the Bank of Japan’s decision to re- April 2013, it found $5.3tn changed hands currency trades they can’t immediately frain from adding to policy stimulus. every day, up from $4tn in 2010. match. “You tend to fi nd volume dropping off Average daily volumes on CME, ICAP The Volcker Rule, named after former he world’s biggest fi nancial mar- if the market’s very choppy,” said Mark and Thomson Reuters have slumped 9% Federal Reserve Chairman Paul Volcker, ket has shrunk by 20% during the Astley, the London-based chief execu- since then, so a similar decline in overall restricts proprietary trading while Basel Tpast year and a half. tive offi cer of Millennium Global In- volumes would equate to about $4.9tn a III’s capital requirements mean banks Currency trading via CME Group, vestments, which oversees about $16bn. day - still the largest fi nancial market in must allocate more capital to off set risks ICAP and Thomson Reuters Corp - three “Banks don’t have the capital to commit the world. they do take on. Both have prompted of the largest trading platforms - fell to to warehouse risk anymore, so it’s kind of “Transactions are relatively stable and banks to step back from market-making $538bn per day last month, from more pass the parcel. easy to execute, even though liquidity is activities. than $669bn in September 2014, ac- If there’s a large trade that’s gone not as strong as it was a couple of years A greater focus on electronic trading, cording to data compiled by Bloomberg. through, they don’t want to warehouse it ago,” said Ken Dickson, the Edinburgh- which requires a smaller headcount, has The fi gures show the extent of the and they’ll pass it on, so you do get this based investment director of currency also encouraged the use of algorithms, slump in a market that this month saw gap risk.” at Standard Life Investments Ltd, which which can exacerbate the severity and some banks report less client activity, Warehousing refers to banks taking manages about $370bn. speed of moves in the market. just as the Bank of International Settle- risk onto their balance sheets. Morgan Stanley and Goldman Sachs All this sets the stage for further vola- ments prepares its defi nitive triennial Trading via CME, ICAP and Thomson Group both noted a slowdown in their tility and more fl ash crashes, accord- survey of global volumes. Reuters plunged to $463bn a day in No- currency businesses during recent earn- ing to Andy Maack, head of foreign- All of this is making bouts of extreme vember, the lowest since at least January ings calls. exchange trading at Vanguard Group, in volatility more commonplace as traders 2013, before increasing in the fi rst quar- Goldman Sachs Chief Financial Of- Malvern, Pennsylvania, the world’s larg- fi nd it harder to enter or exit positions ter, the data show. fi cer Harvey Schwartz said volatility est mutual-fund company. without aff ecting prices. While trading in the euro has slumped created “a challenging backdrop for our “When everybody hits pause and As recently as January, the South Af- 20% from a peak in October 2014, trans- clients with weak investment perform- there’s no more liquidity on either side, rican rand tumbled 9% in 15 minutes be- actions in currencies from the Mexican ance, and drove diffi cult market- mak- very, very small orders can take those fore rebounding; New Zealand’s dollar peso to the Brazilian real have fallen as ing conditions” for the lender’s fi xed- markets down signifi cantly,” Maack said had its own fl ash crash in August; while much as 50% from their peak, accord- income, currency and commodities during an event at Bloomberg’s New York the Reserve Bank of Australia concluded ing to the Bank of England’s twice-yearly division. headquarters last week. “It’s these type that illiquidity caused exchange-rate measure. Owing to added regulations that in- of movements that will ultimately hap- jolts before three interest-rate deci- When the BIS, the Basel, Switzerland- crease the price tag on risk, banks -the pen more frequently as we go more into sions last year. And on Thursday the yen based central bank for central banks, last traditional intermediary in foreign ex- more electronic, more algo trading.”

