SHARES DROP: Page 3 Delta buys stake in Korean Air parent company

Saturday, June 22, 2019 Shawwal 19, 1440 AH LARGEST PENALTY BY FCA: Page 5 Britain’s Lloyds GULF TIMES fi ned $58mn for BUSINESS HBOS fraud failings Envoy optimistic on Qatari FDI growth in Italy Fed offi cials face weak

By Peter Alagos beverage (F&B), design and Business Reporter architecture, and engineering sectors. Leading Italian companies Robust relations and co- are taking part in various infl ation, but split operation between Qatar infrastructure projects in and Italy would play a Qatar, particularly in Al Khor’s significant role in the growth Al Bayt Stadium for the 2022 of Qatari investments in the FIFA World Cup, Salzano said. Italian trade and economic “That stadium is extremely landscape, including other diff icult to build because major sectors, ambassador its shape represents a tent; over what it means Pasquale Salzano said. the materials as well as the According to Salzano, Qatar technology used for that Reuters if the Fed does not lift infl ation not only has important structure is unbelievable. Washington/San Francisco higher, with weakened expecta- investments in Italy’s Skilled and world-class Italian tions dragging down actual in- property market, specifically companies were able to make fl ation, and leaving the central hotels, but also in the Porta the structure look like a real S Federal Reserve offi - bank perennially stuck near zero. Nuova property project in tent in the desert. It will be an cials were divided yes- In a sharp broadside against Milan, the world’s leading iconic and truly impressive Uterday over how seriously the Fed’s decision last week to fashion and design capital. stadium, and I am very proud to treat a slide in infl ation, with hold interest rates steady, Min- The project, the ambassador that Italian companies are one top policymaker saying the neapolis Federal Reserve bank pointed out, is “one of the part of this project,” Salzano Fed was “close” to its infl ation president Neel Kashkari said the most profitable for Qatar,” explained. target and three others warning economy needed shock therapy as Porta Nuova is also He said Italian companies are the weak price increases posed to push infl ation and infl ation considered as one of the also involved in the building major risks the Fed may need to expectations higher, and con- main business districts in of the Doha Metro project, attack with lower interest rates. vince the public the Fed is seri- Milan. specifically in the “artistic Just how deep that division is ous about its 2% infl ation goal. Similarly, Salzano said Qatar lighting” of the stations. and where in the debate the most It is a target that has not been also has investments in the Currently, the Red Line of the infl uential policymakers have consistently met since it was Olbia-headquartered Air Italy metro is ferrying passengers staked their ground is going to formally adopted in 2012, and through Qatar Airways, which along 13 of its 18 stations. grip the fi nancial world between Kashkari said he is concerned has a 49% share in the Italian “Our companies are also now and conclusion of the Fed’s the public and investors have ab- airline. He said Qatar also responsible for providing a next meeting on July 31. sorbed the wrong message. has investments in the Costa specific kind of asphalt used Interest rate futures markets Though he is currently not a Smeralda Resort in Sardinia, for roads and highways in currently see a 100% probability voter on the Fed’s rate-setting as well as in other important Qatar. The material used for of a rate cut then, with the only panel, he called for the Fed to and strategic companies in these road networks are cost- debate in trading circles over slash rates by half a percentage Italy. The presence of Qatari eff icient and can resist high whether the cut will 25 basis point now, and commit to not investments in the large temperatures. points or twice that. raising them until infl ation du- Italian island is seen to spur “It is also very sustainable Policymakers’ rate projections rably moves to the central bank’s growth in the area’s tourism and environment-friendly issued on Wednesday showed a 2% target. sector. because old asphalt could be near clean break at the Fed. The Fed “should take strong On the presence of Italian reused for new roads. Italy Roughly half of offi cials see no action to re-anchor infl ation companies in Qatar, the is well-known for fashion, rate reduction as likely appropri- expectations at our 2% target ambassador said he design, and food. But we ate this year, and roughly half see and support strong job growth, is “satisfied” because are also well-regarded a cut of up to half a percentage higher wage growth, and sus- many leading firms are in high technology and point as probably warranted. tained economic expansion,” operating in most sectors infrastructure, as well as in That division took shape yes- Richard Clarida, vice chairman of the US Federal Reserve, speaks during a Bloomberg Television interview said Kashkari, who has consist- in the country, such as in the defence sector,” said terday, in the fi rst hours after the in Washington, DC, yesterday. Clarida’s description of the current 1.5% inflation rate expected this year as ently opposed recent rate hikes. construction, health, food and Salzano. central bank’s formal “black- “close” to the Fed’s 2% target was in contrast to the views of other policymakers, including Lael Brainard, St. Louis Federal Reserve bank out” lifted for commenting on his colleague on the board of governors. president James Bullard, mean- the results of the last two-day while, a current voter on rate policy session, which concluded emphasised by chairman Jer- day in prepared remarks to a Fed counter a downturn with rates policy, explained his dissent at Wednesday with the Fed leaving ome Powell earlier this month conference in Ohio. cuts alone. The threat of infl ation the recent meeting as largely a rates on hold in a range between as markets slid over broad global With rates so low by historic drifting downward is twofold. response to the weakening pace 2.25 and 2.5%. growth and trade concerns. standards, “basic principles of Waiting too long to counter it of price increases. “The economy’s baseline out- But Clarida’s description of risk management...would argue means more aggressive Fed ac- “Infl ation measures have de- look is good — sustained growth, the current 1.5% infl ation rate for softening the expected path tion could be required. clined substantially since the end a strong labour market and infl a- expected this year as “close” to of policy when risks shift to the In an era when the benchmark of last year and are presently run- tion near our objective,” Fed vice the Fed’s 2% target was in con- downside.” policy rate is already so low, that ning some 40 to 50 basis points chairman Richard Clarida said trast to the views of other poli- While one of the Fed’s man- could mean again hitting the below the FOMC’s 2% infl ation yesterday in an interview with cymakers, including Lael Brain- dates from Congress is for “sta- zero lower bound and forcing target,” Bullard said in a prepared Bloomberg Television. ard, his colleague on the board of ble prices,” central bankers glo- the politically diffi cult decision statement. “The forces that are Clarida said there was “broad governors and the only other Fed bally feel that a bit of infl ation is to ramp up “unconventional” keeping infl ation below target agreement” that the case for rate board member with a doctorate healthy. policy tools like bond-buying seem unlikely to be solely transi- increases had grown stronger in in economics. “Recent indica- Allowing wages and prices once again. tory...Lowering the target range recent weeks. tors of infl ation and infl ation to rise steadily would give them Brainard also sketched out the for the federal funds rate at this Salzano: Proud participation. He also said the Fed was ready expectations have been disap- room to keep interest rates above threat of a sort of self-reinforc- time would provide insurance to act “as appropriate,” a phrase pointing,” Brainard said yester- zero and, therefore, have room to ing spiral that could take hold against further declines.”

Money-laundering watchdog unveils Divided leaders of EU set sorting out crackdown on cryptocurrencies eurozone budget fi nancing as priority Reuters laundered cash using two crypto ATMs, machines that Frankfurt/London issue cryptocurrencies for cash. Riondet said cryptocur- rencies were used to transfer money across borders, as Reuters currency could be fi nanced, “We ask the Eurogroup to re- toring powers over countries well as to break down large criminal money transfers Brussels what it should be used for and port back swiftly on the appro- with economic imbalances and Cryptocurrency firms will be subjected to rules to into smaller amounts that are harder to detect. how it would be managed, with priate solutions for fi nancing,” also facilitate the restructuring prevent the abuse of digital coins such as bitcoin for “We also have some investigation on the dark web in the fi nal size to be determined they said about the eurozone of governments’ debts in crises. money laundering, a global watchdog said yesterday, which the payments are made in cryptocurrencies, uropean Union leaders by the leaders. But progress has budget, called the Budgetary In- Leaders avoided instead a the first worldwide regulatory attempt to constrain sometimes in bitcoin, and they are switching it to told their fi nance minis- been limited because of widely strument for Competitiveness direct reference to the deposit the rapidly growing sector. more anonymised cryptocurrencies,” he said. Eters yesterday to sort out diff ering views. and Convergence (BICC). scheme, which has been stalled The Paris-based Financial Action Task Force (FATF), a So-called privacy coins such as Monero allow users to the sources of fi nancing for a fu- France and several southern “These elements should be for years because of strong op- coalition of countries from the United States to China, conceal nearly all details of transactions. ture eurozone budget as a matter European countries want a large agreed as a matter of priority so position from Germany. told countries to tighten oversight of cryptocurrency The move by the FATF comes amid heightened of priority, but remained vague budget funded by dedicated as to be able to set the size of the Italian Prime Minister exchanges to stop digital coins being used to launder concern about a sector, championed by some as a on the idea of a European bank taxes and able to stabilise econo- BICC in the context of the next Giuseppe Conte said no progress cash. The move reflects growing concern among inter- means of shaking off government controls, but seen deposit insurance scheme. mies hit by an unexpected shock. Multi-annual Financial Frame- could happen on the ESM reform national law enforcement agencies that cryptocurren- by central banks as a potential threat to their status The chairman of eurozone The Netherlands and its work,” they said, referring to and the eurozone budget if the cies are being used to launder the proceeds of crime. as guarantors of the financial system. fi nance ministers, Mario Cen- northern European allies want the wider EU’s next long-term deposit guarantee scheme was Countries will be compelled to register and supervise Earlier this week, Facebook prompted criticism from teno, briefed the leaders on what a small budget funded only from budget. The EU has to agree on a not agreed too, in a potential blow cryptocurrency-related firms such as exchanges, regulators and policymakers when it unveiled its ministers have achieved since the existing, wider EU budget new long-term budget before the to the whole reform process. which will have to carry out detailed checks on cus- plans for a cryptocurrency it dubbed Libra. they were asked last December and used for investment or to end of next year, before the cur- The leaders’ statement said tomers and report suspicious transactions, FATF said Three European central bankers have claimed over- to work on creating a eurozone support structural reforms. rent one ends in December 2020. only that the leaders “look for- in a statement. sight over Libra to ensure it would not jeopardise the budget along with other reforms, “We ask the Eurogroup and EDIS, ESM Leaders took note ward to the continuation of the Simon Riondet, head of financial intelligence at Europol, financial system or be used to launder money. including the deposit guarantee the Commission to further work of progress made by fi nance technical work on the further the European police agency that coordinates cross-bor- Germany’s central bank chief, Jens Weidmann, said scheme known as EDIS. on all pending issues,” the lead- ministers last week on the reform strengthening of the Bank- der investigations, told Reuters he saw a growing use of virtual tokens pegged to off icial currencies, known as The ministers were to have ers said in a statement without of the bloc’s rescue fund, the ing Union” — EU code for the cryptocurrencies in laundering criminal money. Earlier stablecoins, could undermine banks if they become worked out how a budget for the setting any deadline for the con- European Stability Mechanism, scheme — in a sign there was no this year, Europol broke up a Spanish drugs cartel that widely used. 19 countries sharing the euro clusion of the talks. which would increase its moni- deadline for the discussions. Gulf Times 2 Saturday, June 22, 2019 BUSINESS Foxconn chooses chip-unit Asakawa: Japan would voice concern if currency rates move rapidly in a way that deviates from economic fundamentals. head Liu as chairman

Japan Reuters warns on Taipei pple Inc supplier Foxconn chose chip-unit boss Liu Young-way excess Aas chairman yesterday to suc- ceed Terry Gou, who is preparing to contest Taiwan’s presidential elections currency next year. Liu was tipped to take over from Gou, who told Reuters in April that he market planned to step down to pave the way for younger talent to move up the ranks of the world’s biggest electronics con- volatility tract manufacturer. Earlier yesterday, Gou told the com- pany’s annual general meeting (AGM) Reuters in Taipei he will hand over the running Tokyo of the company to a newly formed nine- member operations committee. Gou retained a seat on the board of apan’s top currency diplomat the company, formally known as Hon yesterday issued a warning Hai Precision Industry Co Ltd. Jagainst excessive volatil- The change of guard comes as Fox- ity in the exchange-rate market, conn – with its big factories in China threatening to act if currency and large roster of US clients – navi- moves become too volatile. gates a trade war between Washington The warning underscores con- and Beijing. cerns held by Japanese policy- But Liu’s appointment does not por- makers about sharp yen rises that tend big changes in strategy and Gou is could hurt the country’s export- likely to keep control of the company reliant economy. he founded 45 years ago, analysts have Masatsugu Asakawa, vice fi - said. nance minister for international The handover to Liu is only a formal- aff airs, said there has lately been ity, said a Taipei-based analyst, who “some jittery moves” in the cur- declined to be identifi ed due to Taiwan’s rency market driven in part by trading regulations. heightening expectations of fu- “Gou is still a director... he can still ture US interest rate cuts. control much of Hon Hai. He can still “Group of 20 members share give advice or reject proposals,” the the view that excess volatility (in analyst said. the currency market) is undesir- Foxconn said nearly 3,000 share- able for the economy... and that holders, employees and supporters at- the authorities will coordinate as tended the AGM. needed,” Asakawa said. Thousands braved the heat to watch “There’s also an agreement a live broadcast of the meeting on big Foxconn founder Terry Gou (centre) poses for photographs with supporters after an investors conference in Tucheng district, New Taipei City, yesterday. Gou is among G7 and G20 nations to take screens outside Foxconn’s headquar- preparing to contest Taiwan’s presidential elections next year. appropriate action if necessary. ters, while scores of employees lined up We will respond based on this to welcome Gou and Liu inside. considers a wayward province, analysts married and to have kids” intermingled He gained great trust since joining capacity outside China to meet Apple’s understanding,” he told reporters “In the next four years I want to con- have said. Gou, 68, is Taiwan’s richest with signs calling Gou “the hope for the as a special assistant to Gou in 2007, a demand in the American market if the after a meeting with his counter- tribute what I gathered in the past 40 person with a net worth of $7.6bn, ac- youth”. source told Reuters in May. need should arise for the iPhone maker part at the Bank of Japan and Fi- years to (Taiwan),” said Gou, who was cording to Forbes. In his speech, Gou criticised the state After the AGM, he told Reuters that to adjust its production lines due to the nancial Services Agency. wearing an orchid garland and a dark Foxconn shares closed down 1.2% of Taiwan’s economy, saying growth the company had no plan to increase US-China trade war. Asakawa also said he had full suit. yesterday, compared with the fl at had hit a bottleneck. production capacity outside China at US President Donald Trump has trust in Bank of Japan Governor “Give me four years, and give Taiwan broader market. Taiwan’s economic growth has the moment and that he was not aware threatened to slap further tariff s on Haruhiko Kuroda’s handling of a chance of survival.” “Terry Gou get elected!” employees slowed, hurt by shrinking global tech of client requests for Foxconn to shift $300bn worth of goods from China, monetary policy. Taiwan’s election is set to take place chanted and threw fl owers as he ended demand and the tariff war between its part of its production outside China. where the bulk of Apple’s devices are The dollar has lost ground and amid a period of increasing tensions his speech and walked out of the com- two largest trading partners, China and Investors are keen to know whether assembled. briefl y fell to a fi ve-month low between Beijing and Taipei, with pany’s offi ces. the United States. Foxconn will adjust its production line The country is also a key market for against the yen after Federal Re- Gou seeking to represent the Chi- Scores of police were on standby out- The island’s central bank again cut for Apple and others. the fi rm. serve chairman Jerome Powell sig- na-friendly opposition Kuomintang side the headquarters, where support- its 2019 economic growth forecast on The Nikkei Asian Review reported Gou met with Trump in May and nalled on Wednesday that the cen- (KMT) party. ers stood next to dozens of protesters Thursday after export orders fell for a that Apple has asked its main suppliers sought US support to boost Taiwan’s tral bank could cut rates as early as His election bid might be weighed who questioned Gou’s policy over la- seventh straight month. to assess the cost implications of mov- tech industry. next month’s policy meeting. down by his ties to a Chinese leader- bour rights and wages. Liu, 63, has led Foxconn’s nascent ing part of their production capacity He vowed to be a “peacemaker” for The meeting is held occasionally ship that refuses to renounce the use of Placards saying “young people are semiconductor business, dubbed the S from China to Southeast Asia. China, the United States and Taiwan, if to exchange views on fi nancial and force to unify with self-ruled Taiwan it poor – can’t aff ord to buy house, to get sub-group, since 2017. Foxconn said last week it had enough he wins. economic developments. It is usually convened to signal to markets the policymakers’ dis- pleasure over yen moves. Prior to the meeting, Asakawa had told a news conference that Japan would voice concern if Asean seeks China-led trade currency rates move rapidly in a way that deviates from economic fundamentals. “If the Fed does cut rates in July because it feels doing so would be deal this year, says Thai PM necessary to prevent a US eco- nomic downturn, that’s an ap- propriate monetary policy deci- AFP The China-crafted Regional Comprehen- Analysts say these competing priorities sion,” Asakawa said. Bangkok sive Economic Partnership (RCEP) includes all mean signing the deal any time soon may be “But if exchange rates are mov- 10 economies of the Association of Southeast unlikely. But Asean, hosted this year by Thai- ing rapidly in a way that cannot Asian Nations (Asean) who are meeting this land, is determined to hustle the pact through be explained by economic funda- outheast Asian leaders are eager to sign a weekend in the Thai capital. as tit-for-tat tariff s between the US and China mentals, Japan has no choice but sweeping China-led trade pact by the end But it also sweeps in China’s main regional tariff darken the outlook for global free trade. to voice concern,” he said. Sof this year, Thailand’s prime minister rival India, as well Japan, South Korea, Austral- “Thailand is trying to expedite the conclu- The BoJ kept monetary policy Prime Minister of Thailand Prayut Chan-o-cha shakes hands with said yesterday, with further talks expected at a ia and New Zealand, covering half the world’s sion of the RCEP negotiations this year,” Prayut steady on Thursday but Kuroda Vietnamese Prime Minister Nguyen Xuan Phuc at the National Bangkok summit on the world’s biggest com- population and around 40 % of its trade. Chan-o-cha, Thailand’s former junta leader signalled readiness to ramp up Convention Centre in Hanoi (file). Southeast Asian leaders are mercial deal. Squabbles with India over access to its gi- who is now premier, told a business forum in stimulus as global risks cloud the eager to sign a sweeping China-led trade pact by the end of this Beijing is seeking to shape the rules of free ant consumer market – as well as Australia and Bangkok yesterday. “This is the agreed intention economic outlook, joining US and year, Thailand’s prime minister said yesterday, with further talks trade across the Asia-Pacifi c, as America re- New Zealand over the lack of ‘high quality’ la- of all leaders.” Seven of the 18 chapters within European central banks in drop- expected at a Bangkok summit on the world’s biggest treats from multilateral deals under US Presi- bour and environmental standards – have un- the deal have been “concluded”, according to the ping hints of additional easing. commercial deal. dent Donald Trump. dercut talks in recent months. Philippines’ Trade Secretary Ramon Lopez.

