HOPES DASHED | Page 2 BANKING NORMS | Page 3 Tata Steel to PBoC queries halt UK plant some banks on sale process MLF demand

Saturday, July 9, 2016 BREXIT IMPACT: Page 12 Shawwal 4, 1437 AH GULF TIMES

UK consumer confi dence suff ers BUSINESS one of its biggest falls in 21 years Qatar firm calls for best practices in waste management

By Peter Alagos 100% natural fruit and vegetable juices, bottles, which we recycle. Hopefully, the be used for composting. The company disposes around 3,000 tonnes of solid Business Reporter does not only practice recycling but practice will inspire them to recycle as also supports local and regional farmers domestic waste, according to statistics encourages customers to recycle by well,” al-Dorani told Gulf Times. by buying their products first, depending from the Ministry of Municipality and returning the company’s plastic bottles. To help educate the community on on their availability. Environment (MME). A local firm specialising in the production As an incentive, al-Dorani said customers sustainable development and best The Qatari-American entrepreneur The figure, however, does not include of natural juice drinks has underscored get QR1 off on their next order for every practices, al-Dorani said Raw Middle East also emphasised the need for more construction and hazardous wastes the need for more companies in Qatar bottle returned. has posted on its website other initiatives awareness on recycling initiatives from collected from diff erent industrial and to maintain best practices in waste Aside from plastic bottles, Raw Middle that help minimise the company’s the private and public sector. construction areas. management, specifically recycling. East also uses tote delivery bags that are carbon footprint such as use of eff icient “I think there should be more awareness The Integrated Domestic Solid Waste Citing the availability of a range of also recyclable. lighting, deploy new vehicles for less gas about these initiatives in Qatar and Management Centre at Mesaieed, which incentive programmes for eco-friendly “While these eff orts don’t have any emission, and the use of a timesaving that there should be more waste was established in 2011, has the capacity practices in the US or the UK, Raw Middle economic benefit to the company, we scheduling system to reduce operating management companies that would to recycle green waste and organic East founder Layla al-Dorani noted that simply try to become a sustainable days and utility consumption, among promote these programmes. It’s materials up to 750 tonnes per day. The companies in Qatar should “do their company and put our best foot forward. others. something that should be explored facility is currently undergoing expansion Al-Dorani: Preserve environment. part” in preserving the environment. She I think we’re the only company in Qatar Al-Dorani said Raw Middle East donates further,” she said. to accommodate more waste, the MME PICTURE: Thajudheen said Raw Middle East, which produces that pays our customers to return our its by-products to farmers, which could On a daily basis, the country collects and added.

IMF cuts eurozone US adds 287,000 jobs in June, growth forecast giving stock markets a boost for 2017 AFP Washington

AFP Brussels S employers added new workers at a sur- prisingly strong rate in June after an un- Unerving stall in May, delivering a fresh he IMF cut its growth forecast sign of US economic strength, the Labor Depart- for the eurozone yesterday, cit- ment reported yesterday. Ting the fallout from Britain’s The much better-than-expected numbers shock vote to leave the European Un- gave a boost to markets in the US and Europe, ion. battered down by worries that Britain’s vote to The IMF cut the growth forecast for withdraw from the European Union will drag 2017 to 1.4%, from the earlier 1.6%, down economic growth. “mainly due to the negative impact of But analysts remained cautious, saying it still the UK referendum outcome,” the In- waits to be seen whether the rebound from May ternational Monetary Fund said in a will be sustained. statement. Private businesses and government authori- “Downside risks have grown,” the ties across the United States generated 287,000 Washington-based fund added. new positions last month, 112,000 more than Spillovers from the Brexit vote, the analysts had expected. refugee crisis as well as terrorism con- The strongest hiring was in the health care, cerns “could contribute to greater un- hospitality, information and retail sales sectors, certainty, hurting growth and hinder- while government hiring also picked up. ing progress on policies and reforms,” That largely compensated for the poor num- it said. bers from May that had shocked policymakers British Prime Minister David Cam- and markets, sending the dollar lower and con- eron stepped down last month after tributing to the Federal Reserve’s decision last losing the Brexit referendum and left it month to put off an interest rate hike. to his eventual successor to start nego- The May job creation numbers in fact were re- tiations to fi nd a new relationship with vised downward in Friday’s data from the origi- Brussels. nal 38,000 reported to just 11,000. EU member states have pressed June’s hiring levels boosted the monthly aver- 100 barometer rising 1% and Frankfurt’s DAX in- pace for the last three months to 2.5%, compared hiring surge means for the economy going ahead, Britain to begin the negotiations im- age of the last three months to a solid 147,000, dex gaining 2%. with the 12-month rate of 2.6%. saying US businesses could remain cautious in mediately but in London the preferred which economists say is adequate to keep bring- With analysts saying the data increases the And the unemployment rate, which is based the coming months, concerned about the pos- option is to proceed with extreme cau- ing down unemployment overall. chances that the Federal Reserve will raise inter- on a separate database from the job creation sible economic drag from Britain’s vote to with- tion, leading some to say Britain may “This is a good trend but nothing spectacu- est rates at least once before the end of the year, numbers, rose by 0.2 percentage points to 4.9%, draw from the European Union, expected to hit even be stalling on the talks. lar. It suggests that hiring has taken a step down the dollar jumped to $1.1029 against the euro, though still near the lowest level in more than economic growth in Britain and Europe. “The impact that we worry about is since late last year but that job growth is still compared with $1.1078 before the announce- eight years. “We believe the trend remains more than that if the process takes longer, in ad- strong enough to absorb slack in the labour mar- ment. US bond yields, which had plunged in re- That rise was mainly due to a large jump in the strong enough to keep the unemployment rate dition to the obvious trade disruption ket,” said analysts at Nomura Global Economics cent weeks with the 10-year Treasury hitting a number of people reported rejoining the work- declining over time, consistent with addi- and the uncertainty about the new in a client note. record low, spiked higher in early trade. force, diluting the impact of the hiring surge on tional upward pressure on wage gains,” said Jim trade relations between the UK and “Most important, today’s report quells any The jobs report was not unequivocally good the jobless rate. O’Sullivan, chief US economist at High Frequen- the EU area,” said Mahmood Pradhan, concerns of a broader economic slowdown in the news. In May the unemployment rate had fallen from cy Economics. deputy director of the IMF’s European US.” Wage growth, another indicator of the 5% to 4.7% after the volatile data showed a huge But O’Sullivan expects the Federal Reserve will department, in a teleconference with Markets reacted positively, with the S&P 500 strength of the employment market and the number of people had dropped out of the labour continue to keep US interest rates on hold at its reporters. on Wall Street adding 1.1%, the London FTSE economy generally, slowed, bringing the annual force. Analysts remained cautious over what the end-July meeting.

Shell CEO warns Brexit could slow $30bn asset sale plan IMF board approves $5.34bn

Reuters could take longer than the initial time-frame. production globally and deepwater exploration in Brazil. standby arrangement for Iraq London But van Beurden said on Wednesday the uncertainty Sales in the North Sea, an ageing oil basin that has seen that has engulfed global markets following Britain’s production falling since the late 1990s, have been seen Brexit vote on June 23 was set to be an obstacle for as particularly diff icult following the halving of oil prices Reuters Royal Dutch Shell’s chief executive, Ben van Beurden, the programme, according to two investors who were over the past two years. Washington has told investors that Britain’s decision to exit the at the Wimbledon event. A possible Scottish independence drive could further European Union could slow its $30bn asset sale plan, “Ben said that post-Brexit, the disposals could take cloud the outlook for the North Sea oil industry and especially in the North Sea which had struggled to more than three years to complete,” one source stall mergers and acquisitions in the region due to The International Monetary Fund said on Thursday its executive board ap- attract buyers for years. told Reuters, asking not to be identified because the a lack of confidence in future regulations and taxes, proved a new three-year, $5.34bn standby arrangement for Iraq to support The comment, made during an investor and analyst event, hosted by Shell, was not open to the public. one of the sources explained. Baghdad’s eff orts to deal with lower oil prices and ensure debt sustainability. event at the Wimbledon tennis tournament this The 58-year-old Dutchman, who has stated his Shell’s shares, together with those of British rival BP , The IMF said in a statement the approval will allow for the immediate dis- week, came as Shell mandated Bank of America ambition to make Shell the best oil company have nevertheless made strong gains since the Brexit bursement of about $634mn under the programme. Merrill Lynch to find buyers for several key assets investment ahead of ExxonMobil, said Brexit vote as the weaker British pound and their dollar In July 2015, Iraq received about $1.24bn under the previous rapid fi nancing in the North Sea, including its stake in the lucrative “will make it more diff icult to execute disposals”, dividends attract investors. instrument programme. Buzzard oilfield, hoping the sale would raise at least particularly in the North Sea, according to a second Shell has in recent days put on the block a package of The IMF said that Iraqi authorities have pledged to maintain their currency $2bn. person who spoke to him. oil and gas assets in the North Sea including rapidly peg to the dollar, reduce spending on ineffi cient capital expenditures whole The Anglo-Dutch oil major had previously targeted A Shell spokesman said in response that “there has depleting fields as well as new developments, three protecting social spending. wrapping up the disposal of dozens of assets been no change to the previous statements we made banking sources told Reuters. It said overhauling the management of public fi nances will put the govern- around the world by roughly 2018 to help fund its on the three-year, $30bn divestment programme”. The company is off ering potential buyers a bundle of ment in a better position to combat the Islamic State militant group and cope $54bn acquisition of rival BG, which it completed in BAML also declined to comment. assets including BG’s non-operating stake in Buzzard with lower oil prices. “The Iraqi economy has been hit hard by the double February. Chief financial off icer Simon Henry had The company said in June it wanted to exit 10 countries north of Aberdeen, a relatively new field that feeds shock arising from the ISIS attacks and the sharp drop in global oil prices,” previously indicated the divestment programme after merging with BG to sharpen its focus on gas into the global Brent oil benchmark, the sources said. IMF deputy managing director Min Zhu said in a statement.”The policies put in place by the authorities to deal with this double shock are appropriate.” Gulf Times 2 Saturday, July 9, 2016 BUSINESS

Nintendo shares power up as new Pokemon mobile game wins fans

Reuters rolled out in Japan, other parts of Asia and 9% at their highest level in more than two Pokemon games have a deep fan base from its Pokemon Go Plus – an accessory manage to make profits from GPS games Tokyo Europe. months, giving the firm a market value of with the first title dating back to 1996. that will alert players when they come similar to Pokemon GO but that Nin- The game, which has players walking about $23bn. While free, Pokemon GO off ers in-app close to Pokemon so that they don’t tendo’s large user base had the potential around their neighbourhoods in real The news will be a welcome salve for purchases for power-ups and extra items. always have to be looking at their phones. to turn that around. Shares in Japan’s Nintendo Co surged yes- life to search out and capture Pokemon Nintendo which for years resisted intro- “It has more (monetisation) than we It will be released in late July and will In another sign of the game’s skyrock- terday as early signs showed consumers characters on their smartphones, earned ducing mobile games with its best-known expected; as users build their Pokémon be priced at $34.99 in the United States. eting popularity, the Northern Territory falling in love with its new Pokemon GO enthusiastic reviews by fans on Twitter characters such as Super Mario Bros inventory, spending money becomes The company has promised four more Police, Fire and Emergency Services in smartphone game, raising hopes that the despite some glitches. and Pokemon in an eff ort to protect its needed to store, train, hatch and battle,” smartphone games in the financial year to Australia posted on its Facebook page company’s long-awaited shift into mobile Analysts have also noted that the console business. Macquarie Securities said in a note to end-March and has said it expects mobile that while the game featured the Darwin gaming will pay off . money-making potential from in-app It finally yielded to investor calls to do clients. The game was jointly developed gaming to help boost annual operating Police Station as a “Pokestop”, players did Since its launch late Wednesday in purchases appears to be better than so last year when it announced a tie-up by Niantic and Pokemon Company and is profit by a third to ¥45bn ($450mn). It also not actually have step inside to gain their the United States, the title has shot up to expected. “Ran into 4 people playing with mobile specialist DeNA Co. published by Niantic. plans to release its next console globally Poke Balls. “It’s also a good idea to look claim the No 1 free app ranking in Apple #PokemonGO on my 20 minute walk But its first mobile title, Miitomo, was Macquarie said it expects Nintendo to in March. up, away from your phone and both ways Inc’s US iTunes store. home this evening from work. launched only in March after a delay and make most of its money through its one- Hideki Yasuda, an analyst at Ace before crossing the street. It was also launched in Australia and I struck up a convo w/ one of them. was a social networking-style app, leaving third holding in Pokemon Company. Research Institute, said Niantic, which was That Sandshrew isn’t going anywhere New Zealand this week and will soon be Nintendo’s shares jumped to end up investors disappointed. Nintendo also stands to make money spun off from Google last year, did not fast,” it said.

China to consider aid for Mizuho raising pool of struggling state fi rms bankers advising SMEs Bloomberg Bloomberg Beijing Tokyo

hina is considering pro- izuho Financial Group is increasing its viding about 10 of its pool of bankers who advise small Japa- Cstate-owned enterprises Mnese businesses on matters ranging from with an aid package, people fa- investing to going public, part of a push to spur miliar with the matter said. Si- fee income at the nation’s third-biggest banking nosteel Corp is among those that group. may receive help, one of the peo- Tokyo-based Mizuho seeks to boost the number ple said. of bankers covering small and mid-sized enter- The government is consid- prises, or SMEs, by about 50% in the next three ering options such as asset or years from the current 350, said Hidetoshi Kaji, equity transfers, takeovers and a senior corporate offi cer at its securities unit. It preferential policies, the people will do so mainly by transferring people from its said, asking not to be identifi ed retail brokerage and fi lling the gap by hiring new because the discussions haven’t graduates. been made public. The proposal Chief executive offi cer Yasuhiro Sato has been is still being discussed, the peo- stressing the importance of bolstering fee busi- ple said. nesses as plummeting interest rates curtail prof- Should the plan be approved, itability from lending. Japanese SMEs, which it would mark the government’s earned record profi ts last year, are paying fees for latest eff ort to provide relief to advice on anything from investing in a negative- its state fi rms, many of which rate world to pursuing acquisitions and listing are struggling with overcapac- shares during global market turmoil. ity and slumping demand as the “Taking a company public is a big event for us economy grows at its slowest and the company owners, and it’s crucial to sup- pace in a quarter century. SOEs port them as the lead manager to hold a long-term have seen their profi ts drop by relationship,” Kaji, 52, said in an interview in To- about 10% during the fi rst fi ve kyo last week. “Negative interest rates are forcing months of the year, extending small businesses to think about how to take risks last year’s slump. when they can’t get decent returns from domestic Among the measures being bonds.” considered, state-asset man- Succession planning is also a key area for Mi- agement fi rms such as China zuho, as Japan’s growing ranks of ageing business Chengtong Holdings Group owners seek advice on how to hand over the reins and China Reform Holdings to the next generation. Tokyo-based Mizuho seeks to boost the number of bankers covering small and mid-sized enterprises, or SMEs, by about 50% in the next three years from Corp could take over struggling According to Kaji, Mizuho Securities Co will the current 350, said Hidetoshi Kaji, a senior corporate off icer at its securities unit. SOEs, according to the people. move about 150 to 200 people, mainly those who In another option, weaker SOEs handle individual clients, to cover SMEs and major Japanese securities fi rms aren’t accelerat- Oversight of small fi rms falls within Mizuho’s Pretax profi t at SMEs in Japan climbed to a would receive assets or equity “middle-market” fi rms, which he defi ned as ing hiring of university graduates next fi scal year. new retail and business banking division, one of record ¥5.2tn last year, according to the trade from healthier SOEs, the people those with an estimated value of less than ¥100bn Nomura Holdings Inc, Daiwa Securities Group fi ve in-house companies created by CEO Sato ministry. Such companies generate about 55% of said. ($990mn) if they were publicly traded. The bro- Inc and SMBC Nikko Securities Inc plan to recruit this year and the biggest by revenue. Mizuho ex- the country’s economic activity, government data The State-owned Assets Su- kerage plans to recruit 400 graduates for the year fewer school leavers, while Mitsubishi UFJ Morgan pects revenue from the division will expand about show. Still, sentiment among smaller compa- pervision and Administration starting next April, increasing its intake by 13% Stanley Securities Co will keep the number little 7% over the next three years to ¥740bn in the 12 nies worsened last quarter as a rising yen damped Commission, which is in charge from a year earlier, with most joining the retail changed, spokesmen for the companies said. months ending March 2019, according to calcula- prospects for exporters, a Bank of Japan survey of overseeing SOEs, didn’t im- brokerage operation, said Hiroki Saigusa, a Tokyo- Mizuho climbed to the top of Japan’s rankings tions based on a presentation for investors on June showed last week. mediately respond to a request based spokesman. of IPO underwriters in the fi rst half of 2016 from 17. It sees the unit’s profi t climbing to ¥60bn from Mizuho isn’t the only investment bank to fo- for comment. Representatives “Frankly, we’re not increasing manpower fast seventh last year, managing listings ranging from ¥16bn in the same period. cus on small businesses in Japan. Goldman Sachs at the state asset managers and enough to keep up with the rapid growth of the CHIeru Co, a Tokyo-based online education pro- The bank’s four other in-house companies are Group is planning to work with smaller companies Sinosteel, the country’s largest business,” Kaji said. “We see fairly big potential in vider, to Hiroshima-based tofu maker Yamami Co, corporate and institutional, global corporate, glo- on takeovers abroad as they follow larger peers in steel trader, either didn’t im- biotech, IT and fi nancial technology companies data compiled by Bloomberg show. The number bal markets and asset management. Sato set up the search for growth overseas, local M&A head mediately respond to queries or because they’re the ones that are seeking growth” of IPOs in Japan increased in each of the past six the system this year to make the fi nancial group Yoshihiko Yano said in December. weren’t available to comment. by listing their shares, he said. By contrast, other years, led by smaller companies. more responsive to customers. China auto sales growth accelerates on rising SUV demand