Asia stocks mostly fall

Sensex up slightly; rupee strengthens AFP “Central banks look like they Tokyo have run out of bullets to a de- gree,” Mark Lister, head of private Bloomberg cal stocks on April 28, taking this year’s wealth research at Craigs Invest- Mumbai infl ows to $1.8bn. Asian stocks mostly fell yesterday ment Partners in Wellington, told The Sensex has retreated 2% this year following losses in New York Bloomberg News. and trades at 15.7 times 12-month pro- while concerns about the global “We’re getting to that point ndia’s benchmark stock index capped jected earnings versus 11.8 for the MSCI outlook were reinforced after where there are limits to the re- its fi rst weekly decline in three weeks Emerging Markets Index. data showed the US economy sults they can get from anything Ias ICICI Bank reported its biggest drop Meanwhile the rupee strengthened grew at its slowest pace for two more they do. This points to a in quarterly profi t in at least 15 years as against the US dollar yesterday amid years in the first quarter. fragile outlook with still a lot of provisions for bad loans surged. mixed cues from Asian currencies mar- Investors were still coming to risks out there.” ICICI and State Bank of India, the na- kets and a modest gain in local shares. terms with the Bank of Japan’s The downcast outlook and lack tion’s biggest lenders, were the worst per- The currency closed at 66.33, up 0.29% decision not to boost its stimulus, of movement from the Fed or BoJ formers on the S&P BSE Sensex this week. from its previous close of 66.52. The ru- with the yen at 18-month highs has pushed the yen up against Bharti Airtel, the largest mobile-phone pee opened at 66.49 a dollar and touched against the dollar, while analysts the dollar. The greenback sank to operator, fell the most in three weeks. a high and a low of 66.28 and 66.56, re- warned central banks’ weapons ¥107 in the afternoon—at levels Vedanta, a producer of aluminium and spectively, in intraday trade. were becoming less eff ective. not seen since Japan last beefed copper, rose for the fi rst time in three days Asian currencies were trading mixed Hong Kong ended 1.5% lower, up its stimulus in late 2014. after its earnings report. against the US dollar. Malaysian ring- while Seoul closed 0.3% down. The weaker greenback provid- India’s benchmark Sensex index git was down 0.192%, Philippines peso Shanghai ended off 0.3%, al- ed further support to oil, which is rose 0.01%, or 3.52 points, to close at 0.16%, China renminbi 0.166%, South though Sydney rose 0.5%. priced in dollars making it cheaper 25,606.62. So far this year, the Sensex has Korean won 0.114% and China off shore Taipei slipped 1.1% after figures for holders of other currencies. fallen 1.96%. declined 0.089%. showed the island’s economy Both main contracts—West The gauge lost 0.9% this week and yes- However, Japanese yen was up 0.952%, shrank in the first three months, pro- Texas Intermediate and Brent— terday’s decline pared the monthly gain Thai baht 0.206%, Singapore dollar longing a recession that started last rose to fresh 2016 highs yester- to 1%. Bad-loan concerns resurfaced af- 0.164% and Taiwan dollar 0.09%. year, as its key export sector dived. day, topping off another strong ter ICICI Bank’s results. Eleven banks in Year to date, the rupee has weakened The US Commerce Department week that saw US production fall. India reported losses in the three months The rupee closed up 0.29% to 66.33 yesterday 0.27%, while foreign institutional inves- said on Thursday that the world’s Confidence in the crude market ended December amid surging bad loans tors have bought $1.77bn from the local number one economy grew 0.5% has picked up in recent weeks after the nation’s central bank began an on the Sensex. State Bank lost 1.6%. So ager with Karvy Stock Broking in Mum- equity market and sold $372mn in the debt in January-March, almost half as China’s economy shows small audit, known as the asset-quality review, far, fi ve out of nine Sensex companies that bai, said by phone. “Investors are pausing, market. the pace expected, and the worst signs of picking up, while US bor- on October 1. have reported March-quarter results beat digesting the rally and will move depend- The dollar index, which measures the reading since 2014 as consumer rowing costs are expected to be “ICICI Bank is a heavyweight and its or matched analyst estimates. ing on how the earnings pan out.” US currency’s strength against major cur- spending sputtered. kept low for the near-term. earnings