India becomes investment darling for sovereign wealth and pension funds

Reuters election win last month consolidated his Hindu building. Private equity deal activity in India ADIA, the world’s third-biggest sovereign wealth Ashoka India Equity Investment Trust, said London nationalist party’s power base and is expected surged to $19bn in 2018, the highest level in at fund, which has been investing in Indian equities that change had helped kick-start the onshore to stimulate further foreign investment. least a decade, according to PitchBook data. and fixed income for years, has broadened fund management industry for foreign-sourced Foreign institutional investor flows into Indian Sovereign wealth funds and pension funds its focus to include asset classes such as funds. “This could be looked back on as an Sovereign wealth funds are piling into India, equities are $11bn year-to-date, surpassing the participated in about two-thirds of that amount. infrastructure, real estate and private equities, inflection point in the growth of the Indian fund buying stakes in everything from airports to total annual tally in each of the four previous Among recent deals, Singapore’s GIC sovereign said people familiar with ADIA’s thinking. management business,” said Khemka, one of renewable energy, attracted by political stability, years and setting 2019 on course for the highest wealth fund and the Abu Dhabi Investment Its increased interest in India is driven by the four fund managers to gain such an approval a growing middle class and reforms making it annual inflows since 2012. Authority (ADIA) this month agreed to make country’s strong growth potential, positive so far. more enticing for foreigners to invest. India’s benchmark BSE index has soared nearly a further investment of $495mn in renewable demographics and continued economic Institutional names, including sovereign wealth Wealth and state pension funds are expanding 10% year-to-date. energy firm Greenko Energy Holdings, which development, the people said. funds and pension funds, account for around their horizons to private markets, to “The rapid rise of an educated middle class has wind, solar and hydro projects. More than half of India’s 1.3bn population is two-thirds of his clients. complement an existing focus on stocks and off ers enormous opportunities for the India is widening its use of solar and wind aged under 25. Bankruptcy resolution rules introduced in bonds. deployment of long-term capital, the kind that energy to help reduce its reliance on fossil fuels. The push comes as India and the United Arab 2016 helped pave the way for ADIA’s $500mn “India is popular with sovereign wealth funds,” sovereign wealth funds are ideally suited to In April, ADIA and India’s National Investment & Emirates seek to strengthen economic and investment earlier this year in a distressed debt said Tihir Sarkar, London-based partner at provide,” said Ravi Menon, chief executive Infrastructure Fund (NIIF) agreed to buy a 49% trade ties. fund. Cleary Gottlieb, which counts several prominent off icer of HSBC Asset Management India. stake in the airport unit of Indian conglomerate Reform push The investment was seen as an eff ort to launch sovereign funds as clients. The new China GVK Power & Infrastructure. a secondary market in India’s mountain of “Almost every jurisdiction in the western world Another wealth fund is in talks on an Regulatory reforms are also bolstering distressed debt and help ease the burden on is raising the bar for entry for foreign investors The attention sovereign funds are giving India infrastructure investment, while Canadian sentiment and drawing in wealth funds. local banks. But some say more reforms are but in India it’s the other way round. is like that they have paid to China, now clouded pension funds are seeking similar deals, said a Indian-based fund managers were from this needed. A source close to several wealth and There’s also the attraction of the demographics by a trade war with the United States, said a source familiar with the matter. year licensed to manage foreigners’ portfolio pension funds said many would like to see and a lot of assets that sovereign funds like, banker specialising in institutional investors. Canada Pension Plan Investment Board and holdings in the country, where previously such the government further overhaul tax rules, such as infrastructure, where there’s a huge In the public markets, funds were focused on GIC earlier this year participated in a $145.8mn assets had to be managed outside India. building upon a new goods and services tax appetite for foreign funding.” public equity and fixed income, he said. buyout of Oakridge International School, an Prashant Khemka, founder of White Oak Capital that is credited with helping cut red tape, and Indian Prime Minister Narendra Modi’s In the private market, momentum is also operator of schools in India. Management which advises London-listed undertake land and labour reforms. Gulf Times Saturday, June 22, 2019 3 BUSINESS

Thailand sees foreign investment boom as Delta buys stake in trade tensions escalate Bloomberg 3.4% export rise. Prime Minister Singapore Prayuth Chan-Ocha also said at a Bloomberg summit on Friday that the US-China trade Foreign investment into war creates more uncertainty Thailand surged in the first for global businesses and is a quarter, further evidence that concern to Thailand. Korean Air parent Southeast Asian nations are In an interview in Bangkok on benefiting as businesses seek Thursday, Pisit said exports Reuters new locations in the region to may show some improvement Seoul/Chicago avoid an escalating US-China in the second half of this year trade war. and solid growth in tourism Applications for foreign direct helping to underpin the elta Air Lines bought a small stake investment climbed to 84.1bn Southeast Asian economy. The in Korean Air Lines Co’s parent baht ($2.7bn) in the first expected gains in shipments Dcompany and said it wants to in- quarter, up 253% from the same in the six months through crease it to 10%, giving a boost to the period last year, according to December are mainly due management of South Korea’s top carrier Pisit Puapan, executive director to base eff ects given the that seeks to thwart a local activist fund’s of the Ministry of Finance’s “dramatic change” in the goods challenge. Macroeconomic Policy Bureau, export picture in the same Shares of the parent, Hanjin Kal Corp, citing off icial data from the period last year when global tumbled 15% yesterday, as Delta’s move nation’s Board of Investment. growth deteriorated, he said. dashed investor hopes of a battle to con- Thailand joins countries like Longer-term, the ministry trol the family-run group that had driven Malaysia and Vietnam that are still sees reasons to be up shares since the death of patriarch reporting soaring investment upbeat about exports. More Cho Yang-ho in April. as global supply chains shift. Chinese investors are coming Korean Air, which has a joint venture Approved FDI into Malaysia’s to Thailand as they spread with Delta since last year, said yesterday manufacturing rose 127% in out across Southeast Asia – it believes Delta’s 4.3% stake buy intends the first quarter from a year potentially a result of both tariff to ensure the ‘stable management” of the ago, and the central bank strains at home as well as rising company and support for its leadership. governor recently said the labour and production costs in Should the No 2 US carrier raise its positive spinoff from the trade China. stake to 10% in Hanjin Kal, the airline’s war could add10 basis points to On the services side, Pisit founding family and its allies will have a economic growth. sees Thailand continuing to total stake of 39%, versus the 16% stake The jump in FDI in Thailand benefit from solid growth in held by the activist fund, Korea Corpo- comes at a time of weakening tourism. The nation is on track rate Governance Improvement (KCGI). export demand, which is to achieve 40mn visitors this “Delta played a role as a white knight weighing on the economy. year, bolstered by a rise in for Hanjin,” said Choi Nam-gon, an ana- The Finance Ministry in April Indian, Japanese and Malaysian lyst at Yuanta Securities. downgraded its growth outlook tourists even as arrivals from “Now it would be impossible for KCGI for this year to 3.8%, based on a China continue to slide. to take control of the group. The stake buy removes the chance of a manage- ment battle at Hanjin Group,” he said. A Delta Air Lines Airbus 220 aircraft sits on the tarmac in the Queens borough of New York. The airline bought a small stake in KCGI said in a statement that if Delta’s Korean Air Lines’ parent company and said it wants to increase it to 10%, giving a boost to the management of South Korea’s investment decision intends to “simply top carrier that seeks to thwart a local activist fund’s challenge. defend the management rights of the controlling family members, this would age 70, just weeks after shareholders de- stake to nearly 16%, fuelling speculation It also did not say who it bought the Japan’s core consumer go against the honour and principles that cided to end his 27-year tenure on the air- about an impending ownership battle at stake from or when it may raise it to 10%. it has built so far.” line’s board, in a show of growing share- the conglomerate. Atlanta-based Delta has been growing It proposed Delta, backed by US in- holder activism in Asia’s fourth-biggest Delta chief executive Ed Bastian said internationally both through joint ven- infl ation slows in May vestor Warren Buff ett, work together economy that has long been dominated earlier this month he had “a lot of con- tures – which allow airlines to co-ordi- to eliminate ineffi ciencies and improve by family-owned conglomerates. fi dence” in Walter Cho, noting their nate fares and schedules while building management transparency at the Hanjin The group subsequently appointed friendship had gone back 20 years. a presence in new markets – and direct Reuters strength has translated into Group. his only son Walter Cho, 43, as CEO and “The investment demonstrates Delta’s equity investments, which help airlines Tokyo price gains, was up 0.5% in Korean Air shares fell 2.6% and its chairman, but the company has yet to commitment to the success of its joint align their respective strategies. May from a year earlier. budget affi liate Jin Air Co Ltd rose 0.2% inform regulators about a defi nitive suc- venture with Korean Air,” Delta said in a Delta also owns stakes in Grupo Aer- The central bank has al- in the wider market that was down 0.3%. cession plan. statement. omexico, Air France KLM, China Eastern, apan’s core consumer ready conceded that it will Korean Air has been plagued in recent He and his two sisters have small stakes The venture includes 290 US destina- Brazil’s Gol and Virgin Atlantic, and has prices rose 0.8% in May take time to achieve its price years by a series of scandals involving its in Hanjin Kal, in which the late Cho has a tions and over 80 in Asia. been negotiating a stake in Alitalia. J from a year earlier, data target, stressing that it will founding family members. 17.8% stake. The US airline did not disclose how Shares in Delta closed down 0.7% at showed yesterday, keeping the ease policy further only if In April, the tycoon suddenly died at Against that backdrop, KCGI raised its much it paid for the 4.3% stake. $55.97 in New York on Thursday. central bank under pressure risks threaten to derail Japan’s to maintain or even expand its recovery. massive stimulus programme The economy is holding to achieve its elusive 2% infla- up for now, expanding by an tion target. annualised 2.1% in the first The increase in the core quarter as the non-manufac- consumer price index, which turing sector maintains its China overnight repo rate falls to 4-year low includes oil products but ex- pace on investment, temper- cludes volatile fresh food ing the gloom in the export Reuters and their fi nancing costs have spiked. at a medium-sized Chinese bank, adding larger lenders not to cut off such firms costs, matched a median mar- sector, which more vulnerable Shanghai The volume-weighted average rate of the recent generous cash injections by the from funding markets. ket forecast and slowed from a to external headwinds. China’s benchmark overnight repo for central bank should not be interpreted as Non-bank fi nancial institutions have 0.9% gain in April. But many analysts predict banks fell to 1.10% yesterday morning, a sign of a change in its monetary policy increasingly turned to stock exchanges to The data highlights the growth to slow in coming hina’s benchmark overnight repo the lowest since June 2015. stance. borrow cash, where requirements for col- challenge the Bank of Japan quarters as the US-China tar- rate fell to a four-year low of near- The People’s Bank of China injected a Late June usually sees strong demand lateral remained less stringent. faces in spurring inflation to- iff row hurts global trade. Cly 1% yesterday as the central bank net 285bn yuan ($41.56bn) for the week for cash in China as fi nancial institutions Rising demand for cash on the ex- wards its 2% target, as trade A scheduled sales tax hike continued to inject funds into money via open market operations, more than have to shore up their balance sheets to change triggered spikes in the interest frictions and slowing glo- in October may also curb con- markets to ensure ample liquidity ahead four times the amount last week. meet half-year end regulatory require- rates and trading volume. bal growth cloud the outlook sumption, they warn. of a seasonal surge in cash demand at the However, the weighted average repo ments. Volume of 14-day repos traded on the for the world’s third-largest A downturn in consumer end of June. rate of the same tenor traded on the In China, many small lenders and non- Shanghai Stock Exchange leapt to an all- economy. and business spending could Typical market jitters over liquidity at Shanghai Stock Exchange was 1.9550%, bank fi nancial institutions do not have di- time high of 208.9bn yuan ($30.47bn) on The so-called core-core cast doubt on the BoJ’s argu- this time of year have been amplifi ed after about 85.5 basis points higher than the rect access to the PBoC’s various liquidity Monday. CPI, which strips away the ment that a sustained eco- regulators took over credit-laden Inner over-the-counter interbank money mar- facilities and need to rely on bigger banks. For the week, the PBoC also inject- effects of volatile food and nomic recovery will gradually Mongolia-based Baoshang Bank in May. ket. “The fact is that the central bank has Traders said some smaller institutions ed 240bn yuan of long-term funding energy costs and is closely prod firms to boost prices and Some smaller banks and brokers have kept pouring liquidity, but the transmis- were denied loans in interbank markets through its medium-term lending facil- watched by the BoJ to gauge wages, helping inflation ac- since struggled to get short-term funding sion is not functioning well,” said a trader last week, prompting regulators to warn ity. how much the economy’s celerate.

Baoshang failure takes a toll on China’s interbank markets as contagion fears grow

Reuters mutual fund houses as of March 31, tried to limit the fallout, urging larger Shanghai according to fund consultancy Z-Ben lenders not to starve smaller players Advisors. of cash. Great Wall West China Bank, which has The central bank has also pumped Nearly three weeks after Chinese an investment grade credit rating of money into the market. regulators took over troubled AA, had sought to raise 500mn yuan Over the past week, the central Baoshang Bank, a mid-sized mutual ($73mn), according to an interbank bank and securities regulator have fund house in Beijing suddenly became market statement. held meetings with brokerages and unable to borrow cash in the interbank It off ered a 3.9% yield on one-year mutual fund houses, urging them to market and was forced to default on deposits, above the 3.25% off ered by support each other rather than blindly some products. issuers of NCDs with top-notch AAA+ blacklisting counterparties. Around the same time, Great Wall West ratings. In one such gathering, regulators put China Bank, a regional lender in Sichuan An off icial at Great Wall West China’s it bluntly: “If mutual distrust keeps province, set out to sell negotiable capital markets department said the spreading, it will eventually evolve into certificates of deposit (NCDs) – usually lender had had contingency measures systemic financial risks,” according a routine fundraising tool for small in place and was not suff ering from a to minutes of the meeting seen by lenders – but was only able to raise a liquidity shortage. Reuters. tenth of its targeted amount. It is not the only lender to be The China Securities Regulatory Both examples highlight increasing disappointed. Commission did not respond to a distrust in China’s interbank market Estimates by CITIC Securities Reuters request for comment. as smaller banks, asset managers and showed issuers of NCDs with a For many China experts, the brokerages find their creditworthiness second-tier investment rating of Baoshang takeover is the first shot in questioned in the wake of the AA+ or lower raised on average only a new campaign by Beijing to reduce takeover of Inner Mongolia-based 15% of their fund-raising targets this excessive leverage in the banking Baoshang. A man walks past a building with an advertisement of Baoshang Bank in Beijing. Nearly three weeks after Chinese month, compared with over 70% system and curb reckless interbank Fund managers and traders say regulators took over troubled Baoshang Bank, a mid-sized mutual fund house in Beijing suddenly became unable before the Baoshang Bank takeover lending. they are worried about the prospect to borrow cash in the interbank market and was forced to default on some products. in May. It follows a slew of ‘deleveraging’ of further defaults in interbank Wang Ming, a product supervisor policies between 2016 and 2018 that borrowing as well as more troubled worth 50mn yuan ($7.3mn) or less, chaos in the financial system. on June 12 it needed to sell assets at Hua Chuang Securities’ trading targeted the shadow banking sector banks coming to light. shattering a widely held belief in full Many small lenders rely on short-term after defaulting on several products, department, said investors are and off -balance-sheet investments. “As the old saying goes, when you government guarantees for such borrowings for long-term investments according to a letter it sent that was thoroughly re-assessing counterparty They also see Beijing’s move as a see one cockroach, you will discover assets. and surging financing costs could hit reviewed by Reuters. risks and demanding higher-quality precursor to consolidation in an a swarm of them,” said Liu Haiying, Short-term interbank lending rates their returns or force them to liquidate Asked about the letter’s contents, collateral. industry with more than 4,000 players founder of Shanghai-based Haiying have spiked to as high as 15% this assets. the fund house said in an e-mailed “Interbank lending used to be a no- and where smaller lenders account for Investment and author of the book month from more normal levels of That in turn could further strain statement it was “obliged to take active brainer. But now, it has become very a quarter of the sector’s assets. China’s Huge Debts. around 3.5%. liquidity conditions in a market that measures to flag and reduce risks”. diff icult to borrow money if you pledge Many of those smaller banks have been “Worryingly, Baoshang Bank is likely “The liquidity stress we’re witnessing is also a key fundraising channel for It has not publicly disclosed the size securities rated AA+ or below.” expanding aggressively, using cash that first cockroach.” now is rooted in concerns over smaller fund houses and brokerages. of the default or whether it has made The China Banking Association raised via NCDs. Particularly shocking for the market insolvency, which is very diff icult to Funding woes repayments. declined to comment. Proceeds are channelled into riskier has been the government’s decision cope with,” said Liu, adding that while Controlled by Hengtai Securities Co Regulators have said the Baoshang but higher-yielding investments, such to only guarantee the principal for authorities were right to try to clean The Beijing-based fund house, New Ltd, New China Fund ranked 62nd in takeover was necessary to stave off as corporate bonds, or even local interbank deposits with Baoshang up problems, they risked creating China Fund Management, told clients terms of assets among 124 Chinese risks to the financial system and have government pet projects Gulf Times 4 Saturday, June 22, 2019 BUSINESS

Malaysia launches legal action to recover $65mn stolen from 1MDB

AFP the investment vehicle and spent on Corruption Commission has launched forfeiture action to date, with the individuals. Latheefa added that about $5bn worth of foreign assets Putrajaya, Malaysia everything from yachts to expensive civil forfeiture actions – which allow money purportedly coming from a about 919mn ringgit in looted funds linked to 1MDB, senior anti-graft artwork, in a fraud allegedly involving authorities to recover assets allegedly local bank account tied to Najib. have so far been recovered, some of official Azam Baki said. disgraced ex-premier Najib Razak and obtained through crime – against 41 Among the organisations targeted it from overseas. Since losing power, Najib has been Malaysia has launched legal action his cronies. entities and individuals. are branches of the United Malays Last month, about $57mn forfeited hit with dozens of charges linked to to recover about $65mn stolen from Anger at the scandal contributed to “We are set to recover at least 270mn National Organisation, the party that by the company behind the Leonardo the scandal, and has been on trial scandal-hit state fund 1MDB, much Najib’s long-ruling coalition losing ringgit ($65mn),” Latheefa Koya, the Najib once headed and which was DiCaprio film “Wolf of Wall Street” since April in the first of several of it from groups connected to the power at historic polls last year, and newly appointed head of the agency, the lynchpin of the former ruling was returned to Malaysia by US court cases he is expected to face ousted former regime, anti-corruption the new government is seeking to told reporters in the administrative coalition. authorities, who are seizing assets in over 1MDB. authorities said yesterday. claw back looted funds. capital Putrajaya. They also include other parties in America linked to the scandal. Najib, who vehemently denies any Billions of dollars were looted from In the latest move, the Malaysian Anti- She said it was Malaysia’s largest civil the coalition, charitable trusts and In total, Malaysia aims to recover wrongdoing, is free on bail.