Bloomberg pared with 27% in the same period a year ear- Beijing lier. That’s also in part been driven by more local manufacturers introducing cheaper models in the segment to woo buyers. Indus- hina’s passenger-vehicle sales ex- trywide deliveries rose 19% to 1.7mn units in panded at a faster pace in the fi rst half, June. The operating costs for Chinese cus- Cas rising demand for SUVs and new- tomers to switch from sedans to SUVs are energy vehicles widened the nation’s lead as low because domestic automakers off er less the world’s biggest auto market. expensive SUVs than their foreign competi- Retail sales of cars, sport utility vehicles tors, according to Steve Man, an auto analyst and multipurpose vehicles climbed 9.5% to at Bloomberg Intelligence. 10.8mn units in the January-June period, The more than doubling of sales of elec- according to the China Passenger Car Asso- tric vehicles stand out as the government ac- ciation. Honda Motor Co, Toyota Motor Corp celerates construction of charging points to and Daimler AG’s Mercedes-Benz gained serve 5mn electric vehicles by 2020. China, share as growth in industrywide deliveries which surpassed the US as the largest market outpaced last year’s 8.4% gain. for electric vehicles last year, wants sales of Demand for SUVs has been rising as in- what it calls new-energy vehicles to exceed creasingly affl uent Chinese buyers opt for 3mn units a year by 2025. more spacious vehicles, a trend that may Deliveries of new-energy vehicles surged continue with the scrapping of the country’s 126% to 86,374 units in the fi ve months decades-old one-child policy. The reduction through May, according data on the asso- in the purchase tax on vehicles with engines ciation’s website. BAIC Motor Corp’s BAIC E smaller than 1.6 litres in October also provid- series was top-selling electric vehicle in the ed a tailwind for sales of compact and mid- January-May period, while BYD Co’s Tang sized SUVs. SUV was the best seller in the plug-in hybrid “Sales of SUVs continue to be robust as category. Chinese families who plan to have a second One segment that was an exception to the child are keen on the size and height of the growth trend was mini commercial vehicles, car,” said Zhang Xin, chief auto analyst with with sales falling 34% to 374,208 units in the Guotai Junan Securities in Beijing. “SUVs fi rst half. with small engines that are more fuel-effi - Among global carmakers, sales climbed cient are becoming the trend.” 5.3% to 1.81mn units for General Motors Co, Deliveries increased 18% to 542,527 for 6% to 577,097 units for Ford Motor Coand Honda, while Toyota’s rose 16% to 592,100 3.8% to 609,900 units for Nissan Motor Co. units in the fi rst half. Mercedes-Benz sales China’s Geely Automobile Holdings Ltd’s surged 32% to 229,137. deliveries gained 11% to 280,337 units and SUVs accounted for 35% of total passen- Guangzhou Automobile Group Co’s sales in- SUVs accounted for 35% of total passenger-vehicle sales in China in the first six months, compared with 27% in the same period a year earlier. ger-vehicle sales in the fi rst six months, com- creased 29% to 731,884 units. Gulf Times Saturday, July 9, 2016 3 BUSINESS

China firms among three China’s central bank queries bidders for Emerson’s Leroy-Somer

Reuters some banks on MLF demand Beijing/Paris

Reuters Emerson Electric’s alternator Shanghai business Leroy-Somer is expected to attract firm off ers from two Chinese companies he People’s Bank of China has and a buyout group in a queried some banks on their de- potential €1bn ($1.1bn) deal, Tmand for medium term lending people close to the matter facility (MLF) loans later in July, mul- said. tiple sources with direct knowledge of Private equity group Clayton the matter told Reuters yesterday. Dubilier & Rice (CD&R), as China’s central bank has increasingly well as Wolong Electric and relied on MLF loans to guide medium- another Chinese company are term interest rates and manage liquidity conducting due diligence on in the banking system. Leroy-Somer and preparing to They are typically for periods from submit final bids this month, three months to one-year long. the sources said. More broad-based easing tools such Emerson wants to focus as cuts to banks’ reserve requirement its business on process ratios release too much liquidity into automation and heating and the banking system at a time when poli- air conditioning. cymakers are trying to manage rising In April it launched the sale credit risks and avoid sharp yuan de- of its Motors and Drives preciation, analysts say. unit, which consists mainly “The MLF is a frequently employed of Leroy-Somer which monetary instrument, and fi nancial makes alternators for power institutions can indicate their demand producers and industrial for any maturities at any time,” said the applications. central bank’s press offi ce in an emailed It aims to choose a buyer statement, without confi rming or de- before the August summer nying it had made inquiries. break, one of the sources said. “The central bank comprehensively CD&R declined to comment, considers liquidity conditions in the while Emerson and Wolong banking system and other factors when were not immediately choosing the amount to off er, in order available for comment. to maintain banking sector liquidity Strategic buyers often have at a suffi cient and reasonable level and an edge over private equity guide fi nancial institutions to increase groups in such acquisitions as support towards key or weak economic they are usually able to reap sectors. cost savings from combining “Therefore, the central bank inquir- their own with the acquired ing on fi nancial institutions’ demand A pedestrian walks past the People’s Bank of China in Beijing. China’s central bank has increasingly relied on medium term lending facility loans to guide medium-term business. is an everyday form of communication, interest rates and manage liquidity in the banking system, sources with direct knowledge of the matter said yesterday. In this case, however, private it does not represent a monetary policy equity investor CD&R is seen signal. “When we conduct MLF opera- more closely aligned with fi nancial in- ous MLF loans would come due. tion of the renminbi rather than any- na Securities Journal earlier this week as having the advantage tions, we release the result to the pub- stitutions. This is a part of the central “As things stand and pending anoth- thing more dramatic,” wrote Gilliam C said that a slower increase in money of deep knowledge of the lic the same day in a timely, open and bank’s market communication, it is not er internal or external shock we expect Hamilton, head of the Beijing offi ce of supply was likely in the second half, business. transparent fashion. In order to serve necessary to over analyse it.” (the PBoC) to support the economy by NSBO China Policy Research in a note and the central bank would continue to One of its partners, James evolving market demand, in the future Sources said the loans would be of- sticking to its box of liquidity manage- on Thursday. rely on MLFs to manage banking sector G Berges, is a former vice the central bank’s movements will be fered on July 13 and July 18, when previ- ment tools and a managed deprecia- An editorial in the state-owned Chi- liquidity. chairman and president of Emerson, where he was among executives responsible for the company’s motors and appliance components businesses. George Tamke, a retired Striking Wal-Mart workers in China return to work operating partner at CD&R, is a former co-CEO of Emerson. Wolong Electric, which has Reuters employees supported it. But Duan Yu, system spread fast via a string of on- bought several smaller Shanghai/Chicago a worker at Wal-Mart in Nanchang line chatrooms on Tencent Holdings companies this year, would, who was representing the strikers in Ltd’s messaging app WeChat un- if successful in the sale, add discussions with management, said der the loose organisation of an on- to a string of recent Chinese orkers striking at Wal-Mart employees had been voicing their line group called “Walmart Chinese acquisitions in Europe. Stores Inc outlets in China displeasure about the system since Workers’ Association”. They include home appliance Whave returned to work after May to no eff ect. About 50-60 workers at each of maker Midea’s planned the fi rm agreed to consider their pro- “I have a very bad feeling about it. four stores in Nanchang, Chengdu purchase of German tests against a new work scheduling There’s no possibility they’ll agree and Harbin had been involved in the robots maker Kuka, China system that some fear could be used (to our demands),” Duan said by tel- strikes, said Zhang Liya, a Wal-Mart Three Gorges’ acquisition to cut overtime pay, workers and la- ephone. employee from the southern city of of off shore wind group bour activists say. Wal-Mart management at Duan’s Shenzhen who set up and manages Meerwind and the sale of The strikes started at the beginning store in Nanchang called a meeting the online group. Italian soccer club Inter Milan of the month in the southern city of of all workers on Thursday, but af- “(The stores) launched the strikes to Chinese electronics retailer Nanchang and spread with the help of terward tried to break them up and on their own,” said Zhang.”If Wal- Suning Commerce Group Co. social media to Wal-Mart hypermar- speak to them one by one to try to Mart malevolently continues with Given Leroy-Somer’s kets in two other cities, the activists “fi nd people with sympathetic ears”, this then there will defi nitely be even exposure to military activities, and workers said. Duan said. more stores that stand up.” the French government Worker unrest has surged in China China Labour Bulletin, a Hong US-based Wal-Mart spokes- may need to give its green as slowing economic growth and high Kong-based workers’ rights group, woman Jo Newbould said the hour light before any deal can be costs have squeezed companies, but it said the strikes had ended because scheduling system, which is unique to completed, sources familiar is relatively rare for workers to organ- Wal-Mart had agreed to respond to China, gives workers the fl exibility to with the matter have said. ise across provincial lines. the workers’ demands within a week. work additional shifts if they want to. A spokesman for the French Wal-Mart said on Thursday it had Wal-Mart China declined to com- “We have communicated the new economy ministry was not Pedestrians walk past a signboard of Wal-Mart store in Beijing. The US firm said on introduced the new work hour sched- ment on whether it had agreed to system to Wal-Mart China associates immediately available for Thursday it has introduced the new work hour scheduling system in July across its uling system in July across its hyper- talks with the workers. and the majority of associates sup- comment. hypermarkets in China, and the majority of its employees supported it. markets in China, and a majority of its Discontentment at the scheduling port it,” she told Reuters.

Chinese outbound deals facing tougher regulatory opposition abroad

Bloomberg plateauing in China deals threatens ity for the country, according to Chen seeks to discourage more buyouts, peo- The deal by Midea Group, with funding left out a crucial clause in its fi nancing Beijing one of the few bright spots in global Lin, a fi nance professor at the Univer- ple familiar with the matter said in May. from Industrial & Commercial Bank of documentation that would have off ered dealmaking, which is down 13% from sity of Hong Kong. And that’s just at home. Chinese China, has triggered concerns from the stronger payment security, according this time last year and reeling from a The Qihoo buyout consortium, lead- acquisitions this year have become in- German government about the longer- to one of the people, who asked not to hinese companies have gone big number of high-profi le blowups. ing the largest ever take- private of a creasingly high-profi le, drawing the term intentions of state-backed Chi- be identifi ed as the information is pri- game hunting this year. Yet that The trend illustrates the bind fac- US-listed Chinese fi rm, is among in- attention of offi cials in the US and Eu- nese investors. vate. China’s KingClean faltered in its Crecord run is threatened by a ris- ing President Xi Jinping’s government, vestors bearing the brunt of the su- rope too. ChemChina has resubmit- “No matter if it’s a US or European bid for German coff ee machine maker ing set of challenges – not to mention which continues to encourage Chinese pervisor’s scrutiny. The group eventu- ted its $43bn Syngenta purchase to the regulator, it’s become more and more WMF when it couldn’t transfer enough the Brexit shock. companies to use acquisitions to gain ally agreed to the Chinese regulator’s Committee on Foreign Investment in likely that they will challenge these funds off shore by a deal deadline, ac- It took less than six months for the know-how while seeking to limit the request to transfer the buyout funds the US, which can recommend trans- deals,” said the University of Hong cording to people with knowledge of volume of announced Chinese out- currency moves that could accompany off shore in several batches, after trying actions be blocked if they pose a risk to Kong’s Lin. Chinese companies “are the matter. Though KingClean was bound deals to surpass last year’s to- a string of big-ticket purchases. unsuccessfully for approval to send the national security, people familiar with going for technologies. And that means one of the fi nal two bidders, KKR & Co tal of $120bn – itself a milestone. But China’s dealmaking ambitions face money overseas in a single go, people the matter said last month. At least two they’re on their way to becoming di- decided to sell the business to France’s now, Chinese buyers are facing tougher increased scrutiny at home. The com- with knowledge of the matter said ear- other recent China deals have unrav- rect competitors with European and SEB SA in a deal valued at about €1.6bn regulatory opposition abroad, while at merce ministry, one of several regu- lier. That further delayed a deal that’s elled amid CFIUS reviews. US fi rms.” ($1.8bn) because it wanted greater cer- home they must grapple with a govern- lators with a say in acquisitions, last still pending more than a year after an “We could be close to the peak in Companies must also contend with tainty of closing the sale, one of the ment keen to stabilise a yuan pressured month publicly warned of the pres- initial announcement. outbound Chinese deals,” said Severin wariness from boards that have seen people said. by outfl ows from $148bn of overseas sure of outbound investment on the Another source of Chinese deals is Brizay, head of European M&A at UBS a number of large Chinese acquisi- Representatives for Astorg Partners, deals this year. country’s foreign exchange reserves. set to dry up as the nearly $50bn wave Group. “But I expect activity will con- tions collapse – sometimes with scant the private equity fi rm that was selling “Chinese outbound M&A is likely The currency supervisor, no longer the of attempted privatisations runs into tinue, until a major deal gets blocked.” warning. Beijing-based Anbang Insur- Ethypharm, and KKR declined to com- to slow down in the second half of the rubber stamp it once was, has also held trouble. Online-chat platform YY Inc Such stumbles threaten the bonanza ance Group Co had topped a rival bid- ment. A spokeswoman for Luye Group year,” said Zilong Wang, head of merg- up some landmark transactions includ- said in June that a group of executives for investment banks, which earned der, Marriott International Inc, for the said she doesn’t have any relevant in- ers and acquisitions at China Interna- ing the $9.3bn buyout of Qihoo 360 pulled a $2.5bn takeover proposal. a record $230mn in fees from Chi- owner of the Sheraton and Westin ho- formation on the matter. A representa- tional Capital Corp, which is advis- Technology Co. 21Vianet Group, a Beijing-based data nese buyers of overseas assets in the tel brands before it abandoned its off er tive for KingClean’s Shanghai-listed ing China National Chemical Corp on A key concern for Chinese authori- centre operator, announced the same fi rst half of the year, according to New with little explanation. At least $21bn arm, KingClean Electric Co, said the its proposed purchase of Syngenta. ties is the stability of the yuan, which month that a potential bid for the York-based consultancy Freeman & Co of announced deals from Chinese buy- bid was pursued by the chairman’s pri- “Mainland companies may face greater is on track for a third annual loss versus company valued at $1.7bn wouldn’t Goldman Sachs Group Inc was the No. 1 ers this year have been terminated, the vate company and declined to pass on a scrutiny in transferring funds off shore the dollar, even after central bank sup- proceed. adviser on China outbound deals with a most since the fi rst half of 2009, ac- request for comment. for acquisitions.” port that’s led to an $800bn decline in Chinese investors planning to ac- 49% market share, followed by Beijing- cording to Bloomberg-compiled data. Brexit will also bring pause to Chi- Would-be Chinese acquirers are be- the nation’s foreign-exchange reserves quire overseas fi rms and then relist based CICC and Credit Suisse Group Some Chinese fi rms saw deals fail nese acquirers. Buyers that took for ing hindered by government opposition over the past two years. China’s cur- them on the Shanghai or Shenzhen ex- AG, data compiled by Bloomberg show. when they stumbled near the fi nish granted the role of the UK as a platform in Europe, which until now had re- rency has depreciated 1.6% over the changes have been given pause follow- Even China’s foray into Europe has line. Health-care investor Luye Group for expanding into Europe will have to mained friendlier territory than the US. past two weeks to the lowest level since ing moves by the securities regulator to faced opposition, with an off er by the lost the bidding for French drugmaker carefully assess the implications of the On top of that, there are sceptical target 2010. China’s State Administration of restrict their route back to the domes- nation’s biggest appliance manufac- Ethypharm despite off ering a higher British vote to leave the European Un- boards and diffi culties getting funds Foreign Exchange is scrutinising deals tic market. The government is planning turer for a stake in German industrial price than the eventual winner, people ion, said Christopher Chua, the head of off shore. For bankers and lawyers, the to ensure they fi t into a strategic prior- new curbs on backdoor listings as it robot maker Kuka drawing criticism. with knowledge of the matter said. Luye China M&A at Credit Suisse. Gulf Times 4 Saturday, July 9, 2016 BUSINESS

Australia dealt AAA Tata Steel to halt UK sale blow as S&P cuts outlook process on Brexit concern

