$108BN FUND: Page 2 TRADE WAR : Page 3 Japan’s Soft Bank Huawei’s ties Group draws with FedEx, in Microsoft Flex fray on and Apple US-China row

Saturday, July 27, 2019 Dhul-Qa’da 24, 1440 AH $26BN TAKEOVER: Page 8 US approves merger GULF TIMES of wireless operators BUSINESS T-Mobile and Sprint US economic growth slows in Q2; Fed likely to cut rates

AFP Washington

he American economy cooled in the second quarter of 2019 Tto a still-solid pace but offi cials Erdogan: High interest rates nevertheless slashed one of President are the biggest obstacle to Donald Trump’s favourite economic the Turkish economy. numbers, government data showed yesterday. Newly revised data covering the past Erdogan fi ve years now show the world’s largest economy actually slowed in the year welcomes after Trump and congressional Re- publicans pushed through a sweeping, $1.5tn tax cut. sharp The change dealt a sharp blow to Trump’s economic message and also Turkish highlighted how momentum had de- teriorated in the fi nal months of 2018 rate cut, when the Federal Reserve last raised interest rates in defi ance of intense pressure from Trump. urges more The central bank next week is widely expected to cut its benchmark lending policy rate, reversing December’s increase. The Commerce Department report- ed that GDP in the April-June quarter easing slowed to 2.1% from the fi rst three months of the year, down sharply from Reuters 3.1% growth in the fi rst quarter, but Istanbul that was better than expected, helped by strong consumer spending. Taken together the new data por- Turkish President Tayyip trayed an economy that enjoys robust Erdogan said yesterday that strength in some quarters but has be- the central bank’s decision gun to sputter worryingly in others, a day earlier to sharply cut even while the US is outshining slug- interest rates was “vital” gish economies in Europe, Japan and and added that the policy elsewhere. easing needs to continue at Analysts had expected second quar- a gradual pace toward year ter growth of just 1.8%, but the econ- end. omy got a boost from strong spending On Thursday the central on autos, food and clothing. bank cut its benchmark rate “Not bad,” Trump tweeted yester- to 19.75% from 24%, more day, “considering that we have the than expected. very heavy weight of the Federal Re- The move came less than serve anchor wrapped around our A container ship is seen at a port in Long Beach, California. The American economy cooled in the second quarter of 2019 to a still-solid pace but off icials nevertheless three weeks after Erdogan neck.” slashed one of President Donald Trump’s favourite economic numbers, government data showed yesterday. abruptly sacked the bank’s Federal spending also took its big- chief and replaced him with gest leap in a decade – with non-de- fewer autos, parts and factory equip- The fourth quarter of 2018 expand- greatest economic performance in 14 economy to 3% annual growth over a a deputy in a move that fence expenditure rising at the fastest ment. ed just 1.1%, down from the 2.2% re- years. A prior Commerce Department decade. alarmed investors. pace in 21 years – a one-time jolt when The ailing American manufacturing ported in March. estimate 2.9% average growth for all of Instead, the economy actually Speaking to provincial heads the government resumed paying em- sector also produced fewer non-du- As a result, growth between the 2018 compared to all of 2017 was un- slowed following the tax cuts from of his AK Party yesterday, ployees following the fi ve-week par- rable goods while retail and wholesale fourth quarter of 2018 and the fourth revised. 2.8% in 2017. Erdogan said high interest tial government shutdown at the start trade softened. quarter of 2017 – the measure of annu- But Trump in March specifi cally re- White House economic adviser Lar- rates are the biggest obstacle of the year. Declining travel exports, dominated al growth favoured by the White House jected this measure. ry Kudlow yesterday echoed Trump’s to the Turkish economy, But that was not enough to make up by tourists and foreign students, also and many economists – was chopped “The press tried to make it 2.9. I view that any sluggishness could be which tipped into recession for tumbling investment in factories weighed growth down for the quarter. down to 2.5% from 3%. Economists said, ‘it’s not 2.9,’” Trump said during blamed on the Fed and that the econ- after last year’s currency and commercial buildings, which sank In the revisions that stretch back say comparing the fourth quarter to speech to supporters in Ohio. omy was otherwise robust. crisis. more than 10% for the quarter, and to the fi nal quarter of 2013, the Com- fourth quarter of the prior year gives a “I said, ‘We’re going to break three.’ “I think, you know, to keep this “I’ve always expressed my falling income from software royalties merce Department said revised and more accurate picture of the economy. And we did.” thing going in the face of severe mon- discomfort over this (high and other intellectual property. newly available data showed October- The downward revision stripped In policy documents, the White etary tightening in 2017 and ‘18, seven interest rates) for years. Amid a global economic slowdown, December 2018 was much weaker than Trump of the banner 3% number he House claims the president’s econom- rate hikes, I think it’s almost a miracle Unfortunately, we could not weakening foreign demand for US ex- previously reported, notably spending had repeatedly hailed in public ap- ic agenda of tax cuts, slashed regula- that the economy is growing as rapidly convey this to central bank ports meant American factories sold on healthcare and autos. pearances and social media as the tion and trade reform will push the US as it is,” he told CNBC. governors of those times,” he said, adding the governors had used “stalling tactics”. Following the sacking of former governor Murat Oman’s 5-month budget deficit Cetinkaya, Erdogan said the decision was taken because Oman issues $3bn bonds out narrows to a third of 2018 level he did not follow instructions regarding monetary policy. The sacking has also led to Bloomberg 2017. Oman announced in June that renewed concerns about the of nearly $14bn in demand Dubai it’s imposing an excise tax that could central bank’s independence generate close to 100mn rials in under Erdogan, who has annual revenue. frequently describes interest Reuters 6.375% on Thursday. Oman issued supportive theme. We have a rising Oman’s budget deficit narrowed in The state-budget plan envisaged a rates as “evil”. Similar Dubai $750mn in 5-1/2 year and $2.25bn number of negatively yielding se- the first five months of the year as deficit of 9% for this year, or 2.8bn concerns contributed to a in 10-year bonds, a separate docu- curities and credits with attractive revenue increased, according to the rials, slightly more than last year’s sell-off in the lira, which lost ment showed. yield levels like Oman should get statistics service. actual deficit of 2.65bn rials. The nearly 30% last year in a full- man raised $3bn with its Sources previously said the a boost,” said Sergey Dergachev, a The shortfall was 358.4mn rials International Monetary Fund puts blown currency crisis. first foray in the interna- bonds would likely be $2bn in size manager of emerging market cor- ($931mn), down from 1.1bn rials in the shortfall in 2018 at about 9% of Inflation, which hit a 16-year Otional debt markets this and be used to cover part of Oman’s porate debt at Germany-based Un- the January-to-May period last year, gross domestic product and sees high in the wake of the crisis, year after receiving strong demand budget deficit, estimated at nearly ion Investment, while the deal was the sultanate’s National Center for it narrowing over the next several declined to just below 16% from global investors hunting for $7.3bn this year. marketed on Thursday. The initial Statistics and Information said in years before it begins to climb back in June, opening the door high returns in a low yield envi- Oman’s finances have been hurt price guidance put the new paper a report. Revenue surged more up from 2022, according to a July for the central bank to start ronment. by a slump in oil prices and the at a premium of around 30 basis than 15% from a year earlier, while report. easing for the first time in Investors made orders worth country is struggling to tame a points over Oman’s existing debt spending dropped 4.3%. Yields on Oman’s bonds due 2028 more than four years. nearly $14bn for papers offered at widening fiscal deficit. curve, said Dergachev. The figures, delayed for months, remain higher than lower-rated Erdogan repeated yesterday a final yield of 4.95% for the long The bond sale was seen as a test Citi, JPMorgan and Standard suggest the Gulf state is making Bahrain’s, which rallied last year his unorthodox view that five-year bonds, due in February of Oman’s ability to tap foreign debt Chartered have been hired to coor- headway in stabilising its public after the nation won a $10bn bailout inflation will come down as 2025, and 6% for the 10-year pa- markets after it was downgraded to dinate the transaction, which will finances. The budget has been slow package. Still, the country’s dollar interest rates are lowered, per, according to a document is- junk status by all the three major be priced later on Thursday. to heal after the oil rout five years bonds have returned about 13% so adding that he expects sued by one of the banks leading rating agencies and comes amid fa- The three banks are also book- ago, as the government lagged far this year, the most among all six stronger economic recovery the debt sale. vourable market conditions across runners together with First Abu behind on fiscal reforms and ran sovereigns in the Gulf, according to in the second half of the year. That is below an initial price emerging markets. Dhabi Bank, MUFG, Natixis and an average deficit of 17% in 2015 to Bloomberg Barclays indexes. guidance of around 5.375% and “The low yield environment is a Societe Generale. Gulf Times 2 Saturday, July 27, 2019 BUSINESS

China moves to regulate ‘blind’ business expansion of financial holding firms

Reuters companies from involvement in non- companies have alarmed policymakers, naming some, including HNA Group, prevent cross-sector risks, the PBoC said, start,” according to the PBoC. Last year, Beijing financial business activities. “There’s a who say the control of multiple financial Fosun International, China Evergrande and it will be illegal for them to inject the PBoC put five financial holding blank in the regulation of the sector, and institutions by conglomerates and their Group, Ant Financial Services Group, capital into financial institutions. companies, including fintech giant Ant the risks are accumulating and become ability to do business across diff erent Tencent Holdings and JD.com. To rescue troubled entities aff iliated with Financial, retail conglomerate Suning. China’s central bank yesterday unveiled exposed,” the People’s Bank of China said sectors could pose wider, systemic risks. According to the draft regulations, financial holding firms, the central bank com and state-owned China Merchants the first draft rules to regulate the in a statement. “Financial holding firms, China has been working towards specific financial holding conglomerates with at can order the conglomerates to inject Group, in a pilot scheme to test their country’s vast and often complex especially those formed by non-financial rules regulating financial holding least 500bn yuan ($72.69bn) in assets capital or transfer their stakes to a third ability to manage risks. financial holding companies, which it companies, witness a blind business companies since last year. or have non-bank aff iliates that manage party, the central bank said. The central bank will seek public said have had “blind business expansion” expansion over the past few years,” it In a the central bank’s 2018 financial 100bn yuan of financial assets or more The regulations, which tighten market comment for the regulations until in recent years. added. stability report released in November, will be subject to the rules. access for financial conglomerates, August 24, and said it would set up The draft rules set minimum asset The opaque cross-holding structures and there was a chapter describing the status Financial holding firms cannot engage are a key measure to contain the a grace period for implementing the requirements and ban the holding “blind” expansion of financial holding of Chinese financial conglomerates and in any non-financial business in order to country’s financial risks “right at the rules.

Dyson SoftBank’s $108bn Vision Fund 2 buying second draws in Microsoft and Apple luxury