have spooked the market,” Paras The Sensex has risen 12% from a Feb- Vedanta jumped 4%, ending a two- rencies, was trading at 93.38, down 0.41% The news seemed to justify the US shares ended sharply lower, Bothra, a Mumbai-based vice president of ruary low as the risk-on sentiment re- day, 6.3% drop. The company reported from its previous close of 93.761. Federal Reserve’s decision not to driven by news that investor ty- equity research at Ashika Stock Broking, turned to Asia. Foreigners bought $588mn fourth quarter net income before ex- The American economy expanded at raise interest rates and to lower coon Carl Icahn had liquidated his said by phone. of local shares this month, adding to last ceptional charges at Rs9.55bn, beat- the slowest pace in two years, 0.5% in its expectations for any more Apple stocks owing to concerns “And the state-owned banks are yet to month’s infl ow of $4.1bn, which was the ing the Rs5.63bn estimated by ana- the fi rst quarter of the calendar year. On hikes this year. China would thwart its eff orts announce their earnings.” most in three years. lysts. It sales in the March quarter was Thursday, the Bank of Japan (BoJ) left However, it was the latest item to sell more iPhones and other ICICI Bank said profi t plunged 75% to There’s concern that fl ows into equi- Rs158.3bn compared with an estimate of monetary policy unchanged. Earlier, the of bad news for investors after gadgets in the country. Rs 7bn ($105mn), missing the Rs30.7bn ties may slow after the Bank of Japan this Rs154.8bn. US Federal Reserve kept its benchmark the BoJ held fire on monetary Hong Kong - Hang Seng down average of 25 estimates compiled by week held off from adding to its monetary Mahindra & Mahindra, a tractor maker, rate unchanged following a two-day policy despite slack Japanese 1.5% at 21067.05 points; Shang- Bloomberg. stimulus and the US Federal Reserve kept slid 1% in a second day of declines. Bharti meeting. growth, falling prices and a hai – Composite down 0.3% at The lender set aside Rs36bn as buff er its benchmark rate unchanged. Airtel fell 2.4% to pare this month’s gains Meanwhile, India’s 10-year bond yield deadly earthquake that caused 2,938.32 points and Tokyo - Nikkei for possible defaults. The stock slid 1.3%, “We’re in a consolidation phase after to 3.7%. closed at 7.436%, as compared with its the closure of factories. 225 closed for a public holiday. extending the weekly loss to 6%, the most the big rally,” Kaushik Dani, a fund man- Foreign investors bought $36mn of lo- Thursday’s close of 7.441%. Saturday, April 30, 2016 GULF TIMES BUSINESS

QSE WEEKLY REVIEW Across-the-board strong selling in real estate and consumer goods drags bourse

By Santhosh V Perumal al-Mansoori view that the new single win- Islamic stocks witnessed faster declines 3.34%, 2.78%, 1.21% and 0.47% respectively bucked the trend during the week. soared 24% to 12.14mn stocks, value by Business Reporter dow system will speed up and smoothen than the conventional ones during the during the week which saw domestic Local retail investors turned net sellers 20% to QR448.48mn and transactions by the listing process. week which saw banking and industrials brokerage houses by and large witness to the tune of QR48.06mn compared 4% to 5,750. “Domestic factors such as the corporate stocks constitute more than 71% of the a lower year-on-year share in the trading with net buyers of QR3.14mn the previous The market witnessed 21% increase in An overall bearish overhang was visible results largely sway the market,” an analyst trading volumes on the QSE. activities in the first three months of this week. the insurance sector’s trade volume to in the Qatar Stock Exchange (QSE) during said, adding regarding the listing of QFB, The 20-stock Total Return Index shed year. Domestic institutions’ net profit book- 0.51mn shares, 25% in value to QR35.07mn the week, which saw the debut of Qatar the investors are rather waiting for the mar- 2.02%, All Share Index (comprising wider Large, mid and small cap stocks have ing weakened considerably to QR1.94mn and 12% in deals to 487. First Bank (QFB) on the bourse. ket to find the intrinsic price of the stocks. constituents) by 1.95% and Al Rayan Is- fallen 4.17%, 0.19% and 0.13% respectively against QR149.96mn the week ended However, the real estate sector’s trade Notwithstanding the surge in world The 20-stock Qatar Index plunged lamic Index 3.27% during the week which year-to-date; whereas microcaps gained April 21. volume plummeted 49% to 7.39mn energy prices mainly due