Bloomberg on fi scal Mumbai gridlock ata Steel has temporarily halted the sale of its UK assets, after many of the short- Tlisted bidders pulled out due to uncer- Bloomberg tainty in the wake of the Brexit vote, people with Sydney knowledge of the matter said. Potential buyers told Tata Steel that the UK’s surprise vote to leave the European Union last &P Global Ratings cut month raised uncertainty about the viability of the outlook on Australia’s its operations there, the people said. At least SAAA credit rating to nega- four shortlisted bidders pulled out of the proc- tive from stable as it warned the ess, according to one of the people, who asked prospect of fi scal-policy gridlock not to be identified because the information could thwart government at- isn’t public. tempts to rein in a budget defi cit. Tata Steel is still keen to sell the business The agency acted follow- and may resume the process after the effects of ing Saturday’s federal election, Brexit become clearer, the people said. The as- which hasn’t delivered either sets, which include the Port Talbot facility, had Prime Minister Malcolm Turn- attracted interest from at least seven potential bull’s Liberal-National coalition buyers including India’s JSW Steel and Hebei or the main opposition Labour Iron & Steel Group, people with knowledge of Party a strong mandate, poten- the matter have said. tially weakening the eventual Britain’s steel industry has been hit by high winner’s ability to push through energy costs, inefficient output and a flood of fi scal savings measures. While cheap Chinese exports. That led to Tata Steel in the coalition is edging ahead as March saying it planned to sell its UK operations counting continues, it remains after years of losses, putting 15,000 jobs at risk unclear whether it will gain and raising the alarm for British politicians. enough seats to form govern- Representatives for Tata Steel in India didn’t ment in its own right. immediately respond to e-mails seeking com- “The negative outlook on ment, while a spokesman for the UK busi- Australia refl ects our view that ness declined to comment. The BBC reported without the implementation of earlier Thursday that Tata Steel will soon an- more forceful fi scal policy de- nounce a pause in the sale of most of its UK cisions, material government business, without saying where it got the budget defi cits may persist for information. several years with little improve- “The cloud of uncertainty over steelworkers’ ment,” S&P said in a statement heads needs to be lifted by Tata giving binding Thursday. There is a “one-in- commitments about its long-term intentions three chance that we could lower regarding Port Talbot and its UK strips busi- One of the blast furnaces of the Tata Steel plant in Port Talbot. Potential buyers told the company that the UK’s surprise vote to leave the European Union last the rating within the next two ness,” UK labour union Unite said in a statement. month raised uncertainty about the viability of its operations there and at least four shortlisted bidders pulled out of the process, sources said. years,” the credit assessor said. “Unite will be pressing Tata for clarity over its While the three main rating intentions and ensuring it sticks to its promise keep the unit if the UK government offers a bail- to review and evaluate the implications of Brex- the next steps for its UK business after the deci- companies warned on Mon- to be a responsible seller and act ethically.” out and helps ease its pension liabilities, one of it,” British Labour lawmaker Stephen Kinnock sion to halt the sale, according to the person. day that Australia’s grade may The UK government will do all it can to assist the people said. said in a statement. “However, it is now abso- Buyout firm Greybull Capital agreed in April come under pressure following with the sale and the offer to support buyers is “We all understand the massive impact of the lutely critical that Tata Steel and the UK govern- to buy Tata Steel’s giant Scunthorpe steelworks the election result, and Treas- unchanged, Minister Anna Soubry told Parlia- referendum result, and we appreciate that Tata ment come forward with a specific timetable.” in England, as well as mills in Teesside and urer Scott Morrison took to ment on Wednesday. Tata Steel may decide to Steel, like so many other businesses, need time Tata Steel will hold a board meeting to discuss northern France. television within half an hour of Thursday’s S&P statement, markets appeared more relaxed. The nation’s 10-year bond yield remains close to the record-low of 1.84% it touched Wednesday, while the currency was little Japan machinery orders seen rebounding changed despite initial volatility. “The fact the rating wasn’t actually downgraded was posi- Reuters ice sector and the retail industry was tive,” said Jason Wong, a cur- Tokyo especially low on fears that a stronger rency strategist at Bank of New yen and lower stock prices triggered by Zealand in Wellington. “By glo- the Brexit would dampen already weak bal standards, Australia is a very apan’s machinery orders were ex- consumer spending. strong credit.” pected to rebound only modestly “There are more uncertainties in eco- S&P’s decision to shift its Jin May, a Reuters poll found, as a nomic outlook following the Brexit, and outlook on Australia comes as strong yen and weak overseas demand the wealthy are refraining from spend- the nation faces a decline in clouded the outlook for capital invest- ing. There are few factors to stimulate tax revenues amid a drop off in ment. spending among the middle class as commodity prices and a fall in Core machinery orders, a highly vol- well. Even though the sales tax hike was mining investment. While the atile data series regarded as a leading delayed again, it’s diffi cult to think that government has sought to chart indicator of capital spending, were seen the situation would improve in the fu- a path back to surplus, budget likely to grow 2.6% in May after falling ture,” said a respondent from the retail defi cit projections have been 11% in April, the poll of 19 economists industry. The outlook index, which in- repeatedly revised higher and found. Core orders, which exclude dicates the level of confi dence in future measures to curtail the shortfall those of ships and electrical equip- conditions, tumbled 5.8 points to 41.5 in have also been stymied in par- ment, were expected to have fallen 8.7% June, the worst level since March 2014, liament. Australia isn’t alone in May from a year ago, after a 8.2% de- as worries about a post-Brexit market in seeing minimal bond market cline in April. turmoil and the global economy cast a impact from rating agency deci- “Firms’ capital spending is expected shadow over sentiment in the service sions. While the UK recently had to stay solid over the medium term due sector. Poor service-sector sentiment in its credit ratings cut by both S&P to the need to upgrade ageing facilities, June comes after data released earlier in and Fitch in the wake of Britain’s special demand from the Tokyo Olym- the day showed gains in price-adjusted European Union referendum, pics, and inbound investment,” said real wages slowed further in May. gilt yields have continued to Takeshi Minami, chief economist at Weak service-sector sentiment and mark record lows. Norinchukin Research Institute. sluggish wage growth are bad news for Australia was last stripped of “But there are worrying factors such Heavy machinery at a construction site in Tokyo. Japan’s core machinery orders, a highly volatile data series regarded as a Prime Minister Shinzo Abe, who has its top ratings by both S&P and as growing risks to the economy in Ja- leading indicator of capital spending, are likely to grow 2.6% in May after falling 11% in April, a Reuters poll found. struggled to beat two decades of defl a- Moody’s Investors Service in pan and overseas, and concerns about tion and boost spending through his re- 1986, the same year then- Treas- corporate earnings due to a strong yen,” CGPI was expected to fall 4.2% in the hit a new low in June due to a stronger to 41.2 in June. It was the lowest read- fl ationary Abenomics policy. urer Paul Keating warned that he said. Minami added that fears about year to June, a 15th straight monthly fall yen and weaker stock prices following ing since October 2014, data released “Wages aren’t changing and bonuses the nation was at risk of becom- harmful consequences from Britain’s refl ecting weak domestic demand and Britain’s surprise vote to leave the Eu- on Friday by the Cabinet Offi ce showed. aren’t increasing. Consumers’ desire to ing a “banana republic.” Moody’s vote to leave the European Union could the strong yen pushing down import ropean Union, adding to headaches for Japanese policymakers and markets spend is lowering. They don’t feel they restored the top tier score in Oc- make Japanese fi rms more cautious prices. policymakers already worried about have been on high alert about the Brex- want to buy anything, so the economy tober 2002, with S&P following about investing. There is growing speculation that sputtering economic growth. it-induced market turmoil, prompting doesn’t improve,” said another re- in February 2003. Fitch Ratings The Cabinet Offi ce will publish the the BoJ will adopt fresh stimulus at its The survey of workers such as taxi the country’s top currency diplomat, spondent from the retail industry. The awarded Australia a AAA ranking data on Monday. On Tuesday, the Bank policy meeting later this month as weak drivers, hotel workers and restaurant Masatsugu Asakawa, to warn earlier on lacklustre data also ramps up pressure in 2011, and the country is cur- of Japan will announce the June corpo- consumption, the strong yen and ex- staff — dubbed “economy watchers” Friday that the government was ready on Abe’s government before elections rently one of just 10 to hold the rate goods price index (CGPI), which ternal headwinds hold back growth and for their proximity to consumer and to respond to any speculative moves in to the upper house this Sunday and the highest score from all three major measures the prices companies charge stifl e infl ation. retail trends — showed their confi dence the foreign exchange market. announcement of an economic stimu- assessors - for now. each other for goods and services. The Sentiment in Japan’s service sector fell 1.8 points from the previous month Meanwhile, Sentiment in the serv- lus package this autumn. Japan’s solar boom showing signs of deflating as subsidies wane

Bloomberg what has been a bright spot for the global are increasing, according to Teikoku about 3.4% in 2015. Solar has grabbed the potential for 80 gigawatts of solar in backing a continued role for nuclear and Tokyo photovoltaic industry. Databank. The number of companies that lion’s share of what’s known as feed-in Japan,” said Masaaki Kameda, secretary- a big role for coal. Despite clouds over “As the declining volume of PV module went bust rose to 36 in 2015, from 17 in tariff s – above market rates awarded to general at the Japan Photovoltaic Energy the nuclear industry and repeated failed shipments shows, the market is shrink- 2013 and 21 in 2014. Bankruptcies con- producers of clean energy. With available Association, the country’s solar lobby. attempts to get reactors back online, Japan’s solar boom is beginning to falter. ing,” said Takehiro Kawahara, an analyst tinue to accelerate, with 17 seen in just the land for solar in short supply and some “But to bring online this potential, various Japan’s latest policy pronouncements see Until recently, the resource-poor nation for Bloomberg New Energy Finance. first five months of 2016, Teikoku said. utilities saying they can’t accept more policies need to be applied continuously,” nuclear accounting for as much as 22% of has been one of the leading markets Repeated tariff cuts and diff iculty Some question what has Japan got for intermittent solar power, that’s a worry for he said. The government has tightened Japan’s power mix by 2030. Similarly, the for photovoltaics, helping to prop up an securing land and grid connections are all the money spent on promoting clean some. Moreover, only about a third of the rules for projects that have been delayed government sees a bright future for coal industry hurt by falling prices for the among some of the reasons that have led energy. While more solar energy is being solar projects awarded the preferred rates and plans to introduce an auction system at 26%. Japan’s solar market is expected technology and policy changes. But four to a drop in new applications to develop produced, it still comprises a fraction of have actually begun producing power. for large-scale solar next year. to shift to rooftops. Between 2016 and years after the introduction of generous solar, Kawahara said. the nation’s power generation mix. The following chart shows clean “Now that we know that solar power 2040, Japan will add 94 gigawatts of new incentives to promote clean energy in the For Japanese panel makers such The following chart shows solar’s energy capacity approved by Japan’s generation systems can certainly supply solar, including 65 gigawatts of rooftop wake of the Fukushima atomic meltdown, as Sharp Corp and Kyocera Corp, “the contribution to Japan’s power mix as government under the FIT program since energy, it is important to find out how PV, BNEF said in a report last month. data show the boom is losing steam. shrinking domestic market forces them to measured by what is purchased and 2012. The bulk of the approvals have been we can make the most of the generated If Japan wants to achieve a much higher The slowdown – after several years of lower costs to remain in competition with produced by the nation’s 10 regional utili- in solar, raising concern that the tariff s power,” Kameda said. penetration of renewables, “an independ- rapid growth - threatens to undermine international players or consider exiting ties. The data, drawn from government don’t seem to have stimulated much in Japanese Prime Minister Shinzo Abe ent system operator would be necessary the government’s push to find a clean the segment,” he said. and industry sources, show the percent- the way of other clean energy sources. has tried to play it both ways – saying he’s to ensure the grid connection approval alternative to nuclear power and dims Solar power-related bankruptcies age has gone from about 0.4% in 2012 to “Feed-in tariff s have proved there’s a supporter of clean energy, while also process is neutral,” said Kawahara. Gulf Times Saturday, July 9, 2016 5 BUSINESS