Reuters Tokyo Singapore

oftBank Group Corp has secured property pledges from Microsoft Corp and Sother investors of around $108bn for a second Vision Fund aimed at in- AFP vesting in technology fi rms. Singapore The Japanese conglomerate itself plans to invest $38bn in the fund, it said in a statement. ritish inventor James Others set to join include Apple Inc Dyson is buying a luxury and Taiwan’s Hon Hai Precision Indus- BSingapore house with an try Co Ltd (Foxconn) – both investors indoor waterfall that was mar- in the fi rst fund. keted for $32mn, a report said Notable by their absence on the list yesterday, weeks after snap- of state and corporate backers were ping up the city-state’s priciest the sovereign wealth funds of the two penthouse. countries which formed the corner- His electric appliance com- stone of its fi rst fund: Saudi Arabia and pany, known for its bagless Abu Dhabi, as well as investment bank vacuum cleaners, hand dryers Goldman Sachs. and fans, announced this year SoftBank said it was still talking to it was shifting its global head- potential investors and that it expected quarters from England to the the fund’s anticipated capital to grow. city-state to be closer to Asian The Wall Street Journal on Wednes- markets. day reported Goldman Sachs would in- The company also plans to vest in the fund. produce electric cars there, as The second fund’s investor base re- part of its expansion east after fl ects diversifi cation beyond the Mid- Britain’s 2016 decision to leave dle East that provided most of the fi rst the EU. $100bn fund’s outside capital as Soft- The Brexit-backing billion- Bank touts industry-beating returns, aire has initiated the purchase with joiners including cash rich Japa- of the luxurious house fac- nese fi nancial institutions and a Ka- ing the Unesco-listed Botanic zakh sovereign wealth fund. Gardens, which was put on the “Those investing two years ago were market at Sg$45mn ($32.8mn), investing in the vision, there was no the city-state’s Straits Times proof the concept was going to suc- newspaper reported. ceed,” said Sanford C Bernstein analyst The freehold property is Chris Lane. over 15,000 square feet (1,400 “Given the track record achieved square metres) and features over the last two years Vision Fund a spiral staircase, landscaped 2 has been substantially de-risked,” garden and an infinity pool. Lane said. A visitor interacts with a SoftBank Group’s Pepper humanoid robot during the SoftBank World 2019 event in Tokyo. The Japanese firm has secured pledges from Official documents seen by SoftBank in May said the fi rst fund Microsoft and other investors of around $108bn for a second Vision Fund aimed at investing in technology firms. AFP showed a “caveat” – a doc- had generated a 45% internal rate of ument to register a purchaser’s return for investors in its common mo Mitsui Trust Holdings Inc have also acterise SoftBank’s investment portfo- The fi rst Vision Fund launched two how it would fund its $38bn contribu- legal interest in a property – shares, or 29% when debt-like pre- signed memoranda of understanding lio, which features businesses as varied years ago with $60bn in backing from tion to the new fund. With the con- was lodged with authorities for ferred shares are included – though the (MoU). as ride-hailing and autonomous driv- the sovereign wealth funds of Saudi glomerate not needing to put up all the the house on July 3. gains still exist mostly on paper. The fi nancial structure of the fund, ing, insurance and healthcare. Arabia and Abu Dhabi. money at once, proceeds from the fi rst A spokeswoman for the Yesterday, it said other participants how much each investor would con- SoftBank has not provided concrete It has already burned through much Vision Fund can potentially be recy- 72-year-old’s company said in the second fund will include the tribute and whether they would pro- details on the kind of investments it is of its capital with investments in over cled, said analyst Dan Baker at Morn- she would not comment on the National Investment Corp of National vide debt or equity backing was not targeting, said a senior executive at one 80 late-stage tech startups. ingstar. Dyson family’s “private affairs”. Bank of Kazakhstan, Standard Char- disclosed by SoftBank. Japanese bank listed as a participant in Bets included Uber Technologies Inc Such a strategy would rely on the Leong Boon Hoe, chief oper- tered Bank PLC, undisclosed parties A spokeswoman for Standard Char- the new fund. and WeWork parent The We Company fi rst fund continuing to provide blis- ating officer of List Sotheby’s from Taiwan and the fund’s own man- tered, however, told Reuters the bank “The fund itself is of course attrac- in a spending spree that has reshaped tering returns, as it transitions beyond International Realty in Singa- agers. would take part in the fund as a debt tive, but what matters is the overall the venture capital industry as Soft- identifying and investing in promis- pore, said that type of property The new fund has broad backing investor. balance of the portfolio,” the banker Bank outguns less-capitalised rivals. ing startups to managing a portfolio was the city’s “most coveted from Japan’s fi nancial industry in- “The objective of the fund is to facil- said, declining to be identifi ed further. “We’ve seen several startups start to of companies that are listed or heading form” of low-rise housing. cluding units of the three mega banks, itate the continued acceleration of the Yesterday’s announcement was beat their rivals and push them out of toward public markets. Usually only Singapore citi- Mitsubishi UFJ Financial Group Inc, AI revolution through investment in driven largely by SoftBank’s need to the market, mainly because – and only “We believe this move should create zens are allowed to buy the Sumitomo Mitsui Financial Group Inc market-leading, tech-enabled growth alert shareholders to its planned in- after – they receive investment and a positive impression in as much as it houses but in certain cases for- and Mizuho Financial Group Inc, Soft- companies,” SoftBank said in its state- vestment in the fund. backing from SoftBank,” said one Hong confi rms the substantial interest in the eigners holding Singapore per- Bank’s statement showed. ment. SoftBank Group’s shares ended the Kong-based senior investor at a large Vision Fund business and fund pro- manent residency are permit- It said Daiwa Securities Group Inc, Masayoshi Son uses artifi cial intel- day up 1.1% in a 0.5% weaker Nikkei venture capital fi rm. curement capabilities,” UBS analyst ted, although they must live in Dai-ichi Life Holdings Inc and Sumito- ligence (AI) as a catch-all term to char- 225. SoftBank did not provide details on Kei Takahashi said in a note to clients. the property themselves. “Criteria includes making exceptional economic contri- butions in Singapore,” Leong told AFP. Asian gold consumers turn sellers after prices rally Dyson is reportedly a Singa- pore permanent resident. Earlier this month, the ty- Reuters since most expect prices to go even higher, he coon made international Mumbai/Bengaluru added. In Singapore, premiums of $0.50 to $0.80 headlines when it emerged were charged, versus $0.40-$0.60 previously. that he had purchased a There is also limited buying by manufacturers 21,000-square-foot “super High prices prompted some Asian consumers looking to stock up, a Singapore-based dealer penthouse” for a reported fig- to sell back physical gold this week in a hunt said. ure of almost Sg$74mn. for profits, with cheaper silver emerging as a In second biggest consumer India, demand The biggest and most expen- preferred investment. remained sluggish as prices held at record highs, sive penthouse in Singapore, it Gold buying stagnated in India as local rates prompting dealers to off er discounts for the sits on the top three floors of a soared, though some investors used temporary eighth straight week. tower in the business district price dips to buy, hoping to cash in on a further “Jewellers are not making fresh purchases due and has a private garden, stor- leg up. to higher prices. They are getting scrap supplies age for 600 bottles of wine, and Global benchmark spot gold held above $1,400 at a discount, which they can use for jewellery a round-the-clock dedicated an ounce this week, up more than 10% this year making,” said Harshad Ajmera, proprietor of JJ butler service. and on course to end July with a third consecutive Gold House, a wholesaler in the eastern city of Affluent and developed, monthly gain. Kolkata. Singapore has long attracted “With prices already at high levels, consumers Dealers off ered discounts of up to $24 an ounce wealthy residents from around have decided to re-sell,” said Brian Lan, managing over off icial domestic prices, compared with $33 the world – a trend that has director at Singapore dealer GoldSilver Central, last week, which was the highest since August helped fuel a rise in property though he added: “Every time there is a price 2016. prices over the years. correction, we might see some investors and The domestic price includes a 12.5% import tax In October, Dyson an- wholesalers buying.” and 3% sales duty. nounced it had picked Singa- “We’re seeing more buying in silver rather Gold futures were trading around 34,850 rupees pore for its first electric car than gold,” he said. “People are looking for per 10 grams yesterday, not far from last week’s plant, sparking criticism from undervalued assets and it seems like they have record high of Rs35,409. some quarters that the Brexit- decided that silver is that asset.” “Legal imports have plunged due to the duty hike. supporting tycoon was not in- In top consumer China, gold was sold at In July imports would be less than 40 tonnes,” vesting more at home. a premium of $10-$12 per ounce over the said a Mumbai-based dealer with a private bullion A prototype Dyson electric benchmark, little changed from last week’s $10- importing bank. vehicle is in the works for 2020, $11. In Hong Kong, gold was sold at a premium of India raised import duties on gold and other followed by a product launch in $0.50-$1.20 an ounce, unchanged from last week. precious metals to 12.5% from 10% earlier this 2021. Demand for gold is coming mostly from the month. The company insists its de- A salesman shows gold bangles to customers inside a jewellery showroom in Kochi. Gold buying investment side, said Ronald Leung, chief dealer In Japan, gold continued to be sold at a $0.25 cision to move headquarters stagnated in India as local rates soared, though some investors used temporary price dips to at Lee Cheong Gold Dealers in Hong Kong. discount, a Tokyo-based trader said, adding from Britain is not due to Brexit buy, hoping to cash in on a further leg up. The rate of sell-back from consumers has slowed demand was muted. but to be closer to a growing majority of its customers. Gulf Times Saturday, July 27, 2019 3 BUSINESS

WhatsApp to launch Huawei ties with FedEx, Flex digital payments service fray on US-China tensions in India

Reuters Hong Kong/Shanghai AFP New Delhi S FedEx Corp yesterday again apologised and blamed Wash- Messaging giant WhatsApp Uington’s ban on Huawei for be- plans to launch its first payment ing “unclear” as Beijing deepened an service this year in India, its big- investigation into why the delivery fi rm gest market with 400mn users, was holding up packages meant for the the company said yesterday. telecoms equipment maker. The Facebook-owned firm Huawei was placed by Washington on has tested the service with a blacklist in mid-May that eff ectively about 1mn people over the past blocks US fi rms from doing business year. with the Shenzhen-based fi rm. But a commercial launch has Chinese authorities investigating Fe- been on hold while it waits for dEx suspect it illegally held back more approval from India’s banking than 100 Huawei packages and has also regulator. violated other laws, state news agency “WhatsApp Payments will Xinhua reported yesterday. make it as easy to pay someone FedEx in a statement yesterday af- on WhatsApp as it is to send a ternoon said, “These shipments in message,” the company’s global question were handled while we were head Will Cathcart said in a trying to comply with the US. DOC statement. BIS order which was unclear and re- “We can’t wait to provide this sulted in considerable complexity for service to our users across India our operations. this year,” he added. We apologise for any confusion or India would be the first harm to our customers as a result.” country to get WhatsApp pay- Beijing started a probe into FedEx last ments, but Cathcart did not say month after Huawei said the US deliv- whether the authorities have ery fi rm had diverted parcels intended given final approval. for the company. He said such services were Xinhua said yesterday that investi- critical to accelerating financial gators also discovered “clues to other inclusion in India and bringing violations”. millions more into the country’s On Thursday, Huawei had accused fast-growing digital economy. US-listed Flex of seizing its goods in India is one of the world’s China. quickest-growing major econo- The developments mark the latest mies, with tens of millions al- fallout from Washington’s trade ban on ready using online transactions. Huawei, which has not only rattled the Once launched, WhatsApp will global technology supply chain tied to compete with local digital pay- Huawei’s $105bn business but also is ment firms Paytm and Phonepe causing much confusion among com- and global behemoths like panies and organisations well beyond Amazon Pay and Google Pay. the US borders regarding the limits of WhatsApp, which has an restrictions. estimated 1.5bn users around FedEx has apologised for multiple the world, has been roiled in incidents of diversion of Huawei pack- controversy in India over data ages, which it attributed to “operational storage and privacy. errors”, but it later sued the US govern- India has insisted that tech- ment for what it said was an “impos- nology companies store data sible task” to “police the contents” of Attendees walk past the Huawei Technologies booth at the MWC Shanghai exhibition. US FedEx Corp yesterday again apologised and blamed Washington’s ban on on Indians in the country, some- export shipments. Huawei for being “unclear” as Beijing deepened an investigation into why the delivery firm was holding up packages meant for the telecoms equipment maker. thing WhatsApp has resisted so FedEx said yesterday that it initiated far for its messaging platform. the suit against the US DOC “to prevent per Global Times. Flex kept the Huawei Flex said in an e-mailed statement to A Flex spokesman declined to say celerate a move to reduce its exposure The Reserve Bank of India, similar occurrences happening in the assets in its factory in the southern city Reuters, “Flex and Huawei have had a whether it still held any Huawei assets to certain products in China and India that regulates the country’s future” and reiterated its commitment of Zhuhai after the US blacklisting and long-standing and successful partner- or counts Huawei as a customer, but after “recent geopolitical developments financial system, has also made to the Chinese market. caused losses for Huawei, according to ship which has recently been impacted said China remains “a very important and uncertainties”, which primarily im- it mandatory to store payment- Huawei told Reuters on Thursday the report. by unforeseen challenges resulting centre of production and end-market” pacted “one customer in China”. It did related data in India. WhatsApp that Flex had withheld some 700mn Huawei told Reuters that it has re- from the US/China trade situation. where it employs tens of thousands of not name the customer. has insisted that its payment yuan ($102mn) worth of its goods in its trieved some 400mn yuan of goods last Both parties are actively working to people. “We have seen a reduction in demand services in India will comply with China factory, confi rming a report by month after negotiations and is still fi nd a mutually agreeable way forward Flex said yesterday in its quarterly for products assembled for that cus- the central bank norms. Chinese government-backed newspa- trying to take back the rest. given these facts.” earnings statement that it would ac- tomer,” it said.