to weak dollar; 2.02% during the week which saw Ezdan saw Alijarah Holding, Masraf Al Rayan and 1.22%. However, foreign institutions’ net buy- equities, value by 87% to QR35.07mn and the local bourse was rather dragged by receives credit ratings from Standard and Gulf International Services (GIS) dominate 11 of the 13 banks and financial services, ing declined perceptibly to QR34.86mn transactions by 90% to 487. an across-the-board strong selling, par- Poor’s and Moody’s. The QSE is down the trading ring in terms of volume and eight of the nine industrials; six of the compared to QR171.64mn the previous There was 32% plunge in the consumer ticularly in the real estate and consumer 2.33% year-to-date. value. eight consumer goods; three each of week. goods sector’s trade volume to 4.5mn goods during the week which saw the QSE Opening the week weak at 10,263 Realty stocks plunged 4.89%, consumer the five insurers, the four real estate and Non-Qatari individual investors turned stocks, 30% in value to QR254.38mn and expect more listings in its main market points on Sunday, the market kept weak- goods (2.94%), transport (1.82%), con- the three transport; and one of the two net buyers to the extent of QR15.32mn 13% in deals to 3,570. and in junior bourse ‘Venture Market’ ening for the next three days to touch a sumer goods (1.79%), insurance (1.61%), telecom stocks closed lower during the against net profit takers of QR25.68mn the The transport sector’s trade volume within this year. low of 10,160 points on Wednesday, after banks and financial services (0.75%) and week. week ended April 21. tanked 29% to 2.2mn shares, value by 48% Local retail investors turned bearish which there was some gains but could not telecom (0.53%) during the week which More than 81% of the scrips were in the Total trade volume was up 9% to to QR83.98mn and transactions by 38% and there were substantially reduced buy- cover the lost grounds and thus settle 210 saw Institute of International Finance view red with major losers being Alijarah Hold- 60.76mn shares, value by 5% to QR1.76bn to 1,252. ing interests of domestic institutions dur- points lower at 10,186 points. that Qatar’s public foreign assets are more ing, Ezdan, Ahli Bank, Aamal Company, and transactions by 1% to 27,518 during The telecom sector saw 26% shrinkage ing the week which saw the newly listed However, the selling pressure from than 200% of gross domestic product Qatar Islamic Bank, Industries Qatar, GIS, the week. in trade volume to 2.74mn equities, 10% QFB eye credit ratings and capital boost to domestic institutions weakened consider- (GDP) this year, which is higher than the Qatar Insurance, Qatar Islamic Insurance, The banks and financial services sec- in value to QR87.08mn and 20% in deals support its current robust growth. ably and non-Qatari individual investors Gulf average of 159%. Mazaya Qatar, Vodafone Qatar and Naki- tor reported 80% surge in trade volume to 2,499. Micro and midcap equities witnessed turned bullish during the week which saw Market capitalisation shrank 1.01% or lat; even as Dlala, QNB, Qatari Investors to 31.28mn equities, 27% in value to In the debt market, there was no heavier off loading during the week which trading turnover decline amidst gains in about QR6bn to QR549.53bn with micro, Group, Ooredoo, United Development QR700.48mn and 39% in deals to 10,817. trading of treasury bills and government saw the QSE chief executive Rashid bin Ali volumes. mid, small and large cap equities declining Company, Al Meera and Doha Insurance The industrials sector’s trade volume bonds during the week. Comcast to buy US, eurozone infl ation DreamWorks Animation expectations diverge for $3.8bn Higher oil, firmer labour market lift US inflation outlook; stronger euro helps Reuters for them to create interesting depress eurozone inflation New York content out of those brands perceptions and monetise them,” Moff ett said. Reuters omcast Corp, the owner Comcast, the largest ca- London of NBCUniversal, said ble distributor in the US, has Cyesterday it would buy steadily boosted its ownership Hollywood studio DreamWorks of content and invested in ex- arket-based infl ation Animation SKG for $3.8bn to panding its theme parks busi- expectations in the eu- boost its family-friendly off er- ness, positioning itself as a di- Mrozone and the US have ings and help it take on media versifi ed conglomerate to rival diverged for the fi rst time in over conglomerate Walt Disney. Disney. two years, as fi rmer job markets The acquisition will add