DJIA WORLD INDICES Company Name Lt Price % Chg Volume Indices Lt Price Change Dow Jones Indus. Avg 18,094.25 +198.37 Apple Inc 96.61 0.69 10,830,222 S&P 500 Index 2,123.65 +25.75 Microsoft Corp 52.31 1.81 10,259,193 Nasdaq Composite Index 4,945.30 +68.50 Exxon Mobil Corp 93.33 0.39 3,799,588 S&P/Tsx Composite Index 14,291.75 +157.29 Johnson & Johnson 122.74 0.19 2,073,529 Mexico Bolsa Index 45,524.31 +129.94 General Electric Co 32.15 1.02 15,094,404 Brazil Bovespa Stock Idx 53,047.20 +1,032.54 Jpmorgan Chase & Co 61.92 2.21 8,837,709 Ftse 100 Index 6,590.64 +56.85 Procter & Gamble Co/The 85.53 0.83 2,307,643 Cac 40 Index 4,190.68 +72.83 Verizon Communications Inc 55.92 0.98 7,005,981 Dax Index 9,629.66 +210.88 Wal-Mart Stores Inc 73.33 -0.27 2,889,368 Ibex 35 Tr 8,185.90 +177.70 Pfizer Inc 35.97 0.55 4,937,255 Nikkei 225 15,106.98 -169.26 Coca-Cola Co/The 45.42 0.73 3,350,172 Japan Topix 1,209.88 -16.21 Chevron Corp 104.14 1.06 3,361,679 Hang Seng Index 20,564.17 -142.75 Visa Inc-Class A Shares 76.01 2.01 4,071,108 All Ordinaries Indx 5,315.55 +4.57 Home Depot Inc 133.55 1.82 1,696,260 Nzx All Index 1,325.55 -0.72 Walt Disney Co/The 99.54 1.15 2,177,733 Bse Sensex 30 Index 27,126.90 -74.59 Merck & Co. Inc. 59.47 1.18 3,523,844 Nse S&P Cnx Nifty Index 8,323.20 -14.70 Intel Corp 33.91 2.12 9,295,087 Straits Times Index 2,847.04 -15.13 Intl Business Machines Corp 154.03 0.93 1,001,409 Karachi All Share Index 25,451.59 +138.47 Cisco Systems Inc 29.20 1.58 10,011,004 Jakarta Composite Index 4,971.58 -45.07 Unitedhealth Group Inc 140.71 -0.06 1,500,018 Mcdonald’s Corp 121.57 0.53 1,519,328 3M Co 176.73 1.06 952,207 Nike Inc -Cl B 56.52 1.07 3,470,228 TOKYO Boeing Co/The 129.44 1.79 1,324,766 United Technologies Corp 103.29 1.29 1,442,600 Company Name Lt Price % Chg Goldman Sachs Group Inc 150.58 2.44 1,587,738 Rakuten Inc 1,050.00 -3.00 5,795,100 American Express Co 61.39 2.64 2,237,746 Kyocera Corp 4,613.00 -1.45 2,101,400 Du Pont (E.I.) De Nemours 62.21 0.47 1,357,752 Nissan Motor Co Ltd 918.90 -0.73 18,095,500 Caterpillar Inc 76.93 2.51 2,468,261 Hitachi Ltd 403.30 0.05 24,623,000 Travelers Cos Inc/The 117.76 0.21 367,480 Takeda Pharmaceutical Co Ltd 4,253.00 -3.30 3,089,300 Jfe Holdings Inc 1,242.50 -0.68 2,931,000 Ana Holdings Inc 276.70 -0.86 12,267,000 Traders work at the Frankfurt Stock Exchange. The DAX 30 closed up 1.9% to 9,598.55 points yesterday. FTSE 100 Mitsubishi Electric Corp 1,108.00 -0.85 5,713,000 Sumitomo Mitsui Financial Gr 2,775.00 -1.56 11,142,700 Company Name Lt Price % Chg Volume Honda Motor Co Ltd 2,476.50 0.57 5,795,000 Fast Retailing Co Ltd 25,445.00 -2.25 993,300 Wpp Plc 1,656.00 1.16 2,759,999 Ms&Ad Insurance Group Holdin 2,429.00 -1.90 1,670,900 Worldpay Group Plc 268.00 1.17 7,190,872 Kubota Corp 1,276.00 -1.05 5,119,400 Wolseley Plc 3,954.00 1.78 480,269 Seven & I Holdings Co Ltd 4,078.00 -1.62 3,874,600 Wm Morrison Supermarkets 178.40 2.35 10,320,260 Europe markets extend gains Inpex Corp 741.50 -1.98 5,048,900 Whitbread Plc 3,608.00 1.32 674,903 Resona Holdings Inc 358.00 -0.61 12,902,200 Vodafone Group Plc 228.00 0.77 34,384,296 Asahi Kasei Corp 698.50 -0.37 5,320,000 United Utilities Group Plc 1,026.00 0.69 1,391,951 Kirin Holdings Co Ltd 1,778.50 -2.28 4,055,200 Unilever Plc 3,651.50 -0.23 2,195,420 Marubeni Corp 459.00 -0.58 6,498,700 Tui Ag-Di 954.50 3.64 1,041,499 on strong US jobs growth Mitsubishi Ufj Financial Gro 428.70 -1.27 70,681,700 Travis Perkins Plc 1,358.00 3.11 2,283,364 Mitsubishi Chemical Holdings 445.70 -0.65 6,373,700 Tesco Plc 163.20 1.87 27,314,037 Fanuc Corp 15,500.00 0.00 1,520,400 Taylor Wimpey Plc 131.50 7.70 36,855,562 But Brexit-related uncertainties Banco Popolare was up 18%, with Daito Trust Construct Co Ltd 16,255.00 -0.94 340,400 AFP Standard Life Plc 270.00 2.27 6,744,072 continue to weigh, and so no rate move other Italian bank stocks rising by close Otsuka Holdings Co Ltd 4,835.00 0.52 2,652,800 London Standard Chartered Plc 586.80 2.71 5,969,751 Oriental Land Co Ltd 6,359.00 -2.36 1,141,100 is expected before September at the to, or even above, 10%. St James’s Place Plc 771.50 1.85 2,266,348 Sekisui House Ltd 1,653.00 -1.75 4,920,200 earliest, giving stock markets unbri- Earlier, Asian markets fell at the end Sse Plc 1,560.00 0.58 3,069,262 Secom Co Ltd 7,443.00 0.20 1,345,800 lobal stock markets surged yes- dled joy for now. of a volatile week dominated by the Smith & Nephew Plc 1,310.00 0.69 2,753,870 Tokio Marine Holdings Inc 3,252.00 -1.75 2,807,900 Sky Plc 864.50 1.95 3,571,800 terday, cheering a spectacu- “Various FOMC members have al- fallout from Britain’s EU exit vote and Aeon Co Ltd 1,444.50 -3.73 6,076,800 Shire Plc 4,841.00 -0.68 1,850,514 larly strong US jobs report as a ready signalled that they want to wait ahead of the employment fi gures. Mitsui & Co Ltd 1,188.00 -1.49 6,045,000 G Severn Trent Plc 2,463.00 0.37 505,656 welcome sign of healthy growth in the and see how Brexit will aff ect the US The declines came after a week of Kao Corp 5,827.00 -1.39 2,045,500 Schroders Plc 2,393.00 3.24 483,672 world’s top economy. economy and fi nancial conditions,” losses in stocks around the world, after Dai-Ichi Life Insurance 1,011.50 -2.27 6,740,000 Sainsbury (J) Plc 223.90 3.04 8,305,635 Mazda Motor Corp 1,211.50 -1.98 10,803,600 American employers added a total said Harm Bandholz at UniCredit. the head of the Bank of England said Sage Group Plc/The 640.00 0.16 3,167,250 Komatsu Ltd 1,759.00 -0.99 6,433,500 of 287,000 workers to their combined “But we stick to our view that from the risks of leaving the EU were “crys- Sabmiller Plc 4,399.00 0.25 4,269,599 West Japan Railway Co 6,486.00 -2.74 859,900 payrolls in June, the Labour Depart- an economic perspective rates in the talising” and British property invest- Rsa Insurance Group Plc 486.10 1.33 1,721,208 Murata Manufacturing Co Ltd 10,475.00 0.05 947,500 Royal Mail Plc 486.30 1.27 2,174,891 ment reported, a full 112,000 more than US should be higher, and continue to ment funds suspended client with- Kansai Electric Power Co Inc 956.70 -2.80 2,568,000 Royal Dutch Shell Plc-B Shs 2,127.00 -0.02 6,027,841 analysts had expected, and eliminating expect one rate hike at the end of the drawals to prevent a run. Denso Corp 3,399.00 1.46 3,323,600 Royal Dutch Shell Plc-A Shs 2,102.00 0.24 7,117,033 any concerns about a slowdown. year, once the Brexit uncertainty has On currency markets, the lingering Sompo Japan Nipponkoa Holdin 2,600.00 -3.44 2,143,700 Royal Bank Of Scotland Group 168.80 6.43 28,895,245 fear of riskier assets weighed down Daiwa House Industry Co Ltd 2,757.50 -3.60 3,014,400 “That economic pause you were (hopefully) settled,” he said. Rolls-Royce Holdings Plc 735.00 0.89 5,363,203 Jx Holdings Inc 381.00 -0.76 10,111,400 worried about? It never happened,” Weak German data added to expec- the dollar against the safe-haven yen, Rio Tinto Plc 2,368.00 1.20 4,303,794 Nippon Steel & Sumitomo Meta 1,864.00 -0.88 2,530,300 tweeted University of Michigan econo- tations that European Central Bank while the greenback climbed against Rexam Plc 645.00 0.00 52,808,327 Suzuki Motor Corp 2,691.00 1.20 2,897,500 emerging market and higher-yielding Relx Plc 1,412.00 0.07 3,503,816 mist Justin Wolfers. will be also be off ering further mon- Nippon Telegraph & Telephone 4,829.00 -2.92 4,257,600 Reckitt Benckiser Group Plc 7,636.00 0.26 982,927 European stocks rapidly extended ear- etary support to the economy. units. Ajinomoto Co Inc 2,479.50 -0.86 2,177,800 Randgold Resources Ltd 9,265.00 -0.16 767,645 lier modest gains, pushing Frankfurt and This view was reinforced yesterday The dollar’s strength is also being Mitsui Fudosan Co Ltd 2,039.00 -4.50 8,650,000 Prudential Plc 1,220.00 3.43 8,007,078 Paris exchanges around 2% higher in an as the European powerhouse’s trade sapped by the prevailing view that the Ono Pharmaceutical Co Ltd 3,952.00 -6.59 5,265,400 Provident Financial Plc 2,493.00 3.49 528,282 Daikin Industries Ltd 8,029.00 -0.85 1,338,500 immediate reaction, and lifting London surplus shrank because of falling ex- Federal Reserve will not rush into rate Persimmon Plc 1,420.00 6.21 4,712,363 Bank Of Yokohama Ltd/The 0.00 0.00 - out of negative territory. ports, pointing to weakness in the hikes. Pearson Plc 944.50 -0.37 3,868,501 Toray Industries Inc 882.00 -0.60 5,952,000 Wall Street also welcomed the data, economy. This allowed the British pound to Paddy Power Betfair Plc 8,225.00 1.92 103,638 Astellas Pharma Inc 1,603.50 1.04 13,244,300 Old Mutual Plc 195.90 1.14 6,370,019 with the key Dow Jones index posting An IMF downward revision for euro- edge up to $1.2954, still below the $1.30 Bridgestone Corp 3,140.00 -0.60 3,026,700 Next Plc 4,943.00 3.74 562,046 a 0.7% gain at the opening, then rising zone growth after Brexit also strength- mark but stronger than the 31-year low Sony Corp 3,013.00 -0.69 7,525,100 National Grid Plc 1,110.00 0.63 6,384,035 further. ened the case for further central bank of $1.2798 touched Wednesday. Hoya Corp 3,527.00 0.74 1,409,000 Mondi Plc 1,371.00 1.26 922,028 Analysts said economic strength help. In London, the FTSE 100 up 0.5% at Sumitomo Mitsui Trust Holdin 289.80 -2.49 22,176,000 Merlin Entertainment 459.50 0.97 927,804 Japan Tobacco Inc 4,289.00 -0.46 5,691,900 would normally prompt expectations In Milan, banking shares rose sharp- 6,564.98 points; Frankfurt — DAX 30 Mediclinic International Plc 1,109.00 0.82 1,108,923 Osaka Gas Co Ltd 390.50 -2.06 5,669,000 of a hike in interest rates at one of the ly after Banco Popolare reported that up 1.9% at 9,598.55 points and Paris — Marks & Spencer Group Plc 317.30 6.16 12,467,945 Sumitomo Electric Industries 1,244.00 0.16 3,779,800 next meetings of the Federal Reserve internal stress tests had confi rmed its CAC 40 up 1.5% at 4,177.69 points at London Stock Exchange Group 2,571.00 2.06 388,933 Daiwa Securities Group Inc 513.90 -0.83 5,447,000 Lloyds Banking Group Plc 52.60 5.84 250,754,735 Open Market Committee (FOMC). capacity to resist external shocks. the close yesterday. Softbank Group Corp 5,399.00 -2.37 5,995,000 Legal & General Group Plc 177.00 3.27 19,112,192 Mizuho Financial Group Inc 142.00 -1.18 115,523,200 Land Securities Group Plc 1,009.00 4.83 4,290,520 Nomura Holdings Inc 352.60 0.00 19,130,200 Kingfisher Plc 309.70 0.65 16,682,162 HONG KONG HONG KONG Daiichi Sankyo Co Ltd 2,547.50 -0.45 3,340,700 Johnson Matthey Plc 2,976.00 1.95 401,420 Fuji Heavy Industries Ltd 3,288.00 -0.18 4,284,200 Itv Plc 180.80 3.31 17,324,176 Ntt Docomo Inc 2,795.00 -1.96 4,643,700 Company Name Lt Price % Chg Volume Company Name Lt Price % Chg Volume Intu Properties Plc 270.90 3.16 5,153,614 Sumitomo Realty & Developmen 2,453.50 -3.63 4,040,000 Intl Consolidated Airline-Di 375.00 3.71 12,076,135 Aluminum Corp Of China Ltd-H 2.64 0.00 8,679,064 Hong Kong & China Gas 13.90 -1.97 10,474,066 Sumitomo Metal Mining Co Ltd 1,031.00 -0.87 3,133,000 Intertek Group Plc 3,536.00 0.37 344,586 Bank Of East Asia Ltd 29.15 -2.02 2,157,228 Hong Kong Exchanges & Clear 183.60 -0.38 2,690,049 Orix Corp 1,251.00 -1.03 5,692,400 Intercontinental Hotels Grou 2,835.00 0.39 833,874 Bank Of China Ltd-H 3.03 -0.98 177,526,509 Hsbc Holdings Plc 46.85 -0.32 17,433,532 Asahi Group Holdings Ltd 3,366.00 -1.64 2,401,800 Inmarsat Plc 795.50 0.70 1,222,079 Bank Of Communications Co-H 4.86 -1.02 23,799,095 Hutchison Whampoa Ltd 0.00 0.00 - Keyence Corp 70,710.00 -0.76 175,000 Informa Plc 736.00 0.68 911,756 Belle International Holdings 4.33 -2.26 10,676,291 Ind & Comm Bk Of China-H 4.14 -1.19 195,508,799 Nidec Corp 7,131.00 -0.82 1,147,200 Imperial Brands Plc 4,035.50 -1.27 2,607,091 Boc Hong Kong Holdings Ltd 23.10 -0.65 6,578,333 Li & Fung Ltd 3.67 0.27 14,136,894 Isuzu Motors Ltd 1,232.00 -1.40 4,011,100 Hsbc Holdings Plc 470.80 1.37 20,597,252 Cathay Pacific Airways 11.26 -0.18 2,825,085 Mtr Corp 39.50 -0.38 2,833,941 Unicharm Corp 2,060.50 -5.63 4,027,300 Hargreaves Lansdown Plc 1,194.00 5.11 895,356 Ck Hutchison Holdings Ltd 81.90 -1.74 9,496,882 New World Development 7.83 -1.01 6,815,630 Shin-Etsu Chemical Co Ltd 5,901.00 -0.34 1,226,600 Hammerson Plc 517.50 5.08 4,177,329 China Coal Energy Co-H 4.08 0.49 8,320,175 Petrochina Co Ltd-H 5.23 -0.57 61,800,137 Smc Corp 23,200.00 -1.15 184,900 Glencore Plc 167.30 0.84 49,105,428 China Construction Bank-H 5.07 -0.78 259,442,809 Ping An Insurance Group Co-H 33.15 -0.90 20,359,143 Mitsubishi Corp 1,748.00 -1.08 3,668,600 Glaxosmithkline Plc 1,652.50 -0.33 8,766,607 China Life Insurance Co-H 16.32 -0.97 27,490,975 Power Assets Holdings Ltd 70.45 -0.77 3,177,319 Nintendo Co Ltd 16,270.00 8.94 2,924,700 Gkn Plc 272.00 2.10 5,429,896 China Merchants Hldgs Intl 20.65 -1.67 2,088,061 Sino Land Co 12.82 0.00 3,317,366 Eisai Co Ltd 5,509.00 -1.06 1,497,600 Fresnillo Plc 1,870.00 -2.40 1,910,967 China Mobile Ltd 87.45 -1.13 10,410,871 Sun Hung Kai Properties 97.70 -0.46 4,873,889 Sumitomo Corp 1,015.00 -1.88 4,358,600 Experian Plc 1,449.00 0.56 1,638,950 China Overseas Land & Invest 24.90 -0.40 9,176,889 Swire Pacific Ltd - Cl A 86.65 -0.69 921,039 Canon Inc 2,802.50 -0.83 4,783,900 Easyjet Plc 1,070.00 2.10 1,686,965 China Petroleum & Chemical-H 5.40 -1.64 62,812,716 Tencent Holdings Ltd 177.00 0.40 13,824,855 Japan Airlines Co Ltd 3,022.00 -1.50 1,541,700 Dixons Carphone Plc 315.30 5.81 7,477,348 China Resources Beer Holdin 16.62 -0.72 5,989,212 Wharf Holdings Ltd 46.70 -0.21 2,347,331 Direct Line Insurance Group 339.20 0.56 3,176,537 China Resources Land Ltd 18.06 0.11 5,273,816 China Resources Power Holdin 10.78 -0.92 8,057,399 Diageo Plc 2,143.50 -0.81 6,023,933 SENSEX Dcc Plc 6,615.00 0.76 152,527 China Shenhua Energy Co-H 13.84 -2.12 34,592,164 GCC INDICES Crh Plc 2,148.00 1.99 3,615,000 China Unicom Hong Kong Ltd 7.98 -1.72 27,201,582 Compass Group Plc 1,441.00 -0.35 3,757,516 Company Name Lt Price % Chg Citic Ltd 11.06 -0.90 3,797,509 Indices Lt Price Change Coca-Cola Hbc Ag-Di 1,536.00 -1.16 586,079 Clp Holdings Ltd 78.90 -1.07 2,801,677 Doha Securities Market Zee Entertainment Enterprise 453.10 1.17 2,024,012 9,964.26 -15.85 Centrica Plc 225.30 0.22 13,339,915 Cnooc Ltd 9.49 -1.35 43,217,403 Saudi Tadawul Yes Bank Ltd 1,120.25 0.73 1,233,301 6,499.88 -0.54 Carnival Plc 3,472.00 1.67 545,209 Cosco Pacific Ltd 7.57 -1.17 3,886,754 Kuwait Stocks Exchange Wipro Ltd 561.65 0.37 2,920,685 5,389.60 +20.57 Capita Plc 924.50 1.82 1,520,935 Esprit Holdings Ltd 5.77 0.87 1,664,752 Bahrain Stock Exchage Vedanta Ltd 143.10 -0.24 16,955,850 1,152.49 +9.73 Burberry Group Plc 1,162.00 0.09 1,422,861 Fih Mobile Ltd 2.52 0.00 1,404,959 Oman Stock Market Ultratech Cement Ltd 3,400.05 0.52 494,994 5,811.82 -0.50 Bunzl Plc 2,339.00 0.43 602,734 Hang Lung Properties Ltd 15.50 0.26 3,428,748 Abudhabi Stock Market Tech Mahindra Ltd 502.95 -0.32 903,599 4,575.84 +26.42 Bt Group Plc 396.95 1.01 12,996,275 Hang Seng Bank Ltd 131.70 -0.53 878,605 Dubai Financial Market Tata Steel Ltd 318.35 0.20 8,859,505 3,371.22 +34.34 British Land Co Plc 587.00 4.26 8,619,925 Henderson Land Development 43.05 -2.16 1,916,844 Tata Power Co Ltd 73.20 -0.48 4,044,876 British American Tobacco Plc 4,898.00 -1.00 3,135,040 Tata Motors Ltd 466.30 2.45 10,704,723 Bp Plc 457.00 0.82 35,208,674 Tata Consultancy Svcs Ltd 2,426.60 -0.13 1,342,323 Bhp Billiton Plc 961.40 2.05 9,960,734 Sun Pharmaceutical Indus 777.50 -0.09 2,340,715 Berkeley Group Holdings/The 2,491.00 7.19 1,290,212 “Information contained herein is believed to be reliable and had been obtained from sources believed to be reliable. The State Bank Of India 218.30 -0.80 17,486,276 Barratt Developments Plc 373.20 6.90 8,080,433 Reliance Industries Ltd 978.40 -0.96 1,908,904 accuracy and completeness cannot be guaranteed. This publication is for providing information only and is not intended Barclays Plc 139.25 3.34 49,573,592 Punjab National Bank 117.60 0.64 17,712,458 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 537.50 1.42 5,324,800 Power Grid Corp Of India Ltd 164.45 0.67 6,806,474 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 921.00 1.26 759,380 Oil & Natural Gas Corp Ltd 223.30 -1.46 2,383,176 this data.” Aviva Plc 363.00 1.11 13,114,384 Ntpc Ltd 153.80 0.59 1,588,572 Astrazeneca Plc 4,574.00 -0.42 2,486,870 Maruti Suzuki India Ltd 4,161.80 0.50 279,281 Associated British Foods Plc 2,826.00 1.65 1,391,404 Mahindra & Mahindra Ltd 1,453.45 -0.23 757,293 Ashtead Group Plc 1,086.00 2.65 2,073,394 Lupin Ltd 1,639.15 -1.00 3,739,286 CURRENCIES Arm Holdings Plc 1,167.00 3.37 4,141,892 Larsen & Toubro Ltd 1,532.65 -1.41 1,472,019 DOLLAR QATAR RIYAL SAUDI RIYAL UAE DIRHAMS BAHRAINI KUWAITI Antofagasta Plc 456.70 -1.72 2,963,642 DINAR DINAR Kotak Mahindra Bank Ltd 743.45 -0.33 691,313 Anglo American Plc 745.00 -0.20 7,355,693 Itc Ltd 245.85 -0.47 7,210,187 Admiral Group Plc 1,982.00 1.95 513,725 Infosys Ltd 1,158.20 0.08 4,081,423 3I Group Plc 556.00 1.28 2,471,556 Indusind Bank Ltd 1,126.70 1.93 1,817,414 #N/A 0.00 0.00 - Idea Cellular Ltd 102.00 -2.63 6,584,932 Icici Bank Ltd 241.95 -1.18 7,746,356 TOKYO Housing Development Finance 1,286.90 -0.28 2,478,379 Hindustan Unilever Ltd 920.70 0.26 1,751,353 Hindalco Industries Ltd 126.85 -0.67 9,018,442 Company Name Lt Price % Chg Volume Hero Motocorp Ltd 3,167.80 2.10 281,020 East Japan Railway Co 9,339.00 -1.91 745,400 Hdfc Bank Limited 1,174.85 -0.91 842,550 Itochu Corp 1,226.00 -1.45 4,823,000 Hcl Technologies Ltd 721.85 0.66 899,100 Fujifilm Holdings Corp 3,724.00 -1.35 2,105,200 Grasim Industries Ltd 4,540.85 -0.21 164,777 Yamato Holdings Co Ltd 2,546.00 -1.05 2,211,800 Gail India Ltd 375.50 -2.42 1,377,203 Chubu Electric Power Co Inc 1,422.00 -3.27 2,090,200 Dr. Reddy’s Laboratories 3,561.25 1.03 240,106 Mitsubishi Estate Co Ltd 1,727.50 -3.49 8,124,000 Coal India Ltd 311.70 -1.22 2,628,412 Mitsubishi Heavy Industries 413.60 -0.43 17,959,000 Cipla Ltd 520.30 1.17 1,968,902 Toshiba Corp 269.50 -1.06 27,448,000 Cairn India Ltd 145.35 -3.07 1,892,291 Shiseido Co Ltd 2,885.50 -0.17 2,781,500 Bosch Ltd 22,789.15 0.26 11,722 Shionogi & Co Ltd 5,539.00 -0.45 1,675,500 Bharti Airtel Ltd 355.05 -2.28 1,752,543 Tokyo Gas Co Ltd 414.60 -2.31 10,317,000 Bharat Petroleum Corp Ltd 1,114.70 0.05 3,352,685 Tokyo Electron Ltd 8,490.00 1.90 1,842,200 Bharat Heavy Electricals 137.90 -1.46 7,551,207 Panasonic Corp 863.00 -0.29 10,935,000 Bank Of Baroda 154.75 -2.15 7,913,712 Fujitsu Ltd 343.70 -1.43 9,268,000 Bajaj Auto Ltd 2,604.60 -0.23 164,478 Central Japan Railway Co 18,065.00 -0.99 494,600 Axis Bank Ltd 546.45 0.77 6,294,755 T&D Holdings Inc 813.00 -1.14 3,521,300 Asian Paints Ltd 1,010.70 2.33 1,345,729 Toyota Motor Corp 5,055.00 -0.35 10,463,100 Ambuja Cements Ltd 258.10 0.45 1,800,016 Kddi Corp 3,134.00 -2.03 8,393,000 Adani Ports And Special Econ 207.05 -1.43 2,763,360 Nitto Denko Corp 6,173.00 1.43 1,862,100 Acc Ltd 1,597.65 -0.44 221,823 Gulf Times 6 Saturday, July 9, 2016 BUSINESS/LEISURE