North Korea’s economy shrinks Pakistan to revive World Bank-proposed gas reforms

most since 1990s Internews ing in the World Bank-led meetings while inter-provincial coordination committee and would remain ring-fenced as at present to Islamabad those of Punjab and Khyber Pakhtunkhwa the Council of Common Interests (CCI) but large consumers with full cost recovery. famine: Seoul have reiterated their reservations over the could not be settled due to strong opposition The price for domestic consumers would idea for purportedly being against the spirit from KP and Sindh governments. continue to be notifi ed by the government he government of Pakistan has revived of Article 158 and 172(3) of the constitution. The transmission network will provide and whereas that of the imported gas would AFP the World Bank-supported gas sec- The federal government, these sources said, open access distribution companies besides be market based. Seoul Ttor reforms left unfi nished by former has conveyed its displeasure to Sindh and Ba- other private operators arising out of increas- At present, the domestic gas supply was prime minister Shahid Khaqan Abbasi amid lochistan for not attending the meetings. ing imports of Liquefi ed Natural Gas (LNG). stagnating at four billion cubic feet per day resistance from provinces. The sources added that the mission is likely The proposed Transco will not take a title (bcfd) with shortfall in excess of 2 bcfd that is North Korea’s sanctions-hit economy shrank in The proposed reforms envisage disman- to visit Quetta and Karachi next month. to gas as it will only transport gas and get paid partially bridged through LNG imports. 2018 by its largest margin since the country’s tling of two gas utilities Sui Northern Gas After dismantling SNGPL and SSGCL, the for a transportation charge to be set by the The new model had been devised by con- devastating famine in the 1990s, the South’s Pipelines Ltd (SNGPL) and Sui Southern Gas reforms propose a plan to introduce multi- regulator for transporting local gas to be sold sultants under the World Bank assistance to central bank said yesterday. Pipelines Ltd (SSGCL) into at least fi ve public ple private operators in the distribution net- by the provincial distribution companies and ensure customers anywhere on the network North Korea, which holds most of the peninsula’s sector companies, including a gas transmis- work with a common transmission company imported LNG by private operators to their can get gas with security of supply and im- mineral resources, was once wealthier than sion company and four provincial distribu- (Transco) as a gas network carrier/operator on dedicated consumers. proved viability and sustainability of the sec- its southern neighbour, but decades of tion companies on the pattern of power sector the pattern of National Transmission and Disp- The imported and domestic gas would tor while remaining within the constitutional mismanagement and the demise of its former companies. tach Company (NTDC) in the power sector. be handled in two segments for all legal and provisions in relation to supply of domestic benefactor the Soviet Union have left it deeply Informed sources said that a World Bank Likewise, there would be four gas distribu- practical purposes. gas resources. impoverished. mission was currently in Islamabad and has tion companies having provincial bounda- This means the domestic gas would go to The federal government understands that The isolated nation saw its gross domestic held detailed discussions with the govern- ries as their sales areas besides dedicating local consumers on as and when available the new structure would address concerns of product contract 4.1% last year, the second ment including the ministry of energy, gas domestic gas supplies to consumers within a basis and imported gas would go to large and the provinces that all costs of delivering Re- consecutive year of decline after a 3.5% slump utilities, the regulator and other stakeholders. gas-producing province to protect the spirit bulk consumers on a fi rm supply basis. gasifi ed LNG must be borne by its customers the year before, Seoul’s Bank of Korea (BoK) said. The sources said the Sindh and Balochistan of Article 158 of the constitution. The domestic consumers would not bear without placing any related burden on non- It was the worst drop since 1997, during the peak governments have abstained from participat- The matter was taken up at the level of the fi nancial impact of imported gas that RLNG consumers. of a nationwide famine that saw hundreds of thousands – some estimates say millions – die of starvation. The North does not publish economic statistics Pakistan budget loses credibility: World Bank of its own, leaving outside estimates as the only available figures for its financial performance. The UN Security Council in 2017 banned North Internews finance were putting responsibility on each other indicators of reliability of budget due to higher- ments to improve local-level participation. Korea’s main exports – coal, fisheries and textile Islamabad but so far no action had been taken in that regard. than-budgeted expenditures and low revenue The ministry of finance declined to comment products, among others – to cut off its access When compared with a similar assessment that collection, extent of unreported government on the report’s findings, saying, “The PEFA report to hard currency in response to Pyongyang’s the World Bank carried out in 2012, the country operations, public access to key fiscal operations, has not been finalised yet, therefore, the ministry pursuit of nuclear weapons and ballistic Pakistan’s budget has further lost its credibility fared poorer on almost all indicators and seven eff ectiveness of internal audit, lack of informa- cannot comment on it at the moment.” missiles. and the public finance management system has key pillars. There were hardly two indicators tion about service delivery, poor quality and The public finance management performance The sanctions cut the North’s exports by also deteriorated, according to a draft report of where the score improved while on the other two timeliness of annual financial statements, public has been gauged on the basis of seven pillars of more than 85% last year while the country’s the World Bank that has downgraded the coun- the score remained unchanged. assets and investment management, and revenue budget reliability, transparency of public finances, international trade fell in value by nearly half, the try’s ranking on almost all 31 fiscal management- In 2012, the country had secured five A grades administration. management of assets and liabilities, policy-based BoK said. related indicators. – the highest score – but in the 2019 assessment In 2012, the country fared well on eight indica- fiscal strategy and budgeting, predictability and “On top of the sanctions, which really aff ected the The Washington-based lender shared the final there was not even a single indicator where it tors and secured B and B plus and in 2019 it got 10 control in budget execution, accounting and North’s export of textiles and minerals, we also draft of the Public Expenditure and Financial got A. Bs and B plus. These included budget classifica- report and external scrutiny and audit. think last year’s heat wave played a factor in its Accountability (PEFA) report with the ministry of Pakistan lost the highest score on critical tion, transfer of resources to provinces, fiscal risk The World Bank has completed the assessment agriculture industry,” a bank off icial told AFP. finance in June. indicators like classification of budget, compre- reporting, debt management, macroeconomic in collaboration with the federal government and The country’s gross national income in 2018 was The report carries an objective assessment of hensiveness of budget information, transparency and fiscal forecasting, fiscal strategy, budget the European Union. estimated at 35.9tn won ($30.35bn) – just 2% of Pakistan’s public finance management system in inter-governmental fiscal operations, participa- preparations, procurement management and The assessment started in December 2018 and that of the South. and its budgets from fiscal year 2015-16 to 2017-18. tion in budget process and predictability of direct financial data integrity. it covered three financial years 2015-16, 2016-17 Its per capita income was $1,119 last year, while But the findings reflect extremely poor per- budget support. “Despite the progress achieved in diff erent ar- and 2017-18 when the Pakistan Muslim League- the South’s was 26 times higher, according to the formance of the ministry of finance that failed to The lowest score is D plus and D. eas, there are still challenges in making the public Nawaz (PML-N) was in power. BoK. carry out its responsibility and let the fiscal rules In 2012, the country got only six Ds and D plus finance management framework at the federal The issues identified in the report remained Despite historic summits between North Korean violated. but the lowest score reached a staggering 13 in level a fully eff ective and eff icient component of unaddressed even in the last fiscal year 2018-19, leader Kim Jong-un and US President Donald The World Bank was facing pressure from the 2019, reflecting extremely poor performance of Pakistan’s system of governance,” said the report. which was the first year of the Pakistan Tehreek-e- Trump, nuclear negotiations between the ministry of finance to soften its report but a senior the finance ministry. In 2012, there were 10 Cs, av- The report acknowledged the importance Insaf (PTI) government. two countries remain stalled, with the North off icial of the World Bank said that on the lender’s erage score – a figure that stood at eight in 2019. of the 18th Constitutional Amendment that “re- There are “inadequacies in fiscal discipline firing two short-range missiles into the sea on part the report was final. The final draft of the report showed that asserted the federalist character of the Pakistani evidenced in expenditure and revenue overturns”, Thursday. Sources said various wings of the ministry of Pakistan was assigned the lowest score ‘D’ on the state”, which set the stage for provincial govern- said the final draft report. Gulf Times 4 Saturday, July 27, 2019 BUSINESS