China to provide Indian steel ministry for higher Pakistan $1bn duties to deter Chinese imports

Internews Reuters Islamabad New Delhi

inister for Planning and ndia’s steel ministry has sought an Development Khusro immediate increase in import du- MBakhtiar said China Ities on fi nished steel products to will provide $1bn grant for so- 15% from a range of 7.5% to 12.5%, cit- cio-economic development in ing a threat from Chinese imports and Pakistan. excess global capacity, an internal note Addressing China-Pakistan reviewed by Reuters showed. Economic Corridor (CPEC) fo- The steel ministry has proposed the rum in Islamabad yesterday, he higher duties as part of its recommen- said co-operation in education, dations to the fi nance ministry for the health, water, poverty allevia- upcoming 2019/20 budget that is due tion and other sectors has been out on July 5. included in socio-economic de- “The US-China trade war is threat- velopment. ening Indian markets as China looks The minister said industrial for alternative markets” for its steel ex- and agricultural development ports, India’s steel ministry said. will be focused in the next phase Citing the vulnerability of local mills, of CPEC and urged the private the ministry said the nation’s steel sec- sector to take lead in industrial tor needs “protection from unfairly development. traded cheap steel imports” as well as He said co-operation in in- lower input costs. dustrial sector will further “Peak rates (for all steel products) strengthen relationship between may be raised to 25% to meet any con- Pakistan and China. tingency arising from potential adverse Bakhtiar said China has of- global market turmoil,” it said. fered free access for export of 313 Existing anti-dumping and counter- Pakistani items, adding that the vailing duties have been rendered inef- government wants to increase fective by the volatility in steel prices, business opportunities under the ministry said. CPEC and for the purpose, Pa- The steel ministry said government kistan-China Business Forum is revenues could increase by Rs13.66bn being set up. ($196.1mn) if the import duties were Bakhtiar said huge investment implemented, although it is the fi- was made in energy sector under nance ministry that makes the final CPEC in Pakistan during the last decision. six years. He said in infrastruc- The steel and fi nance ministries did ture sector, railway network and not immediately reply to Reuters e- development of coastal areas, mails seeking comment. including Gwadar Port, are being India turned from net exporter to net A pedestrian walks past a Tata Steel plant in Jamshedpur, Jharkhand. India’s top four steelmakers, including Tata Steel, together control over 45% of the country’s total given special importance. importer of steel during the 2018/19 fi s- steel production. He said Gwadar Master Plan cal year as local demand increased and will give impetus to economic imports jumped from Japan, Korea and accounted for 58% of its imports of the lating trade war with Washington. Over Steel Ltd, Tata Steel Ltd, state-owned ing about steel being dumped into India activity in Gwadar. China. alloy, while 18% of its incoming steel 50% of India’s imports of wire rods and Steel Authority of India Ltd and Jindal for the last several months. India’s steel He said Pakistan desires to Japan, South Korea and member came from China. bars – both long steel products used in Steel and Power Ltd – together control ministry has also sought cuts to import benefi t from Chinese experience countries of the Association of South- Reuters previously reported that In- construction – came from China last over 45% of India’s total steel produc- duties on coking coal, steel scrap and in diff erent sectors, including east Asian Nations, which all have free dia feared Chinese steel fl ooding its year, government data showed. tion. graphite electrodes to reduce raw mate- livestock, fi shing and research. trade agreements on steel with India, markets as fallout from Beijing’s esca- India’s top four steelmakers – JSW The producers have been complain- rial costs for making steel.

1,323 fi rms ‘US, Japan need more tools registered to shore up banking system’ in Pakistan

Reuters discuss his monetary policy outlook in the the Japanese banking system is now, once last month Washington speech. again, being threatened by adverse eco- The Fed on Wednesday signalled that rate nomic conditions,” said Rosengren, who cuts could begin as early as July in response was at the Boston Fed when the 2008 global Internews he United States and Japan may need to growing economic risks, rising US trade fi nancial crisis shook the economy. Islamabad to shore up bank oversight to prepare tensions and tepid infl ation. “A shrinking population, ageing demo- Tfor economic downturns, the head of The Fed has cited high levels of US corpo- graphics, and very low interest rates provide the Federal Reserve Bank of Boston warned rate debt among major risks to the economy very little room for Japanese banks to oper- he Securities and Exchange yesterday. today. ate profi tably. Commission of Pakistan Eric Rosengren, president of the Boston Rosengren’s speech focused largely on This of course provides an incentive to T(SECP) incorporated 1,323 Fed, said in a speech that policymakers in lessons from the late-1990s fi nancial crisis reach for yield, potentially implying addi- new companies in May, up 21%, the two major economies should consider in East Asia and what he sees as weaknesses tional risk-taking.” from 1,094 companies in corre- whether regulators need more tools, in- in Japan’s fi nancial system today. While Rosengren endorsed requiring sponding period last year. With cluding requiring banks to hold more capital The speech also pointed to the role that banks to keep extra capital cushions dur- the latest additions, the total now, to counteract economic risks. central banks’ powers beyond setting rates, ing good times, the Fed itself has shied away number of registered companies “Japan, like the United States, might including overseeing banks, may play in the from requiring banks to do so, keeping its has reached to 100,532. benefi t from considering an expanded set next downturn. “Countercyclical Capital Buff er” require- Around 73% entities were in- of macroprudential tools to enhance the fi - Policymakers could have lessened the ment for banks at 0%. Rosengren does not corporated as private limited, nancial system’s resilience,” Rosengren said impact of prior fi nancial crises by “stress have a vote on those capital requirements. 24% as single-member compa- in remarks prepared for delivery at a confer- testing” banks and requiring them to hold The Fed is due to report later on Friday nies, while the remaining 3% as Rosengren: Japan, like the US, might benefit from considering an ence in Eltville, Germany. extra cash, Rosengren said. some results from its own annual “stress public unlisted, non-profi t as- expanded set of macroprudential tools to enhance the financial Rosengren, who is voting member of the “Despite the passage of time and adop- tests” of banks’ ability to weather a major sociations, foreign companies system’s resilience. Fed this year on US interest rates, did not tion of better policies, one could argue that downturn. and limited liability partnerships during the month. Almost 55% of these were reg- istered the same day. The trading sector took the Alibaba, JD.com seek to lock in merchant loyalty with new services lead with the incorporation of 199 companies, followed by Reuters what food they like the moment they enter called A100 and which counts Nestle SA Chinese consumer tolerance of data- home – due in part to saturated markets in services with 162, information Beijing one of its stores. Bestore, which already and Procter & Gamble Co as clients, is part sharing between businesses. Hangzhou- China’s biggest cities, flagging consumer technology 153, construction off ers customers the option of paying with of a major push by e-commerce giants based Alibaba said data used for analysis confidence from the US-China trade war 136, tourism 74, food and bev- Alibaba’s face scanning tablets, has also in China to retool their relationship with by brands is anonymised and personal and increased competition from rivals erages 59, corporate agricultural In China, the sales maxim of ‘know your started using Alibaba’s other services for merchants – off ering them a trove of shop- information on customers is not shared. such as newly listed Pinduoduo Inc. farming 56, real estate develop- customer’ is being taken to new lengths. more successful marketing. It can now per data in return for broader and closer Other services Alibaba off ers to retail “For Alibaba and JD.com this is critical ment 55, education 41, market- One of the first firms to join an Alibaba arrange for a person who likes salty food, partnerships. clients include shopper movement ‘heat for their overall ecosystem because they ing/advertisement, textile with Group Holding Ltd programme that pro- owns an SUV and probably has a family to The shift is integral to what Chinese maps’ to help stores better design the have pretty much already exhausted the 40 and engineering 29. vides years of consumer shopping history, receive an ad suggesting suitable Bestore e-commerce firms call ‘new retail’ or layout of products, as well as its chat app online growth,” said Beijing-based Jason Foreign investment has been snack food chain Bestore Co Ltd plans to snacks for a Spring holiday road trip, Huang ‘boundary-less retail’ – the marrying of Dingtalk to communicate within their own Ding, partner at consulting firm Bain & reported in 67 new entities with link facial recognition technology with the Xiao, Bestore’s head of e-commerce, told data available from Internet shopping and companies and with customers. Company. By providing data-driven tools investors from Bahrain, Chile, e-commerce giant’s account data by the Reuters. gathered through brick-and-mortar stores Keeping merchants happy and signing to retail stores, e-commerce firms can China, France, Germany, Indo- year’s end. “With the partnership, our strategies are to provide highly personalised services. them up for more services has taken expand the amount of data collected. “It’s nesia, Iraq, Japan, Jordan, Korea For customers opting to have their facial more focused, sales behaviours are more It has been enabled by the widespread on added urgency for Alibaba and rival not just about money, it’s about continuing South, Kuwait, Lebanon, Nigeria, data in Bestore’s systems, that means targeted and resources are better allocat- use of payments by smartphone, the JD.com. Both are seeking to diversify amid to grow, and hopefully they will find a way Norway, Philippines, Saudi Ara- shop assistants will be able to check on ed,” Huang said. The Alibaba programme, rise of facial recognition technology and slowing e-commerce revenue growth at to monetise that,” he said. bia, Spain, Sri Lanka, Turkey, UK and the US. Gulf Times Saturday, June 22, 2019 5 BUSINESS Powell opens door to July rate cut amid Trump uncertainty

Bloomberg accommodation,” he told reporters The president asked White House were thinking.’’ Goldman Sachs economy could precipitate a diff icult- quarter-point rate cut. His vote marked Washington after the Fed left rates unchanged. lawyers earlier this year to explore Group Inc now expects the Fed to cut to-arrest downward drift in longer run the first dissent of Powell’s 16-month Those uncertainties may not lift any options for removing Powell as Fed by 25 basis points in both July and inflation expectations,’’ he said. tenure as chairman. time soon. While Trump is slated to chair, and Trump told confidants as September and isn’t ruling out the The Fed has failed to convincingly hit While off icials were divided on the Former Federal Reserve chairman meet Chinese President Xi Jinping later recently as Wednesday that he believes possibility of a move of 50 basis points its 2% inflation objective since 2012. path for policy — eight of 17 pencilled Alan Greenspan once remarked this month at the G-20 summit in Japan he has the authority to replace him, “if the news flow disappoints.” The What’s more, inflation expectations, in a reduction by the end of the year that uncertainty is the “defining to discuss their ongoing trade war, the Bloomberg reported this week. need to get ahead of the bond market particularly in financial markets, as another eight saw no change and characteristic” of monetary policy — president’s proclivity to abruptly shift Powell, who’s vowed to protect the Fed’s could be another reason to push Fed have fallen recently and Fed off icials one forecast a hike — Powell said most and he never had to deal with President his tariff strategy could keep corporate independence, said on Wednesday off icials toward a bigger reduction, themselves marked down their forecast agreed that the possibility of a move Donald Trump. decision makers on edge for a while. that he expects to get a clearer a read economists including Jan Hatzius of price rises this year, to 1.5%, from 1.8% has risen. In a reversal of monetary policy, current It’s also put the European Central Bank on whether the economy needs easier wrote in a note. in March. The risks “have called a number of us to Fed chief Jerome Powell on Wednesday on alert for a potential easing of its credit “in the very near term.” He also The Fed’s statement Wednesday and Powell also suggested that the labour write down rate cuts, and a number of opened the door to an interest rate cut monetary policy. refused to rule out the possibility of a Powell’s remarks in the subsequent markets might not yet be tight enough those who haven’t to see that the case as early as next month. The trade tensions “are undercutting half percentage point reduction. press conference were well received to generate the sort of the wage-driven has strengthened,” he said. He made clear that uncertainty — confidence and that is slowly spreading “That’s just something we haven’t really by investors, with both stock and bond rise in inflation that the Fed is seeking. “The main message we heard from primarily about the president’s trade throughout the economy,” said Ethan engaged with yet,” he said when asked prices rising. Markets have sometimes While salaries are increasing, they’re Powell’s press conference was that the battles and their potentially corrosive Harris, head of global economics about a 25 or 50 basis point move. “It expressed disappointment at Powell’s not growing “at a pace that would only argument against cutting rates impact on the US and other economies research at Bank of America Merrill will depend very heavily on incoming communications. provide much upward impetus to today was a desire to wait a little to — was a major factor behind the Lynch. “The tariff termites are chewing data and the evolving risk picture as we The Fed can aff ord to be aggressive inflation,’’ he said. learn a lot,’’ JPMorgan Chase & Co chief shift, along with weaker-than-wanted quietly under the surface.” move forward.” because inflationary pressures are That’s despite the fact unemployment is US economist Michael Feroli said in a inflation. Trump, for his part, has been far from “You can’t rule out a 50 basis point muted. Indeed, Powell suggested that near a half century low of 3.6%. note to clients. “While the baseline outlook remains quiet. He’s repeatedly criticised Powell move in July,” said John Herrmann, sluggish price pressures could be a The Federal Open Market Committee’s “The burden is on the data looking favourable, the question is whether and the Fed for keeping credit too tight director of US rate strategy at MUFG reason on their own for the central bank vote on Wednesday to leave rates quite solid and trade policy turning these uncertainties will continue and complained that the central bank is Securities Americas. “He sounded to reduce rates. unchanged — in a 2.25% to 2.5% range more growth favourable to defuse the to weigh on the outlook and thus undercutting eff orts to win his battles at least willing to entertain the idea, “We are well aware that inflation - was not unanimous, with St. Louis case for cutting at the next meeting,” call for additional monetary policy with China and other trading partners. which is more aggressive than markets weakness that persists even in a healthy Fed President James Bullard seeking a he added.

BoE to consult on new platform to plug £22bn SME funding gap

Reuters London

The Bank of England said it will lay the groundwork for a new platform that will help small companies get loans to grow. BoE governor Mark Carney said it would consult on developing an open platform for competitive financing to plug a £22bn funding gap for small and medium sized enterprises (SMEs). “It is not for the Bank of England to build this platform but we can help lay some of the groundwork,” Carney said in a speech in London’s Mansion House on Thursday. Lenders would be able to access credit data held on companies on the platform to speed up lending. Part of the problem is that the assets that SMEs are seeking to borrow against are increasingly intangible — like a brand or user base — rather than physical machinery or buildings, Carney said. This makes decisions on a loan by a bank trickier. “This should not be the case in a data- rich world. Lenders should be able to access a broader set of information on which to base credit decisions,” Carney said. SMEs could create a “portable credit file” drawing on sale, trading and other data from their business which could then be shared with a wide range of Pedestrians walk past a Lloyds bank branch in London. The £45.5mn fine is a further embarrassment for Lloyds as banks continue to pay for misbehaviour during the financial crisis a decade ago when competing lenders through a national Britain had to bail out several lenders. SME financing platform. The identification of businesses and verification of their data will be crucial to making this work, the BoE said. A “legal entity identifier” (LEI) system was introduced after the financial crisis for regulators to identify each financial firm. Britain’s Lloyds fi ned $58mn The BoE said the LEI system could be adapted for SMEs in Britain so they can pull their data into a single credit file for the new platform to shop around for finance. “Putting data to work is critical to closing one of the biggest funding for HBOS fraud failings gaps in the country,” Carney said. Fine for failures at HBOS arm Britain had to bail out several lenders. the HBOS fraud who runs campaign Services Authority (FSA). The bank’s to customers aff ected. The then FSA to disclose fraud suspicions; Halifax Bank of Scotland (HBOS) group SME Alliance, said the fi ne had failures caused delays to investiga- appointed investigators to examine Lloyds acquired HBOS at height was involved in one of Britain’s big- come too late. tions by both the FCA and police, the misconduct, but the probe was of financial crisis; some investors gest banking frauds which led to six “For victims who lost their busi- said Mark Steward, the FCA’s ex- put on hold from 2013 to 2017 to al- have criticised Lloyds’ handling people, including two former HBOS nesses, livelihoods and, in some ecutive director of enforcement and low for the criminal prosecution to be of case bankers, being jailed in 2017 for a cases families, because of the cra- market oversight. completed. combined 47 years. ven, unrestricted behaviour of HBOS “There is no evidence anyone Lloyds has not yet drawn a line un- Reuters HBOS was rescued by Lloyds in a bankers, action coming over a decade properly addressed their mind to this der the fraud at the HBOS Reading London state-engineered takeover in 2009. after the event is the ultimate insult,” matter or its consequences,” Steward branch, with its handling of the af- The Financial Conduct Authority Turner said. said. fair questioned at the bank’s annual (FCA) says HBOS identifi ed suspi- The fi ne is the largest imposed by The watchdog also banned Lynden meeting last month. ritain’s fi nancial watchdog has cious conduct in Reading in early the FCA on a fi rm for not being open Scourfi eld, Mark Dobson, and hus- British television personality Noel fi ned Lloyds Banking Group 2007 but did not tell the regulator and co-operative with the watchdog, band and wife David Mills and Alison Edmonds has alleged his former en- B£45.5mn ($58mn) for failures until the year Lloyds acquired the but it is dwarfed by the £6bn pre-tax Mills, who were all convicted in 2017 tertainment business collapsed as a to disclose suspicions of fraud at an bank. profi t made by Lloyds last year. in a fraud trial related to the Reading result of the fraud, while Lloyds has HBOS branch in Reading, southern The fi ne would have been £65mn Lloyds shares were down 0.6% at case, from working in fi nancial serv- said 71 business customers have been England. but was discounted by 30% after 13.50 GMT. ices. off ered compensation, of whom 98% The fi ne is a further embarrass- Lloyds agreed to resolve the matter, The FCA said HBOS failed to be Lloyds Banking Group said in a have accepted its off ers. ment for Lloyds as banks continue angering a group representing vic- open and cooperative and failed to statement it welcomed the FCA’s A retired High Court judge is re- to pay for misbehaviour during the tims of the fraud. disclose information appropriately “comprehensive investigation”, ac- viewing whether this compensation Carney: Laying groundwork. fi nancial crisis a decade ago when Nikki Turner, one of the victims of to the then regulator, the Financial cepted its fi ndings and apologised scheme was conducted fairly. BMW billionaire heirs say their lives are harder than you think