Adam After 4,400% surge, bitcoin’s fate hinges on huge Chinese miners

Bloomberg Hong Kong

u Jihan still remembers the exhilaration he felt af- Wter learning about bitcoin in 2011. A self-described computer geek fresh out of China’s top university, Wu soaked up everything he could Pooch Cafe about the digital currency’s mysteri- ous founder and its users’ ambitions to transform the global fi nancial sys- tem. Within a year, he quit his job at a private equity fi rm to launch a bit- A bitcoin paper wallet with QR codes and a coin are seen in an illustration. coin startup. Today, his company is Bitcoin’s volatility has attracted China’s horde of speculative individual one of the world’s biggest players in investors, who are keener than ever to diversify out of yuan-denominated bitcoin mining, a computing proc- assets after a shock devaluation in the nation’s currency last year. ess that makes transactions with the cryptocurrency possible. second-largest mining collec- der capital fl ows and has tight control Yet for Wu, and the rest of bit- tive, and is also one of the largest over the Internet. It’s of particular coin’s online community, feelings of manufacturers of mining hardware. concern to libertarians who value the exhilaration have been replaced by “There’s a lot of money and emo- cryptocurrency’s decentralised na- apprehension over what could be the tions involved, and people have very ture above all else. Unlike most major biggest hurdle to the cryptocurren- diff erent ideas on what they want units of exchange, bitcoin has no sin- cy’s growth since its emergence in bitcoin to be.” gle authority, such as a central bank, 2009. Because of a pre-programmed It could be the opinions of Wu and with control over the money supply. cap on the amount of data bitcoin’s his compatriots that matter most. The maximum number of bitcoins is network is allowed to process, the Chinese miners have leveraged their capped at 21mn. current system for verifying pay- access to cheap labour, inexpensive Having so much mining power in Garfi eld ments needs to boost its capacity, or electricity and local chipmaking China “is a very negative thing,” Pe- transaction times will balloon and factories to outmanoeuvre their glo- ter Todd, an active bitcoin code con- undermine bitcoin’s 4,475% ad- bal peers in performing the complex tributor based in Toronto, wrote in vance over the past fi ve years. calculations needed to verify bitcoin an e-mail interview. “It’d be all too In theory, there’s a simple fi x: With transactions – a service for which easy for the Chinese government to some coding tweaks, transactions they’re compensated in newly- do a lot of harm.” could continue apace. But the prob- minted bitcoin. When the crypto- While China’s central bank has lem is that any change to bitcoin’s ar- currency’s price tumbled from about said bitcoin isn’t a “real” currency chitecture will inevitably create los- $1,000 in late 2013 to below $200 in and has taken steps to prevent it ers, and the motley crew of miners, early 2015, lower costs in China al- from becoming entrenched in the software developers, libertarians and lowed them to stay afl oat even as domestic fi nancial system, there’s entrepreneurs who comprise the bit- many Western operators folded. little evidence that policy makers are coin universe have yet to form a con- Bitcoin’s volatility, meanwhile, trying to gain control over its global sensus. After at least fi ve attempts has attracted China’s horde of spec- development. in the past year, enthusiasts will try ulative individual investors, who are Instead, the infl uence lies with pri- once again at a conference in Silicon keener than ever to diversify out of vately-run Chinese miners. Because Valley this month. Any solution will yuan-denominated assets after a the current system is dominated by almost certainly need the support of shock devaluation in the nation’s the software miners use most, any attendees from China, now home to currency last year. proposal to update bitcoin’s architec- 70% of the world’s bitcoin mining The concentration of bitcoin ac- ture will need their validation. Bound And Gagged power and 90% of trades. tivity in China has some worried that “The miners control the real voting “This truly is one of the biggest the system could become vulnerable power,” said Wang Chun, co-owner tests to global collaboration,” said to meddling by the ruling Commu- and chief administrator of F2Pool, Wu, who runs AntPool, the world’s nist Party, which restricts cross-bor- the world’s largest mining collective.

Mall Cinema (1): Finding Dory Resurgence (2D) 11.15pm. (2D) 1.15pm; Finding Dory (2D) 3 & Royal Plaza Cinema Palace (3): 4.45pm; 30 Years Ago (Arabic) 2pm; Swalef Tafash (Khaleeji) (Arabic) Independence Day: Resurgence (2D) 7.30pm; Abo Shanab (Arabic) 9.30pm; 1.30pm; Me Before You (2D) 3.30pm; 9.15 & 11.30pm. The Purge: Election Year (2D) 11.30pm. The Purge: Election Year (2D) 5.30pm; Mall Cinema (2): Swalef Tafash Royal Plaza Cinema Palace (1): Abo Shanab (Arabic) 7.30pm; Me (Khaleeji) (Arabic) 2pm; Teenage Finding Dory (2D) 2.15pm; Teenage Before You (2D) 9.30pm; The Purge: Mutant Ninja Turtles (2D) 4pm; Mutant Ninja Turtles (2D) 4.15 & Election Year (2D) 11.30pm. Teenage Mutant Ninja Turtles (2D) 6.15pm; 30 Years Ago (Arabic) 8.15pm; Asian Town Cinema: Happy Wedding 6pm; Sultan (Hindi) 8pm; Sultan (Hindi) Sultan (Hindi) 11pm. (Malayalam) 12.30, 3, 5.30, 8, 8.30, 11pm. Royal Plaza Cinema Palace (2): 10.30pm & 1.45am; Sultan (Hindi) 12.45, Mall Cinema (3): Happy Wedding Abo Shanab (Arabic) 2pm; Finding 2.30, 3.15, 4, 5.45, 7.15, 9, 10pm, 12.15 & (Malayalam) 1pm; Happy Wedding Dory (2D) 4pm; Independence 2am; Kammati Paadam (Malayalam) (Malayalam) 5.15pm; Me Before You Day: Resurgence (2D) 6pm; Sultan 12.30 & 11pm; School Bus (Malayalam) (2D) 3.15pm; Me Before You (2D) (Hindi) 8.15pm; Independence Day: 12.30 & 6.15pm.

Sudoku Cryptic Clues Quick Clues

ACROSS DOWN ACROSS DOWN 1. Eats among sailors, 2. Inspired melody? (3) 1. Disbelieving (9) 2. Lettuce (3) causing lateness (9) 3. Incompetent writer going 8. Scull (3) 3. Dance (5) 8. Be prone to untruth? (3) around in it (5) 9. Showing off (11) 4. Vulgar (6) 9. They should get the best 4. Pass by when asleep, 11. Monstrous (7) 5. Free time (7) prices in the stock market possibly (6) 12. Custom (5) 6. Infect (11) (5,6) 5. Prepared scheme for going 13. Spite (6) 7. Averted (9) 11. Says one’s piece? (7) around planets (3,4) 15. Portray (6) 10. Game (11) 12. Weapon of Round Table 6. Didn’t remember being 17. Cringe (5) 11. Murderous (9) knight losing a lot (5) washed? (5,6) 18. Dunce (7) 14. Custodian (7) 13. Procession to trim 7. What MPs do about now (9) 20. Oblivion (11) 16. Swirled (6) without notice (6) 10. Combine to set a price or 22. Enquire (3) 19. Lawful (5) 15. Zoe’s no sort to sleep (6) not? (11) 23. Fragrance (9) 21. Bag (3) 17. Crucifixes out of doors 11. Journalists about to take (5) drinks (9) 18. Pull a pint, perhaps (7) 14. Girl taking workers for 20. Number (11) women’s work (7) Weekly’s Solutions 22. Decay when over the 16. Inventor possibly onside? (6) Sudoku is a puzzle Weekly’s Solutions based on a 9x9 grid. hill? (3) 19. He’s an unusual pale greyish QUICK CRYPTIC The grid is also 23. Money man getting in colour (5) Across: 7 Ordeal; 8 Purple; 10 Across: 7 Heeded; 8 Subtle; divided into nine fine car somehow (9) 21. It’s easily slipped on! (3) Origami; 11 Inane; 12 Chat; 13 10 Chianti; 11 Fears; 12 Edam; 13 (3x3) boxes. You are About; 17 Quart; 18 Bloc; 22 Libra; Appal; 17 Inure; 18 Veal; 22 Syria; 23 given a selection of 23 Seagull; 24 Single; 25 Coyote. Dignity; 24 Eff igy; 25 Veneer. values and to com- Down: 1 Morocco; 2 Admiral; 3 Down: 1 Chicken; 2 Seminar; plete the puzzle, Fatal; 4 Furious; 5 Appal; 6 Refer; 9 3 Means; 4 Ruff ian; 5 Steal; 6 you must fill the Gibberish; 14 Durable; 15 Blouson; Tessa; 9 Hit parade; 14 Enlarge; 15 grid so that every 16 Scalpel; 19 Close; 20 Ebony; 21 Derives; 16 Players; 19 Osier; 20 column, every row Baron. Craft; 21 Agree. and every 3x3 box contains the digits 1 to 9 and none is repeated.

Gulf Times 8 Saturday, July 9, 2016 BUSINESS

Pound magic means UK $149bn pipeline to expand mega-cap profi ts don’t copper supply faces trouble look so bad

Bloomberg Bloomberg Melbourne London

he $149bn pipeline to expand the t took a Brexit vote for equity world’s copper supply is running analysts to pay attention to Tinto trouble. Ithe pound. Producers are counting on expan- While the UK currency was sions and the development of new op- under pressure at the start of erations to meet supply shortages they the year, it’s the plunge after forecast arriving toward the end of the the country’s vote to leave the decade. European Union that has trans- The plans are fraying as reluctant lated favourably into profi t fore- lenders, political wrangling, techni- casts for the FTSE 100 Index, a cal obstacles and a lack of water and gauge crowded with mega-caps electricity push back project deadlines that generate most of their sales from Papua New Guinea to Peru. overseas. Estimates for the next Only six major projects to build new 12 months shot up by as much mines or expand existing operations as 4.5% in just over a week, the will be completed by 2020, with two of sharpest such upgrade in more that total still at risk of potential delays, than a decade, data compiled by according to researcher CRU Group. Bloomberg show. That compares with a global slate of Equity investors, strategists about 80 planned developments, ac- and now analysts are all singing cording to Bloomberg Intelligence. the same bullish tune when it Freeport-McMoRan, the largest comes to the largest UK compa- publicly listed copper producer, fore- nies: a weaker sterling will pro- casts an end to the metal’s current vide a welcome cushion for FTSE surplus from next year as demand im- 100 profi ts beset by declines at proves and output drops. banks and commodity producers Chile’s state- owned Codelco, the this year. With its multinationals top producer, is predicting a defi cit by tempering the eff ect of a poten- 2018, while BHP Billiton, operator of tial recession at home, the gauge the world’s biggest copper mine, sees a is Europe’s best-performing shortage from 2019. benchmark this year - in local- “Our project pipeline has thinned currency terms, that is. considerably over the last year as we “It’s really just an optical ac- have factored in further delays,” said counting boost,” said Leigh Christine Meilton, principal consult- Himsworth, who manages about ant on copper supply and raw materials $100mn of UK equities at Fidel- at CRU in London. While the industry ity International in London. “The is confi dent about an emerging defi cit, overseas earners are a relatively it remains diffi cult to raise fi nance for safe place to be at the moment. It’s projects as low prices deter investors, the speed of the move that caught she said. a lot of people out. It was diffi cult Global production exceeded demand to factor in the pound move due to in fi ve of the past six years, partly be- it really being a surprise.” cause of slower growth in China, the In 2016, analysts say, prof- biggest user, data by Bloomberg Intelli- its at FTSE 100 companies will gence show. Copper has tumbled more contract 5.7%, better than a June than 50% on the London Metal Ex- 24 forecast for a drop of 8.5%. change from a record $10,190 a metric During the same period, they ton in 2011, touching close to a seven- Traders stand outside the open outcry pit following a trading session at the London Metal Exchange. Copper for delivery in three months traded at $4,751 a tonne on the cut their estimates for both the year low of $4,318 a ton in January. LME, down 11% over the past year. Stoxx Europe 600 Index and Macquarie Group last month cut its the S&P 500 Index, data com- price forecasts 4.1% to $4,690 a ton sion of Mongolia’s Oyu Tolgoi won’t be been delayed by up to two years, a fur- Projects on track to deliver at least Still, any new disruptions to projects piled by Bloomberg showed. In for this year and 9% to $4,788 for 2017. completed until 2027, while BHP, the ther 21 for as long as four years and 100,000 tons a year of new supply by could deliver a defi cit earlier than pre- the next 12 months, analysts Copper for delivery in three months world’s largest mining company, says about nine developments face hold-ups 2020 are Qulong in China’s western dicted, CRU’s Meilton said in an e- project earnings of about 417 traded at $4,751 a tonne on the LME in it will be “a little bit late to the party,” of between four and six years, Codelco Tibet Autonomous Region, South- mail. “It will also have implications for pounds per share for fi rms on the London, down 11% over the past year. under a plan for a major expansion at said in a presentation to a Florida con- ern Copper Corp’s Toquepala in Peru, the next decade, when the supply gap is U.K. gauge, versus just over 390 As a result, capital spending by 35 Australia’s largest copper mine from ference earlier this year. Freeport’s expansion at Indonesia’s expected to widen,” she said. pounds in April. major producers will shrink to about about 2025, the site’s asset president, Codelco’s plan to convert the Chu- Grasberg and Myanmar’s Monywa Let- New delays could also spur prices Should sterling remain low- $41bn next year, down from $104bn in Jacqui McGill, said in May. quicamata pit in Chile into an under- padaung operation, according to CRU. further, RBC said in the June note. er for the rest of 2016, it will 2013, and mine output last year tum- “The mid-2020s is when we are tar- ground mine, a program the company Copper demand was weaker than Copper prices may rise more than 40% improve sales at Rolls-Royce bled by more than 20%, company data geting,” Justin Bauer, BHP’s head of re- said in May was about 29% complete, expected in the fi rst four months of through 2020, the bank forecasts. Holdings Plc by about £400mn compiled by Bloomberg Intelligence source planning and development for is among projects CRU sees at risk of 2016 and slower growth in consump- That’s why OZ Minerals is acceler- ($518mn) and add £40mn to show. Olympic Dam, said in an interview at delays beyond this decade. tion poses risks to forecasts on both the ating work on a A$975mn ($728mn) profi ts, the company said on Even with a project pipeline with an Adelaide laboratory where the pro- Targets for First Quantum Miner- market balance and prices, RBC Capital project in Australia, seeking to deliver June 28. Associated British forecast capital expenditure of about ducer is testing processing technology. als’ mine in Panama are also consid- Markets analysts wrote in a June 9 note. new output in 2019, according to Chief Foods jumped 7.5% today after $149.4bn, according to the data, the “We’d like to fi nd a way to expand it, ered under doubt, according to CRU. A deceleration in global growth, in par- Executive Offi cer Andrew Cole. raising its annual earnings fore- mining industry faces challenges to and fi nd a viable way for quite a large First Quantum, which forecasts a rise ticular in China, remains the key risk “When you realise the copper price cast, citing favourable currency deliver new supply in time to meet the expansion, a cheaper way of processing in production at its Cobre Panama site to the demand outlook, the analysts is high it’s too late, you’ve missed the translation. defi cit. ore is a really important step for us.” from 2018, didn’t respond to a request wrote. The country accounted for 47% boat,” Cole told the Sydney Mining Foreign-exchange eff ects after Rio Tinto Group’s $5.8bn expan- About 25 global copper projects have for comment. of global consumption last year. Club in a June 2 speech. the Brexit vote prompted analysts at Citigroup to upgrade their rat- ing on Compass Group, a cater- ing company that relies on North America for more than half its in- Tories mulling more borrowing may threaten world-beating gilts come. A 10% drop for the pound could boost Burberry Group Bloomberg sovereign bonds to a 14% return this quantitative-easing programme, but I Gilts with due dates of at least 10 years companies that need longer-maturity Plc’s profi t by as much as 90mn London year and pushed yields to record lows. can’t pretend to say that 100bn pounds have returned 22% this year, compared debt to match liabilities and also pounds, according to MainFirst A Tory move toward fiscal stimulus is fine,” said David Tan, London-based with an average 14% across the euro provide them alternatives to shorter- Bank. Unilever, whose shares would represent a break from head of rates at JPMorgan Asset area, according to Bloomberg World dated yields that are at historic lows. have gained 14% since the vote to With the race to be Britain’s next prime Chancellor of the Exchequer George Management, which oversees about Bond Indexes. Even though the spread has dropped to near a record, is among the coun- minister down to three candidates, Osborne’s deficit- reduction eff orts, $1.7tn globally. The gains were given fresh impetus last its narrowest since 2008, yields on 30- try’s fi rst mega-caps to report holders of the world’s best-performing even though he has since abandoned “There’s no magic number. The answer week when Bank of England Governor year bonds are 1.45 percentage points half-year earnings on July 21. bonds are getting a taste of what may a plan to return to a budget surplus by is conditional and dependent on many Mark Carney said off icials will probably more than those on two-year gilts. Unhedged foreign investors be in store as policy shifts to deal with 2020. A consultation on introducing moving parts.” have to ease policy over the summer. A similar gap in Germany is about 1 are unlikely to have benefi ted the economic consequences of voters’ 100-year bonds was considered in 2012 While the pound has borne the brunt Futures trading implies an 89% chance percentage points. Benchmark 10-year from the FTSE 100’s rebound - decision to leave the European Union. as part of the plan, only to be dropped of investors’ anxiety about the outlook of a rate reduction this year. gilt yields were little changed at 0.77% in dollar terms, the index is still Business Secretary Sajid Javid, a later after the Debt Management Off ice for the UK economy since the June The economic challenges were Thursday, ending a six-day drop. down 11% since the vote through supporter of front-runner Theresa May, concluded it lacked “tangible market 23 referendum, sliding to 31-year lows highlighted this week by a survey “Currently, the UK is seen as a safe yesterday. In local currency, the has proposed selling an additional demand.” this week, demand for gilts has been showing a slide in business confidence haven in the world,” said Darren Ruane, gauge is up 8.1% from last week’s £100bn ($130bn) of gilts to fund Javid, who previously worked at insulated by the prospect of lower and some money managers a fixed-income manager at Investec bottom and near an 11-month infrastructure projects as one way to Deutsche Bank before entering interest rates and new asset purchases. announcing the closure of property- Wealth & Investment in London, high. By comparison, the Stoxx safeguard growth. Parliament, has also served as a The DMO sold 2026 bonds at a record- investment funds. which oversees £27bn. “It has its own 600 has gained less than half as First mooted by Stephen Crabb before Treasury minister. None of the low yield Thursday, two days after Depending on how any proposal to independent monetary policy system much and remains below its June he dropped his own leadership bid candidates have made such explicit auctioning five-day debt, also at lowest raise money through gilt sales would and a strong rule of law. 23 level. The pound weakened to this week, the plan may translate into proposals on government borrowing. yield on record. be implemented, it may not all be bad As a result, there should be demand for a fresh 31-year low against the more debt for investors to absorb and “Some supply will be readily absorbed, The UK is due to sell £131.5bn of gilts in news. new gilts providing they are drip fed dollar on Wednesday, and to its test the demand that has propelled UK particularly if the BoE restarts its the 2016-17 fiscal year. It may satisfy demand from pension into the market over time.” lowest level versus the euro since August 2013. Gulf Times Saturday, July 9, 2016 9 BUSINESS