DJIA WORLD INDICES Company Name Lt Price % Chg Volume Indices Lt Price Change Dow Jones Indus. Avg 27,183.34 +42.36 Apple Inc 208.12 0.53 2,077,112 S&P 500 Index 3,022.77 +19.10 American Express Co 126.69 -0.36 221,170 Nasdaq Composite Index 8,324.99 +86.45 Boeing Co/The 345.27 -0.81 346,014 S&P/Tsx Composite Index 16,544.78 +56.58 Caterpillar Inc 133.47 -0.92 325,300 Mexico Bolsa Index 40,765.25 -168.18 Cisco Systems Inc 56.42 -0.35 1,099,140 Brazil Bovespa Stock Idx 102,659.30 +4.70 Chevron Corp 123.94 -1.35 550,890 Ftse 100 Index 7,549.06 +60.01 Walt Disney Co/The 144.88 1.17 429,424 Cac 40 Index 5,610.05 +32.00 Dowdupont Inc 0.00 0.00 - Dax Index 12,419.90 +57.80 Goldman Sachs Group Inc 221.20 0.55 103,626 Ibex 35 Tr 9,225.50 -64.40 Home Depot Inc 216.00 0.21 164,729 Nikkei 225 21,658.15 -98.40 Intl Business Machines Corp 150.58 0.13 194,958 Japan Topix 1,571.52 -6.33 Intel Corp 51.85 -0.59 5,962,859 Hang Seng Index 28,397.74 -196.56 Johnson & Johnson 130.72 -0.31 377,787 All Ordinaries Indx 6,879.35 -22.50 Jpmorgan Chase & Co 116.14 0.37 855,786 Nzx All Index 1,834.56 -14.56 Coca-Cola Co/The 54.12 1.98 835,619 Bse Sensex 30 Index 37,882.79 +51.81 Mcdonald’s Corp 215.50 0.49 385,210 Nse S&P Cnx Nifty Index 11,284.30 +32.15 3M Co 175.69 -1.37 209,862 Straits Times Index 3,363.76 -17.50 Merck & Co. Inc. 81.28 -0.57 890,760 Karachi All Share Index 23,409.47 -338.15 Microsoft Corp 141.11 0.66 2,145,159 Jakarta Composite Index 6,325.24 -76.13 Nike Inc -Cl B 87.10 -0.21 300,284 Pfizer Inc 42.91 0.55 1,119,833 Procter & Gamble Co/The 114.33 1.38 727,753 Travelers Cos Inc/The 148.77 0.19 58,004 TOKYO Unitedhealth Group Inc 252.83 1.66 222,487 United Technologies Corp 135.79 -0.42 178,386 Company Name Lt Price % Chg Volume Visa Inc-Class A Shares 183.11 0.84 414,367 Nidec Corp 14,980.00 0.77 1,415,800 Verizon Communications Inc 57.03 1.19 795,237 Isuzu Motors Ltd 1,236.00 -0.80 1,804,600 Walgreens Boots Alliance Inc 55.00 0.44 300,085 Unicharm Corp 3,214.00 0.59 958,700 Walmart Inc 113.32 0.98 338,988 Nomura Holdings Inc 352.00 -2.11 15,834,400 Exxon Mobil Corp 74.86 -0.09 738,696 Daiichi Sankyo Co Ltd 6,156.00 0.11 740,400 Subaru Corp 2,624.50 -2.20 2,064,200 Sumitomo Realty & Developmen 3,932.00 -0.48 450,500 FTSE 100 Ntt Docomo Inc 2,642.50 -0.08 2,807,600 Sumitomo Metal Mining Co Ltd 3,111.00 -3.48 1,583,600 Company Name Lt Price % Chg Volume Orix Corp 1,665.00 0.42 2,370,000 Asahi Group Holdings Ltd 4,629.00 -0.26 1,432,800 Anglo American Plc 2,098.00 -4.07 34,793,723 Keyence Corp 65,040.00 -3.31 387,500 Associated British Foods Plc 2,394.00 0.84 725,424 Mizuho Financial Group Inc 157.40 -0.38 58,687,900 Admiral Group Plc 2,227.00 0.00 480,455 Sumitomo Mitsui Trust Holdin 3,892.00 -0.21 603,600 Ashtead Group Plc 2,290.00 2.10 1,043,490 Japan Tobacco Inc 2,423.50 -0.14 2,067,600 Antofagasta Plc 938.40 -2.25 1,313,265 Sumitomo Electric Industries 1,364.00 -1.69 1,866,000 Auto Trader Group Plc 535.00 1.06 3,276,645 Daiwa Securities Group Inc 475.70 -0.44 4,107,600 Aviva Plc 410.60 -0.05 6,293,484 Softbank Group Corp 5,665.00 1.09 11,165,800 Astrazeneca Plc 6,905.00 0.80 2,035,391 Panasonic Corp 910.50 -0.42 3,435,800 Bae Systems Plc 533.80 0.34 4,493,721 Fujitsu Ltd 8,597.00 9.33 3,931,200 Barclays Plc 160.08 0.34 19,597,743 Central Japan Railway Co 22,000.00 0.25 210,700 British American Tobacco Plc 3,019.00 -0.03 2,202,458 Nitori Holdings Co Ltd 14,555.00 -1.12 177,800 Barratt Developments Plc 662.00 1.01 2,561,920 Ajinomoto Co Inc 1,784.50 -0.61 1,008,700 Bhp Group Plc 1,955.00 -0.15 3,484,489 Daikin Industries Ltd 13,825.00 -0.58 546,100 Berkeley Group Holdings/The 3,945.00 2.47 561,340 Mitsui Fudosan Co Ltd 2,491.00 -0.02 1,682,600 British Land Co Plc 535.60 -0.07 1,730,756 Ono Pharmaceutical Co Ltd 1,938.00 1.39 1,448,400 Bunzl Plc 2,158.00 0.47 662,799 Toray Industries Inc 764.90 -2.21 5,179,800 Bp Plc 523.00 -0.11 23,627,509 Bridgestone Corp 4,202.00 -1.32 1,480,700 Burberry Group Plc 2,295.00 2.32 782,874 Sony Corp 5,958.00 0.90 5,371,600 Bt Group Plc 191.98 1.44 19,261,377 Astellas Pharma Inc 1,529.00 -0.13 2,919,600 Coca-Cola Hbc Ag-Di 2,824.00 1.11 525,382 Hoya Corp 8,444.00 1.37 814,500 Carnival Plc 3,641.00 1.34 481,391 Nippon Steel Corp 1,743.00 -0.20 2,383,000 Centrica Plc 87.48 1.37 16,972,955 Suzuki Motor Corp 4,325.00 -2.52 1,859,400 The London Stock Exchange building in Paternoster Square, London. The FTSE 100 closed up 0.8% to 7,549.06 points Compass Group Plc 2,039.00 1.04 1,934,108 Nippon Telegraph & Telephone 5,054.00 0.26 2,200,900 yesterday. Croda International Plc 4,674.00 1.26 487,503 Jxtg Holdings Inc 521.70 -0.13 11,838,300 Crh Plc 2,707.00 1.23 1,185,524 Murata Manufacturing Co Ltd 4,870.00 -1.10 2,874,900 Dcc Plc 6,974.00 2.17 131,202 Kansai Electric Power Co Inc 1,251.00 1.21 1,579,600 Diageo Plc 3,323.00 2.55 4,184,870 Denso Corp 4,801.00 -1.86 1,661,400 Direct Line Insurance Group 325.80 -0.34 4,428,403 Sompo Holdings Inc 4,418.00 0.20 567,500 Evraz Plc 654.00 -0.03 1,896,237 Daiwa House Industry Co Ltd 3,124.00 0.03 951,200 Experian Plc 2,482.00 1.76 1,074,978 Dai-Ichi Life Holdings Inc 1,592.50 -0.25 2,412,200 European stock markets end Easyjet Plc 1,030.50 -3.96 2,170,814 Mazda Motor Corp 1,095.50 -1.48 3,166,500 Ferguson Plc 6,158.00 2.60 276,688 Komatsu Ltd 2,460.00 -0.85 2,835,500 Fresnillo Plc 786.00 0.18 942,181 West Japan Railway Co 8,835.00 0.23 285,500 Glencore Plc 272.10 -1.34 29,650,154 Kao Corp 8,223.00 -0.25 829,000 Glaxosmithkline Plc 1,685.80 0.95 7,153,747 Mitsui & Co Ltd 1,784.00 0.03 3,235,400 higher as investors confi dent Gvc Holdings Plc 626.40 1.03 921,219 Daito Trust Construct Co Ltd 14,365.00 -0.38 197,900 Hikma Pharmaceuticals Plc 1,836.00 0.69 181,400 Otsuka Holdings Co Ltd 3,879.00 0.34 874,100 Hargreaves Lansdown Plc 2,105.00 1.20 318,348 Oriental Land Co Ltd 14,120.00 0.36 315,000 Halma Plc 1,993.50 0.61 632,399 Sekisui House Ltd 1,888.00 -0.40 1,612,500 Hsbc Holdings Plc 662.40 1.11 15,165,378 about prospect of rate cuts Secom Co Ltd 8,581.00 0.18 388,600 Hiscox Ltd 1,772.00 1.03 463,785 Tokio Marine Holdings Inc 5,742.00 0.45 992,400 Intl Consolidated Airline-Di 438.00 -1.51 4,953,132 Aeon Co Ltd 1,891.50 0.21 1,939,400 Intercontinental Hotels Grou 5,587.00 1.79 213,362 to boost fl agging growth and infl ation sumption expenditures rising by 4.3%. Asahi Kasei Corp 1,116.50 -1.46 1,800,500 AFP 3I Group Plc 1,111.50 0.05 886,727 in Europe. “The key takeaway from the report Kirin Holdings Co Ltd 2,344.50 -0.36 1,731,500 London Imperial Brands Plc 2,140.00 -0.16 1,558,438 Marubeni Corp 714.30 -1.15 4,706,500 But it then snapped higher after is that it revealed some impressive Informa Plc 883.20 1.24 2,024,211 Mitsubishi Ufj Financial Gro 530.10 0.25 27,723,000 Draghi left some traders feeling disap- strength in the US consumer,” he said, Intertek Group Plc 5,700.00 1.46 186,833 Mitsubishi Chemical Holdings 736.90 -1.19 4,683,100 tock markets in Europe and the pointed by the lack of any immediate adding this type of data could lead one Itv Plc 112.75 -0.84 12,253,836 Fanuc Corp 19,585.00 -1.58 687,800 Johnson Matthey Plc 3,195.00 -0.22 456,039 United States pushed higher action and the tone of his comment. member of the US Federal Reserve to Fast Retailing Co Ltd 67,250.00 -0.01 403,500 Kingfisher Plc 223.50 1.13 5,864,354 yesterday as investors remained In trading on Friday, the euro re- dissent on cutting interest rates when Ms&Ad Insurance Group Holdin 3,581.00 -0.56 903,800 S Land Securities Group Plc 841.00 -0.31 811,573 confi dent about the prospect of inter- sumed sliding, while it stayed consid- it meets next week. Kubota Corp 1,683.50 -0.82 1,400,100 Legal & General Group Plc 270.00 1.12 13,502,874 Seven & I Holdings Co Ltd 3,737.00 -1.53 1,537,500 est rate cuts. erably above $1.1102. “That point notwithstanding, it Lloyds Banking Group Plc 55.99 -1.37 168,896,510 Inpex Corp 966.50 -0.41 2,408,700 In Europe, investors focused on the Frankfurt stocks fi nished the day won’t deter the Fed from cutting the London Stock Exchange Group 5,672.00 0.82 202,035 Resona Holdings Inc 445.40 -0.56 6,343,200 likelihood the ECB will move forward 0.5% higher and Paris 0.6%. target range for the fed funds rate by 25 Micro Focus International 1,723.80 2.13 866,743 Fujifilm Holdings Corp 5,364.00 0.24 771,500 Marks & Spencer Group Plc 209.50 0.48 3,958,859 with measures to boost the economy London climbed 0.8%, with the basis points, but it may very well have Yamato Holdings Co Ltd 2,190.00 -0.11 514,100 Mondi Plc 1,825.00 -0.16 1,905,350 at its next meeting in September, de- weaker pound a plus for companies taken the prospect of a 50-basis points Chubu Electric Power Co Inc 1,492.00 -0.10 1,031,300 Melrose Industries Plc 194.35 -0.89 8,026,285 spite the fact that in his comments listed there that report their earnings cut off the table,” said O’Hare. Mitsubishi Estate Co Ltd 1,956.00 -1.29 2,545,500 Wm Morrison Supermarkets 198.30 -0.10 8,248,927 on Thursday ECB chief Mario Draghi in other currencies. The Dow was up marginally in late Mitsubishi Heavy Industries 4,607.00 -0.32 614,200 National Grid Plc 846.40 0.73 4,244,935 Sysmex Corp 7,757.00 3.91 858,500 was less dovish — or open to an eas- Wall Street shrugged off data that morning trade, with the broader S&P Nmc Health Plc 2,470.00 -1.48 654,033 Shiseido Co Ltd 8,072.00 -0.37 807,900 ing of monetary policy — than ex- showed the US economy slowed 500 and tech-heavy NASDAQ indices Next Plc 5,712.00 0.78 227,192 Shionogi & Co Ltd 6,209.00 1.70 1,043,500 pected. sharply in the second quarter, with both posting bigger gains. Ocado Group Plc 1,240.00 2.52 2,162,072 Terumo Corp 3,161.00 0.19 818,200 Paddy Power Betfair Plc 0.00 0.00 - “The prospect of a rate cut in Sep- Google parent Alphabet, Starbucks American stocks have struck record Tokyo Gas Co Ltd 2,654.50 -0.17 617,700 Prudential Plc 1,692.50 0.03 3,761,486 tember is still on the table and trad- and Intel posting good earnings reports highs in recent weeks on expectations Tokyo Electron Ltd 18,295.00 -1.37 1,769,400 Persimmon Plc 2,094.00 1.11 1,553,497 ers are snapping up relatively cheap after trading ended on Thursday. that the Federal Reserve will cut inter- East Japan Railway Co 9,970.00 0.47 673,300 Pearson Plc 927.00 5.89 6,839,315 stocks,” said CMC Markets analyst Data showed the US economy grew est rates next week. Itochu Corp 2,087.50 -0.67 2,933,600 Reckitt Benckiser Group Plc 6,481.00 0.78 1,008,106 Ana Holdings Inc 3,619.00 -0.49 565,000 David Madden. at an annual rate of 2.1%, compared But strong American economic data, Royal Bank Of Scotland Group 227.90 -0.09 6,608,985 Mitsubishi Electric Corp 1,446.50 -1.57 3,758,800 “Yesterday acted as a speed bump, to the 3.1% rate it grew at in the fi rst including Thursday’s report showing Royal Dutch Shell Plc-A Shs 2,548.00 0.33 4,338,621 Sumitomo Mitsui Financial Gr 3,843.00 -0.05 3,000,900 and today dealers are reshaping their quarter. an increase in durable goods sales in Royal Dutch Shell Plc-B Shs 2,554.00 0.45 3,053,820 Relx Plc 1,934.50 3.59 3,718,105 outlook, which remains broadly posi- Moreover 2018 GDP growth was re- June, had investors fearing a less do- Rio Tinto Plc 4,605.50 0.66 2,809,550 tive,” he added. vised down to 2.5%. vish Fed announcement and led to a dip Rightmove Plc 524.90 2.60 3,791,683 SENSEX The European single currency had But the second quarter growth In London, the FTSE 100 closed up Rolls-Royce Holdings Plc 868.40 0.05 2,790,938 briefl y sunk on Thursday to $1.1102 — was higher than forecast by many 0.8% to 7,549.06 points; Frankfurt — Rsa Insurance Group Plc 577.80 0.84 1,632,670 Company Name Lt Price % Chg Volume the lowest level since May 2017 — after economists, and Briefi ng.com analyst DAX 30 ended up 0.5% to 12,419.90 Rentokil Initial Plc 411.60 0.73 5,528,838 Adani Ports And Special Econ 381.65 0.34 2,701,597 the ECB signalled it could undertake Patrick O’Hare pointed to strong con- points; and Paris — CAC 40 closed up Sainsbury (J) Plc 198.80 -1.14 6,974,922 Asian Paints Ltd 1,526.45 2.05 2,420,636 0.6% to 5,610.05 points yesterday. Schroders Plc 3,001.00 0.20 170,369 new stimulus measures and cut rates sumer spending, with personal con- Axis Bank Ltd 729.85 0.93 5,450,010 Sage Group Plc/The 742.40 1.42 3,493,000 Bajaj Finance Ltd 3,264.60 7.16 6,945,080 Segro Plc 768.40 -0.21 1,704,046 Bharti Airtel Ltd 334.90 -1.21 4,995,313 Smurfit Kappa Group Plc 2,632.00 -1.28 239,469 Bharti Infratel Ltd 270.20 3.17 1,960,464 HONG KONG HONG KONG Standard Life Aberdeen Plc 304.60 0.20 2,952,337 Bajaj Auto Ltd 2,618.65 2.81 2,105,536 Ds Smith Plc 375.50 0.13 3,191,338 Bajaj Finserv Ltd 7,233.00 6.65 1,282,898 Company Name Lt Price % Chg Volume Company Name Lt Price % Chg Volume Smiths Group Plc 1,639.50 0.55 464,207 Bharat Petroleum Corp Ltd 343.80 1.03 4,659,856 Scottish Mortgage Inv Tr Plc 554.00 0.45 3,470,261 Ck Hutchison Holdings Ltd -0.33 Cipla Ltd 532.10 -0.85 1,371,242 75.60 3,638,228 Hong Kong & China Gas 17.50 -0.23 13,103,359 Smith & Nephew Plc 1,796.50 1.41 2,143,999 Hang Lung Properties Ltd -0.63 Coal India Ltd 210.65 0.77 10,490,177 18.96 7,429,531 Bank Of Communications Co-H 5.78 -0.86 22,332,105 Spirax-Sarco Engineering Plc 8,880.00 1.20 112,288 Ck Infrastructure Holdings L 0.33 Dr. Reddy’s Laboratories 2,704.95 1.92 537,619 60.75 2,124,753 China Petroleum & Chemical-H 5.15 -0.19 72,378,201 Sse Plc 1,093.50 1.30 4,473,038 Hengan Intl Group Co Ltd -0.74 Eicher Motors Ltd 17,186.55 4.56 230,056 60.00 2,097,300 Hong Kong Exchanges & Clear 268.60 -0.07 2,074,046 Standard Chartered Plc 690.20 0.44 5,196,397 China Shenhua Energy Co-H -1.12 Gail India Ltd 132.95 -1.34 5,883,152 15.88 13,260,855 Bank Of China Ltd-H 3.26 -0.61 226,033,947 St James’s Place Plc 1,063.00 1.19 1,720,162 Cspc Pharmaceutical Group Lt -1.98 Grasim Industries Ltd 874.95 0.73 707,596 13.88 28,394,623 Hsbc Holdings Plc 64.25 -0.62 17,063,658 Severn Trent Plc 2,038.00 0.49 329,770 Hang Seng Bank Ltd -0.15 Hcl Technologies Ltd 1,001.45 -0.97 1,166,192 195.50 840,408 Power Assets Holdings Ltd 57.25 -0.78 2,022,515 Tesco Plc 226.00 -0.40 19,895,427 China Resources Land Ltd -1.15 Housing Development Finance 2,165.75 -1.35 1,920,114 34.45 10,354,845 Mtr Corp 53.80 0.37 2,646,130 Tui Ag-Di 847.00 0.31 1,016,773 Ck Asset Holdings Ltd -0.16 Hdfc Bank Limited 2,277.30 -0.38 3,207,457 62.70 5,174,868 China Overseas Land & Invest 27.95 -0.89 8,784,065 Taylor Wimpey Plc 173.50 0.52 10,484,079 Sino Biopharmaceutical -1.46 Hero Motocorp Ltd 2,467.30 3.39 1,085,566 9.45 53,542,598 Tencent Holdings Ltd 370.20 -0.59 11,652,441 Unilever Plc 4,899.00 0.06 2,068,579 Henderson Land Development -0.70 Hindalco Industries Ltd 198.00 0.64 5,373,373 42.40 3,491,297 China Unicom Hong Kong Ltd 7.86 -1.01 21,949,262 United Utilities Group Plc 791.60 0.84 2,134,870 Aia Group Ltd -1.58 Hindustan Petroleum Corp 275.35 3.22 5,893,249 84.20 25,031,452 Link Reit 95.00 -0.37 4,311,375 Vodafone Group Plc 146.00 10.61 204,210,925 Ind & Comm Bk Of China-H -0.90 Hindustan Unilever Ltd 1,730.65 -0.35 771,408 5.52 183,625,912 Sino Land Co 13.04 -1.06 4,685,587 John Wood Group Plc 553.20 0.44 999,133 Want Want China Holdings Ltd -1.58 Icici Bank Ltd 415.75 1.65 17,493,739 6.24 4,017,719 China Resources Power Holdin 11.04 0.18 4,421,335 Wpp Plc 958.20 1.23 1,782,199 Sun Hung Kai Properties -0.62 Indiabulls Housing Finance L 624.35 2.02 8,286,875 128.00 4,423,951 Petrochina Co Ltd-H 4.25 -0.47 66,685,466 Whitbread Plc 4,554.00 0.31 768,728 New World Development -1.85 Indusind Bank Ltd 1,415.50 1.71 3,106,622 11.68 17,010,114 Cnooc Ltd 13.16 -0.75 34,713,536 Geely Automobile Holdings Lt -1.11 Infosys Ltd 787.00 -0.94 4,941,763 12.46 30,213,254 China Construction Bank-H 6.20 0.16 257,912,174 Swire Pacific Ltd - Cl A -0.94 Indian Oil Corp Ltd 141.80 -3.31 13,556,114 95.05 1,908,348 China Mobile Ltd 67.40 -1.25 18,357,046 Sands China Ltd -1.13 Itc Ltd 270.40 0.95 4,788,040 39.35 10,269,346 TOKYO Wharf Real Estate Investment 0.30 Jsw Steel Ltd 249.70 0.42 5,386,836 50.80 3,889,424 Clp Holdings Ltd -1.15 Kotak Mahindra Bank Ltd 1,511.85 1.80 1,681,353 85.80 4,843,533 Country Garden Holdings Co -0.72 Company Name Lt Price % Chg Volume Larsen & Toubro Ltd 1,392.15 1.44 3,019,850 11.08 20,498,385 Aac Technologies Holdings In -1.45 Mahindra & Mahindra Ltd 564.45 3.09 5,063,750 44.30 4,332,944 GCC INDICES Japan Airlines Co Ltd 3,416.00 -0.96 907,100 Shenzhou International Group -0.81 Maruti Suzuki India Ltd 5,805.65 0.85 2,346,714 110.40 1,139,980 Indices Lt Price Change Recruit Holdings Co Ltd 3,684.00 -1.26 2,195,800 Ping An Insurance Group Co-H -0.37 Ntpc Ltd 128.80 -0.73 11,411,885 95.25 22,889,157 Softbank Corp 1,445.50 -0.41 6,618,100 China Mengniu Dairy Co 32.20 -1.53 6,530,859 Oil & Natural Gas Corp Ltd 141.90 -1.36 10,055,490 Doha Securities Market 10,631.28 +81.53 Kyocera Corp 7,096.00 0.28 1,578,900 Sunny Optical Tech -0.95 Power Grid Corp Of India Ltd 211.55 -0.75 6,159,906 93.85 3,462,765 Nissan Motor Co Ltd 741.00 -3.21 20,077,800 Boc Hong Kong Holdings Ltd 31.05 -0.16 3,719,868 Reliance Industries Ltd 1,213.80 -1.44 9,320,481 Kuwait Stocks Exchange 4,846.62 +10.89 T&D Holdings Inc 1,229.00 0.49 2,200,600 China Life Insurance Co-H -0.97 State Bank Of India 342.60 0.38 16,139,052 20.50 18,804,802 Toyota Motor Corp 7,151.00 -0.98 4,276,600 Citic Ltd 10.48 -0.95 9,085,891 Sun Pharmaceutical Indus 439.95 0.64 5,094,438 Oman Stock Market 3,754.76 -10.30 Kddi Corp 2,875.00 -0.52 3,654,700 Galaxy Entertainment Group L -0.81 Tata Steel Ltd 445.50 1.17 6,585,786 55.25 6,406,131 Nitto Denko Corp 5,283.00 -0.11 731,800 Wh Group Ltd 8.19 0.49 60,607,865 Hitachi Ltd 3,932.00 -1.13 2,628,800 Tata Consultancy Svcs Ltd 2,109.05 -0.89 1,720,592 Takeda Pharmaceutical Co Ltd 3,678.00 -0.30 3,030,700 Tech Mahindra Ltd 643.50 -1.38 1,637,706 Jfe Holdings Inc 1,477.00 -1.07 3,336,800 Titan Co Ltd 1,106.40 1.46 1,128,870 Sumitomo Corp 1,619.00 -0.58 2,657,500 Tata Motors Ltd 147.15 1.98 83,905,651 Canon Inc 3,060.00 0.79 2,795,900 Upl Ltd 601.55 -0.46 6,739,394 “Information contained herein is believed to be reliable and had been obtained from sources believed to be reliable. The Eisai Co Ltd 5,814.00 -0.36 531,000 Ultratech Cement Ltd 4,500.55 0.91 225,799 accuracy and completeness cannot be guaranteed. This publication is for providing information only and is not intended Nintendo Co Ltd 40,220.00 0.10 849,200 Vedanta Ltd 164.10 -4.29 23,645,819 as an off er or solicitation for a purchase or sale of any of the financial instruments mentioned. Gulf Times and Doha Bank Shin-Etsu Chemical Co Ltd 11,000.00 -0.32 1,545,500 Wipro Ltd 263.60 0.51 2,719,372 or any of their employees shall not be held accountable and will not accept any losses or liabilities for actions based on Mitsubishi Corp 2,949.50 0.22 3,128,600 Yes Bank Ltd 96.05 9.58 186,097,455 this data.” Smc Corp 40,860.00 -3.88 224,600 Zee Entertainment Enterprise 403.90 3.05 14,751,785