Bloomberg as a guardian of wealth also has supervisory board. “For both of us, how it’s done,” said Quandt, Berlin personal sides that aren’t so nice.” it’s certainly not the money that who questions the rationale of Klatten – whose father Herbert drives us,” said Quandt. “Above all, it inheritance tax. “Instead, it was a Quandt helped rescue BMW in the is the responsibility of securing jobs constant questioning, associated Dealing with the responsibility and late 1950s – is Germany’s second- in Germany.” with self-doubt.” jealousy from inheriting wealth is a richest person with a fortune The two heirs say they’re Klatten, who gained notoriety in 1978 misunderstood burden, according to valued at $18.6bn, according to comfortable with their roles, but when police foiled a plot to kidnap Susanne Klatten and Stefan Quandt, the Bloomberg Billionaires’ Index. initially struggled with taking on her and her mother Johanna, said the billionaire siblings who together She has also built up holdings in high-level positions at young ages. that wealth redistribution doesn’t own almost half of BMW AG. chemicals company Altana AG and Quandt, who was 30 when he was work and that a fair society allows “Many believe that we are carbon producer SGL Carbon SE. given his first board seat, said he people to pursue opportunities permanently sitting around on a Quandt, who owns stakes in logistics might have wanted to work a few according to their abilities. yacht in the Mediterranean,” Klatten company Logwin and homeopathic years as a “simple” product manager “Our potential stems from the role of Susanne Klatten, billionaire and chairman of SGL Carbon, speaks at the German Foundation told Manager Magazin in a rare medicine company Heel, has a somewhere or study architecture. being an heir and developing that,” of Family Businesses conference in Berlin (file). “The role as a guardian of wealth also has interview with her younger brother net worth of $15.5bn. Both he and “My starting point was never: So, she said. “We work hard on that personal sides that aren’t so nice,” Klatten told Manager Magazin in a rare interview. published on Thursday. “The role his sister have seats on BMW’s now I come and show everyone every day.” Gulf Times 6 Saturday, June 22, 2019 BUSINESS

DJIA WORLD INDICES Company Name Lt Price % Chg Volume Indices Lt Price Change Dow Jones Indus. Avg 26,799.39 +46.22 Apple Inc 200.03 0.29 6,908,854 S&P 500 Index 2,955.31 +1.13 American Express Co 125.67 0.60 1,053,997 Nasdaq Composite Index 8,033.53 -17.81 Boeing Co/The 374.15 -0.19 967,540 S&P/Tsx Composite Index 16,533.38 -41.45 Caterpillar Inc 134.35 0.54 1,158,712 Mexico Bolsa Index 43,424.11 -221.00 Cisco Systems Inc 57.60 0.33 7,020,384 Brazil Bovespa Stock Idx 101,733.50 +1,430.10 Chevron Corp 125.35 0.86 3,024,898 Ftse 100 Index 7,407.50 -16.94 Walt Disney Co/The 141.20 -0.58 1,794,909 Cac 40 Index 5,528.33 -7.24 Dowdupont Inc 0.00 0.00 - Dax Index 12,339.92 -15.47 Goldman Sachs Group Inc 197.56 0.95 852,142 Ibex 35 Tr 9,227.20 +18.70 Home Depot Inc 209.52 -0.82 1,458,857 Nikkei 225 Intl Business Machines Corp 138.74 -0.08 1,123,151 21,258.64 -204.22 Japan Topix Intel Corp 47.50 0.65 6,315,634 1,545.90 -14.00 Hang Seng Index Johnson & Johnson 141.39 -0.58 2,489,333 28,473.71 -76.72 All Ordinaries Indx Jpmorgan Chase & Co 111.15 0.87 3,077,752 6,734.30 -33.64 Nzx All Index Coca-Cola Co/The 51.68 0.04 4,346,486 1,754.13 +6.18 Bse Sensex 30 Index Mcdonald’s Corp 205.69 0.28 1,021,670 39,194.49 -407.14 Nse S&P Cnx Nifty Index 3M Co 173.41 -0.30 951,879 11,724.10 -107.65 Straits Times Index Merck & Co. Inc. 83.90 -0.83 2,640,488 3,321.40 +6.89 Karachi All Share Index Microsoft Corp 137.33 0.28 9,573,312 25,622.70 +101.94 Jakarta Composite Index Nike Inc -Cl B 85.12 -0.14 1,500,337 6,315.44 -20.26 Pfizer Inc 43.61 0.02 4,685,200 Procter & Gamble Co/The 111.91 0.15 3,085,078 Travelers Cos Inc/The 152.66 0.31 630,678 TOKYO Unitedhealth Group Inc 250.26 1.01 1,253,998 United Technologies Corp 129.80 -0.18 1,164,705 Company Name Lt Price % Chg Volume Visa Inc-Class A Shares 174.27 0.31 1,801,946 Nidec Corp 14,330.00 -0.10 1,080,500 Verizon Communications Inc 57.83 0.85 3,673,791 Isuzu Motors Ltd 1,228.50 -0.20 2,872,000 Walgreens Boots Alliance Inc 52.70 -0.34 2,168,186 Unicharm Corp 3,301.00 -3.14 2,610,300 Walmart Inc 112.02 1.54 2,047,194 Nomura Holdings Inc 378.30 0.21 27,168,900 Exxon Mobil Corp 77.35 0.97 5,460,712 Daiichi Sankyo Co Ltd 5,789.00 -4.14 3,367,700 Subaru Corp 2,494.50 -2.90 3,645,000 Sumitomo Realty & Developmen 4,039.00 -2.58 1,857,000 FTSE 100 Ntt Docomo Inc 2,480.50 -0.54 6,250,900 Sumitomo Metal Mining Co Ltd 3,175.00 1.93 2,669,900 Company Name Lt Price % Chg Volume Orix Corp 1,591.50 -0.34 3,987,500 Asahi Group Holdings Ltd 4,946.00 0.84 1,932,700 Anglo American Plc 2,159.00 0.94 4,765,427 Keyence Corp 64,820.00 1.15 523,700 Associated British Foods Plc 2,441.00 0.58 1,294,047 Mizuho Financial Group Inc 154.40 0.19 116,479,400 Admiral Group Plc 2,112.00 0.67 1,614,512 Sumitomo Mitsui Trust Holdin 3,895.00 -0.84 2,032,500 Ashtead Group Plc 2,165.00 1.12 2,804,443 Japan Tobacco Inc 2,503.50 0.10 6,419,600 Antofagasta Plc 895.80 0.74 2,564,576 Sumitomo Electric Industries 1,376.50 0.36 4,789,000 Auto Trader Group Plc 562.20 -0.64 6,400,974 Daiwa Securities Group Inc 480.60 -0.19 9,131,700 Aviva Plc 417.00 -0.02 16,984,716 Softbank Group Corp 10,250.00 -2.52 6,374,000 Astrazeneca Plc 6,378.00 -1.67 3,864,253 Panasonic Corp 886.00 1.03 9,384,000 Bae Systems Plc 485.60 0.37 19,436,961 Fujitsu Ltd 7,508.00 -1.13 861,500 Barclays Plc 148.70 -1.18 74,426,958 Central Japan Railway Co 22,285.00 -1.02 385,300 British American Tobacco Plc 2,797.00 -0.11 8,230,545 A trader monitors stock prices at the London Stock Exchange. The FTSE 100 was flat at 7,425.08 points yesterday. Nitori Holdings Co Ltd 13,270.00 -0.67 455,800 Barratt Developments Plc 562.60 -0.50 5,512,786 Ajinomoto Co Inc 1,855.00 -2.52 2,024,900 Bhp Group Plc 1,965.00 0.10 8,983,265 Daikin Industries Ltd 13,900.00 -1.07 1,645,600 Berkeley Group Holdings/The 3,567.00 1.16 832,517 Mitsui Fudosan Co Ltd 2,649.50 -1.87 6,743,200 British Land Co Plc 540.00 0.00 7,543,506 Ono Pharmaceutical Co Ltd 1,907.00 -2.83 2,753,100 Bunzl Plc 2,102.00 -0.85 2,139,002 Toray Industries Inc 808.40 -0.27 10,129,500 Bp Plc 556.20 1.26 78,957,522 Bridgestone Corp 4,234.00 0.02 3,578,900 Burberry Group Plc 1,783.00 0.17 2,989,340 Sony Corp 5,648.00 -2.25 8,103,300 Europe stock markets rally Bt Group Plc 201.35 -0.89 44,171,370 Astellas Pharma Inc 1,459.00 -2.77 9,605,700 Coca-Cola Hbc Ag-Di 2,971.00 0.44 1,119,089 Hoya Corp 7,994.00 -1.35 1,679,800 Carnival Plc 3,485.00 -1.80 2,948,071 Nippon Steel Corp 1,839.50 0.03 3,517,800 Centrica Plc 89.10 1.16 71,409,363 Suzuki Motor Corp 5,077.00 -1.67 3,312,800 Compass Group Plc 1,850.00 -0.99 6,654,601 Nippon Telegraph & Telephone 5,003.00 -0.60 4,324,700 Croda International Plc 5,375.00 0.84 689,545 cools on rising oil prices Jxtg Holdings Inc 523.80 0.87 30,878,400 Crh Plc 2,554.00 -0.39 2,538,199 Murata Manufacturing Co Ltd 4,737.00 -1.09 5,869,900 Dcc Plc 7,090.00 0.45 504,112 Kansai Electric Power Co Inc 1,222.50 0.08 3,956,600 Diageo Plc 3,380.00 -0.43 9,980,257 Frankfurt’s DAX recouped early which is now expected to cut rates Denso Corp 4,468.00 -0.11 1,569,400 Reuters Direct Line Insurance Group 323.50 0.62 12,046,467 losses to trade 0.21% higher after a sur- from July. Sompo Holdings Inc 4,146.00 -1.43 1,732,500 London Evraz Plc 636.00 -2.27 8,498,883 After a busy week for monetary Daiwa House Industry Co Ltd 3,182.00 -5.75 3,388,500 vey yesterday showed higher activity in Experian Plc 2,414.00 -0.21 3,602,033 Dai-Ichi Life Holdings Inc 1,603.50 -1.20 5,000,000 Germany’s services and manufactur- policy, sterling traders will turn their Easyjet Plc 883.20 -1.05 8,828,675 Mazda Motor Corp 1,108.00 -0.76 6,839,200 pbeat data and rising oil prices ing sector edged higher in June, sug- attention back to British politics and Ferguson Plc 5,682.00 0.00 893,027 Komatsu Ltd 2,521.00 -0.61 5,310,500 the Conservative Party leadership Fresnillo Plc 883.20 1.66 2,586,867 helped European stock markets gesting that growth in Europe’s biggest West Japan Railway Co 8,743.00 -1.32 795,900 contest. Glencore Plc 280.25 0.50 76,656,665 Ueke out some marginal gains economy has stabilised at a moderate Kao Corp 8,402.00 -1.64 1,711,500 Glaxosmithkline Plc 1,576.40 -1.90 18,745,625 yesterday, off setting another jolt for pace in the second quarter. Johnson faces foreign minister Jer- Mitsui & Co Ltd 1,774.00 0.60 8,720,700 Gvc Holdings Plc 630.00 -1.47 3,446,824 chipmakers from the fallout of a US London’s FTSE 100 was fl at at emy Hunt in a contest to succeed Daito Trust Construct Co Ltd 13,980.00 -1.58 596,400 Hikma Pharmaceuticals Plc 1,691.00 -3.48 3,504,411 Otsuka Holdings Co Ltd 3,562.00 -1.66 1,408,800 ban on trading with Huawei Technolo- 7,425.08 points yesterday. Theresa May as party leader and prime Hargreaves Lansdown Plc 1,903.00 0.61 1,913,350 Oriental Land Co Ltd 13,220.00 -1.12 624,700 gies. Other surveys showed French busi- minister, with Johnson the odds-on Halma Plc 2,008.00 -0.99 3,384,728 Sekisui House Ltd 1,796.50 -0.42 2,668,700 At the end of a week that has seen ness activity strengthened more than favourite to secure a majority of votes Hsbc Holdings Plc 649.60 -0.67 60,745,999 Secom Co Ltd 9,485.00 -0.33 559,400 Hiscox Ltd 1,712.00 -0.23 1,243,320 European markets gain around 2%, expected in June, and eurozone busi- from the Conservative Party. The new Tokio Marine Holdings Inc 5,399.00 -1.85 2,923,400 Intl Consolidated Airline-Di 460.80 1.05 11,837,525 and bond yields and the euro sink, es- ness activity picked up a touch this leader will be chosen by a ballot of par- Aeon Co Ltd 1,856.50 -0.43 3,084,400 Intercontinental Hotels Grou 5,132.00 -1.33 887,890 calating tensions between Washington month. ty members, with the result due next Asahi Kasei Corp 1,160.50 0.56 5,185,900 3I Group Plc 1,063.00 0.66 4,344,611 and Iran also gave investors reason to “Both the French and German fi g- month. Kirin Holdings Co Ltd 2,299.00 -0.43 2,378,100 Imperial Brands Plc 1,870.00 0.04 5,126,847 Marubeni Corp 728.50 1.08 11,794,200 be cautious about pushing ahead with ures were better than expected but also Whoever triumphs, the new prime Informa Plc 809.00 0.10 6,476,135 Mitsubishi Ufj Financial Gro 503.70 -0.71 61,017,000 this month’s rally. fi rmly in contraction territory,” said minister will try to wring a tweaked Intertek Group Plc 5,564.00 -1.21 1,030,223 Mitsubishi Chemical Holdings 746.60 0.67 6,410,400 Helped by gains in oil prices that Campbell. Brexit withdrawal deal more palatable Itv Plc 107.45 -0.05 15,727,550 Fanuc Corp 19,960.00 0.50 1,165,900 Johnson Matthey Plc 3,182.00 -0.66 1,042,264 drove shares in Royal Dutch Shell, BP The technology index fell 0.4%, to British politicians from a sceptical Fast Retailing Co Ltd 66,100.00 -2.07 788,900 Kingfisher Plc 207.80 -0.34 17,683,410 and Total higher, the pan-regional and was among the biggest fallers, as Brussels that has said there will be no Ms&Ad Insurance Group Holdin 3,423.00 -1.16 2,352,100 Land Securities Group Plc 832.60 0.70 5,578,447 STOXX 600 index was just 0.05% British wafer maker IQE Plc warned further negotiation over the agree- Kubota Corp 1,769.50 -1.39 4,200,200 Legal & General Group Plc 266.40 0.11 26,390,898 ment. Seven & I Holdings Co Ltd 3,660.00 -1.24 2,662,100 higher by 0800 GMT. it would report lower-than-expected Lloyds Banking Group Plc 58.10 -0.50 255,716,916 Inpex Corp 999.30 4.44 16,928,600 The benchmark index, has rallied revenue in 2019, citing the impact of The current deal has been rejected London Stock Exchange Group 5,500.00 -0.54 1,151,617 Resona Holdings Inc 438.60 -0.72 12,862,800 nearly 5% so far this month, on sig- the Huawei ban. three times by the British parliament, Micro Focus International 2,002.00 -0.84 2,112,902 Fujifilm Holdings Corp 5,394.00 -0.68 1,790,100 and if Johnson or Hunt cannot get it or Marks & Spencer Group Plc 209.80 -1.04 17,394,172 nals from the Federal Reserve and the Semiconductor companies were the Yamato Holdings Co Ltd 2,192.50 -1.28 1,083,800 Mondi Plc 1,759.00 -0.59 2,678,976 European Central Bank that they were hardest hit with Infi neon, AMS and another version passed, investors wor- Chubu Electric Power Co Inc 1,557.00 0.00 2,317,600 Melrose Industries Plc 175.65 -1.32 16,128,092 ready to act to counter the impact of STMicroelectronics, Siltronic, Dia- ry Britain will leave the European Un- Mitsubishi Estate Co Ltd 2,065.50 -2.02 6,455,900 Wm Morrison Supermarkets 200.30 0.63 19,763,345 US-China trade tensions on a slowing log Semiconductor dropping between ion on October 31 without transitional Mitsubishi Heavy Industries 4,780.00 0.38 2,312,700 National Grid Plc 847.10 0.55 14,256,174 Sysmex Corp 7,385.00 -0.66 606,400 global economy. 1.2% and 3.2%. trading arrangements in place with its Nmc Health Plc 2,438.00 0.12 766,493 Shiseido Co Ltd 8,464.00 -3.04 3,482,900 “There is probably lingering posi- Spain’s IBEX rose 0.7%, outper- largest trading partner. Next Plc 5,634.00 1.44 959,879 Shionogi & Co Ltd 6,150.00 0.36 1,259,500 tivity from the broadly dovish central forming most European indexes. “Johnson is the fi rm favourite and Ocado Group Plc 1,148.50 4.17 3,274,174 Terumo Corp 3,206.00 -1.93 1,796,100 Paddy Power Betfair Plc 0.00 0.00 - bank statements this week from the Meanwhile, sterling yesterday based on our scenario analysis of a Tokyo Gas Co Ltd 2,619.50 -0.13 2,552,800 Prudential Plc 1,698.00 1.04 9,757,898 ECB and the Fed,” said Connor Camp- slipped to a whisker off recent fi ve- Johnson leadership, GBP could run into Tokyo Electron Ltd 15,060.00 1.45 2,055,300 Persimmon Plc 1,947.00 0.54 1,421,061 bell, fi nancial analyst at Spreadex in month lows against the euro after trouble this autumn,” ING analysts East Japan Railway Co 10,105.00 -1.65 1,088,000 Pearson Plc 816.00 0.12 3,788,104 London. Brexiteer Boris Johnson moved closer said in a note. Itochu Corp 2,072.00 -0.05 6,542,300 Reckitt Benckiser Group Plc 6,209.00 -1.60 2,787,288 Ana Holdings Inc 3,546.00 -1.14 1,545,300 “That rally maybe running out of to becoming British prime minister, sterling was trading fl at by 1600 Royal Bank Of Scotland Group 215.70 -0.92 30,101,065 Mitsubishi Electric Corp 1,396.00 0.58 7,157,900 steam a little bit but it seems to be worrying investors that his govern- GMT at $1.2697. That still left the Brit- Royal Dutch Shell Plc-A Shs 2,584.00 0.45 17,362,275 Sumitomo Mitsui Financial Gr 3,754.00 -0.56 6,247,000 keeping the indexes in the green.” ment would make a no-deal Brexit ish currency up 0.7% this week, with Royal Dutch Shell Plc-B Shs 2,595.00 0.37 11,878,731 Relx Plc 1,922.00 -0.95 6,972,234 Investors will now look to a G20 more likely. most of the gains down to a selloff in Rio Tinto Plc 4,689.50 0.15 5,872,400 summit in Japan next week for progress It eased versus the dollar as well the dollar after the Fed opened the Rightmove Plc 568.70 -0.30 4,818,203 SENSEX from the United States and China on but stayed on course for a weekly gain door to looser monetary policy. Rolls-Royce Holdings Plc 882.00 -3.40 9,681,732 resolving the diff erences that drove the against the greenback after the bank But the pound has not fared as well Rsa Insurance Group Plc 571.60 -0.35 4,520,812 Company Name Lt Price % Chg Volume worst monthly performance in Euro- of England stuck to its message that against the euro, and was down 0.3% Rentokil Initial Plc 394.20 -0.95 9,922,014 Adani Ports And Special Econ 402.00 0.20 4,710,025 pean stock markets in more than two interest rates would need to rise, con- at 89.18 pence. It traded at 89.74 pence Sainsbury (J) Plc 195.85 -0.20 14,292,102 Asian Paints Ltd 1,383.00 -0.65 1,242,165 trasting with the US Federal Reserve on Tuesday, the highest since January. Schroders Plc 3,074.00 -0.74 605,048 years in May. Axis Bank Ltd 771.05 -0.05 12,610,688 Sage Group Plc/The 790.00 0.38 4,577,438 Bajaj Finance Ltd 3,565.85 -0.47 1,058,266 Segro Plc 742.80 1.34 7,488,127 Bharti Airtel Ltd 343.80 -1.36 9,584,254 Smurfit Kappa Group Plc 2,330.00 -3.40 1,452,003 Bharti Infratel Ltd 275.35 -1.33 2,133,362 HONG KONG HONG KONG Standard Life Aberdeen Plc 290.40 2.25 25,360,058 Bajaj Auto Ltd 2,875.55 -0.75 529,699 Ds Smith Plc 353.40 0.57 8,393,183 Bajaj Finserv Ltd 8,392.45 -0.30 230,915 Company Name Lt Price % Chg Volume Company Name Lt Price % Chg Volume Smiths Group Plc 1,514.00 -0.53 2,132,804 Bharat Petroleum Corp Ltd 380.00 -1.35 5,393,974 Scottish Mortgage Inv Tr Plc 533.50 -0.28 4,005,390 Ck Hutchison Holdings Ltd -0.51 Cipla Ltd 551.55 0.05 1,534,007 77.55 8,059,876 Hong Kong & China Gas 17.50 -0.68 24,532,410 Smith & Nephew Plc 1,714.00 -0.38 3,413,896 Hang Lung Properties Ltd -0.33 Coal India Ltd 254.25 -2.34 20,185,830 17.98 5,171,636 Bank Of Communications Co-H 6.46 0.00 36,850,278 Spirax-Sarco Engineering Plc 9,110.00 1.39 948,914 Ck Infrastructure Holdings L -0.16 Dr. Reddy’s Laboratories 2,551.55 -0.52 579,138 64.00 1,988,492 China Petroleum & Chemical-H 5.34 0.75 149,639,635 Sse Plc 1,111.50 -0.18 6,252,159 Hengan Intl Group Co Ltd -2.66 Eicher Motors Ltd 19,719.20 -0.37 54,662 56.70 6,713,239 Hong Kong Exchanges & Clear 276.80 -0.50 6,527,586 Standard Chartered Plc 702.80 -0.76 12,604,754 China Shenhua Energy Co-H 0.47 Gail India Ltd 311.60 0.14 5,984,422 17.02 16,349,252 Bank Of China Ltd-H 3.27 -0.30 340,737,733 St James’s Place Plc 1,098.50 1.06 3,182,749 Cspc Pharmaceutical Group Lt -1.45 Grasim Industries Ltd 897.75 -0.34 1,827,826 12.22 31,264,661 Hsbc Holdings Plc 64.65 -0.84 17,137,080 Severn Trent Plc 2,080.00 -0.72 2,515,931 Hang Seng Bank Ltd -2.29 Hcl Technologies Ltd 1,076.25 -1.02 2,347,555 196.00 2,921,233 Power Assets Holdings Ltd 56.90 -0.09 6,479,353 Tesco Plc 236.70 0.04 48,353,837 China Resources Land Ltd 0.15 Housing Development Finance 2,140.80 -2.66 7,764,514 33.95 9,085,862 Mtr Corp 51.40 0.78 5,462,576 Tui Ag-Di 728.60 -1.11 3,917,552 Ck Asset Holdings Ltd -0.08 Hdfc Bank Limited 2,414.20 -0.50 3,312,565 60.90 9,192,170 China Overseas Land & Invest 27.80 -1.07 13,615,992 Taylor Wimpey Plc 157.10 0.42 18,009,698 Sino Biopharmaceutical -1.29 Hero Motocorp Ltd 2,606.00 -2.24 903,440 7.68 36,471,345 Tencent Holdings Ltd 354.40 0.11 20,111,025 Unilever Plc 4,908.50 -0.09 4,691,535 Henderson Land Development -0.94 Hindalco Industries Ltd 197.65 1.72 7,596,593 42.25 48,250,785 China Unicom Hong Kong Ltd 8.55 -0.35 43,776,395 United Utilities Group Plc 801.00 1.19 5,858,236 Aia Group Ltd 0.79 Hindustan Petroleum Corp 291.90 -0.26 5,154,257 82.70 24,281,500 Link Reit 96.10 -1.08 6,458,819 Vodafone Group Plc 126.90 -1.12 127,569,334 Ind & Comm Bk Of China-H 0.00 Hindustan Unilever Ltd 1,766.65 -2.13 2,512,357 5.93 299,489,257 Sino Land Co 13.42 -1.03 8,632,347 John Wood Group Plc 423.60 1.66 4,846,061 Want Want China Holdings Ltd 1.29 Icici Bank Ltd 430.80 -0.60 13,909,654 6.28 28,863,085 China Resources Power Holdin 11.22 0.54 8,001,098 Wpp Plc 972.40 -1.24 5,364,725 Sun Hung Kai Properties -1.04 Indiabulls Housing Finance L 612.00 2.04 38,708,216 133.00 5,766,459 Petrochina Co Ltd-H 4.36 0.46 132,813,709 Whitbread Plc 4,510.00 0.02 1,311,812 New World Development -0.80 Indusind Bank Ltd 1,448.65 0.91 4,913,512 12.34 24,478,525 Cnooc Ltd 13.48 2.59 74,309,197 Geely Automobile Holdings Lt -1.80 Infosys Ltd 750.20 -0.62 13,200,318 13.10 62,174,109 China Construction Bank-H 6.57 -0.45 408,410,779 Swire Pacific Ltd - Cl A -0.36 Indian Oil Corp Ltd 153.85 -1.85 12,256,650 95.80 1,088,453 China Mobile Ltd 71.00 1.07 28,296,494 Sands China Ltd -1.71 Itc Ltd 274.25 -0.99 18,595,809 37.30 11,003,628 TOKYO Wharf Real Estate Investment 0.00 Jsw Steel Ltd 267.15 -0.78 6,144,176 55.00 4,304,399 Clp Holdings Ltd -4.27 Kotak Mahindra Bank Ltd 1,489.80 -1.88 1,214,842 86.40 14,119,056 Country Garden Holdings Co 0.00 Company Name Lt Price % Chg Volume Larsen & Toubro Ltd 1,539.75 -1.11 3,028,524 11.80 26,729,437 Aac Technologies Holdings In -2.01 Mahindra & Mahindra Ltd 627.45 0.05 2,713,987 43.95 6,873,509 GCC INDICES Japan Airlines Co Ltd 3,431.00 -1.66 1,997,300 Shenzhou International Group 1.26 Maruti Suzuki India Ltd 6,417.25 -3.02 1,345,890 104.50 4,437,829 Indices Lt Price Change Recruit Holdings Co Ltd 3,501.00 -1.80 4,473,800 Ping An Insurance Group Co-H -0.42 Ntpc Ltd 134.55 0.00 9,456,244 93.95 52,869,247 Softbank Corp 1,419.00 0.89 12,465,500 China Mengniu Dairy Co 30.40 -0.65 8,562,010 Oil & Natural Gas Corp Ltd 170.95 -0.61 11,402,911 Doha Securities Market 10,688.67 +181.27 Kyocera Corp 7,050.00 0.18 1,183,400 Sunny Optical Tech -0.74 Power Grid Corp Of India Ltd 199.90 -0.52 9,338,314 80.00 7,720,238 Nissan Motor Co Ltd 766.30 0.55 13,776,000 Boc Hong Kong Holdings Ltd 30.60 -1.92 25,333,581 Reliance Industries Ltd 1,279.50 -1.33 10,623,098 Kuwait Stocks Exchange 4,741.36 -0.25 T&D Holdings Inc 1,131.00 -1.09 2,960,700 China Life Insurance Co-H -0.31 State Bank Of India 349.40 1.23 24,749,090 19.32 46,975,370 Toyota Motor Corp 6,687.00 -1.21 6,428,100 Citic Ltd 11.22 0.72 19,532,367 Sun Pharmaceutical Indus 382.80 -1.97 5,389,874 Oman Stock Market 3,928.26 -15.20 Kddi Corp 2,792.50 -0.18 7,015,200 Galaxy Entertainment Group L -1.92 Tata Steel Ltd 497.65 -0.67 6,126,246 51.15 8,517,615 Nitto Denko Corp 5,247.00 0.46 1,080,100 Wh Group Ltd 8.05 -0.25 51,348,474 Hitachi Ltd 3,935.00 -0.88 3,900,300 Tata Consultancy Svcs Ltd 2,249.85 -1.23 3,871,804 Takeda Pharmaceutical Co Ltd 3,778.00 -1.18 6,996,600 Tech Mahindra Ltd 740.45 2.05 7,280,809 Jfe Holdings Inc 1,540.00 0.39 6,005,000 Titan Co Ltd 1,292.35 -1.09 2,640,376 Sumitomo Corp 1,609.50 -0.62 8,942,800 Tata Motors Ltd 158.90 -0.22 23,304,207 Canon Inc 3,215.00 0.69 5,895,100 Upl Ltd 890.10 2.28 12,447,297 “Information contained herein is believed to be reliable and had been obtained from sources believed to be reliable. The Eisai Co Ltd 6,185.00 -3.93 1,233,800 Ultratech Cement Ltd 4,595.15 0.42 643,439 accuracy and completeness cannot be guaranteed. This publication is for providing information only and is not intended Nintendo Co Ltd 38,290.00 -0.70 1,094,300 Vedanta Ltd 172.40 0.23 10,322,918 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 9,582.00 1.50 2,141,100 Wipro Ltd 285.85 -0.38 6,477,258 or any of their employees shall not be held accountable and will not accept any losses or liabilities for actions based on Mitsubishi Corp 2,891.50 0.16 6,532,800 Yes Bank Ltd 109.60 -4.32 106,421,502 this data.” Smc Corp 39,000.00 -0.59 223,300 Zee Entertainment Enterprise 345.65 -1.72 9,443,466