Emerging stocks, currencies slip

Reuters largest economy. “They will London continue to devalue, everyone is in the same game, the race to the bottom,” said Mahesh Emerging stocks retreated yes- Bhimalingam, global head of terday and were set to end the emerging markets credit strat- week down almost 2%, whilst egy at BNP Paribas. the yuan faced its fifth straight The yuan has declined week of decline against the almost 0.5% over the past week, dollar, its longest losing streak and is set for its fifth straight in seven months. weekly loss, its longest losing The benchmark emerging eq- streak since mid-December. uity index was down 0.3% after Other currencies such as the weak performance in Asia set South African rand, Turkish lira the tone for European trading. and Russian rouble benefited Among the biggest fallers from a weaker dollar, gaining in Asia were Chinese mainland 0.2-0.4%. stocks, which lost 0.9%, and The Hungarian forint firmed Hong Kong, down 0.7%, whilst a touch against the euro, trad- in Europe, Russian dollar-de- ing at its strongest level in two nominated shares lost 0.7% and weeks on hopes the sovereign Turkish stocks slipped 0.8%. credit rating could be raised to Investors have stepped back investment grade by Moody’s before US non-farm payrolls after close of business on data. Friday. The consensus is for a gain of Better-than-expected foreign 175,000 jobs in June according trade surplus numbers for May to a Reuters poll, but the previ- added to the upbeat mood. ous month’s negative surprise However, some analysts has made markets wary. struck a note of caution, People walk in front of China Vanke Co headquarters in Shanghai. One of China’s top-ranked hedge fund managers turned to social media as he sought to borrow shares for a “If we see another weak given Britain’s vote to exit the bearish wager against China Vanke, the developer embroiled in a struggle for control with major shareholders. print, especially an even bigger European Union has added to downside surprise than the uncertainties about growth in miserable 38,000 recorded last central and eastern Europe. month, then the risk-off mood “There had been a high that prevailed at the start of the likelihood of Moody’s following week is likely to return with a Fitch and upgrading Hungary vengeance,” Rabobank analysts to investment grade at today’s said. review; but this appears unlikely On the flip side, a strong in view of Brexit uncertainties, Top China hedge fund number could renew specula- which is making policymak- tion about a US rate increase ers revise forecasts lower,” this year, triggering dollar Commerzbank analysts said in strength and punishing emerg- a note. ing assets. The Polish zloty has weak- The yuan is already under ened around 0.5% against the pressure, with bets against euro this week, and was flat on seeks help to short the Chinese currency hitting a the day. five-month high in the last two But Brexit has driven devel- weeks on expectations it will be oped market yields even lower, allowed to weaken further to spurring inflows to higher-yield- besieged builder Vanke support the world’s second- ing alternatives.

Bloomberg turning 129% in the June to August pe- raised its stake further in the company Vanke’s management last month de- Beijing riod. The money manager said in an in- this week. scribed the $6.9bn stock sale to Shen- terview last year that he exited near the The shares slumped 4.5% to 18.91 zhen Metro as a “life or death” matter as top of the market on June 12. Ze Quan yuan in Shenzhen on Thursday, even it seeks new ways to expand amid surging ne of China’s top-ranked hedge manages about 8bn yuan ($1.2bn), ac- after a Vanke filing late Wednesday that land costs. fund managers turned to social cording to Shanghai Suntime Informa- Baoneng units boosted their holding The proposed transaction would have Omedia as he sought to borrow tion Technology Co, which tracks Chi- again, to 25%. made the state-owned subway builder shares for a bearish wager against China nese hedge funds. Investors sold 558,300 Vanke A shares Vanke’s largest shareholder, and in return Vanke Co, the developer embroiled in a In a Wechat reply to Bloomberg News, short on the Shenzhen Stock Exchange the developer would get assets to develop struggle for control with major share- Xin said “we’re just an ordinary investor on Wednesday, after two days without for property projects. holders. in the secondary market, not involved in new bearish bets, bringing the outstand- The decline in the A shares has helped Xin Yu, Beijing-based chairman of Ze it,” referring to the tussle for control at ing bearish position on the company to narrow the gap with the developer’s Hong Quan Investment, posted a message on Vanke. 34.6mn yuan and making it the most- Kong-traded stock. his WeChat account that was later de- Vanke’s mainland-traded A shares fell shorted stock on the bourse, according to The gap almost doubled after the A leted, asking for “Vanke stock-fi nancing by their 10% daily limit for two consecu- the exchange’s website. shares stayed suspended, while the H resources,” using the Chinese term for tive days after resuming trading on Mon- In Hong Kong, bearish bets on Vanke’s shares tumbled about 28% this year. shares borrowed for shorting purposes. day following a half-year suspension. so-called H shares jumped to 3.2mn The A shares are likely to decline by the “Friends who have please be quick to con- The management of the nation’s biggest shares on Wednesday, an almost fi vefold 10% daily limit two or three more times tact me,” according to the post. publicly traded developer has been mull- increase from the prior day. to further shrink the discrepancy with “Want 1bn,” he wrote, without specify- ing a restructuring aimed to fend off what Both Baoneng and China Resources are the Hong Kong shares, Wang Ruizhe, a ing whether he’s referring to the number it called a “hostile takeover” by little- opposed to Vanke management’s pro- Shanghai-based analyst at Capital Secu- or value of shares. known Baoneng Group. posal to issue new shares to Shenzhen rities Corp, said. Ze Quan’s Jingbo Wealth run by The stock gained 0.1% on Wednesday Metro Group, and Baoneng has called “Many friends today want to bot- Xin ranked as China’s best- perform- after Baoneng, which displaced state- for the removal of almost all Vanke board tom-fish Vanke,” Xin wrote in a sepa- ing stock fund during the nation’s $5tn owned China Resources (Holdings) Co members including founder and Chair- rate Wechat post on Wednesday. “Good stock- market rout last year after re- as Vanke’s largest shareholder last year, man Wang Shi. luck to them!” Sensex drops; rupee steady

Bloomberg a multiple of 11.8 for the MSCI Emerging Asian bourses fall in volatile trade Mumbai Markets Index, data compiled by Bloomberg show. Foreign investors bought $44mn of local shares on July 5, taking this year’s AFP Indian stocks fell, with the benchmark index inflows to $3bn. Hong Kong erasing a weekly advance, as energy and tel- The June-quarter earnings season begins ecom shares dropped and investors focused next week with Tata Consultancy Services on the start of the results season next week. on July 14. Infosys Ltd and Reliance Indus- sian markets fell yesterday Bharti Airtel and Idea Cellular, the nation’s tries will report on July 15. About 66% of the at the end of a volatile week largest mobile-phone operators, slid more companies in the NSE Nifty 50 Index posted Adominated by the fallout than 2% each after the government said it March-quarter results that beat or matched from Britain’s European Union exit, will recover money from them for understat- estimates, versus 52% in the previous three with investors now turning their ing revenues for four years. Oil and Natural months. Operating profits climbed 9% year- attention to the release of US jobs Gas Corp (ONGC), the biggest state explorer, on-year, the most since September 2014, data. retreated for a third day as crude oil traded data compiled by Bloomberg show. The June non-farm payrolls fi g- below $46 a barrel. Larsen and Toubro and Six telecom operators understated rev- ures from Washington will be pored ICICI Bank were among the worst perform- enue by Rs46,000 crore between 2006 and over for clues about the Federal Re- ers on the S&P BSE Sensex. 2010, according to a report by the Comptrol- serve’s interest rate plans in light of The benchmark gauge fell 0.3%, or 74.59 ler and Auditor General of India. The govern- the Brexit vote, following a surpris- points, lower at 27,126.90 points at the ment will recover licence fee and spectrum ingly low reading in May. close, capping a fourth weekly decline in usage charge dues along with interest and They come after a week of losses five weeks. The gauge has rallied 18% from penalty, the communications ministry said in stocks around the world, after a low in February amid forecasts for strong in an e-mailed statement on Thursday. the head of the Bank of England rainfall after back-to-back droughts and as Meanwhile the rupee yesterday closed lit- said the risks of leaving the EU were company earnings recovered after declines tle changed against the US dollar, as traders “crystalising” and British property in four of the previous five periods. The avoided taking long positions ahead of the investment funds suspended cli- market capitalization of Indian equities has macroeconomic data due next week. ent withdrawals to prevent a run on grown faster than world market value in The currency closed at 67.37, up 0.04% them. the five months ended June, making them from its previous close of 67.40. The local “While a strong June report is not vulnerable to global shocks, according to currency opened at 67.47 a dollar and going to ring alarm bells for an im- Credit Suisse Securities (India). touched a high and a low of 67.28 and 67.51, minent rate hike, strong print tells “After five months of outperformance, I’d respectively. The rupee closed higher for the market that when the post- Pedestrians stand in front of an electronic quotation board in Tokyo. The Nikkei 225 closed down 1.1% to 15,106.98 stay cautious,” Neelkanth Mishra, manag- seven out of nine trading sessions. Brexit dust settles, the door will be points yesterday. ing director for equity research at Credit So far this year, the rupee is down 1.8%, open for the Fed to resume a path Suisse, said in an interview with Bloomberg while foreign institutional investors (FIIs) of interest rate normalisation,” said from the European Central Bank’s yen, while the greenback climbed 31-year low of $1.2798 touched on TV India yesterday. “Nearly 40% of our have bought $2.98bn in equity and sold Stephen Innes, senior trader at pre-Brexit policy meeting hinted at against emerging market and high- Wednesday. Oil prices bounced back free-float and trading volume is owned by $1.85bn in debt markets. OANDA Asia Pacifi c. more potential stimulus if Britain er-yielding units. slightly yesterday after a mauling foreign investors. If there’s a global risk off India’s 10-year bond yield closed at Tokyo fell 1.1% — a fourth- voted to leave the EU. The dollar was trading at ¥100.61, the day before fuelled by a smaller- and people start pulling out of equity funds, 7.385%, compared with Thursday’s close of straight loss ahead of weekend elec- Weak German data added to ex- from ¥100.76 in US trade, with trad- than-expected fall in US inventories. India won’t stay immune. There’s only so 7.382%. Most of the Asian currencies closed tions to Japan’s upper house that are pectations of further monetary sup- ers guessing as to whether Japan’s US benchmark West Texas Inter- much outperformance that we can stand.” lower as investors are cautious ahead of the expected to see a win for Prime Min- port. central bank will step in to protect mediate added 0.9% to $45.56 and Companies with a domestic focus “would US payroll data to get a clearer picture of ister Shinzo Abe’s party despite the London’s FTSE 100 also produced the country’s exporters from the im- Brent rose 1.1% to $46.92. be a good place to hide in the next 12 to the health of the world’s biggest economy. country’s stuttering economy. a healthy rally thanks to bargain- pact of a stronger currency. WTI fell 4.8% on Thursday and 24 months” as the economy benefits from South Korean won was down 0.63%, Shanghai ended 1% lower and buying after recent losses. Australia’s dollar eased 0.3% Brent shed 4.9%. above-average rainfall and lower borrowing Malaysian ringgit 0.51%, Philippines peso Seoul shed 0.6%. On Friday in European trade Lon- against the US unit, while the South In Tokyo, the Nikkei 225 down costs, he said. 0.27%, Indonesian rupiah 0.26%, Taiwan dol- Hong Kong fi nished down 0.7%. don and Frankfurt each rose 0.2% Korean won was down 0.5% and In- 1.1% at 15,106.98 points; Hong The Sensex has risen 3.9% this year and lar 0.07% and China renminbi 0.05%. How- Singapore dipped 0.9% but Syd- and Paris added 0.1%. donesia’s rupiah shed 0.4%. Kong — Hang Seng down 0.7% at trades at 16.3 times projected 12-months ever, Japanese yen 0.33%, Singapore dollar ney closed slightly higher. On currency markets the lingering Britain’s pound edged up to 20,564.17 points and Shanghai — profits, versus a five-year mean of 14.3 and was up 0.25%, and China off shore 0.04%. European markets provided a pos- fear of riskier assets weighed down $1.2930, unable to break above the Composite down 1.0% at 2,988.09 itive lead after the release of minutes the dollar against the safe-haven $1.30 mark but stronger than the points at the close yesterday. Gulf Times 10 Saturday, July 9, 2016 BUSINESS