Gulf Times 6 Saturday, July 27, 2019 BUSINESS

Negative yields see record Chinese property euro borrowing from EMs Reuters nia, and those with close ties to the London currency bloc such as Poland or the Czech Republic, have long been a mainstay of the euro debt market.But merging market borrowers are recent sales have seen new names big loading up with record amounts and small pushing in. Eof euro-denominated debt in Saudi Arabia — one of the biggest bonds’ time in the anticipation of even more deeply issuers of emerging market debt — negative interest rates and protracted sold €3bn earlier this months, with easy money from the European Cen- the issue 4.5 times oversubscribed. tral Bank. Benin made its international capi- Year-to-date sales of euro-de- tal markets debut in euros while the nominated debt by emerging mar- Philippines issued its fi rst euro- ket sovereigns were $33bn by early denominated bond since 2009 and July, making up about one third of all Egypt raised €2bn. And it looks to be sun may end soon hard-currency debt sales by develop- a busy summer ahead. ing nations, according to calculations “The fact we have such a low-yield Bloomberg profiles, most of which tend to be from JPMorgan. environment is clearly encouraging Shanghai smaller in size too. Those rated AA+ Data from Dealogic shows euro borrowers to return to the debt capi- or below face an $8.7bn maturity wall debt sales by developing nations and tal market as an alternative refi nanc- in the third quarter. fi rms amounted to $58bn year-to- ing tool for bank debt which may have hinese developer bonds’ A unit of Fuzhou, Fujian-based date, quickly catching up with last been more favoured in the past two or healthy run may be coming to Tahoe Group Co paid investors 15% for year’s total volume of $77bn. three years,” Societe Generale’s head Can end. three-year money last month and in “It is quite incredible what is going of CEEMEA debt capital markets Notes sold by home builders topped May offl oaded stakes in some residen- on, and you see this in all these new Cecile Camilli said. 10 other sectors in Asia in the fi rst half, tial projects to Shimao Property Hold- issuances, especially the euro-de- “Now we are seeing an increasing a Bank of Merrill Lynch index shows, as ings Ltd. Those $400mn of notes due nominated space,” said Marcelo As- trend towards non-dollar bond mar- investors were lured by a relaxation of 2022 are now yielding 17.2%. salin, head of emerging market debt kets,” said Camilli, who worked on the property curbs and easier liquidity for China Evergrande Group’s 8.75% of at NN Investment Partners. Saudi euro deal. real-estate fi rms. Yet fund managers bonds due 2025 are the second-worst “This is clearly a refl ection the very Dealogic data shows that euro-de- say those gains may be short-lived, with performers on the BAML index this ample liquidity conditions we ex- nominated debt sales in July made up both factors now being dialled back. month, while securities sold by Fu- perience right now, because of these a fi fth of all emerging market corpo- Since May, top policymakers have ture Land Development Holdings Ltd monetary policy accommodations, rate and sovereign bond issues — up sought to limit almost every fi nancing haven’t fared well either following the and even more so for the expectations from 14% in the past 18-months and avenue for developers to ensure they arrest of controlling shareholder Wang of additional monetary policy ac- just over 10% in 2011. can’t buy land at infl ated prices and Zhenhua. commodation.” Fund managers expect frontier is- spark a property bubble. Stock in companies linked to Wang A dive further below zero for Ger- suers such as Togo to sell euro bonds, Home-buying restrictions have also most of which have been sold by de- Limitations have also been placed on plunged afresh Tuesday after news many’s benchmark government bond with other African countries follow- been widened. That means bond in- velopers, returned 10.3% in the fi rst six onshore bonds and trust fi nancing, an that a unit is offl oading assets for cash. yields in recent weeks has pulled not ing suit. But enticing investors to buy vestors will have to be more discern- months of 2019, the best two consecu- important shadow-banking channel. Dollar notes due 2022 sold by China only other eurozone debt with it but euro instead of dollar-denominated ing, particularly when it comes to tive quarters since 2012, a BAML index Outside of developer fi nancing, South City Holdings Ltd, a developer even tipped some corporate ‘junk’ debt may not be straightforward. smaller developers, many of which are shows. The solid performance fol- some home builders have been told focused on commercial property and bonds and emerging market debt into “Liquidity is heavily concentrated facing looming maturity walls. lowed a largely lacklustre 2018. Buyer they’re pricing new projects too ex- thus less aff ected by residential tight- negative yielding territory too. in dollars, so for most investors it “I don’t expect developers’ net interest revved up in the fi nal months pensively, and some banks have been ening, topped peers, gaining 4%. Now emerging market borrowers makes more sense to have the funds bond prices to keep surging,” said Gary of the year following central bank li- told they’re off ering home buyers “The challenging funding environ- are embarking on a fresh borrowing in dollars,” said Jan Dehn, head of re- Zhou, the Hong Kong-based head of quidity injections. mortgages that are too cheap. All up, ment may throw some builders’ ex- spree. Emerging market eurozone search at emerging markets invest- fi xed income at Dongxing Securities The landscape’s now changing after 251 property-policy tweaks were un- pansion plans into a mess,” said CCB members such as Latvia and Lithua- ment manager Ashmore Group. Co. “We’ve started to play defensive: Beijing earlier this month announced veiled in the fi rst half, according to International Holdings Ltd analyst Siu turn to those with shorter tenors or fresh restrictions on foreign-debt Centaline. Fung Lung. higher ratings, or simply buy less.” sales, allowing fi rms only to refi nance if It couldn’t come at a worse time “It’s worth avoiding small develop- Chinese high-yield US dollar notes, their off shore notes mature in one year. for developers with weaker credit ers and waiting for more certainty.” Emerging shares, currencies drop