Gulf Times 8 Saturday, June 22, 2019 BUSINESS

UniCredit locks in funds early after 2018’s late dash

Bloomberg stimulus measures hampered London issuance. UniCredit has sold about €7bn of bonds this year, and it is more advanced in UniCredit SpA paid the price its fundraising than last year, last year when it left it late to a spokesperson said in an meet funding targets. This emailed reply to Bloomberg year, the Italian lender seems News questions. The bank’s set on avoiding selling debt at other deals this year include unfavourable terms. risk-laden Additional tier 1 The bank has surpassed notes and subordinated Tier 75% of its €9bn ($10bn) 2 bonds in euros, as well as full-year funding goal, dollar bonds. following a bond sale this Shares of UniCredit have week, as it takes advantage risen about 7% this year, of tumbling borrowing costs outperforming a gain of less and comparative political than 1% for a Euro Stoxx banks stability to get deals done. index. That’s a contrast to 2018, The lender priced €1.25bn when the lender did a costly senior preferred bond, A man using a Bank of America ATM in New York. Bank of America Corp, JPMorgan Chase & Co and Citigroup have agreed to lend $450mn to TransPerfect Global to help it $3bn private bond sale in which is callable in 2024, refinance a loan that the language- and translation-services provider got from an alternative lender last year, according to its chief executive officer Phil Shawe. November to meet year-end at 155 basis points above regulatory requirements. midswaps. In November, it That month the bank said sold a five-year dollar bond during an analyst call that an at the euro equivalent of 420 impairment and US sanctions basis points, according to a curtailed its issuance statement. Pacific Investment window. Management Co bought the “UniCredit has taken a very note, people familiar with the diff erent approach this year,” transaction said at the time. BofA-led group ousts said Alexander Pelteshki, Last year’s high price was investment manager, fixed partly due to Italian political income at Kames Capital, which instability, and that risk could oversees about £37bn ($47bn). flare up again. The country is It “has been sensible getting on in a budget dispute with the with its funding,” he said. European Union, and cracks Investors have flocked to are appearing in the governing Owl Rock in fi nancing Italian bank bonds this year, populist coalition. Italian including placing 4.3bn of lenders are also large holders orders in the UniCredit sale, of domestic government as diminishing interest-rate bonds, or BTPs, which makes expectations force them into them vulnerable to sovereign riskier assets to boost yields. price moves. That’s helped Italian lenders “Given UniCredit’s solid credit for TransPerfect sell more unsecured euro profile, the key driver for bonds already this year than its credit spreads remains Bloomberg what Owl Rock Capital Partners beth Elting. Elting fi led a pe- group Inc didn’t immediately “We had a wonderful experi- in the whole of 2018, when Italian politics and BTPs,” said New York had provided. tition in Delaware Chancery respond to a request for com- ence working with TransPerfect government upheavals and Richard Thomson, a credit The deal stands out in the hy- Court in 2014 to dissolve the ment. and look forward to their con- the wind-down of central-bank analyst at Janus Henderson. per-competitive leveraged-loan partnership between her and The new financing was tinued success,” an Owl Rock ome of the biggest US market, where shadow banks Shawe due to clashes between priced at 300 basis points over spokesman said. banks are rushing to lend have been chipping away at the two. Libor, down from 675 basis Shawe said wrapping up the Sto a company that a year Wall Street’s market share. New That action eventually led to points over Libor on the exist- legal case, as well as an increase ago they found too risky. York-based TransPerfect has the company being put up for a ing debt. The loan will allow in earnings from adding new The fi rms — Bank of America also shored up its balance sheet forced sale. The tug of war over the company to slash its annual clients and expanding existing Corp, JPMorgan Chase & Co and in the year since its deal with control of the company ended interest expense by over 40%, relationships, helped it boost Citigroup Inc — agreed to lend Owl Rock. in May 2018, when Shawe pur- or more than $15mn a year, earnings, which enabled it to $450mn to TransPerfect Global “I wanted to stay partners chased the remaining shares of Shawe said. The new debt ma- score the improved terms. The Inc to help it refi nance a loan with Owl Rock and they wanted the company from Elting. tures in June 2024. fi rm’s Ebitda increased 22% in that the language- and transla- to stay with us — it just wasn’t “Having the litigation in our TransPerfect began explor- 2018 to $92.3mn, he said. tion-services provider got from feasible based on what we were rearview mirror allowed us to be ing a refi nancing of its exist- TransPerfect intends to use an alternative lender last year, being off ered,” Shawe said. judged on the fi nancial perform- ing Owl Rock debt in March. the cost savings to explore po- A logo is seen on display outside a UniCredit bank branch in according to chief executive of- Owl Rock provided an emer- ance of the company,” Shawe Though both the company and tential mergers and invest in Moscow. UniCredit has surpassed 75% of its €9bn ($10bn) fi cer Phil Shawe. To clinch the gency loan to TransPerfect last said. the direct lender “were willing the business through hiring and full-year funding goal, following a bond sale this week, deal, they agreed to slash the year to help put an end to a legal Representatives for Bank of to bend a lot,” they weren’t able geographic expansion, as well as as it takes advantage of tumbling borrowing costs and company’s interest rate by more dispute between co-founders America and JPMorgan declined to come to an agreement, Shawe for general corporate purposes, comparative political stability to get deals done. than 3 percentage points from Shawe and his ex-fi ance Eliza- to comment on the loan. Citi- said. he said. Gulf Times Saturday, June 22, 2019 9 BUSINESS