The $41-per-share cash off er help lift US infl ation prospects major children’s franchises to represents a premium of about just as a rise in the euro sup- Universal’s fi lm library such as 27% to DreamWorks’ Wednes- presses price pressures. Shrek, How to Train Your Drag- day close. The European Central Bank’s on and Kung Fu Panda, which it DreamWorks shares, which preferred gauge of long-term could tap for its growing theme have gained nearly 50% in the infl ation expectations, the fi ve- parks and consumer products last six months, soared 24% to year, fi ve-year breakeven for- businesses. $39.95 on Thursday. ward — which measures where Comcast’s Universal Pic- Chief executive Jeff rey the market expects 2026 infl a- tures found success with Katzenberg will become chair- tion forecasts to be in 2021 — is blockbuster family fi lms like man of DreamWorks New around 1.45% and well below the Despicable Me and Minions, Media, which will include the ECB’s 2% target. but this deal will ramp up its company’s ownership interests It remains close to record portfolio. in technology company NOVA lows around 1.35% hit in Febru- DreamWorks’ burgeoning and Awesomeness TV, a teen- ary even after aggressive mon- TV business will also be a boon focused studio that cultivates etary stimulus and a recovery in to Universal, Wall Street ana- stars of Alphabet Inc’s YouTube oil prices, indicating low infl a- lysts said. DreamWorks pro- and other digital platforms. tion expectations continue to vides original programming to Katzenberg will also serve as a favour lower government bond streaming service Netfl ix and consultant to NBCUniversal. yields in the region as well as other digital platforms that are DreamWorks Animation further action from the central on investors’ inflation outlook this year and is up 2% in trade- market infl ation expectations year, the European Union’s sta- eager for content as TV viewer- was spun off from Dream- bank. in 10 years hit its strongest lev- weighted terms. for the eurozone. tistics agency said yesterday. ship rapidly moves online. Works Studios in 2004. The In contrast, similar measures el since early August on Thurs- “There has been a substantial While US unemployment For others, a decoupling of US “It’s a sensible strategy,” studio was founded in 1994 by in the US have steadily risen since day due to higher oil prices and move in the euro, which should rates have fallen to just above 5% and eurozone expectations re- Moff ettNathanson analyst Katzenberg, Steven Spielberg February to above 2% as oil’s re- data showing faster than fore- dampen infl ation in the euro- the eurozone’s unemployment fl ected concerns that the ECB’s Craig Moff ett said. “They are and David Geff en. bound and signs of labour market cast price growth in the first zone,” said Patrick O’Donnell, rate remains above 10%, adding 1.5tn euro quantitative eas- buying characters.” The animation studio strength fuel a view that domes- quarter. investment manager at Aber- to the low infl ation environment ing package was insuffi cient to In addition to brands it cre- struggled in recent years as tic infl ation is accelerating. But oil, up roughly 70% from deen Asset Management. in the region. boost infl ation. ated, like Shrek, DreamWorks the market for children’s Investor perceptions of where January lows, has not had the HSBC fi xed income strate- Many investors want to see “There is a view that the ECB owns rights to iconic characters movies became crowded. In infl ation in the US and euro area same impact on eurozone infl a- gist Theo Chapsalis said tech- headline infl ation go up before won’t be able to manufacture such as Lassie and Casper the 2015, it cut one-fifth of its have started to change in early tion expectations. nical factors, increased supply they put on bigger positions in the enough infl ation to fulfi l its man- Friendly Ghost that it acquired workforce and reduced its March, having moved closely to- One reason for this is a rally of long-dated infl ation linked forwards market, said Chapsalis. date,” said ING senior rates strate- in its 2012 purchase of Classic movie slate from three films a gether since late 2013. in the euro, which has gained bonds and still low headline in- Eurozone April infl ation was gist Martin Van Vliet. “But I’m not Media. year to two. This year, it had a The US bond market’s gauge almost 5% versus the dollar fl ation were also behind the low estimated at -0.2% year-on- willing to throw in the towel yet.” “There’s a lot of opportunity hit with Kung Fu Panda 3.