Reuters Rabobank, said in a note. “However, we London still believe the September rate cut is all but a done deal.” Focus now shifts to next week’s meeting of the US Bank of Jinzhou courts investors as bonds tumble Emerging-market assets fell Federal Reserve, which is expected yesterday, on track to end the week to cut interest rates by at least a lower, as investors shied away from quarter of a point. Bloomberg the bank said in a Thursday state- under increased scrutiny since the reliant on interbank fi nancing, par- riskier assets after the head of the Emerging-market currencies, which Shanghai ment, which didn’t refer to its liquid- surprise government takeover of Ba- ticularly non-bank fi nancial insti- European Central Bank disappointed typically gain when developed- ity situation. “Recently, the bank’s oshang Bank Co. The move led to a tutions’ deposits, among more than them by toning down expectations world central banks cut rates, fell, board of directors and some major repricing of risk for much of China’s 200 local banks, Bedford said when of aggressive monetary-policy with South Africa’s rand down ank of Jinzhou Co said it is in shareholders have been in talks with banking system which had long oper- reached by phone on Thursday. easing. 0.6%. Turkey’s lira was 0.3% higher, talks to introduce strategic in- several institutions that wish to and ated under an assumption that policy The bank’s seven negotiable cer- MSCI’s index for emerging-market continuing a rally after the Turkish Bvestors after a report that Chi- have the ability to to become strate- makers would support fi rms in trou- tifi cates of deposits – a type of fund- shares fell 0.4% with stocks in Hong central bank cut rates more than na’s fi nancial regulators are seeking to gic investors.” It added that the talks ble. ing that small banks heavily rely on – Kong losing the most. Mainland China expected on Thursday to spur a resolve its liquidity problems pushed have been “going smoothly.” PBoC “We expect the regulators to step were indicated at yields ranging from managed to end higher but made recession-hit economy. down the lender’s dollar-denominat- and Bank of Jinzhou didn’t reply to up their support if more fi nancial in- 3%-5.5% earlier on Thursday, higher tepid gains. The ECB held interest A collapse in the Turkish lira last year ed debt. Bloomberg’s requests for comment. stitutions run into liquidity issues,” than valuations of 2.8%-3.45%, ac- rates steady on Thursday but signalled had pushed inflation to a 15-year Offi cials including those from the Bank of Jinzhou’s Hong Kong-list- said Becky Liu, head of China macro cording to Bloomberg data. Its dollar- rate cuts ahead, initially supporting high above 25%, which dropped People’s Bank of China and China ed shares have been suspended since strategy at Standard Chartered Plc, denominated loss-absorbing debt in- risk sentiment. last month to its lowest level in a Banking and Insurance Regulatory April after it failed to disclose its 2018 who declined to comment directly struments, known as AT1 bonds, fell, But President Mario Draghi sounded year at 15.7%, sealing expectations Commission recently held a meeting fi nancial statements. Auditors Ernst about Bank of Jinzhou. according to credit traders. more upbeat on the global economy for the cut. “We think the new level with fi nancial institutions in Bank of & Young Hua Ming LLP and Ernst & “Over time, the cost of funding be- Bank of Jinzhou was set up in 1997 than investors had expected and of the policy rate is consistent with Jinzhou’s home province of Liaon- Young resigned saying there are in- tween the stronger and weaker fi nan- in the northeastern province of Li- said policymakers had not discussed an end-2019 inflation but further ing to discuss measures to resolve dications that some loans to institu- cial institutions will see further diver- aoning. It had total assets of $113bn rate cuts. “The ECB wants to see the easing will depend on the global the lender’s liquidity issues, Reuters tional customers weren’t used in ways gence.” Bank of Jinzhou was among and total deposits of $53bn in June incoming data in the coming weeks risk sentiment and the likelihood for reported Wednesday citing sources it consistent with the purposes stated in the lenders named by Jason Bedford, 2018, according to data compiled by and the September staff projections the attainability of high single-digit didn’t identify. documents, Bank of Jinzhou disclosed a UBS Group AG analyst, who in 2017 Bloomberg. The bank listed in Hong before it makes a decision,” Bas van inflation by end-2020,” Credit Suisse “Currently, Bank of Jinzhou’s busi- in May. highlighted Baoshang’s troubles. Kong in December 2015, and has Geff en, an ECB quantitative analyst at analysts said in a note. ness operations are normal overall,” China’s smaller lenders have been Bank of Jinzhou is the second-most gained about 50% since its debut. Sensex ends higher amid volatile trade; rupee falls Asia stock markets tumble after

Bloomberg, Reuters its previous close of 69.04. Government bond Mumbai yields rose in six out of eight trading sessions after news reports said the Prime Minister’s disappointing US earnings Off ice (PMO) was opposed to the proposed Indian shares ended higher yesterday amid sovereign bond sale in foreign currencies. volatile trade, ending a six-session losing The yield on the 10-year government bond AFP Philip Lowe hinting at further rate streak. The Sensex ended 51 points higher at was at 6.538% compared with Thursday’s Hong Kong cuts, fi nishing 0.4% down after 37,882 while Nifty settled at 11,284, up 0.30%. close of 6.511%. Australia’s competition watchdog Banking stocks outperformed today with Nifty News agencies reported citing an unnamed called for measures to better police Bank index rising 0.97%. government off icial that Prime Minister sian markets tumbled yes- internet giants Google and Face- Some buying was also seen in auto, FMCG, Narendra Modi’s off ice does not favour a terday after disappointing book. metal and pharma stocks. However, losses in forex-denominated overseas sovereign bond AUS earnings and a bearish Mixed messaging from the Eu- IT and energy stocks capped gains. issuance. outlook on hopes for a Fed rate cut ropean Central Bank over further Among the Sensex stocks, Yes Bank rose This comes a day after finance secretary weighed on Wall Street overnight. stimulus had weighed on regional 10% to be the top gainer. Bajaj Finance (+7%), Subhash Chandra Garg was transferred to Tesla and American Airlines bourses, said Michael Hewson of Hero MotoCorp (+3%), M&M (+3%), Bajaj Auto the power ministry. The report said the PMO both suff ered bruising declines af- CMC Markets, after major Euro- (+3%) and Tata Motors (+2%) were among the favoured rupee-denominated overseas sover- ter posting quarterly results, while pean indices dipped in Thursday other top gainers. eign bond issuances. Amazon reported a slowdown in trade. Nifty has support at 11,200 and faces Analyst said the market was expecting dol- earnings growth as it ramped up “Uncertainty has elicited a simi- resistance at 11,400, says Gaurav Bissa, AVP lar issuance to replace domestic borrowing, one-day delivery operations. lar response from markets in Asia Derivatives & Technicals at LKP Securities. The but now there is confusion on whether the American stocks had been bol- where the Bank of Japan also has a broader range is thus expected to be 11200- government will go ahead with the sale. stered in recent weeks by expecta- similar decision to make next week 11400 for next few trading sessions, he adds. Earlier, former governors of Reserve Bank tions that the Federal Reserve will about easing policy further,” he Among the losers, Vedanta fell 4%, RIL 1.5%, of India had criticised the idea arguing it could cut interest rates next week. said. Bharti Airtel 1.5% and ONGC 1.4%. create long-term economic risks by expos- But strong American economic The euro hit two-year lows before Investor mood remained cautious. “Foreign ing the government’s liabilities to currency data, including Thursday’s report rallying Thursday after the ECB sig- investors have continued to be net sellers in fluctuations. showing an increase in durable nalled it could soon undertake new our markets, and barring a few, (corporate) The rupee has risen 0.94% against the goods sales in June, has investors stimulus measures and cut rates to results so far have not been very encourag- greenback in the year so far. Foreign investors fearing a less dovish Fed announce- boost fl agging growth and infl ation ing,” said Anita Gandhi, whole-time director at bought $9.27bn in Indian equities and $2.70bn ment. in Europe. Arihant Capital Markets. in the debt market during the period. “Markets are getting nervous that But “the lack of detail alongside a State-backed lender Bank of Baroda Ltd Asian currencies were trading lower as trad- Fed could disappoint next week,” lack of urgency, notwithstanding an climbed 2.5% after its quarterly profit jumped ers await next week’s US Fed review, as well as said OANDA senior market analyst explicit acknowledgement of things 34%. Another lender PNB rose 3% after it data on US jobs and manufacturing. South Ko- Edward Moya. An external view of the Hong Kong Stock Exchange building. The Hang getting worse, looks to have disap- posted a profit in the June quarter, aided by rean won was down 0.28%, Indonesian rupiah Recent data also showed that Seng closed down 0.7% to 28,397.74 points yesterday. pointed the market,” said National lower provisions. fell 0.24%, Malaysian ringgit declined 0.14%, Washington’s long-running trade Australia Bank’s Rodrigo Catril. Biopharmaceutical firm Biocon Ltd ad- Philippines peso lost 0.1%, China renminbi war with Beijing was “not having was off 3.2% after announcing a rose 1.1% after it announced a new London and Frankfurt were both vanced 1.2% on the back of an over 70% surge and China off shore were down 0.08% each, a terrible impact” on the Ameri- 95% plunge in quarterly net profi t $108bn fund to drive investment in up 0.1% shortly after Friday’s open. in quarterly profit. Thai Baht fell 0.07%, and Singapore dollar lost can economy, he added, tempering and the shedding of 12,500 jobs on artifi cial intelligence. In Tokyo, the Nikkei 225 closed Meanwhile the rupee yesterday weakened 0.06%. hopes of a sizeable rate cut. Thursday. Shanghai closed up 0.2% but down 0.5% to 21,647.29 points; marginally against the US dollar tracking The dollar index, which measures the US Tokyo was down 0.5% at close as Chip-testing equipment maker Hong Kong fell by 0.7%, erasing the Hong Kong — Hang Seng ended losses in its Asian peers. currency’s strength against a basket of major investors went into profi t-taking Advantest also edged lower after a week’s gains, while Singapore and down 0.7% to 28,397.74 points The Indian currency opened at 69.13 a dol- currencies, was at 97.785, down 0.03% from its mode ahead of the weekend, ending 20.2% surge on Thursday on better- Taipei were both down. and Shanghai — Compos- lar. The rupee traded at 69.12, down 0.11% from previous close of 97.818. a three-day winning streak. than-expected quarterly earnings. Sydney pared Thursday’s gains ite closed up 0.2% to 2,944.54 Beleaguered automaker Nissan But Japan’s SoftBank Group on the back of central bank chief points yesterday. Gulf Times Saturday, July 27, 2019 7 BUSINESS

Swiss court gives greenlight for French tax authorities to Vodafone to set up $20bn access UBS client data