Emerging market currencies rise

Reuters rack up a 1.2% gain for the week, London its biggest weekly rise since July 2017. The MSCI’s developing world merging market curren- stocks index dipped 0.2% as ris- cies consolidated gains ing US-Iran tensions took the Eagainst the dollar yester- edge off the Fed-fuelled rally, day, on track for their biggest but was still set for a 3.6% week- weekly rise in close to two years ly gain. China’s yuan softened in but stocks snapped a three-day onshore trade. winning streak on concerns over Chinese stocks added 0.5% US-Iran tensions. on the day, while South Korean A more dovish than expect- equities declined 0.3%. Turkey’s ed US Federal Reserve outlook lira was 0.8% softer, while stocks on Wednesday boosted appe- fell 0.3%. tite this week for developing The country’s disagreements world assets, starkly contrast- with the United States over buy- ing with 2018, when a slew of US ing a Russian defence system rate hikes drained capital from show no signs of easing. emerging markets. Russia’s rouble traded softer “It’s been a massive week for ob- after fi rming 1.4% on Thursday vious reasons, in terms of the Fed to its strongest level since August being even more dovish than what 2018, in sympathy with Brent People stand in front of a sculpture of bulls at the entrance to the Shenzhen Stock Exchange building in China. The Shanghai and Shenzhen stock exchanges have been people thought they could be,” said crude futures, which spiked on inundated with investor queries about spinoffs on the new Nasdaq-style tech board, where the first listing is expected in the next two months. Stuart Ritson, head of Asian rates & rising US-Iran tensions. FX at Aviva Investors. Moscow-traded stocks “Already rates markets were slipped 0.4%, ceding some of performing really well, with Thursday’s 0.8% gain. yields moving lower globally... South Africa’s rand weakened what has changed post-Fed is 0.7% while equities fell 0.1%. EM currencies have sparked to Some analysts said President life,” Ritson said. Cyril Ramaphosa’s state of the He noted that currencies were nation address on Thursday contributing more to returns lacked detail on how he plans to China Nasdaq-style this week than they have been fi x the ailing economy. recently, whereas rates have In Europe, Poland’s zloty generally provided the lion’s was 0.2% weaker against the share of profi ts. euro, retreating from an about MSCI’s emerging market cur- 13-month closing peak notched tech board draws rencies index was on track to on Thursday. Yuan snaps strong rally

Reuters than the previous fix of 6.8805 Shanghai and was the strongest since May 14. The move in Friday’s guidance rate was the biggest one-day in spinoff listings China’s yuan fell yesterday, but strengthening in percentage terms still looked set to post its biggest since February 21. Bloomberg Chinese fi rms. Suzhou HYC Technology panies should be listed.” Domestic year-to-date despite slipping from April weekly gain in over five months as In the spot market, onshore Beijing Co is the fi rst to start an initial public spinoffs appeal as they’d give inves- highs: the ChiNext is up 18% in 2019 and Washington and Beijing said they yuan opened at 6.8515 per dollar, off ering there, fi ling a preliminary pro- tors on the mainland fresh buying the Hang Seng has added 9.8%. were re-engaging in trade talks. rose to a high of 6.8340 before spectus this week. opportunities in China, while parent The newly named SSE STAR Market The trade news, along with a changing hands at 6.8601 at hina’s new Nasdaq-style tech Investors and companies were encour- companies can potentially streamline has attracted attention in part because weaker dollar prompted by the US midday, 78 pips weaker than the board could become a hotbed aged by the China Securities Regulatory operations and have seen boosts — at of its simpler listing process, including Federal Reserve’s hints of interest previous late session close. C for companies to spin off and Commission saying earlier this year that least in the short term — to their share waiving restrictions on how companies rate cuts, have greatly improved But on a weekly basis, if the list units domestically, something companies of a certain scale would be prices. are priced, theoretically making it less market sentiment on the yuan, onshore spot yuan finishes the that hasn’t been much of an option able to list qualifi ed subsidiaries sepa- The nine companies that announced onerous for applicants. driving it to six-week highs. late night session at the midday until now. rately on the tech board, though it didn’t spinoff plans all rose in subsequent days. It hasn’t all been clear sailing though: But some yuan traders said the level, it would have gained 0.96 At least nine companies listed in Hong elaborate. “Spinoff listing on the tech board the Shanghai exchange has complained market had overreacted to trade %, the biggest weekly rise since Kong and mainland China have decided The CSRC, which has historically been is definitely an attractive invest- that many fi lings lacked suffi cient details developments and buying calmed mid-January. to or are considering spinning off parts of reluctant to approve spinoff s at home, ment theme for the stock market, and contained too much jargon. down yesterday. Bargain hunting for cheaper their businesses on the freshly launched didn’t immediately respond to a request given these subsidiaries are expected While there’s no real precedent, the A telephone call between US dollars quickly dragged the local SSE STAR Market. for comment. to enjoy higher valuations and better new board’s simplified approval proc- President Donald Trump and his currency lower yesterday. One of them, Western Metal Materials “The regulators didn’t encourage do- branding thanks to the huge attention ess and improved delisting mecha- Chinese counterpart Xi Jinping as Several traders said corporate Co, surged by the 10% limit for two days mestic spinoff listings in the past, as on the tech board right now,” said Fu nism should help soften the regulator’s well as confirmation the two will clients rushed to load up on in a row after disclosing its plans in early there were concerns it might spur specu- Lichun, an analyst at Northeast Secu- stance on domestic spinoffs, said Peng meet in Japan on the sidelines dollars when the spot yuan rose April. lation or problems such as fi nancial mis- rities Company. Hai, an analyst at Lianxun Securities of a Group of 20 summit, have close to 6.83 per dollar. “The USD/ Lepu Medical Technology Beijing Co behaviour or corporate independence is- “The potential number and scale of Company. raised hope for an end or at lease RMB is likely to consolidate at climbed 13% over a similar time-frame. sues,” said Ge Shoujing, a Beijing-based spinoff s is expected to be very large.” “Compared with listing spinoff units a ceasefire in the months-long recent lows before figuring out The Shanghai and Shenzhen stock senior analyst at the Reality Institute of The tech-heavy ChiNext Index trades at in Hong Kong, companies may enjoy trade war between the world’s the direction after the meeting exchanges have been inundated with in- Advanced Finance. around 20 times forward earnings, while higher valuations on the tech board, giv- two largest economies. between the top leader (of the vestor queries about spinoff s on the new “With the launch of the tech board, Hong Kong’s Hang Seng Index is at 11 en the higher valuations of the A-share Prior to the market opening yes- United States and China) during board, where the fi rst listing is expected which introduces a registration-based times. market,” Peng said. terday, the People’s Bank of China G20 summit,” said Bill Zhou, ana- in the next two months. IPO system, the regulatory mindset Both gauges have had a rough few “The vetting process would also be set the midpoint rate at 6.8472 per lyst at China Construction Bank The bourse is in part aimed at stem- has changed to loosen control and al- months as the trade dispute with the US simplifi ed given it will have to be re- dollar, 333 pips, or 0.49%, firmer (Asia) in Hong Kong. ming an exodus of listings by innovative low the market to decide which com- escalated, but they’ve still posted gains viewed only by the domestic regulator.” Sensex drops; rupee weakens

Bloomberg, Reuters geopolitical tensions in the Gulf region. A broad Asian bourses turn negative again Mumbai sell-off in the domestic equity markets also kept sentiment at a low ebb, forex traders said. At the interbank foreign exchange (forex) mar- AFP India stocks declined, extending their third ket, the domestic currency opened sharply lower Hong Kong weekly drop, as lower-than-average rainfall and at 69.75 against the dollar. However, it recouped a surge in crude oil prices added to investor some losses to finish at 69.58, registering a fall concerns about slowing economic growth. of 14 paise. il prices stabilised yesterday following The S&P BSE Sensex fell 1% at the close in The rupee had settled at 69.44 against the US the previous day’s surge fuelled by ten- Mumbai, capping the worst weekly drop in more dollar on Thursday. Osions between the United States and than a month. The NSE Nifty 50 Index slipped “Overnight surge in crude oil prices have Iran, while Asian equities turned negative as 0.9%, also down for a third week. weighed on Indian rupee as it weakened the investors took their foot off the pedal following The monsoon rainfall was 43% below normal most among Asian currencies. The geopolitical a recent rally. levels through June 20, according to the Indian risks from escalation of US-Iran tension pushed Fears of a confl ict in the crude-rich Middle Meteorological Department in Delhi, stoking crude oil price higher. East ratcheted up on Thursday when Tehran concern that the late arrival of seasonal rain “In near-term, rupee is having resistance said it had shot down a US “spy drone” that was could delay sowing and reduce crops, even if it around 69.03 and support at 70.01, the 100 violating its airspace, which Washington de- gathers pace later. days simple moving average,” said V K Sharma, nied. US President Donald Trump described the The June-September period accounts for head – PCG and Capital Market Strategy, HDFC move as a “big mistake”, adding: “This country more than 70% of India’s annual rainfall. Adding Securities. will not stand for it.” to worries, a surge in US-Iran tensions boosted Safe-haven assets like the yen rose after The news — which comes a week after the US crude oil prices 4.3% overnight. reports said US President Donald Trump had accused Iran of attacking two tankers in the Gulf Finance Minister Nirmala Sitharaman will approved military strikes against Iran, but later of Oman — sent oil prices soaring more than 6% present her first federal budget to lawmakers on decided against it. on Thursday, while talk has increased of a mili- July 5. Investors will be looking for the govern- Geopolitical tensions in the Middle East have tary stand-off that could deal a massive blow to ment’s steps to stimulate economic growth that ratcheted up following attacks on two oil tankers supplies. Employees prepare to work at the Tokyo Stock Exchange. The Nikkei 225 closed down 1.0% to slowed to a five-year low in the January-March and shooting down of a US surveillance drone. However, after an initial gain the commodity 21,258.64 points yesterday. quarter. Brent crude futures, the global oil bench- edged down slightly yesterday as traders took “Market is likely to consolidate around the mark, spurted 1.44% to USD65.38 per barrel on heart from comments from Trump later, say- fuelled a surge across global markets on hopes in a sustainable manner.” The prospect of lower current levels as on one hand there are concerns concerns that the US-Iran standoff may lead to ing he thought it “hard to believe it was inten- for a deal to end their countries’ long-running interest rates kept the dollar under pressure about delayed monsoon and the economy supply disruptions. tional”, adding “I think that it could have been trade war that has impacted the world economy. against its major peers as well as most higher- going through challenging times while on the “India’s sovereign bond yields have climbed somebody who was loose and stupid that did it.” However, Asia took a step back yesterday, yielding currencies including the Chinese yuan, other, there are expectations government may from a 20-month low of 6.79% to 6.86%, amid The president’s mixed message left the world having been given an extra boost by the Fed in- which is at levels not seen since mid-May. announce measures in the federal budget next concern that higher oil prices will boost inflation unsure what Washington’s next move would be dicating it will begin to cut interest rates soon, A cheaper dollar and tensions in the Middle month to kick-start economic activity,” said and the budget deficit will widen. The yields have but observers said the cost of crude could con- and other central banks erring towards softer East have also ramped up demand for gold — Jitendra Panda, managing director at Peerless dropped more than 50 bps in the past six weeks,” tinue to rise. monetary policies. seen as a go-to asset in times of uncertainty and Securities in Kolkata. Sharma said. “If we meld supply risk fear, a powerfully bull- Hong Kong dipped 0.3%, while Tokyo ended upheaval — sending it above $1,400 an ounce Seventeen of 19 sector sub-indexes compiled The 10-year government bond yield rose 1.35% ish narrative, (the Federal Reserve’s) willingness 1% lower and Sydney shed 0.6%. for the fi rst time since 2013. by the BSE fell, with gauges of auto, energy and to 6.88% yesterday. to execute a pro-cyclical rate cut juicing risk Seoul dropped 0.3% while Singapore was off “Gold jumped more than 3% on Thursday as telecom stocks dropping more than 1% each. On a net basis, foreign institutional investors assets and frame it with the potentially game- 0.1%, with Manila, Mumbai and Jakarta also the Fed left little doubt that an interest rate (cut) HDFC bank and Reliance Industries contrib- sold equities worth Rs438.41 crore on Thursday, changing G20, you have the makings of a solid down. But Shanghai gained 0.5%, Taipei added is coming and with trade and political tensions uted most to the index decline; Yes Bank had the while domestic institutional investors pur- base for oil to shoot even higher,” said Stephen 0.4%, and Wellington put on 0.4%. still at play the yellow metal was a clear choice largest decrease, losing 4.4%, Aurobindo Pharma chased shares to the tune of Rs1,241.23 crore, Innes, managing partner at Vanguard Markets. The recent rises were “built on the potential for investors looking for a safe haven,” said slid 3.9% to its lowest level since July 2018 after a provisional data available with stock exchanges The focus is also on next week’s planned for monetary policy support from the Federal OANDA senior market analyst Alfonso Esparza. warning from US. showed. meeting between Trump and his Chinese coun- Reserve on one side, and the easing of trade ten- In Tokyo, the Nikkei 225 closed down 1.0% Meanwhile the rupee dived 14 paise to close at The dollar index, which gauges the green- terpart Xi Jinping on the sidelines of the G20 in sions on the other”, Alex Dryden, global market to 21,258.64 points; Hong Kong — Hang 69.58 against the US dollar yesterday, pressured back’s strength against a basket of six currencies, Japan next week. strategist at JPMorgan Asset Management, told Seng ended down 0.3% to 28,473.71 points by firming crude oil prices amid intensifying slipped 0.03% to 96.59. Trump’s tweet about “a very good telephone Bloomberg TV. However, he warned: “That is not and Shanghai Composite closed up 0.5% to conversation” between the pair this week the best basis for building an equity market rally 3,001.98 points yesterday. Gulf Times 10 Saturday, June 22, 2019 BUSINESS

‘Quadruple witching’ roils US stocks with bursts of trading volume

Bloomberg of the S&P 500, and can spur volatility “They amplify/exacerbate moves May (narrow participation, extremely And volume is relatively low. While the witching may not be over this week, New York and share purchases by dealers. in the markets as institutions up- light volume) suggest it’s nothing more S&P 500 has advanced every week this according to McElligott. As the mar- The event was cited by at least two date large derivatives positions,” Russ than a relief rally within an ongoing month, daily trading on exchanges has ket loses the buying “impulse” from chart-watching analysts as something Visch, a technical analyst with BMO medium-term downtrend,” he said. stayed below the 2019 average in 10 out options traders, stocks may fall next record-setting week for US eq- that has added fuel to the rally for the Capital Markets. Among other signs of trepidation, of 12 days. week, prompting a narrative that in- uities just endured a burst of week as Federal Reserve’s Chairman “My general advice is to be wary of hedge funds have resisted embracing This time, the rebalancing alone vestors are starting to doubt the Fed Atrading as futures and options Jerome Powell opened the door to a any outsized moves in quad expiry stocks, with the ratio of long hold- could force about $24bn of trades, and setting the stage for the S&P 500 on indexes and stocks expire. rate cut. weeks because it may be nothing more ings versus shorts falling last week to compared with $26bn a year ago, S&P to rally to 3,000, he said. Transactions on S&P 500 stocks The expiration weeks tend to bring than someone getting caught on the the 16th%ile over the past 12 months, Dow Jones estimated on June 14. “The market then risks ‘mis-reads’ spiked in the fi rst 15 minutes of yester- wrinkles to markets as large deriva- wrong side of a trade and/or unwind- client data compiled by JPMorgan’s One scenario on how yesterday’s this potential fl ow-centric weakness day’s session, with volume jumping to tive positions are rolled over. Trading ing a big position.” prime brokerage unit showed. event may have boosted share prices in equities next week as some sort of four times the 30-day average at this spikes usually occur near the market Visch is sceptical of a rally that has A net 21% of money managers sur- was laid out by Charlie McElligott, a ‘fading the Fed’—when in fact it’s al- time of the day. The benchmark index open and close. added almost $6tn to equity values veyed by Bank of America said they are cross-asset strategist at Nomura. most entirely mechanical in nature,” slipped 0.2% to 2,949, after climbing The last time a “quadruple witch- from the December low. While the S&P underweight equities, the most bearish In a note earlier this week, he attrib- McElligott wrote. on Thursday to an all-time high for the ing” and an S&P 500 rebalancing took 500 has fully recovered from its near- positioning since March 2009. uted buying to traders who sold bullish “This type of head-fake could in fact fi rst time since April. place, on March 15, almost 11bn shares death experience in late 2018, the dam- With so many tilting bearishly, a mi- options on the S&P 500 at strike prices see more shorts added and sentiment “Quadruple witching” happens changed hands, 39% above the average age to sentiment hasn’t healed. nor technical adjustment could spark a of 2,950. purge, which then perversely is the every quarter, often with a rebalancing in the previous three months. “The quality of the rally since late big upside move when liquidity is thin. The muddling eff ect from quadruple fodder for a melt-up.”