Silk Road Fund to Cheap gold mines vanish as mull bid for $2bn Glencore buyers splurge for bullion Bloomberg mine New York o much for the run on cheap Bloomberg gold mines. Producers who were Hong Kong Sforced by slumping prices to un- load assets last year are regaining lev- erage. hina’s Silk Road Fund, a With bullion off to its biggest rally $40bn pool set up to in- to start a year in four decades - aided Cvest along the nation’s by the UK’s vote to quit the EU - mine ancient trade routes with Cen- buyers are paying higher premiums tral Asia, is discussing a joint bid and the pace of deals is accelerating, for Glencore Plc’s gold mine in data compiled by Bloomberg show. The Kazakhstan, people with knowl- value of reserves held by major pro- edge of the matter said. ducers has almost doubled since the The Silk Road Fund is part- third quarter of last year, according to nering with state-owned China Bloomberg Intelligence. National Gold Group Corp on The revival comes after a three- a possible joint off er for the year slump led to losses, rising debt Vasilkovskoye mine, which and a fi re sale of assets. With valua- could fetch about $2bn, accord- tions dropping, private equity fi rms ing to the people. The group is and companies including Zijin Min- in discussions with Glencore, ing Group pounced. The number of though there’s no certainty it acquisitions worth at least $1mn rose will win the bidding, the people 14% last year to 192, the fi rst increase said, asking not to be identifi ed since 2010, data compiled by Bloomb- as the information is private. erg show. But now investors are pour- The Beijing-based fund may ing money into gold funds, and prices vie with Chinese gold producers are near the highest in more than two Shandong Gold Mining Co and years, boosting premiums for available Zijin Mining Group Co, which mining assets that are getting harder to are also potential bidders for the fi nd. asset, people familiar with the “Scarcity of high-quality targets, matter said last month. Chi- both producing and development- nese companies have announced stage, is more of a factor than bargain- $9.6bn of mining acquisitions hunting,” said Michael Siperco, an this year as commodity prices analyst at Macquarie Capital Markets start to recover, a 36% jump from in Toronto. “We could see potential ac- the same period in 2015, data quirers more willing to pull the trigger compiled by Bloomberg show. on transactions, given the improving “Chinese miners are compet- near and longer-term macro environ- ing to secure gold assets, because ment for gold.” Gold has rallied 24% this year, heading for the best fi rst half of any year since 1974 there’s a consensus that domes- The average premium paid on deals tic demand will far outstrip local worth at least $1mn is about 42% in June 24, the day after a UK plebiscite Bloomberg Intelligence show. In the according to data compiled by Bloomb- this year, the people said. About half of supply due to fast-growing in- the current quarter, up from 29% in showed a majority wanted to exit the third quarter last year, the average was erg Intelligence. gold companies surveyed by Macquarie vestment demand,” Wang Rong, the fi rst quarter, data compiled by EU, a vote dubbed Brexit, prompting $90.90. “There’s competition for these as- indicated they were now more inclined an analyst at Guotai Junan Futures Bloomberg show. The 60 deals pend- investors to stock up on bullion as a ha- Investors have been fl ocking to gold sets,” Hoff man said. “The small miners toward mergers and acquisitions than Co, said by phone from Shanghai ing or completed in the quarter are the ven as global equity markets plunged. this year amid signs that the US will tend to worry more about private equi- six months ago. The primary obstacles, on Thursday. “The valuation of most since the fourth quarter of 2011, “Brexit has given gold deals even keep interest rates lower for longer than ty. The large miners worry about China. according to two-thirds of respond- gold assets might still have poten- the year that bullion surged to a record more of an advantage as gold surged, previously forecast. The Chinese have really shown an ap- ents, were the availability of quality tial to rise given the bullish out- high of $1,921.17 an ounce. and the interest in gold continues to Those concerns were compounded petite for gold deals, and so they could targets and high valuations. look in the bullion market now.” Teranga Gold Corp, a Toronto-based build momentum,” said Kenneth Hoff - after Brexit, when yields on more than get themselves in the bidding wars.” “A lot of them missed opportuni- China Molybdenum Co producer, agreed on June 20 to buy man, senior metals and mining analyst $9tn of bonds slide below zero. Shandong Gold Mining Co and ties to buy things on the cheap that agreed in May to buy control of Gryphon Minerals, based in Subiaco, at Bloomberg Intelligence in Princeton, That means anyone who buys debt Zhongjin Gold Corp are among the po- were distressed when gold prices were Freeport-McMoRan’s copper Australia, at a premium of 53%, based New Jersey. today will lose money if they hold the tential bidders for Glencore’s gold mine lower,” said Dan Denbow, a portfolio mine in the Democratic Repub- on the closing price before the deal was Even before the so-called Brexit vote, bonds to maturity, which boosts the in Kazakhstan, according to people fa- manager at the USAA Precious Metals lic of Congo for $2.65bn, fol- announced. That compares with an valuations were improving. A gauge of appeal of gold as a store of value as miliar with the matter. & Minerals Fund in San Antonio, which lowing a $1.5bn deal in April for estimated 33% premium given by Van- 14 senior gold producers tracked by prices rise. Glencore may be seeking about $2bn oversees $751mn. “If anybody was stra- Anglo-American’s niobium and couver-based Goldcorp, the world’s Bloomberg Intelligence has more than While the rally boosted the value for the asset, the people said, asking not tegically looking at replacing explo- phosphate business. China Na- largest producer, when it agreed in May doubled this year. of gold deposits, it also improved the to be named because the deliberations ration dollars by doing acquisitions, tional Gold said in April it will to acquire Kaminak Gold Corp. On average, their reserves were val- cash fl ow available for mining compa- are private. Zijin Mining, one of China’s they would have been better off doing purchase Eldorado Gold Corp’s Gold has rallied 24% this year, head- ued at $178.43 an ounce in the sec- nies looking to acquire assets. Chinese largest producers, may be interested in it when assets were much cheaper, six Jinfeng gold mine in Guizhou ing for the best fi rst half of any year ond quarter, the highest since the producers have already made $1.2bn of the Vasilkovskoye mine, which Glen- months ago. Now they’re having to pay province for $300mn. since 1974. Prices touched $1,358.54 on fi rst quarter of 2013, data compiled by deals in the quarter, the most in a year, core put on the auction block earlier for a bit of premium.” The Silk Road Fund was set up in 2014 with backing from the nation’s sovereign wealth fund, state-owned Export-Import Bank of China and policy lender China Development Bank Corp, Goldman stock picker’s case gets run over as correlations jump according to its website. The fund is focused on infrastructure and resource investments aligned Bloomberg turns of benchmark indexes. “The tive managers the past few years? Re- Goldman published a note to clients The 30-day correlation of prices in with President Xi Jinping’s New New York markets were getting rich for bottom- turn dispersion, measured by Gold- heralding the return of the stock-pick- the S&P 500 and oil, for example, was Silk Road initiative, aimed at up stock pickers and unfortunately man as the standard deviation of S&P er’s market. 0.15 on May 16, compared with a high of bolstering the nation’s economic Brexit kind of puts that on hold for a 500 stock returns and a value that The S&P 500 “has moved beyond a nearly 1.0 at the beginning of the year. clout across more than 70 coun- t was less than a month ago that quarter or two,” Krishna Memani, chief rises when correlations ease, reached a low dispersion environment,” wrote The market’s correlation with the US tries in Asia, Europe and Africa. Goldman Sachs Group saw the US investment offi cer at New York-based record low in the third quarter of 2014 the bank’s research team, led by chief dollar, which had surged to more than China National Gold is the na- Iequity market turning into a stock- Oppenheimer Funds, said by phone. and remained suppressed throughout equity strategist David Kostin. Stocks minus 0.9 in September of 2015, eased tion’s biggest miner of the metal picker’s playground. Then came Brexit. “If things stabilise there will still be most of 2015, the team wrote in a report “recently transitioned out of the low to positive 0.1 by June 3. Still, both re- by reserves. The UK’s surprise vote to quit the tremendous opportunities but these last month. return dispersion regime that persist- lationships have strengthened since It is the largest shareholder European Union last month reawak- larger macro shocks certainly increase A similar metric used by JPMorgan ed for the past several years and into a then. of China Gold International ened lockstep moves in stocks at a time correlation of individual equities.” Chase & Co shows weekly dispersion more normalised regime.” While Brexit indeed spiked stock-to- Resources Corp, listed in Hong when the market was just beginning to A Goldman Sachs representative de- averaged 3.5% from 2011 through 2014, There are a handful of tools strat- stock correlations, labelling the market Kong, and Shanghai-traded show signs of becoming more amena- clined to comment. compared with 5.3% going back to 1995. egists use to measure correlation in as being good or bad for picking stocks Zhongjin Gold Corp. ble to stock selection. The Citi index, which tracks the de- Yet going into the UK’s referendum, markets. is missing the point, says Citigroup’s Representatives for China One-month correlation among the gree to which stocks in the S&P 500 markets had fi nally managed to wriggle Longer-term relationships, such chief US equity strategist Tobias Lev- National Gold and the Silk 50 biggest companies in the S&P 500 move in the same direction, now reads free of forces that at the start of 2016 as three-month returns, still show kovich. Road Fund didn’t answer phone Index is now near the highest since 83%, compared with 32% the day be- kept US stocks in sync amid a global easing in lockstep moves between “Right now you get the sense people calls and e-mails seeking com- 2011, according to Citigroup. fore the vote. selloff in equities. stocks, according to data compiled by are throwing away the baby with the ment. A spokesman for Glen- It’s an unwelcome return to an envi- When measured using standard de- By May 16, a CBOE index that meas- Bloomberg. bathwater, and that tends to happen core declined to comment. Gold ronment that has plagued active equity viation, or variance from the average ures the expected correlation between And in Goldman’s favour, it wasn’t when the market is selling off and they climbed to more than $1,368 an managers for much of the bull market. swing, dispersion in the S&P 500 in returns of stocks in the S&P 500 fell just the ties between US stocks that want to protect themselves from more ounce in Hong Kong as investors US equities moving in unison off er few June was the lowest of the year, accord- to the lowest level of the year, meaning were loosening. Connections between losses,” Levkovich said by phone. “His- sought a haven from the turbu- places for investors that rely on their ing to data compiled by Bloomberg. shares were charting unique paths. stocks and other asset classes had been torically it’s been a buy signal for the lence in fi nancial markets. stock-picking acumen to beat the re- Just how tough has it been for ac- It was a few weeks after that when easing as well. next six to 12 months.” Australia’s most indebted state lures bond buyers hunting yield

Bloomberg the hunt by global bond buyers for Queensland Treasury Corp’s A$7.3bn General government sector debt is budget in 2015. The government said deterioration in Queensland’s financial Sydney extra yield has helped tighten credit borrowing program for 2016-17 is expected to fall to A$38.4bn by June its aim was to take the measure to performance is “a credit negative,’’ spreads. And although last month’s predicted to include about A$1.9bn of 2019 from A$43.1bn in June 2015, between 70% and 75% for the public while Fitch said the state’s net overall state budget estimated total borrowing new money and A$5.4bn for refinancing according to budget documents. In firms, which would free up about risk remains the same despite the plans Investors are snapping up Queensland will rise to A$75.3bn ($56.5bn) in the of existing obligations. contrast, borrowing by state- owned A$3.5bn in equity from the businesses. to lower general government debt. government bonds even as Australia’s current financial year, that’s less than Pitt said that while he’s cognizant of the firms is set to increase by about A$7.5bn While Queensland is catching up with The Australian federal government, most indebted state increases its total the government had projected in earlier total debt carried by Queensland, the to A$39.6bn over the same period. other states in leveraging its state-run which has top credit scores at all three borrowing and the tapering of the fiscal updates. administration’s actions are centred The state is resorting to shifting debt as Corps, it “can’t keep doing this forever major agencies, had its outlook shifted resources boom weighs on revenues. “In terms of the market, we will around reducing the money owed it faces lower- than-expected revenue because total state government debt is to negative on Thursday by S&P. That The average yield premium the debt have overall less debt on off er than directly by the government, as opposed and after a study by KPMG showed the not shrinking,” said Damien McColough, move which mirrored for the country’s off ers over federal government notes previously forecast,’’ Queensland to the obligations of the state’s publicly- public firms had room to load up on head of fixed-income research at most highly rated regional borrowers: has fallen to 27 basis points as of Treasurer Curtis Pitt said in an interview owned Corps. debt. Westpac Banking Corp in Sydney. “They New South Wales, Victoria and the Wednesday from 45 at the end of June in Sydney last week. Having come to off ice in February Last financial year’s revenue hole - will need to improve the revenue side of Australian Capital Territory. 2015, Bloomberg AusBond index data “We expect they will see us not only as 2015 as part of a Labor government stemming from lower mining royalties, the balance and keep the expenses side “Fundamentals get trumped right show. safe investment, but also seeing their that’s vowed not to sell off assets, taxes and federal support payments under control.’’ now by demand for yield,’’ Westpac’s The northeastern state’s securities investments over a longer period will he is instead ramping up gearing on - was estimated at the most recent Queensland carries a stable AA+ credit McColough said. have returned 5.6% so far this year, pay dividends.’’ businesses such as electricity networks budget to be A$1.2bn larger than score at S&P Global Ratings, one step “Our broad view on the state trailing only Victoria’s 5.9% among the The government’s debt, including the and ports. previously anticipated. below the highest ranking. It has an government sector is relatively positive country’s eight provincial issuers. liabilities of state- owned businesses, The treasurer is also drawing on Queensland’s energy network equivalent rating of Aa1 at Moody’s and there’s not a lot of performance While the drop in commodity prices is is projected to climb to A$78.9bn by A$4bn of the state’s surplus funding businesses had a net debt to regulated Investors Service, albeit with a negative relative to bonds still left in the AAA crimping royalties and slowing revenue 2019-20 from an estimated A$72.7bn for pension liabilities to keep so-called asset base ratio of about 55% compared outlook, while Fitch Ratings puts it one space. So that will slowly but surely growth in one of the country’s largest at the end of last month, according to general government borrowing in to an average of 80% for the industry, level lower at AA. benefit Queensland and the other mining and energy producing regions, the most recent budget documents. check. according to papers from Pitt’s first Moody’s said last month that the higher-yielding issuers.” Gulf Times Saturday, July 9, 2016 11 BUSINESS Shaken exporters point to Brexit pain ahead for Irish economy

Reuters is the currency,” said Brian Nolan, 35, who next six years would cut Irish GDP growth vourable post-Brexit deal with the EU. KBC they agreed to pilot. In the last two weeks, of 124% of GDP, stood at 94% of annual Dublin left a career in finance to work with his by an average of 0.8% a year. For the chief economist Austin Hughes said that we’ve heard nothing,” said Cloud90 chief output last year. wife to turn avocados and coconuts into Nolans, there is no easy answer. the extent of the damage to sentiment in executive Nicola Byrne. “We’re counting Ireland’s fiscal watchdog estimates that Nobo ice cream in 2012, when Ireland was Already priced for the premium market, Ireland should be limited in the near term on this, we were planning all our expan- if forecast GDP growth comes in 1.5 per- When Irish ice-cream makers Brian and still relying on an international bailout. they do not have the luxury of simply as the early impact will hit external trade sion to come from the UK and now we centage points lower each year, it would Rachel Nolan launched an ambitious expan- “If it keeps going down the wrong way, increasing prices, and seeking to off set and investment, not household spending. don’t know where we are, even with small cause the debt-to-GDP ratio to stagnate at sion into Britain last month, they were bet- it makes that market a place where it be- the hit by sourcing cheaper ingredients in But concerns are surfacing in some businesses who we were about to start current high levels before rising again by ting on a steady exchange rate easing them comes very challenging to operate in.” sterling could risk sacrificing the quality of data. Business expectations in the services trading with. the end of the decade. into one of the world’s biggest food markets. Like so many firms in a country of only raw materials that are key to their brand. sector — which includes tourism operators The uncertainty is just chaotic, this is a That could scupper government plans Some of those anticipated returns 4.6mn people, Nobo must look abroad The mood in Britain itself is dour. who rely on the UK for 40% of visitors — real risk.” Irish firms are being encouraged to grow the workforce by 12% to 2.2mn look set to evaporate after Britain voted for growth. Fourteen times larger than In a special post-referendum survey tumbled in June, according to a survey on by trade bodies to look to new markets over the next six years. Experienced to leave the European Union on June 23, Ireland, Britain accounts for 16% of its ex- published yesterday, market research Tuesday, as firms expressed concern that but that can be easier said than done. exporters like 65-year-old Jimmy McGee, sending the value of sterling plunging as ports, rocketing up to 44% when foreign- company GfK said consumer confidence Brexit would lead to a slowdown. Byrne said she could look to the United owner of the Athlone Extrusions manu- much as 13% and putting UK-dependent owned firms operating out of Ireland are fell 8 points to -9 in the aftermath of the While Nobo’s owners worry that a States but diff ering state laws make the facturing firm, have been through enough Irish exporters like the Nolans into an excluded. June 23 vote from -1 in its previous regular premium ice cream might be something process far more complex for her risk downturns to know that diff icult times exchange rate-induced bind. The exchange rate was more favourable monthly survey. Britons leave out of their shopping basket analytics. may lie ahead. Ireland, with the fastest-growing econ- at £0.78 to the euro when Ireland’s finance Ireland’s government is maintaining its at a time of low consumer confidence, “We have no idea what the future “I believe this will cost jobs in Ireland. omy in Europe, is considered more vulner- department made its most recent projec- forecast for 4.9% GDP growth for 2016 fol- Dublin-based online risk analysis company holds, just none,” she said. While Ireland’s It’s just too large,” said McGee, who is able than anyone else in the EU to Brexit, tions but is now 9% lower at 0.85. lowing a strong first half to the year. Cloud90 is already seeing investment economy is forecast to be Europe’s best confident layoff s won’t be needed at his especially the one in ten workers whose If it fails to recover, the impact could But it has trimmed its outlook for 2017 stalling, as well. “The week of the vote we performing for a third straight year, it firm because it exports sheeting for baths jobs directly relate to trade with the United be significant — the department has to 3.4% from 3.9% and warned that worse went into a very large insurance company needs all the growth it can get to cut a and shower trays to 41 countries other Kingdom. “The scary part at the moment estimated an average rate of 0.82 over the could be ahead if Britain strikes an unfa- in London with a very innovative product public debt that, while down from a peak than the UK.

Brexit vote leaves Dutch real estate Price of safety surges market simmering

Reuters a small number of large deals had Amsterdam boosted the quarterly fi gure. “That’s very steep growth and in Swiss stocks as very much supports the trend ntil the British vote to that demand is far outstripping leave the European Union supply of basically any invest- Ulast month Dutch real es- ment proposition,” said Jeroen tate prices were booming, lifted Jansen, a researcher at the prop- from the depths of the fi nancial erty services and consultancy crisis in the last three to four group Savills. old haven awakens years by a surge in foreign inves- Germany remains the top for- tors seeking better yields. eign investor, while British and Bloomberg And although there has been American private equity buyers London no immediate impact on Dutch have really taken the Dutch mar- property prices, Britain’s pos- ket by storm, increasing their sible departure from the EU has share from zero in the 2009- wiss stocks, dislodged in 2015 as excited speculation that Am- 2011 period to 36% in 2014- a haven from European volatility, sterdam could attract London- 2016, Jansen said. Shave seen the status restored fol- based businesses seeking to re- Asian investors have also lowing Brexit, so much that some inves- locate to continental Europe. moved into the market. tors are balking at valuations. Hitherto prices have been Singapore-listed First Spon- After trailing shares from Germany to supported by a structural resi- sor Group Limited, a property France and Italy for most the past year, dential housing shortage, recov- developer in China, said last No- the Swiss Market Index is fi nding a new ering offi ce demand and, in re- vember it was buying 16 Dutch appeal in the fallout of the UK vote to cent months, stalled investment offi ces for €206mn. leave the European Union. in London. And in June, French asset Investors buying up mega-caps in- In May and June alone Dutch manager Amundi purchased the cluding Nestle SA, Novartis AG and Ro- property deals worth nearly massive, riverfront “De Rotter- che Holding AG have pushed the valua- €2bn ($2.2bn) were struck with dam” building in the port city tion of companies in the gauge to more big, mostly foreign, private eq- for Korean investors for €375mn. than 16 times estimated profi ts, the uity companies, according to The Dutch property market highest since 2013 relative to the Euro data compiled by Reuters. was among the hardest hit dur- Stoxx 50 Index. Investors have been piling into ing the fi nancial crisis, hav- EFG Asset Management’s Urs Beck- all property classes, the prices of ing fallen 3% per year between says haven equity investments may soon which sank more deeply than in 2008-2013, or nearly 20%. lose their appeal because of their high other European cities after the Prices have since risen for 11 prices. 2008 fi nancial crisis, as normal- consecutive quarters, with the After the referendum, he sold Nestle ly conservative pension funds strongest gain of 5.6% reported shares that now trade at almost 22 times and other investors look further by the Dutch Association of their estimated earnings - 34% more afi eld for yield at a time of rock- Realtors (NVM) in the second than the SMI. Beck has since been buy- bottom interest rates. quarter of this year. ing shares of Swiss mid-cap Autoneum The Netherlands, a signifi - Out of a dozen predominantly Holding AG every day, with a valuation cantly smaller market than Brit- Western countries analysed by multiple of about 12. ain, Germany or France, has JLL, the Dutch property market “Roche and Novartis have been these already attracted a higher per- carried the highest risk premium havens given the uncertainty around the centage of foreign capital com- in 2013 and 2014 at more than Brexit situation,” said the equities man- ing into its property market over 5% above benchmark 10-year ager from Zurich. The drugmakers have the past three years, with foreign government bond. risen more than 2.4% since the referen- money accounting for 52% of In 2015, that slipped slightly to dum. “Is it sustainable? I don’t think so.” property investments in 2015, 5%, declining to 4.75% this year, The rally that began on June 28 was a up from 22% in 2012, real estate JLL said. redemption of sorts for the SMI, which consultancy JLL said. “Amsterdam is not really climbed the second most among west- That compares with a rela- cheap anymore after steep price ern- European markets since the UK A logo is displayed on the exterior of the Six Swiss Exchange in Zurich. Swiss stocks, dislodged in 2015 as a haven from European tively stable 40% share for for- rises,” said Sven Bertens, head vote, briefl y erasing losses last week. volatility, have seen the status restored following Brexit, so much that some investors are balking at valuations. eign investors in German and of research at JLL in the Neth- Investors were reassured by the Swiss French markets. erlands. But “it is a market with National Bank’s intervention to keep some yield. Switzerland’s economy has the vote - less than half the losses in the paying up for hedging in the next three “There is a lot of buying by a relatively low risk and a yield the franc under control, and were lured been resilient even though the cap with Euro Stoxx 50 - the SMI had recovered by months. The cost of bearish versus bull- foreign players,” Jaap Sellen, that is still attractive.” by the high dividends paid by the na- the euro broke last year.” the end of last week. ish options is about 18% greater than the Dutch offi ce fund manager at However, the speed of the re- tion’s companies, according to Ion-Marc Last year’s currency cap removal and With consumer and health-care average for the past year, and the number CBRE Global Investors, the real covery and price levels has some Valahu, co-founder and fund manager at subsequent franc surge stoked concern stocks making up 65% of the index, UBS of puts outstanding relative to calls is estate services and investment market players worried about Clairinvest. about a recession, but Switzerland defi ed Group AG said the market is among the near its highest level since 2008. company, said.”They are hitting overheating, with prime com- “There’s a big fl ight to quality, people expectations. best bets to investors looking to profi t “Investors are desperately looking for the whole market.” mercial properties selling for prefer to put their money in Switzerland Now economists forecast gross do- from the British referendum. yield, and companies like Roche, Nestle Dutch commercial real estate up to triple the price they were and be secure,” Valahu said from Ge- mestic product will expand 1.2% this At 3.6%, the SMI’s dividend yield is or Novartis still off er an attractive divi- investment volumes increased snapped up for at the tail end of neva. He kept his Swiss stocks through year. While the currency has risen in the near a record high relative to the rate on dend yield,” said Andreas Nigg, head of 47% in the fi rst four months of the crisis. the initial selloff . “The SNB intervention aftermath of the June 23 referendum, it the 10-year government bond, which is equity and commodity strategy at Von- 2016 to €2.5bn compared with Several private equity fi rms helped a bit, and Swiss companies do pay remains far below the levels seen in Janu- negative. tobel Asset Management in Zurich. “It the same period last year, Savills have already sold off portfolios, a lot of dividends. ary 2015. While the perception of safety has will not be a smooth path, there will be World Research said, noting that having bought in earlier. That’s a refuge for people looking for After sliding 5.3% in the two days after been helping Swiss stocks, traders are volatility in the future.” Bank of Italy says public money needed to help banks