Reuters Geneva

Europe mobile mast fi rm Switzerland’s highest court ruled yesterday in favour of Vodafone will separate towers, last week. Vodafone would talk to play- handing over historical data on potential to float a minority stake; ers in the market, he said, adding that 40,000 UBS clients to French new unit operational by May 2020, Deutsche Telekom, like Telecom Italia, tax authorities in a landmark worth more than €18bn; Vodafone shared its vision to build a high-quality ruling, but blocked use of the Q1 organic service revenue falls network. data as evidence against the 0.2%; says gradual recovery in top Deutsche Telekom and Telefonica bank itself. Three of the five line will continue; shares rise 10%, Deutschland said last October they judges deciding the case at the on track for best day since 2002 would expand their network co-oper- Swiss Supreme Court voted to ation ahead of 5G, with Telekom con- overthrow a lower court ruling Reuters necting up to 5,000 of Telefonica’s base that had stopped the data trans- London stations to its fi bre-optic network. fer last year, giving the green Deutsche Telekom has also carved light for Swiss tax authorities to out its own towers unit, Deutsche provide the data to their French ritain’s Vodafone will separate Funkturm, which runs a portfolio of counterparts. its mobile masts in Europe into a 29,000 mobile masts. The judges, however, said Bnew company worth upwards of A spin-off of the towers unit has long it had to be made very clear €18bn ($20bn) with a view to listing a been mooted, but has yet to materialise. in the written ruling that the minority stake. Vodafone also reported on Friday transferred data could not be Announcing the plan yesterday, Vo- that fi rst-quarter group service rev- used as evidence in a separate dafone said the move would unlock val- enue decline by a smaller-than-ex- ongoing criminal case against ue for shareholders and reduce its debt. pected 0.2%. It said a gradual recovery UBS in France. Shares in the world’s second largest in its previously weak top line would The Supreme Court’s ruling mobile operator rose as much as 10% continue. is being closely watched for the on the news to 145 pence, putting them “We are now at a turning point in impact it might have on UBS’s on track for their best daily rise since our service revenue following the low €4.5bn ($5bn) legal battle with 2002 and regaining all of the ground point in Q4 of last fi scal year,” Read told France over alleged client tax lost when the group cut its dividend for reporters. “We are confi dent that this avoidance. It could also set a the fi rst time ever in May. improvement in service revenue will precedent whereby other Swiss Chief executive Nick Read said a continue as the year progresses.” banks have to hand over confi- standalone towers business would un- Analysts at Citi, who have a “buy” dential historical data to foreign lock “the signifi cant value of our infra- rating on Vodafone, said the better top tax authorities that demand it. structure assets at a time when tower line and the decision to separate the Judges in the oral delib- multiples are very attractive”. The Diff erent types of 4G, 5G and data radio relay antennas for mobile phone networks are pictured on a relay mast operated towers and look at monetisation should eration on Friday said the separate unit would comprise 61,700 by Vodafone in Berlin. Vodafone will separate its mobile masts in Europe into a new company worth upwards of $20bn with be well viewed. Vodafone said market written ruling must state the sites in 10 markets, 75% of which will a view to listing a minority stake. conditions in Italy had continued to transferred data cannot be be in Germany, Italy, Spain and Britain, improve and retail growth in Germany used in the ongoing criminal and could have annual proportionate “Vodafone is obviously a very high- be used to cut Vodafone’s debt, which ices to be rolled out faster and at lower remained robust, which in part had case against UBS in France, revenue of €1.6bn and core earnings of quality anchor tenant and we’ve got stood at 27bn euros on March 31. cost. “This is a window of opportunity been off setting intense competition in upholding the so-called “spe- €900mn a year. very high-quality assets, and these op- Vodafone already shares network where 5G is launching into the market,” Spain. cialty principle” which stipulates It would overtake Cellnex, currently portunities don’t come around there infrastructure with Telefonica’s O2 in Read told reporters. The company had launched more information obtained via legal Europe’s biggest towers group, which often,” he said. “So people are very, very Britain and with Orange in Spain and Cellnex said on Friday it was not new pricing plans and products in the assistance may only be used is valued at just over 17 times earnings. keen to pursue it with us.” on Friday it fi nalised an agreement in planning to invest in listed tower com- quarter than in any he could remember, for the purpose stated in the Read told analysts there was high Mobile operators across Europe have Italy with Telecom Italia’s tower unit panies. including next-generation 5G services original request. demand to invest in Vodafone’s infra- been selling or sharing their network INWIT. Friday’s Italian deal left Germany as in its major markets. UBS said it would carefully structure and discussions with inves- infrastructure to cut debt, tapping into Its stakes in these joint ventures will Vodafone’s only major market without He said Vodafone was confi dent review the written verdict that tors indicated the assets could achieve the appeal of the assets’ steady cash be rolled into the new European com- a network-sharing agreement, a situa- about its full-year guidance for adjust- will follow the oral decision, and values north of 20 times earnings, fl ows to investors. Read said the pro- pany, which will be operational by May tion Read said could be addressed after ed core earnings of €13.8bn-€14.2bn noted Swiss authorities should which would imply a value of more than ceeds from listing a minority stake, or 2020. Teaming up with other operators the EU cleared its acquisition of Liberty and free cash fl ow before spectrum ensure data is only used for €18bn. from attracting other investors, would enabled next-generation mobile serv- Global’s cable networks in the country costs of at least €5.4bn, Read said. the intended purposes — in this case, checking whether clients had paid their taxes. “Regardless of the decision, French firm Worldline debt issue takes it is important that the Swiss Federal Tax Authority ensures Russia’s Transneft sets cap on oil that any data sharing is subject negative yields to new frontiers to the specialty principle before contamination compensation any data is shared,” the bank Reuters America’s Fidelity National Informa- data from Tradeweb. Against this said in a statement. London tion Services (FIS) paying $35bn for backdrop, Worldline sold €600mn One of the judges who Worldpay in March and Fiserv Inc of seven-year convertible bonds at Reuters that his fi rm would seek compensation. backed the data transfer said buying payment processor First Data a yield-to-maturity of minus 0.96%, Moscow Pouyanne had said the costs of the contami- French judges had made it very French payments company Worldline Corp for $22bn in January. with strong demand allowing it nation and eventual decontamination were clear that it wasn’t possible to broke new territory this week by Worldline is one of the biggest to exceed the original target of still to be clarifi ed. use the documents from the tax issuing some of the most negative- European players, helping companies €500mn. ussian oil pipeline monopoly Tran- “Who is going to pay for the decontami- case in the criminal case against yielding debt on record in Europe, to accept and process cashless pay- The bonds were issued at a cash sneft set a cap of $15 per barrel on nation? There is a signifi cant amount that is UBS. Although Switzerland showing the levels of market distor- ments, competing with the likes of price of €103.20 and the conversion Rcompensation for contamination in being mentioned, around $15 per barrel. exchanges bank account data tion caused by central bank stimulus. Worldpay and Nets. premium — the amount by which the its network, drawing scepticism from tran- At the moment, everyone is looking at the on current clients with dozens The payments sector has been “It’s a company with a great story bond price exceeds the value of the sit country Belarus and criticism from some other to fi nd the one who is responsible,” of countries to crack down on fertile ground for merger and acquisi- ahead of it, but the overall rates envi- underlying stock — was 60%, which buyers that the off er was too low. Pouyanne said, answering questions from cross-border tax cheats, court tion activity over the past year and ronment is a big factor, obviously, and was one of the attractions for inves- The contamination, fi rst discovered in shareholders in May. cases such as UBS’s with France attracted growing interest from there have been a few negative-yield- tors, the banker said. April in Belarus, led to the stoppage of Rus- President Vladimir Putin said the con- are highlighting potential investors looking to tap into the rapid ing issues already,” said one banker Because of the complexity of hav- sian oil exports via the 1mn barrels-per- tamination had dealt a blow to Russia’s rep- legacy issues in Europe. increase in the proportion of cash- who managed the transaction. ing a negative coupon, it is common day Druzhba pipeline and a reduction in oil utation as a reliable supplier. The case was triggered by less transactions by consumers and “But still, minus 1% or thereabouts on negative-yielding issues to sell the production in Russia, one of the world’s top Three market sources familiar with the lists of tens of thousands of UBS businesses. is significant.” bonds at a cash price higher than par. producers of crude. buyers of Russian oil said the compensation client account numbers that Investors will pay nearly 1% for Bond yields across Europe have This means the issuer pays back Buyers along the Druzhba pipeline to Ger- was too low. French tax authorities received the privilege of lending Worldline been pushed lower as the European less than the amount borrowed, re- many, Poland, Hungary, Slovakia, Ukraine, Belarus called Transneft’s statement a from German colleagues after a €600mn ($668mn), convertible into Central Bank pumped trillions of moving the need to figure out how to Belarus and the Czech Republic discovered “one-sided” decision, signalling that the search of the bank’s local off ic- shares after seven years. euros into the market and put inter- organise reverse coupon payments. chemicals in the oil. compensation off er may not be suffi cient to es. France wanted names, birth The debt will be used to repay a est rates into negative territory to This is one of the reasons negative The Baltic port of Ust-Luga was also af- end the row. dates and account balances bridging loan related to its buyout of try to jump-start flatlining economic yields on bond issues remain a rarity fected. “This is not enough to compensate for the to check whether the account the remaining 36.4% stake in equens- growth and inflation. and off limits to many investors. Those purchasers include trading fi rms costs of contamination,” one source said. holders had paid their taxes. Worldline, taking advantage of the With European government bonds In the corporate bond world, the and European majors such as Glencore, To- Another source with a buyer of Russian oil UBS is separately cur- bouyant investor interest in both yields going deeper into negative- likes of Deutsche Bahn have issued tal, Trafi gura, BP, Eni and Royal Dutch Shell. said the compensation should be at least two rently appealing a €4.5bn pen- acquisition finance and the payments yielding territory, corporate bonds negative-yielding bonds in the past, BP, Total, Glencore and Trafi gura declined times higher than that off ered by Transneft. alty from a French court which industry. have followed suit. and this month Merck sold three to comment on Transneft’s announcement. “This is nonsense. found the bank guilty of illegally The sector has featured a number Nearly a third of the sector now tranches of debt, the shortest of Shell did not respond immediately to a re- The compensation should be higher and soliciting clients and laundering of big deals this year, including has negative yields, according to which held a negative yield. quest for comment. depend on whether the oil was supplied by the proceeds of tax evasion. Total CEO Patrick Pouyanne said in May the pipeline or by sea,” he said. Why London Metal Exchange warehouses thrive in the shadows

By Andy Home Much of this has been down to the ero- gressive price hikes have left a yawning mitigated these extra costs by storing London sion of aluminium load-out queues at LME chasm between the full cost of LME stor- metal in an LME-designated location and warehouses in Detroit and the Dutch port age and anywhere else. in units close to LME sheds. of Vlissingen. Rent for a tonne of on-warrant alumini- But why be “close to” when you could Investment fund Cobalt 27 boasts on its LME rule changes have accelerated the um can be as high as 56 cents per day. be inside? website that it holds 2,904.7 tonnes of process. It’ll cost you another $45 if you want to LME shadow storage is the answer, physical cobalt “fully insured and stored in The number of registered LME get it loaded out. an evolving arbitrage between the cost LME-certified warehouses in Europe and warehouse units had been falling in You can of course negotiate a discount of holding metal on LME warrant or off - the US”. Which is curious because the Lon- tandem with stocks, which is logical since with the warehouse operator but your warrant in the same warehouse. don Metal Exchange (LME) reports only warehouse operators don’t make money metal may already be covered by a pre- The rent on the latter can be as low as 840 tonnes of cobalt sitting in its entire by running empty sheds. Over the last existing rental deal between the operator 10 cents per day. Moreover, the owner of global warehouse network. year though, the number of registered and the person who put the metal onto the metal reaps the same insurance and That, however, is metal that has been units has increased from 536 to 559, warrant in the first place. financing gains as if it were on warrant. Bit placed on warrant with the exchange. even as total registered LME stocks have Storing the metal outside the LME of a no-brainer, isn’t it? What Cobalt 27 owns is not on warrant. It shrunk by another 25%. The withdrawal of system, where rent can be as low as 6 Which is why LME warehouses are could be warranted overnight. Engelhart’s 22-LME warehouse operation or 7 cents per day, suddenly seems very seemingly thriving even while visible It is, after all, already sitting in one of has benefited Kloosterboer, which picked attractive. stocks are grinding relentlessly lower. the LME’s 559 registered warehouses. up the European warehouses, and ISTIM, That’s why so much aluminium was The LME itself accepts that shadow But because it hasn’t been warranted, it which bought Engelhart’s Singaporean logjammed in load-out queues a couple of storage is an eff icient and thriving busi- doesn’t get counted as part of the LME’s subsidiary. ates the growth of the shadow storage average warehouse company operating years ago. ness. daily inventory reports. ISTIM continues to expand its LME system of LME-certified warehouses with manual. The quid pro quo for cheaper storage, Nor is the exchange in the business of And because it hasn’t been warranted, warehousing footprint with 61 units, stocks of unregistered metal such as Rather than being the latest Machiavel- though, is the loss of what the LME calls its setting stock holding targets. it’s also subject to a much lower storage putting it in fourth place behind C Stein- Cobalt 27’s physical hoard. lian wheeze by LME warehouse operators “gold standard” of security and liquidity. But its consultation document released charge. Which is, of course, one of the weg with 164, Access World with 106 and P It’s also noteworthy that while total to replace the discredited load-out queue Metal acting as collateral for the stocks Thursday reflects the concerns of many main reasons it hasn’t been warranted. Global Services with 66. registered LME storage capacity has been operating model, this shadow storage finance and repo trade is on warrant parts of the LME user base that what’s in Welcome to the world of shadow LME Between them the four companies were declining over the last five years, it hasn’t system is simply an eff icient market reac- because it can, if circumstances require, the LME warehouse system should ideally warehousing, the latest chapter in the storing 78% of LME-registered metal at been falling nearly as fast as stocks. tion to a distorted LME warehouse pricing be sold immediately. not be just the amount needed for physi- exchange’s long-running storage saga. the end of June. And quite possibly a lot of LME inventory has shrunk by two thirds landscape. Moving metal off LME warrant gener- cal settlement of contracts. LME stocks of all metals have fallen unregistered metal as well. since 2015, but storage capacity has con- Although the exchange is continuing ates a spectrum of higher insurance and from over 7mn tonnes in 2013 to 1.7mn at The discrepancy between falling visible tracted by just 23%. What’s there is being for another five years its freeze on rental financing costs depending on where it  Andy Home is a columnist for Reuters. the end of June. stocks and rising warehouse units deline- used. Lots of unfilled space is not in the fees and load-out costs, decades of ag- ends up. Stocks financiers have in the past The views expressed are those of the author. Saturday, July 27, 2019 GULF TIMES BUSINESS US approves merger of wireless operators T-Mobile, Sprint