Chewy’s runaway IPO blazes path for J Crew and Neiman Marcus

Bloomberg that would strengthen our balance New York sheet and increase our overall fi nan- cial fl exibility to address our 2021 debt maturities, giving us an im- etSmart Inc’s massively suc- proved platform to support J Crew’s cessful stock off ering of turnaround and allowing Madewell PChewy.com, and the windfall to achieve its full potential.” it created for creditors, is stoking The assets that Neiman Marcus speculation that other deeply in- and J Crew might spin off have some debted retailers will stage sales of key diff erences with Chewy. For their own fast-growing units. starters, both of those chains deal Neiman Marcus Group and J Crew in fashion, whose customers can Group have already said they’re ex- be harder to please compared with ploring strategic options for their Chewy, which sells food and toys booming side businesses, MyThere- online to doting pet parents. And sa and Madewell. Should those as- while Neiman Marcus’s MyTheresa sets be shopped or go public, stake- unit also is web-based, Madewell is holders would benefi t if the proceeds primarily a brick-and-mortar chain. A bearish view on the euro following the European Central Bank’s latest easing signal may be better expressed through haven currencies than are used to pay down debt or bolster That said, sales at MyTheresa and the dollar, even as the yen and the Swiss franc trade near cycle highs the balance sheets. Madewell are growing fast, and they It’s certainly working out for debt can draw hope from online fashion holders of PetSmart, whose 2023 retailer Revolve Group Inc, whose bonds sold for just 56 cents on the trading debut in early June saw the dollar as recently as December. After shares more than double after its Chewy’s IPO – which raised about $212mn IPO. It was the year’s third- $1bn after the price and size was best US trading debut at the time, boosted to meet demand – PetS- valuing Revolve at about $2.33bn and mart’s notes were almost back to par. about 5.5 times revenue. Euro bears may need The timing for such deals is right, Based in Cerritos, California, Re- according to Rett Wallace at Triton Re- volve is profi table, earning $31mn on search, a New York investment advi- sales of $499mn last year. MyTheresa, sory fi rm. “You could take a ham sand- Neiman’s German online business, wich to the public market right now generates positive earnings and is and it would be received positively,” only slightly behind Revolve, posting to turn to havens amid said Wallace, Triton’s chief executive. $414mn of sales. Madewell’s sales for Chewy.com had one of the best the year totalled $529mn; the public trading debuts in a decade, with the report didn’t include the unit’s profi t. shares now up almost 60%. Inves- Chewy has been driving much of tors who hold the company’s more PetSmart’s revenue gains, report- than $8bn of debt are slated to receive ing a 45% year-over-year increase to more than half of the IPO proceeds. around $1.14bn for the fi rst quarter dollar rebalancing The sale is a positive for creditors any of this year. By contrast, brick-and- way you look at it, said Mickey Chad- mortar sales were stagnant. Bloomberg ing is a question of when and not if. may regain ground as a reserve cur- President Trump and Chinese Presi- ha at Moody’s Investors Service. Given the value the markets have Athens Position rebalancing in the dollar is rency. Still, trade and geopolitical dent Xi Jinping will meet on the side- “It’s not even where the money ascribed to businesses like Revolve hefty following the latest Federal Re- concerns are likely to keep safety de- lines to resume trade negotiations fl ows to, just the fact that the com- and Chewy, investors should be re- serve policy statement and chances mand strong versus the euro. Focus that broke down in May Bank of Eng- pany is a de-levered, stronger com- ceptive to MyTheresa going public, bearish view on the euro fol- are that it may not end in the com- now lies on the Group-of-10 summit land governor Mark Carney testifies pany, which indirectly benefi ts the Christina Boni of Moody’s said. If Ne- lowing the European Central ing sessions as real-money names on June 28-29 where US President before Parliament’s Treasury Com- lenders because they are invested in iman does choose to sell some or all of A Bank’s latest easing signal may and macro accounts look to short the Donald Trump is expected to meet mittee on the May inflation report on a healthier company,” Chadha said in MyTheresa, that value should fl ow be better expressed through haven greenback afresh, according to trad- with Chinese President Xi Jinping. Wednesday, June 26. an interview. “If there’s a market for through to debt holders, she said. currencies than the dollar, even as the ers in Europe who asked not to be A breakdown of trade talks would Policy makers’ speeches include it, that’s great. A Madewell sale or spinoff by J yen and the Swiss franc trade near cy- identified because they are not au- spark another haven rally as Trump- Fed chair Jerome Powell, New York But you have to have the asset Crew could help the preppy retailer cle highs. thorised to speak publicly. related uncertainty stays strong, with Fed President John Williams, At- and the opportunity, and those in- carry its approximately $1.9bn of The common currency looks rela- This makes euro-dollar trading the latest example being a military lanta Fed President Raphael Bostic, gredients don’t happen every time.” junk-rated borrowings and make it tively supported against the green- risky on policy bets at a time when strike on Iran that was ordered by the St Louis Fed President James Bull- A representative for Dallas-based easier to fund a turnaround. back, which remains vulnerable to ongoing trade concerns and Brexit US president before being called off. ard, ECB Governing Council mem- Neiman Marcus declined to com- A similar move involving losses after the Federal Reserve sig- uncertainty make case for haven In the short term, charts suggest ber Ewald Nowotny, Reserve Bank of ment. The company said in April it’s MyTheresa by Neiman Marcus could nalled an imminent interest-rate cut. longs. that the dollar may be in for an- Australia Governor Philip Lowe Eco- considering strategic alternatives for quell doubts about its $4.7mn of It has less defence against the yen The euro may remain supported other round of strong selling as the nomic releases include euro area in- MyTheresa, without specifying what debts, which S&P Global Ratings and the franc, amid bets the ECB will versus the dollar until the ECB actu- Bloomberg Dollar Spot Index touch- flation; US GDP, personal spending, they might be. says could wind up in default within move first to cut rates even as the ally pulls the trigger on policy easing, es its lowest in three months and PCE deflator; UK GDP; and Norway J Crew, based in Lynchburg, Vir- a year. “All of these guys should be Japanese and Swiss central banks stay or until Fed rate cuts are no longer support from a year-long trendline unemployment. ginia, declined to comment. But in racing to get to market. You want to dovish. Comments by Klaas Knot, seen as precautionary moves but as seems to finally give in. The Fed releases the results of April, the company said a Madewell get there while your growth is still one of the hawkish Governing Coun- a necessity to climb out of recession, What to watch: Group of 20 sum- part two of its annual bank stress IPO “could unlock signifi cant value strong,” said Carla Casella, high- cil members, suggest policy loosen- a point in time where the greenback mit in Osaka, Japan on June 28-29; tests on June 27. and generate meaningful proceeds yield analyst at JP Morgan Securities. Europe’s aluminium industry has its own tariff problems

By Andy Home from 3% for unalloyed aluminium to 6% head of EU and Multilateral Aff airs at FACE. FACE, “a de facto hidden subsidy mecha- London for alloys. Aluminium represents over half of nism”. But it is not so “hidden” because the Countries with preferential trade production costs for transformers such as aim of the duty was always to support the agreements, such as Iceland, Norway and rolling mills and extruders. dwindling number of European smelters. US tariff s on imports of aluminium have Mozambique, are exempt. Europe’s downstream sector comprises It is looking ever more anomalous as changed the pricing landscape for domes- The explicit aim of the duty has always more than a thousand companies, many the regional aluminium supply chain con- tic users. The US Midwest premium, which been the preservation of EU smelters, of them small and medium sized opera- tinues migrating from upstream smelting overlays the London Metal Exchange their workforces and their research and tors without the negotiating clout to pass to downstream metals formation. (LME) cash price, remains stubbornly high development. the duty on to their customers. Competi- The net eff ect on the whole chain is and consumers, led by the drinks can The European Commission has twice tion is fierce. negative, an outcome which seems at industry, are up in arms. reacted to consumer ire by reducing parts Europe has been just as much aff ected odds with the EU’s renewed focus on They could do worse than learn a tariff s of the tariff structure, once in 2007 and by China’s high-volume exports of semi- strengthening its industrial self-suff iciency. lesson from the European Union, which again in 2013. manufactured products as the United In essence, the European Commission has imposed its own duties on aluminium The first time around there was even a States in recent years. has to decide whether the sector’s future imports for many decades. proposal to eliminate the duties altogether Compressed margins have taken their is one of smelting aluminium or making As with US tariff s, the rationale is to but it wilted in the face of concerted op- toll. EU production of aluminium extru- value-added products. preserve threatened primary aluminium position from producer countries. sions in 2017 was below levels in 2000, The United States may end up facing smelters. Since then more EU smelters have shut, according to the LUISS study. the same choice. Its 10% tariff s on imports The duty, however, has ended up failing with plants closing in France, Germany, Flat rolled products output has of aluminium are also explicitly linked to to stop multiple smelter closures while Italy, the Netherlands and Britain. increased but “at a significantly slower protecting domestic smelting capacity. actively undermining the downstream The fate of two Spanish plants is now in sucked in 6.2mn tonnes of aluminium. are incentivised to “align their prices to pace than on the global level.” “The EU’s Some production has been rekindled sector, according to the Federation of the balance as US producer Alcoa tries to The duty has cost the EU downstream the highest possible level — that is, the trade balance has constantly worsened but with so many smelters dismantled Aluminium Consumers in Europe (FACE). negotiate a sale rather than close them. aluminium sector somewhere between duty-paid price.” in all sectors of aluminium semi-finished years ago, there’s only so much capacity FACE, which has lobbied for many years Europe has lost more than 30% of its €10bn and €18bn ($11bn-$18bn) since Tax-exempt producers have a similar products, as consumption of semi-finished to restart. against the duty, is renewing its eff orts aluminium smelting capacity since 2008, 2000, according to the LUISS study. incentive, since they know the EU will still aluminium products has increased at a The United States, like Europe, is going with a piece of research from the LUISS the LUISS report notes. It’s inevitably a broad range of esti- import tax-payable metal. compound growth annual rate of 3% in the to remain dependent on imports, both University of Rome, spelling out the Smelting, both primary and from scrap, mates because it’s a complex, fluid supply The end result is that “EU market prices same period,” the study adds. from tariff -exempt suppliers, such as negative impact on Europe’s downstream now represents just 30% of turnover and chain. The real takeaway is that even for unwrought aluminium always include Which is why other major net importers Canada and Australia, and on non-exempt aluminium value chain. 7% of jobs in the aluminium supply chain, though duty-exempt imports represented the customs duty”, according to the such as Japan, which exited the aluminium producers, such as Russia. The report also has some interesting according to FACE. around 50% of total imports over the LUISS study. “There is no duty-free priced smelting business in the last century, don’t things to say about how tariff s really work. Net import dependency has grown 2008-2017 period, everyone ends up pay- unwrought aluminium available to EU us- have any import duties on primary metal  Andy Home is a columnist for Reuters. The EU import duties currently range steadily to 74% in 2017, when the region ing the full 6% tariff anyway. EU producers ers and consumers,” adds Roger Bertozzi, and alloys. The EU duty is, in the words of The views expressed are those of the author. Gulf Times Saturday, June 22, 2019 11 BUSINESS

Czechs shun Eurobond market as $6.5bn Facebook’s Libra gambit forces repayments loom US hand on crypto policy Bloomberg Prague Bloomberg fi nancial instrument like most digital Washington coins. The company said that the cur- rency would allow people to use their As its emerging-market peers mobile phones to send money cheaply flock back to the foreign debt acebook Inc’s decision to create anywhere in the world. markets, the Czech Republic its own digital money – with the What’s unclear from the paper, how- has a plan to significantly curb Fgrandiose ambition of establish- ever, is what kind of government over- its Eurobond sales after suc- ing an alternative global fi nancial sys- sight the cryptocurrency will have. cessfully testing an alternative tem – is jumpstarting a long simmer- That’s been a particularly sensitive route to global investors. ing debate in Washington over how to topic in Washington, where policy mak- The government is trying to regulate cryptocurrency. ers have failed to agree on an overarching avoid the cost and procedure For years, US regulators and lawmak- policy for regulating virtual money. That of hiring arrangers, organis- ers have bickered over how to tackle the grey area has allowed many coins to fl our- ing roadshows, and compiling thorny issues surrounding the emer- ish but also has enabled fraud and other lengthy prospectuses as it gence of cryptocurrencies, like protect- criminal activity like money laundering. prepares to refinance €5.75bn ing consumers and preventing crime. Many government offi cials aren’t ($6.5bn) of international debt But the entry of a big and controver- even sure how cryptocurrencies should by 2022. Instead, it wants to sell sial company like Facebook could force be classifi ed under the law and which most foreign-currency bonds their hand. agency might be responsible for them. through routine, domestic auc- At least six federal agencies that have Some have argued that digital coins tions that are nimbler and less some say in cryptocurrency oversight should be monitored by the SEC because bureaucratic, according to Petr could slow, or even derail, Facebook’s they often trade on exchange-like plat- Pavelek, head of the Finance plans, former regulators said. The com- forms and in some ways act like stocks. Ministry’s debt-management pany is already under the spotlight for Others have pushed for the CFTC to department. a series of policy stumbles and scandals oversee the products because they re- “We believe that Eurobond that have many lawmakers itching for a semble currencies that underlie some issuance is unnecessar- fi ght. Among Facebook’s missteps are futures products. Much of that juris- ily complicated,” he said in an major data breaches and letting Rus- diction would be in cases of fraud or interview in Prague. “We would sians hijack its platform during the manipulation rather than actually reg- like to refinance the upcoming 2016 election to push President Donald Small toy figures stand on representations of virtual currency in front of the Facebook logo in an illustration picture. ulating the markets. maturities in a more diverse Trump’s candidacy. Facebook’s decision to create its own digital money, with the grandiose ambition of establishing an alternative global The Federal Trade Commission, and modern way, and under “Facebook is going to get whacked a financial system, is jumpstarting a long simmering debate in Washington over how to regulate cryptocurrency. which has some oversight of tech com- Czech law.” Pavelek’s comments number of diff erent ways,’’ predicted panies, could make the argument that underscore the rising self- Patrick McCarty, a former Commodity The Senate Banking Committee, led Exchange Commission, the Federal Re- will likely provoke similar objections. it should regulate cryptocurrencies, confidence of the ex-communist Futures Trading Commission offi cial by Republican chairman Mike Crapo, serve, the CFTC and parts of the Treas- In a 12-page white paper detailing lawyers who work on the issue said. nation that joined the European who teaches a class on cryptocurren- plans to hold a hearing next month. In ury Department to sort it out among Facebook’s plans, the company and its The Federal Bureau of Investigation and Union in 2004 and has since cies at Georgetown University’s law its Wednesday announcement, the pan- themselves. partners described launching “a sim- the Internal Revenue Service also claim become one of its most stable school and lobbies on the issue. “The el said the hearing would focus at least Traditionally, Silicon Valley com- ple global currency and fi nancial in- some jurisdiction. economies, with a low debt company went into another area that partly on privacy issues, showing law- panies have tried to remain far below frastructure that empowers billions of Bank regulators, while not a primary burden and close business ties many in Congress are very sceptical makers’ scepticism that Facebook can Washington’s radar until they were too people” by next year. cryptocurrency watchdog, have been to Germany. about. It’s like they are doubling down protect its users’ fi nancial information. large to ignore, a tactic aided by their The token will be called Libra and built involved in digital currency policy talks. The government hasn’t on hot button issues.” Facebook’s soon- Facebook, in a statement responding to physical distance on the West Coast as on a new Blockchain infrastructure ac- Fed chairman Jerome Powell told re- tapped the Eurobond market to-be launched Libra app. the congressional outcry, said the com- well as a lack of technological under- cessible from anywhere in the world. porters on Wednesday that the central since 2012 because domestic A number of Democrats on Capitol pany would address lawmakers’ concerns. standing by many policy makers. The companies have set up a non-profi t bank was one of a number of regulators banks flush with cash as well as Hill swiftly criticised Facebook’s Tues- And David Marcus, the Facebook execu- Facebook is now long past that point, organisation in Switzerland to govern the that Facebook consulted before reveal- foreigners’ demand for koruna- day announcement and called for addi- tive leading the company’s cryptocurren- and it has been stepping up its lobbying payment network and hold a reserve of ing its plans for Libra. denominated notes have kept tional scrutiny of the technology com- cy eff orts, told Bloomberg last week that eff orts as it faces a slew of regulatory bank deposits and short-term govern- Powell, speaking at a press confer- local-currency funding cheap. pany. Representative Maxine Waters, he has been in touch with regulators and investigations and potential antitrust ment securities that will back the coin. ence, said because digital currencies While the country now pays the chairwoman of the House Financial central banks in multiple countries. scrutiny. Senators Bernie Sanders and The goal is for Libra to maintain a are in their infancy, they don’t yet pose more to borrow in the koruna Services Committee, said she would Despite the Bitcoin investment craze Elizabeth Warren are among the 2020 stable value, so that consumers feel monetary policy implications for the than in euros, the local 10-year conduct hearings on the crypto plans, and a series of fraudulent initial coin Democratic presidential contenders comfortable using it to buy things. Bit- Fed. Still, he added that the central yield is lower than the inflation and demanded that Facebook hit the off erings, Congress has not moved to who have argued that the company coin, with its wild volatility, has never bank would want to ensure that there rate as well as the returns on pause button “until Congress and regu- pass legislation setting out an approach should be broken up because it has too achieved that status. Indeed, Facebook aren’t “safety and soundness” issues central bank deposits and other lators have the opportunity to examine for dealing with the industry. That has much power over many aspects of peo- took pains to describe Libra as a method for the fi nancial system should Face- money-market instruments. these issues and take action.” left regulators like the Securities and ple’s lives. The cryptocurrency project of payment rather than a speculative book go forward with Libra. That anomaly is helping the ministry refinance a record amount of mostly shorter-term bonds maturing in 2018 and 2019 with securities due in up to Swiss exchanges to lose access 38 years. US markets regulators reach deal on Pavelek expects the average to EU investors from July maturity on the local-currency sovereign debt will rise to at Dodd-Frank swaps capital rules least six years in 2019 from 5.4 Reuters on the EU dossier, reiterating its position that it years at the end of 2018 and Brussels would reactivate counter-measures to ban trad- five years at the end of 2017, Reuters Chairman Christopher Giancarlo of its post-crisis rules by 2014 but ing of Swiss stocks on EU exchanges in response the lowest level in more than a Washington to coordinate more closely on poli- the SEC has lagged far behind. to any such action by the bloc. decade. cy and enforcement matters. The SEC fi rst proposed capital Swiss exchanges will lose direct access to Euro- That could make volume swell on the SIX “The de-facto inverted yield “Moving these rules is a posi- and margin rules for swaps in 2012 pean Union investors from July 1 in a potential Swiss Exchange — Europe’s fourth-largest — at curve is very positive for us,” he S markets regulators yes- tive development in getting a big but until Friday had failed to fi nal- blow to Switzerland’s financial industry after the least temporarily. said. “We’re in a very comfort- terday unveiled an agree- piece of Dodd Frank Title VII over ise them. bloc lost patience in talks on a stalled partner- Exchange industry off icials say EU investors able situation where we’re Ument on how much capital the fi nish line, completing the In a move that caught the indus- ship treaty. The European Commission will not would still be able to trade Swiss shares, but only paying a negative real yield on and margin fi rms must hold when mandate that Congress gave us,” try by surprise, the Republican- propose extending the equivalence regime through a broker that is a member of the Swiss 10-year and even longer notes.” trading swaps based on securities, Republican Commissioner Hester led SEC last year said it would try that lets EU investors trade on Swiss bourses, exchange in Zurich, rather than having a choice Four months ago, the fi nalising a key piece of the 2010 Peirce, who led the SEC rule-writ- to fi nalise its Dodd-Frank regime. eff ectively ending it as of July 1, an EU diplomat of exchanges like Aquis, Cboe and Turquoise finance ministry began off ering Dodd-Frank law introduced fol- ing eff ort, said in an interview. Over the past few months, the told Reuters yesterday. that help to drive down prices. euro-denominated bonds in lowing the 2007-09 fi nancial crisis. “We’re in the place we are be- agencies have worked together to Friday was the deadline for the Commission These other platforms now account for nearly domestic auctions alongside The Securities and Exchange cause of the nice relationship with address problems with the SEC to make such a proposal, but it will refrain from a third of the trading volume for Swiss stocks local-currency debt to gauge Commission (SEC) and Commod- the CFTC,” she added. proposal. doing so because Bern did not endorse a part- including heavyweights like Nestle, Roche and demand for the new type of ity Futures Trading Commission Title VII of Dodd-Frank handed The SEC rule would have sub- nership treaty with the EU that had been under Novartis. Although the loss of trading access securities. (CFTC) agreed to fend off a regu- the CFTC oversight of the vast jected swap trading fi rms already negotiation for years, the diplomat said. granted under an equivalence regime would To date, it has issued €735mn latory overlap that would have majority of the US swaps market, registered and regulated by the The blue-chip Swiss Market Index was down also have broad financial repercussions for the of the notes due in August drastically increased the capital including interest rate and foreign CFTC to an additional capital re- 0.4% yesterday, but off session lows. 28-country EU, it was seen as inevitable in Brus- 2021, including €200mn this burden for many fi rms already exchange swaps, but gave the SEC quirement. Bern’s request this month for “clarifications” sels after years of inconclusive negotiations. Wednesday. In that latest sale, operating under CFTC rules, the oversight of the small slice of the CFTC data showed this addi- on three areas — protecting wages, regulating The hardening of the EU stance is also partly investors ordered more than regulators said. swaps market based on individual tional burden could potentially put state aid and defining the rights of EU citizens in linked to parallel talks under way with Britain twice the amount and the aver- The agreement underscores securities. many fi rms out of business. Switzerland — are seen in Brussels as demands over Brexit, as a lenient approach to the Swiss age accepted yield fell to minus an unusual degree of harmonisa- Dodd-Frank aims to make the Friday’s compromise would to reopen the treaty text, which the EU refuses to could encourage London to seek softer terms. 0.31% from minus 0.12% at the tion between the two US markets swaps market safer by requiring place the overwhelming major- do. Granting stock market equivalence is the EU’s The treaty would have non-EU member Swit- last reopening in April. watchdogs, which in the past have dealers to hold suffi cient capital ity of uncleared swaps trading by major leverage in trying to get the Swiss to finally zerland routinely adopt EU single market rules The ministry is taking steps been accused by the industry of and margin against swaps, and CFTC-registered fi rms under the sign off on the pact, but Switzerland’s foreign and pave the way for new trade deals, such as to open the nascent market for jacking up their compliance bills by pushing more swaps through CFTC’s capital rules, avoiding the minister has said repeatedly Bern will not be for an electricity union. But ahead of Swiss elec- Czech euro-denominated debt by failing to co-ordinate. clearing houses which sit in be- additional SEC charge. rushed into any deal although it remains open for tions in October, it has drawn opposition from to even more global investors, It is part of a broader push by US tween trades to guarantee pay- The new rules will not become talks. In Bern, a government spokesman earlier across the Swiss political spectrum for infringing according to Pavelek. President Trump appointees SEC ment in case either party defaults. eff ective for at least 18 months, the told reporters the cabinet took no new decisions national sovereignty. chairman Jay Clayton and CFTC The CFTC implemented most SEC said. Danske Bank calls to analysts are followed by a sudden selloff