Italy pressing Brussels to allow ation was “full of risks for financial means of public intervention allowed single EU member states and for the state help for its banks; Italy’s stability,” and a public backstop to by EU regulations,” Padoan said. eurozone as whole. However, he also banks hit by market sell-off , need support the banks was necessary Italy’s fragile economy, and Prime said a large part of the soured credit capital; Bank of Italy chief warns of and was not prohibited by European Minister Matteo Renzi, can ill aff ord a in Italy was held by banks which are in threat to financial system rules. full-blown banking crisis. sound fi nancial condition. Italy has been in talks with the Eu- Economic growth is seen by most “It is wrong to speak of the problem Reuters ropean Commission to devise a plan economists at below 1% this year and of bad loans as an emergency for the Rome to recapitalise its lenders with public lower in 2017. whole banking system,” he said. money, limiting the losses for bank “Renzi needs to deliver greater Italy has moved to try to consolidate investors which are required by EU confi dence in the Italian fi nancial its fragmented banking system, and ank of Italy Governor Ignazio rules. system... or face the real risk of Italy Visco said that after the recently an- Visco said yesterday that public “We are confi dent of the possibility being thrown into another recession nounced merger between Banco Popo- Bmoney should be used to help of success for a common commitment after just exiting its longest post-war lare and Banca Popolare di Milano, he Italy’s troubled banks in a fi nancial to overcome the current diffi culties,” one at the start of 2015,” said Raj Ba- expected other mergers or takeovers system which is “full of risks” follow- Visco told a conference of Italian diani, senior economist at IHS Global “before too long.” ing Britain’s decision to leave the Euro- bankers. Insight. He said that in the current situation pean Union. Economy Minister Pier Carlo Pa- ECB Vice President Vitor Constan- it was essential that EU policy mak- Italy’s banks are saddled with some doan, speaking at the same conference, cio said on Thursday that the plight of ers be ready “to limit market tensions, €360bn ($400bn) of bad loans and said EU rules allowed for fl exibility on Europe’s banks may need some “small” ensure liquidity, reinforce the banking their shares have been hit by heavy state aid for banks and this must be state support. system and support confi dence.” selling this year, which has intensifi ed used to the full in the current circum- Visco, who sits on the European He also warned that a too-rigid ap- in the wake of last month’s referendum stances. Central Bank’s policy-setting govern- plication of bank supervision rules in Britain. The government is in “continuous ing council, warned of potential sys- should not “become a source of ten- Visco said the current market situ- dialogue” with Brussels “to explore all temic eff ects of a banking crisis for sion in itself.” Visco: Full of risks for financial stability. Saturday, July 9, 2016 GULF TIMES BUSINESS Sovereign investors’ M&A deals fall 26% by value in Q2

Total of 39 deals in Q2, down from ment vehicles, were involved in 39 This could be making the sector tional institutional clients at JP Morgan into turmoil with many funds freez- capital,” Thomson said. Real estate has 45 in Q1; biggest was for Alibaba deals between April and June, six fewer more cautious about committing new Asset Management, said there was no ing investor cash to counter ballooning also proved easier for SWFs to access aff iliate Ant Financial; real estate than in the fi rst quarter. capital. requirement for private transactions to outfl ows. than infrastructure and private equity deals among most popular The single biggest deal was the However, industry experts sug- be reported, so some investments were However, property-related deals in recent years. $4.5bn funding round for Ant Financial gested the publicly available fi gures not being captured in public data. made up roughly a quarter of the sec- An Invesco survey of sovereign in- Reuters Services Group, an affi liate of China’s might not tell the whole story, with The overall volume was still 11% ond quarter total, as SWFs continued vestors found that the average portfo- London biggest e-commerce company, Alibaba some deals fl ying below the radar, higher than the second quarter of 2015, to diversify away from low or negative lio exposure to real estate had risen to Group Holding, which attracted Chi- such as those carried out by boutique helped by a handful of very large trans- yielding developed market govern- 6.5% in 2015, from 3% in 2012. na’s CIC Capital, among others. fund managers on behalf of sovereign actions. ment bonds. “There is a greater stock of real es- overeign investors, includ- Some sovereign investors witnessed wealth funds (SWFs). The second largest deal was the Property off ers predictable, repeat- tate and a greater number of places to ing wealth funds, made $14.1bn reduced infl ows as a result of lower oil “There’s a steady secular fl ow into $3.5bn investment in ride-hailing able cash fl ows, and yields of 3-5% in source deals,” said Alex Millar, head of Sworth of acquisitions in the prices and increasing demands from illiquid investments which hasn’t service Uber by Saudi Arabia’s Pub- some core retail markets, JPMorgan’s EMEA sovereigns, Middle East and Af- second quarter, down 26% from the cash-strapped governments — Russia stopped, so the overall volumes should lic Investment Fund, while the $2.5bn Thomson said. rica institutional sales at Invesco. fi rst three months of the year but un- for instance is proposing to empty one be higher,” said Elliot Hentov, head of sale of BlackRock’s 43-storey offi ce Also, prime offi ce blocks are expen- Some Gulf SWFs were said to have derpinned by a rebound in real estate of its two sovereign funds next year. policy and research in the offi cial in- building in Singapore to the Qatar In- sive, allowing investors to do very large held back from new property buys in deals. Volatile markets have also taken a stitutions group at State Street Global vestment Authority (QIA) was in third single transactions. Britain before the referendum. Data compiled by Thomson Reuters toll, with big direct investors such as Advisors. place. “SWFs have relatively limited in- But Norway’s $830bn fund said in shows sovereign investors, a category Singapore’s Temasek suff ering a fall “There are a lot of deals we don’t see Following Britain’s vote on June 23 vestment staff , and need to put quite March it was undeterred, and Singa- that can include everything from state in the value of its portfolio of almost that have SWF participation.” to leave the European Union, London a lot of money to work, so they need pore’s Gif said the turmoil may even pension funds to oil-backed invest- $18bn over the past year. Patrick Thomson, head of interna- property markets have been thrown an asset class that can absorb a lot of bring buying opportunities.

Ageing storage sites Consumer confi dence in make British gas market more prone Britain suff ers one of its to price spikes Reuters Gas links with Europe Milan/London and imports from Norway, as well as liquefi ed natu- ral gas (LNG) shipments ritain faces a grow- via three import terminals, biggest drops in 21 years ing risk of spikes in have eroded the traditional Bwholesale gas prices as winter risk premium. Reuters ageing storage facilities mean British consumers, how- London increased maintenance and ever, will have to pay more greater reliance on imports for their gas supply from to meet spot demand. Europe through two ex- ritish consumer confi dence suff ered The main storage site, isting gas links, because one of its biggest drops in 21 years Centrica’s Rough, is over wholesale prices at the UK Band the country’s largest department 30 years old, and its closure trading hub, National Bal- store expressed concern over the pound’s last month for at least 42 ancing Point, will need to fall, in the strongest evidence to date of the days to inspect the integrity rise to attract continen- challenges Britain’s economy faces after the of wells has underscored tal supplies at times when Brexit vote. the vulnerability of the supplies are tight. The vote to leave the European Union has country’s storage capacity. “While Rough’s out- thrust Britain into its worst political crisis The announcement of the age doesn’t mean we can’t in modern times. outage pushed up winter gas bring gas in, it does raise Investors have warned that what was prices 8%, and raised con- the risk of price spikes to ranked as the world’s fi fth largest economy cerns about refi lling the site attract gas from Europe,” faces years of uncertainty over everything in time for this winter as Morris said. from trade to investment. well as its long-term future. The pound’s sharp drop In a special post-referendum survey “The facility is showing against the euro after Brit- published yesterday, market research com- signs of wear and tear and ain’s June 23 vote to leave pany GfK said consumer confi dence fell 8 we have seen a decrease in the European Union has points to -9 in the aftermath of the June 23 the operational reliability only made continental im- vote from -1 in its previous regular monthly of Rough over the last cou- ports dearer, gas traders survey. ple of years. say, levying a higher cost “During this period of uncertainty, we’ve It is hard to expect that on Britain’s growing import seen a very signifi cant drop in confi dence, it will get better,” said En- reliance. as is clear from the fact that every one of our ergy Aspects analyst Trevor Some 40% of Britain’s key measures has fallen,” said Joe Staton, Sikorksi. gas consumption comes Head of Market Dynamics at GfK. Other British sites are from home heating, making The last time the index, which dates back also struggling to cover it highly sensitive to cold to 1974, fell so steeply was in January 2011, their costs of capital as weather. and the last time it fell more was in Decem- falling profi tability stalls A spokesman at the De- ber 1994. new investment and forces partment of Energy and Cli- Moody’s credit rating agency said yester- operators to idle capacity, mate Change said Rough’s day Britain faced a shock to confi dence and such as SSE did last year at current closure won’t aff ect almost halved its UK growth forecast for Pedestrians walk past clocks in the Canary Wharf business, financial and shopping district of London. British consumer confidence its Hornsea site. Britain’s ability to source next year to 1.2% from 2.1%. suff ered one of its biggest drops in 21 years and the country’s largest department store expressed concern over the pound’s fall, in the “The least effi cient stor- gas supply, and the National Moody’s also cautioned that the Brexit strongest evidence to date of the challenges Britain’s economy faces after the Brexit vote. age sites are losing money Grid, in its winter outlook vote could potentially threaten the exist- — there will be an incentive report published yester- ence of the EU, which has a $16.5tn econ- more stimulus into Britain’s economy over the second half. “It can never be quite that while in the south, including London, there on them to close at some day, said Britain will have omy. “The potential strengthening of na- the summer. simple because you don’t know where cost has been a 2-point drop, GfK said. point in the future with- enough capacity to meet tionalistic and protectionist movements The Bank’s rate setting committee is due infl ation comes through from other things Most people in the north of England out government support,” demand even if Rough is not could have a detrimental eff ect on the EU, to make its monthly policy announcement that are imported, perhaps one stage away voted to leave the EU, whereas Scotland and Poyry Management Con- fully fi lled this year. even threatening its existence,” the credit on Thursday. from direct importing,” he said. London voted strongly to stay, by a margin sulting director Andrew Centrica, which operates rating agency said. Most economists polled by Reuters ex- GfK reported that people who wanted to of around two-to-one. Morris said. Rough, reduced Rough’s It expected global spillovers to be limited, pect it to hold off on any action until it re- stay in the EU — 48% of those who voted — The biggest drop in confi dence, from an “Politically, the country capacity last year amid however. leases new economic forecasts in August. were much more pessimistic than the 52% income perspective, was a fall of 16 points has to decide if it can accept safety concerns and has a With households and investors left The depreciation of sterling could poten- who voted to leave. among households with income levels of regular price spikes.” There £40mn ($52mn) mainte- guessing about what the future relation- tially become a major issue for John Lewis, “Our analysis suggests that in the im- £25,000-49,999. are no new gas storage sites nance programme this year ship with the EU will look like, sterling has Managing Director Andy Street said late on mediate aftermath of the referendum, sec- Bolstering the case for those who say being built and the govern- and a similar investment for suff ered its worst three-week performance Thursday. tors like travel, fashion and lifestyle, home, Britain will pay a heavy economic price for ment has ruled out subsi- next year at Rough. against the US dollar since 1992 when Brit- “Genuinely it is a big issue for us to face living, DIY and grocery are particularly the Brexit vote, accountants BDO said re- dising development of new “The ability to buy LNG ain crashed out of the pre-euro Exchange into next year,” Street told reporters at a vulnerable to consumers cutting back their tail sales spiralled lower through the month plants. from the US (and other Rate Mechanism. media dinner. discretionary spending,” said Joe Staton, as the referendum campaign reached its Storage operators rely on places) probably means Sterling dipped under $1.30 this week the John Lewis imports about two-thirds of head of market dynamics at GfK. climax. BDO’s High Street Sales Tracker large swings between sum- that (Britain) will be able fi rst time since 1985. the goods it sells and one third is purchased The survey also showed a distinct re- showed like-for-like retail sales fell 3.6% mer and winter gas prices to manage through a nor- It was trading as high as $1.50 just hours in dollars. gional diff erence in perceptions, although year-on-year last month, the worst June in to turn a profi t and drum up mal winter, but the markets after voting ended in the referendum. Street said while the fi rm is fully hedged this did not appear to be linked with how more than a decade. demand for their services, could get a bit jumpy if it is Amid the turmoil, Bank of England Gov- for its 2016-17 fi nancial year and has “a regions voted. Although the month started well, BDO but prices have fl attened a cold winter and we have ernor Mark Carney said on June 30 that the good proportion” of hedging for the fi rst In the north of England, confi dence said sales fell at progressively faster pace as Britain’s access to year- no Rough,” Energy Aspects’ central bank would probably need to pump half of its 2017-18 year, it has “a lot less” for dropped 19 points and in Scotland 11 points, through the month. round supply has improved. Sikorksi said. Europe corporate earnings outlook darkens post-Brexit

Reuters Financials, which have borne the brunt A survey on Friday showed consumer the broader market since the London of the sell-off in Europe, have seen the confidence suff ered one of its biggest referendum. sharpest cuts, with earnings forecasts drops in 21 years after the referendum The US bank says for sectors most for region’s major banks, insurers and while the country’s largest department aff ected by a slowdown in UK Two weeks after Britain’s shock vote to asset managers slashed more than 5% store chain expressed concern over the investment spending, earnings leave the European Union, the already in the past two weeks. pound’s plunge to a 31-year low against estimates could realistically fall by bleak outlook for corporate profits in European banks have lost more than a the dollar. 10-20 %. the region has darkened, with near- fifth of their value this year. Consumer spending is a key driver of A further deterioration in profits term concerns focused on the health Turbulence in financial markets has the British economy. would mean that European earnings of banks. sent bond yields spiralling lower, Banks including Goldman Sachs, will definitely contract for a second As earnings season gets underway which in turn has hit banks’ investment Barclays and Credit Suisse are now successive year. in the United States next week, with income, while higher regulatory costs forecasting a mild recession in Britain in The energy sector in Europe is the only European firms set to follow later in and large fines are squeezing their the second half of this year or by early one to see earnings estimates up since the month, analysts are scrambling profit margins. 2017. before the referendum although that is to adjust their models for the slump Weaker bank earnings could hurt Goldman sees companies and largely due to the British oil majors, for in sterling that followed the June 23 lending and broader demand, households delaying spending, leaving which off shore earnings become more Brexit referendum, weaker consumer suggesting the next cycle of earnings real estate, travel and leisure, banks and valuable in sterling terms. confidence and an expected hit to downgrades is just getting started. the autos sectors vulnerable, and has Other sectors are firmly in the red since economic growth. “Europe is a bank-financed economy warned that current earnings estimates the referendum. Expectations for European companies’ and when they get squeezed like are still not reflecting the expected “A lot of investors over the past few earnings this year are 3.5% below pre- they are now they won’t lend,” said slowdown in growth. years have invested in Europe hoping Brexit forecasts, according to Thomson Artur Baluszynski, head of research at Shares of European firms which have for an earnings recovery. Reuters data, putting annual profits on investment firm Henderson Rowe. a significant portion of their sales in Unfortunately, it risks becoming a course for their fourth decline in five In Britain, the eff ects of the Brexit vote Britain, such as Ryanair and staff ing firm value trap,” said Henderson Rowe’s years. are already starting to show. Adecco, have started underperforming Baluszynski.