Airbus wins $4.3bn Delta order for single-aisle A321s Danske CEO reveals ambitions

Bloomberg the Atlantic from the eastern US Toulouse when fitted with an extra fuel tank. JetBlue Airways Corp said on Tuesday it was “very seriously” for bank’s $207bn wealth unit Airbus Group won an order for considering the long-range A321LR 37 A321 single-aisle jetliners from model. Bloomberg Borgen’s commitment to wealth deposit rate below zero for the better Delta Air Lines valued at $4.3bn Delta, which ordered the so-called Copenhagen management comes despite the unit’s part of four years and most econo- at list prices, consolidating the classic version of the A321 rather rocky start to the year. Profi t before tax mists don’t see policy going positive European plane maker’s role as a than the Neo, or new engine slumped 25% from a year earlier as in- until 2018 at the earliest. The ability of major supplier to the US carrier. option, is rebuilding its narrow- anske Bank has created a wealth come fell 15%. Borgen said the fi rst two Denmark’s largest bank to weather the The A321s will replace older- body fleet as low oil prices spur management unit that’s almost months of the quarter were unusually monetary environment holds lessons generation jets including Boeing record earnings. Bombardier also Dtwice as big as Denmark’s larg- turbulent and the broader outlook for for other countries with similar poli- Co MD-88s, Atlanta-based Delta this week benefited from the plan est pension fund and about two-thirds investing clients’ money looks promis- cies, according to the head of the Dan- said in a statement yesterday. with a deal from the airline for 75 the size of the country’s economy. ing. ish regulator, Jesper Berg. The airline had already ordered smaller C Series jets that provides The 1.35tn kroner ($207bn) unit, “The market was very complicated Danske’s expansion of its wealth 45 A321s from Airbus in two the Canadian plane maker with which has existed in its current form during particularly the fi rst couple of business opens the door to an alterna- batches, the last in June 2014, and a much-needed boost for the since April 1 after the bank combined months, which has a natural impact tive revenue stream as lending income the new planes will be delivered beleaguered project. several divisions including its pen- on the unit and also taking into ac- dries up. But Danske’s experience also concurrently with those aircraft. Airbus secured a $14bn Delta sion business, will target growth in count the fi rst quarter of last year was shows that negative rates aren’t all bad. Boeing has been losing out to contract for 25 A350-900s one of the world’s richest corners as extremely good,” he said. “But long The bank wrote back 130mn kroner Airbus in the largest narrow- wide-body jetliners and the same Scandinavians look for ways to gen- term we are very comfortable with the in bad debt, compared with losses of body jet category after ending number of updated A330neos erate returns on their growing pile of wealth unit.” 502mn kroner a year earlier. production of its 757 more than in late 2014 after winning out in savings. Wealth management delivered the Danske reported net income that a decade ago. The US company contests with Boeing. “We have very high ambitions long- bank’s best profi t before tax as a per- slipped 1% last quarter to 4.78bn is contemplating development of The European company revealed term for it,” chief executive offi cer centage of allocated capital, at 25.6%. kroner ($730mn) in the three months an all-new model as the A321 and the A321 order after announcing on Thomas Borgen said in a phone inter- The worst performing unit by that ended March 31, beating the 4.52bn- updated A321neo, seating 180 to Thursday that it had secured a deal view yesterday. “I don’t want to point metric was corporates and institutions, krone estimate of analysts surveyed 240 passengers, win more orders to supply China Eastern Airlines to any particular area where we will at 10.7%. The result underscores the by Bloomberg. Net interest income than its largest 737. Corp with 20 A350-900s. It also invest, but the wealth area overall, as capital-light appeal of wealth manage- was little changed while total revenue Borgen: Long-term plans. Airbus sales chief John Leahy said said today that Philippine Airlines it has been lifted to an important stra- ment as regulatory requirements con- slipped 9%, Danske said yesterday. the A321’s capacity and range make has signed a purchase agreement tegic area for the bank, will get even tinue to stack up. The bank’s shares rose as much as about 1% this year, compared with a it ideally suited to flying within for six A350-900s, sealing a deal higher attention going forward and to No other major bank has experienced 4.4% after the open and traded at roughly 15% loss in the 39-member North America, or on routes across announced in February. that extent we will make sure that we negative interest rates as long as Dan- 183.60 kroner as of 12:06pm in Co- Bloomberg index of European finan- allocate enough resources.” ske. Denmark has had its benchmark penhagen. Danske’s stock is down cial companies.