AFP transitional services required to be- executive chairman Marcelo Claure assets to Dish was “needlessly convo- Washington come a facilities-based mobile net- said the tie-up “will allow the US to luted.” work operator that can provide a full fi ercely compete for 5G leadership” and “DoJ does not need to bend over range of mobile wireless services na- that the combined fi rm would build backwards to fi x a bad merger. It can S antitrust authorities yester- tionwide.” T-Mobile, whose parent is “one of the world’s most advanced 5G simply block the deal,” he said. day approved the $26bn merger German-based Deutsche Telekom, and networks, which will massively revo- Derek Turner of the consumer group Uof T-Mobile and Sprint in a deal Sprint, controlled by Japan’s SoftBank, lutionise the way consumers and busi- Free Press also denounced the deal. that brings together the third- and claim the merger will allow them to nesses use their connected devices to “This arrangement does not off er fourth-largest wireless operators as compete against their larger rivals. enhance their daily lives.” cellphone users a viable fourth com- the industry moves toward deploy- “The T-Mobile and Sprint merger No timetable for fi nalising the merg- petitor in the wireless market,” Turner ment of superfast 5G networks. we announced last April will create er, which was fi rst announced more said. “This merger is bad for wireless The deal aims to create a strong a bigger and bolder competitor than than a year ago, was given yesterday. users and can’t be fi xed.” number three US operator to compete ever before — one that will deliver the Consumer groups and others have Avery Gardiner, an antitrust fellow at against sector leaders Verizon and most transformative 5G network in criticised the deal, arguing that too the Center for Democracy & Technolo- AT&T and speed 5G deployment, but the country, lower prices, better qual- much concentration would lead to gy, said the decision to approve the deal consumer groups have complained the ity, unmatched value and thousands higher prices. Earlier this year, 14 “goes against decades of settled prin- deal would mean more concentration of jobs,” said T-Mobile chief executive states sued to block the deal. ciples” of competition. “The wireless and higher prices. A T-Mobile and Sprint store sit side-by-side in a mall in California. US John Legere, who will retain the CEO The Justice Department said fi ve industry is already highly concentrated, It calls for Sprint to sell some of its authorities yesterday approved the $26bn merger of T-Mobile and Sprint in a job upon completion of the merger. states agreed to the settlement, which and this deal is likely to result in higher prepaid wireless operations to satel- deal that brings together the third- and fourth-largest operators in the sector. “Today’s results are a win-win for still faces approval in court. prices, calcifi ed cell service plans, and lite TV operator Dish Network, which everyone involved. Joshua Stager of the New America lower quality all around,” she said. would create its own telecom service. amounts of currently unused or un- Delrahim, head of the Justice Depart- We cannot wait to get to work bring- Foundation’s Open Technology Insti- But Jessica Melugin of the Competi- “With this merger and accompany- derused spectrum are made available ment’s Antitrust Division. ing this pro-consumer, pro-competi- tute said the deal falls short of retain- tive Enterprise Institute said the deal ing divestiture, we are expanding out- to American consumers in the form of Delrahim added that the agreement tion New T-Mobile 5G network to US ing four “viable competitors” for the would be positive for consumers by al- put signifi cantly by ensuring that large high quality 5G networks,” said Makan “will provide Dish with the assets and customers from coast to coast.” Sprint sector and said the eff ort to sell off lowing for three strong 5G operators.

Russia central bank trims key interest rate to 7.25%

Reuters along with temporary factors, Moscow limits infl ation risks over the short-term horizon,” the central bank said. he Russian central bank Elvira Nabiullina, governor trimmed its key interest of the central bank, cemented Trate to 7.25% yesterday, market expectations of more rate as expected, and said more cuts cuts this year when she said in an were likely later this year amid interview with Reuters earlier in slowing infl ation. July that the bank would like to Russia needs lower rates as complete the rate-cutting cycle cheaper lending could rekin- by mid-2020, trimming the key dle its now sluggish economic rate in small steps. growth. The next 25 basis point rate cut As infl ation is now slowing to- is now possible in September but wards the 4% target and hovers further easing would depend on well below double-digit readings infl ation and economic growth seen a few years ago, the central as well as other risks, said Dmit- bank has room to reduce rates ry Polevoy, chief economist at further. Yesterday’s cut became Russian Direct Investment Fund. the second this year and was in “As the CBR has always been line with market expectations. stressing, ‘undercutting & Twenty-three analysts and catching up’ would be safer for economists who took part in a the economy and policy credi- Reuters poll unanimously pre- bility than ‘overcutting and then Pedestrians pass the Bank of England building in London. The BoE will swim against the tide of looser policy sweeping other central banks next week, when it will try to keep dicted that the central bank being forced to reverse’,” Polevoy alive the prospect of future rate rises, even as Prime Minister Boris Johnson raises the risk of a Brexit shock for the economy. would trim the rate to 7.25% said. from 7.50% at Friday’s meeting. ING analysts said they saw “If the situation develops in scope for one more 25 basis point line with the baseline forecast, cut in September and do not rule the Bank of Russia admits the out another cut in December. possibility of further key rate “We expect an additional 75 reduction at one of the upcom- basis points of cuts over the next ing Board of Directors’ meet- 9-12 months,” the Capital Eco- ings,” the central bank said in a nomics research fi rm said. BoE to resist global tide statement. The rouble showed a muted The latest move puts the rate reaction to the rate decision, back at a level where it was be- which was considered as in- fore a hike in September last terim because it was not fol- year, something the central bank lowed by a news conference by said was possible due to abating Nabiullina. infl ationary pressure. The next rate-setting meet- of policy loosening That, it said, should help it ing on September 6 will be hit its infl ation target of 4% in followed by a news conference Reuters “Although there was a dovish shift...I twice next year but said Johnson’s cam- at their fastest rate in over a decade as early 2020. Consumer infl ation at which Nabiullina will ex- London don’t think they will want to endorse the paign promises of tax cuts and more pub- businesses struggle to fi nd staff at a time slowed to 4.6% as of July 22. plain the central bank’s mon- easing that markets are pricing in,” Ross lic spending would add to hesitancy at when unemployment is its lowest since “Weak economic activity, etary policy more. Walker, co-head of global economics at the BoE about relaxing monetary policy. 1975. he Bank of England will swim NatWest Markets, said. “If there are MPC members who are The BoE’s forecasts next week will be against the tide of looser policy This week the BoE’s chief economist, wary about moving too quickly to cutting trickier than normal to interpret, due to Tsweeping other central banks Andy Haldane, likened the BoE to a golfer or signalling an easing bias, this rising a rift between its assumption that Britain Gazprom sells discounted 2.9% next week, when it will try to keep alive who did not know which course he or she possibility of fi scal loosening increases will leave the EU with a transition deal the prospect of future rate rises, even as would be asked to play, given the uncer- that,” he said. and investors pricing in a material risk stake to one bidder, raises $2.2bn Prime Minister Boris Johnson raises the tainties about Brexit. Market bets on a Some measures of Britain’s economy of a no-deal Brexit. Carney and Haldane risk of a Brexit shock for the economy. rate cut refl ect the risk of a disorderly no- look strong but others point to a slow- have said the forecasts will show some Reuters showed the sale was split into two The BoE has long said its plan is to raise deal Brexit on October 31, when Johnson down. Britain’s economy grew a robust adjustment to refl ect this. Moscow almost equal sized transactions. interest rates gradually, a message it has has promised to take Britain out of the 0.5% in the fi rst three months of 2019 as But the BoE is unlikely to go as far as Gazprom CFO Famil Sadygov stuck to while worries about Britain’s exit EU “no ifs or buts” — even if Haldane and companies stocked up on supplies before setting out a clear scenario for what it said on Friday that the shares had from the European Union have mounted. others have warned rate cuts are no cer- the original March 29 Brexit deadline, expects will happen in a no-deal Brexit, Russia’s Gazprom, the world’s been sold to one buyer, whose BoE policymakers have softened their tainty in this scenario. but the rush to get ready probably means according to JP Morgan’s Monks. largest conventional gas pro- bid covered 70% of the overall tone recently, led by governor Mark Car- Haldane said he would be “very cau- the economy stagnated in the second Instead, it might revive the approach it ducer, has raised about $2.20bn demand. ney who highlighted global economic tious” about cutting rates, unless there quarter. took before the Brexit referendum when from selling a 2.9% stake to a The company had set a price risks as well as growing pressures from was a severe downturn, because of the A number of business surveys — some it adjusted the market price of sterling single buyer at a large discount to of 200.5 roubles ($3.18) per share Brexit uncertainty. risk of fuelling infl ation rather than of which have proven too pessimistic used in its forecasts to strip out what it the market price. for the deal, a 5% discount to But economists still think the BoE growth. in the recent past — point to the slow- viewed as a Brexit risk premium. The sale of the shares, of- Wednesday’s closing price, with will push back against the growing view Unlike in the eurozone, Britain’s econ- down spilling over to the third quarter, This time around, that process is fered by subsidiaries Gazprom the transactions taking place on among investors that it will have to cut omy is running close to capacity, and in prompting some think-tanks to warn of a likely to be more convoluted, as wor- Gerosgaz Holdings BV and Thursday. rates, giving a distinctly diff erent mes- contrast to the United States, the BoE’s growing risk of a technical recession. ries about a no-deal Brexit have pushed Rosingaz, was initially welcomed “A reasonable price… but far sage on August 1 to those from the US monetary policy has not shifted much But for the year as a whole, the Interna- down British government bond yields by investors who were looking to below what we think the stock is Federal Reserve and the European Cen- from its post-fi nancial crisis settings. tional Monetary Fund forecast this week and some share prices. As a result, BoE buy into the company after major worth,” Citibank analyst Ronald tral Bank. “We look for the MPC to eff ectively that Britain will grow 1.3%, the same as watchers are likely to rely more than management changes and a Smith said in a note. “We see Financial futures markets — taken at communicate a neutral bias while it the eurozone which it used to comfortably usual on verbal guidance from Carney pledge of higher dividends earlier Gazprom as being worth ap- face value — point to an 80% chance that awaits more clarity,” JP Morgan econo- outperform. The IMF forecast assumes and other senior BoE offi cials, who will this year. proximately 50% more than the the BoE will lower Bank Rate by a quarter mist Allan Monks said. there is no major Brexit disruption. be keen to avoid any miscommunication Moscow Exchange data current price.” point to 0.50% before Carney steps down NatWest’s Walker predicts the BoE Infl ation is on target at 2% and the la- as new fi nance minister Sajid Javid pre- at the end of January. will ultimately end up having to cut rates bour market is tight. Wages are growing pares to pick Carney’s successor. Twin-speed US economy poses dilemma for the Fed

By John Kemp fastest since the end of 2017, with a concern about a future slowdown in The case for an interest rate cut rests London broad-based pick-up in spending on growth, or even a recession, are holding on the need to create a firebreak to durables, non-durables and services. back business investment. prevent the current weakness in the By contrast, business investment in new The gross domestic product estimates business sector, manufacturing and The US economy is currently split structures, equipment and intellectual are consistent with a broad range of construction from spreading to the between a fast-growing consumer property shrank at an annualised rate other indicators that show a twin-speed much larger consumer sector and sector and a much slower-growing of 0.6%, the worst performance since economy. services. business sector, with the contrasting the first quarter of 2016. Passenger transportation numbers Early and aggressive cuts in interest speeds confirmed by the latest figures Final sales to private domestic have accelerated since the start of rates could help the economy avert a for second quarter gross domestic purchasers, which excludes short- the year even as freight volumes have business cycle recession as they did in product. term volatility from foreign trade, come close to stalling. 1998. Personal consumer expenditures inventories and government spending, Retail sales show strong and quickening But with so much momentum on adjusted for inflation increased at an and is the best measure of underlying growth while manufacturing output is the consumer side of the economy annualised rate of 4.3% in the three momentum, accelerated to 3.2% from stalling, purchasing managers’ surveys already, they risk igniting an months from April to July, according 1.6% in the first three months of the point to the most sluggish conditions unsustainable increase in consumer to advance estimates published by year. since 2016, and construction activity is and business borrowing that the Bureau of Economic Analysis High levels of employment, wage falling. could contribute to a subsequent yesterday. growth, consumer confidence and The Federal Reserve’s policymaking downturn. Real consumer spending growth rising share prices are supporting very Federal Open Market Committee is accelerated from just 1.1% in the brisk increases in consumer spending. widely expected to reduce short-term  John Kemp is a Reuters market analyst. previous three months and was the But the trade conflict with China and interest rates when it meets next week. The views expressed are his own.