Bloomberg penhagen, said by phone on Wednes- pared script where we only comment Volatile markets mean executives Copenhagen day that he was contacted by market on seasonality, one-off s, trends and have an incentive to lower expectations participants who were wondering indexes. The calls are always attended before they publish quarterly results, what was going on. by at least two IR offi cers,” Jensen said. but the calls don’t typically result in s Danske Bank started calling “I got calls from analysts who were He said any details specifi c to the bank large share movements. Investor rela- analysts this week to give them asking, ‘What you have communicated that were provided to analysts would tions departments are prohibited from Aan overview of the trends and because there are rumours in the mar- already have been made public. revealing any new information to a market developments that aff ected ket,’ and I also got a calls from a couple “It’s very unfortunate that analysts’ limited group of people. second-quarter results, its stock price of investors who were alarmed by mar- own interpretations are being per- The July report will be the fi rst for started falling. ket rumours, and were making refer- ceived as though Danske Bank is eff ec- Chris Vogelzang, Danske’s new chief The calls, which are routinely done ence to these calls.” tively guiding on the second quarter, executive offi cer. The former ABN by companies to ensure market expec- Danske is struggling to rebuild its which is not the case,” Jensen said. Amro banker started work this month, tations don’t stray too far from reality, image after last year admitting it was at “Unfortunately, I can see that things replacing interim CEO Jesper Nielsen left one analyst with the impression the centre of a $230bn Estonian mon- get mixed up, from what happened who held the position since Thomas that the bank’s net interest income ey-laundering scandal. It has lost more yesterday.” Subjects discussed with Borgen was ousted last year in the wake may be under pressure. A second ana- than half its market value since the be- analysts included the development in of the scandal. lyst said there were also signs of weak- ginning of 2018 as investors weigh the interest rates, which aff ect net interest Vogelzang has made regaining the ness at Danske’s wealth unit. Both de- risk of fi nes against the bank’s fi nancial income, as well as increases in inter- trust of customers and investors his clined to be identifi ed by name because performance. Danske Bank sign is seen on the Estonian branch building in Tallinn. Danske is bank rates in Sweden and Norway, and primary goal. the conversations were private. Danske began its analyst calls on struggling to rebuild its image after last year admitting it was at the centre of their impact on wholesale funding, Jensen, the head of IR, said Danske By the end of Tuesday, Danske was Tuesday, ahead of a silent period be- a $230bn Estonian money-laundering scandal. Jensen said. has for years arranged calls with indi- the worst performing fi nancial stock in fore the bank reports second-quarter He also said that the calls touched vidual analysts as a service, and that Europe with its share price down more earnings on July 18. the conversation had been downbeat. the second quarter is set to rise about on the performances of indexes and the banks adheres rigidly to a standard than 4%. Claus Jensen, head of inves- One of the analysts to have received According to estimates compiled by 5% from a year earlier, led by an 11% what that might mean for assets un- procedure and a pre-set presentation, tors relations at Danske Bank in Co- a call from Danske said the tone of Bloomberg, Danske’s pretax profi t in increase in revenue. “We stick to a pre- der management. to avoid triggering market reactions. Saturday, June 22, 2019 GULF TIMES BUSINESS

QSE WEEKLY REVIEW Foreign institutions continue to be net buyers; index settles near 10,700 levels

By Santhosh V Perumal register a 1% month-on-month increase in become QR1 per share instead of QR10 goods (2-.09%), insurance (1.73%) and ing increased noticeably to QR137.36mn The telecom sector’s trade volume almost Business Reporter the industrial production in April 2019. earlier. industrials (0.6%); whereas real estate against QR102.49mn the previous week. tripled to 7.72mn shares and value soared The Total Return Index gained 1.65%, All Market heavyweights and blue chips were and telecom declined 2.08% and 0.03% Foreign funds’ net buying declined 56% to QR91.06mn, whereas deals fell 21% Share Index by 1.96% and Al Rayan Islamic seen high in demand as the 20-stock respectively this week which saw banking influentially to QR262.7mn compared to to 1,907. Strengthened global energy prices had Index (Price) by 0.9% this week which Qatar Index gained 173 points or 1.64% to sector alone accounted for about three- QR366.77mn the week ended June 13. The banks and financial services more its fair reflection on the Qatar Stock Ex- saw Qatar’s equity landscape is set to see 10,688.67 points, although it touched a fourth of the total trade volume. Non-Qatari individuals’ net profit booking than doubled to 167.93mn equities, value change (QSE), which settled near 10,700 enhanced liquidity, thus off ering an attrac- low of 10,390 points on Monday. The banks and financial services sector strengthened perceptibly to QR14.74mn gained 7% to QR798.74mn and transac- levels this week that saw the bourse tive option for foreign investment funds Islamic stocks continued to make gains accounted for 75% of the total volume, against QR9.49mn the week ago. tions by 10% to 11,715. urge international investors to look at with stock purchase becoming easier at but slower than the conventional ones this consumer goods (8%), real estate (6%), Total trade volume grew 90% to 225.07mn The insurance sector reported 90% surge the country as an attractive investment lesser price. week which witnessed as many as 5,689 industrials (5%), telecom (3%), transport shares, while value fell less than 1% to in trade volume to 2.79mn stocks, 61% in option. So far, Commercial Bank, Qatar First Bank, Masraf Al Rayan sponsored exchange (2%) and insurance (1%) this week. QR1.69bn and transactions by 17% to value to QR68.28mn and 31% in deals to Foreign institutions continued to be net Al Khaliji, Dlala Holding, Qatar Oman traded fund QATR valued at QR0.14mn In terms of value, banks and financial 33,961 this week. 1,347. buyers but with lesser vigour this week, Investment, QIIB, Alijarah Holding, QNB, trade across five deals. services sector’s share was 47%, industri- The consumer goods’ trade volume more However, the real estate sector’s trade which featured that Qatar’s commercial Ahlibank Qatar, Islamic Holding, Qatar Market capitalisation zoomed 3.87% or als (18%), consumer goods (12%), realty than tripled to 18.64mn equities, while volume plummeted 31% to 13.32mn banks’ total assets grew about 6% year-on- Islamic Bank, Doha Bank, Masraf Al Rayan, about QR22bn to QR590.07bn this week (8%), telecom and transport (5% each) and value declined 22% to QR202.99mn shares, value by 28% to QR133.67mn and year to QR1.43tn at the end of Mary 2019. Al Meera Consumer Goods, Mannai which saw a total of 800 Doha Bank spon- insurance (4%) this week. despite 8% higher deals at 3,958. transactions by 68% to 4,028. Trade turnover was rather flat amidst Corporation, Widam Food, Zad Holding sored QETF valued at QR0.08mn across Local retail investors’ net selling weakened The transport sector’s trade volume more There was 16% decline in the industrials higher volumes this week, which saw and Qatari German Company for Medical four transactions. significantly to QR110.77mn compared to than tripled to 3.49mn stocks and value sector’s trade volume to 11.19mn equities robust manufacturing sector and higher Devices have implemented the stock split, The banks and financial services index QR254.96mn the week ago. also more than tripled to QR89.67mn on and 14% in value to QR309.33mn but on extraction of hydrocarbons help Qatar whereby the nominal value of a share has soared 3.51%, transport (2.46%), consumer However, domestic institutions’ net sell- 37% increase in transactions to 1,075. 2% jump in deals to 3,958.

Waymo plans to study driverless services with Naspers delays multi-billion Renault-Nissan alliance

Bloomberg euros Internet assets fl oat Paris

Reuters Waymo LLC agreed to explore driver- Johannesburg less services with Renault SA, Nissan Motor Co. and Mitsubishi Motors Corp, pairing a leader in self-driving technol- outh Africa’s Naspers has been ogy with the world’s largest automo- forced to delay the multi-bil- tive alliance. Slion euro fl otation of its inter- The three car makers and Alphabet national Internet assets, including Inc.’s autonomous-vehicle unit will its lucrative stake in China’s Tencent, study market opportunities and re- after an admin error by a third party search legal and safety issues related involved in the fl oat. to driverless transportation services in The company said a shareholders’ France and Japan, the companies said meeting in Cape Town on June 28 to in a statement on Thursday. The deal approve the fl otation on Euronext doesn’t extend to cooperation produc- Amsterdam, with a secondary listing ing robo-vehicles. on the Johannesburg Stock Exchange “We’re convinced that with this added (JSE), had been cancelled and recon- expertise, we’ll be able to position our- vened for August 23. selves for autonomous services that The listing of the new company, to are viable for customers,” Hadi Zablit, be called Prosus, has been moved to senior vice president for business de- September from July 17. velopment at the Renault-Nissan-Mit- Naspers said the third-party er- subishi alliance, told reporters in Paris. ror meant some postal copies of the When it comes to implementation, the resolution for the meeting had been three automakers won’t necessarily wrongly addressed. off er services in common with Waymo, It did not name the provider in- he said. volved or say if any compensation The French-Japanese alliance pro- would be sought. duced more than 10 million vehicles “It was outside our control but still last year — on a par with the biggest unfortunate”, Naspers chief execu- carmakers: Volkswagen AG and Toyota tive Bob Van Dijk told reporters on Motor Corp. Unlike Waymo’s previous- a conference call. “We think from ly announced deals with Fiat Chrysler a governance point of view it’s ex- Automobiles NVand Tata Motors Ltd’s tremely important we treat and in- Jaguar Land Rover, the partnership form our shareholders well, and we with Renault-Nissan-Mitsubishi doesn’t felt with this mistake, maybe people Visitors approach the entrance to the headquarters of Naspers in Cape Town. Naspers said a shareholders’ meeting in Cape Town on June 28 to approve the include supplying any cars. are still informed, but we wanted to flotation on Euronext Amsterdam, with a secondary listing on the Johannesburg Stock Exchange (JSE), had been cancelled and reconvened for August 23. Waymo’s parent company, Alpha- take no chance.” bet, struck a separate deal with the The fl otation of the business, with out disproportionate exposure to The company, whose e-commerce $3bn. Naspers said its e-commerce March 2019,” it said in a statement. three-way partnership last September, assets valued at more than €100bn Tencent, one of China’s biggest social holdings cover areas such as food de- division which houses assets such Other e-commerce assets also giving its Google Android operating ($112bn), is motivated by the value media and gaming groups. livery, classifi ed ads and online retail, as OLX narrowed its trading loss continued to expand, with online re- system access to their vehicle dash- of its 31.2% Tencent stake, worth Naspers plans to retain a 73% stake said core headline earnings per share (at the EBITDA level) by 14%, or tail trading losses almost halving and boards starting in 2021. around 100bn Hong Kong dollars, in the new company, which will hold from continuing operations reached 15% in local currency and adjusted the Payments and Fintech business The new agreement marks a first step and which has made Naspers’ valu- assets also including its OLX classi- 694 cents in the year through March, for acquisitions and disposals, to narrowing its trading loss margin to toward developing long-term, profit- ation account for more than 25% of fi ed businesses in India and Brazil, compared with 553 cents the year be- $556mn. 12% from 22% last year. able driverless-vehicle services for the JSE’s Top 40 share index. and its US business letgo. fore. “Trading losses in e-commerce The Internet business, which passengers and deliveries, the compa- That makes it problematic for Naspers also yesterday reported Core headline EPS is Naspers’ reduced signifi cantly with the classi- houses Tencent, saw trading profi t nies said. While the analysis will take South African pension funds and oth- a 25% rise in annual core headline main profi t measure that strips out fi eds business continuing its margin rise 11% as many e-commerce units place first in France and Japan, they er investors in Africa to buy Naspers earnings per share, thanks to reduced non-operational and one-off items. improvement to become profi table boosted profi tability and Tencent de- said it may expand to other markets — shares or South African indexes with- losses at its e-commerce business. Headline earnings rose 26% to in the aggregate for the year ended 31 livered a stable performance, it said. excluding China — in the future. Zablit sees deployment of the new mobility services in less than 10 years. For Renault and Nissan, working with Waymo brings expertise as the race US factory index falls to fresh nine-year low, says IHS Markit to develop autonomous vehicles heats up. It also shows the French and Japanese manufacturers continue to Bloomberg The IHS Markit manufacturing Purchasing global growth weigh on businesses. The Federal The report also noted that payroll gains among collaborate on key strategic matters, Washington Managers’ Index slipped to 50.1 from 50.5, Reserve this week downgraded its assessment all industries were the weakest in two years. even after their two-decade partner- according to a preliminary report yesterday that of the economy and signalled that it is moving “Anecdotal evidence suggested that heightened ship was shaken by the arrest in trailed most estimates in Bloomberg’s survey toward cutting interest rates. economic uncertainty had acted as a brake on November of former leader Carlos A gauge of US factories fell in June to the lowest of economists. A separate gauge for service “Recent months have seen a manufacturing-led staff hiring,” IHS Markit said. Ghosn in Japan over alleged financial since late 2009 and hovered just above the providers edged down to a three-year low of downturn increasingly infect the service sector,” In addition, two-thirds of manufacturers improprieties. threshold between expansion and contraction, 50.7, also falling short of projections. Chris Williamson, chief business economist attributed some or all of their raw material Tensions escalated after Renault pur- the latest signal that the American industrial The readings add to signs that the economy at IHS Markit, said in a statement. Business cost increases to tariff s. Final June data sued a combination with Fiat without sector is losing momentum amid rising is slowing in the second quarter as President sentiment has deteriorated amid concerns are scheduled to be published on July 1 for initially telling its Japanese partners. uncertainty. Donald Trump’s trade policies and weaker about tariff s, geopolitics and growth, he said. manufacturing and July 3 for services. Those merger talks have since ended.

A US-Iran confl ict could impact gas markets much more than oil

Bloomberg the past to halt fuel shipments pact any disruption on global Singapore through the vital passage. Ten- markets. sions in the region are high af- While most major import- ter US President Donald Trump ers don’t have as much storage potential confl ict be- approved and then later called for gas as they do for oil — Ja- tween the US and Iran off military strikes against Iran pan had about 19 days of LNG Acould be far more dis- on Thursday night after Iranian imports on hand at the end ruptive for liquefi ed natural forces shot down an American of March versus enough oil in gas markets than to the world’s Navy drone over the strait. strategic reserves to cover 133 crude shipments. “Whatever spike you get in days of deliveries — the startup About a quarter of the world’s oil, you will likely get twice the of new export projects and mild LNG goes through the Strait of spike in spot LNG,” said David weather have curbed LNG de- Hormuz, the narrow sea con- Hewitt, an oil and gas ana- mand, leaving the market over- duit that borders Iran and lyst at Macquarie Capital Ltd. supplied. through which tankers carrying “The market would be unable Brent oil on Thursday jumped about one-fi fth of the world’s to” make up the full amount 4.3%, the most since January, oil transit, according to the US of shipments from the region after the US drone was shot Energy Information Admin- if deliveries through the strait down and is now trading near istration. Major importers are were halted, he said. $65 a barrel. Benchmark LNG also less prepared for LNG sup- Japan, South Korea and In- Japan/Korea Marker futures, ply disruptions, because they dia are among top LNG buyers, which have hovered near a hold a fraction of the invento- according to the International three-year low, gained 1.4% to ries they do for oil. Gas Union. Inventory levels and $4.615 per million British ther- Tehran has threatened in seasonal demand could also im- mal unit the same day.