FUNDING ISSUES | Page 2 HANDOVER DAY | Page 9 Home Capital China ready eyes asset to support disposals HK market

Saturday, May 13, 2017 Sha’baan 17, 1438 AH PICKUP IN ECONOMIC GROWTH : Page 12 US retail sales rise GULF TIMES broadly; consumer BUSINESS prices rebound Saudi said to boost US relations with US, China ink trade deal $40bn investment Bloomberg London

Saudi Arabia is preparing to cement ties with Presi- dent Donald Trump by committing to unprecedented promoting fi nancial investments in the US. The kingdom’s sovereign wealth fund is set to announce plans to deploy as much as $40bn into US infrastructure, according to people familiar with the matter. The investment may be unveiled as early as next week to coincide with Trump’s visit to the kingdom, said the people, asking not to be identi- services, gas and beef fied as the information is private. No final decisions have been made and the announcement may still be Bloomberg an LNG terminal in the US Northwest that delayed, they said. Washington would ship gas to Asia. China imports of US Saudi Arabia is eager to reset relations with the liquefi ed natural gas picked up last year af- new US administration after feeling shunned by Presi- ter Cheniere Energy launched the fi rst in a dent Barack Obama, who crafted the 2015 nuclear he US reached agreement with China wave of new plants designed to liquefy and deal with Iran. to promote market access for Ameri- export abundant US shale gas. American The kingdom claimed a “historic turning point” in Tcan natural gas, fi nancial services and supplies accounted for almost 7% of China’s bilateral relations after President Trump met Saudi beef that Commerce Secretary Wilbur Ross total imports in March, customs data shows. Arabia’s Deputy Crown Prince Mohammed bin Salman said was part of a broader eff ort to begin re- Chinese companies already have long- in the White House earlier this year. On May 19, Trump shaping the trade relationship between the term contracts with non-US suppliers for will make his first foreign trip since taking off ice, world’s two largest economies. more LNG than domestic demand requires visiting Saudi Arabia and Jerusalem before heading The agreement covers 10 areas where ne- through at least 2023, according to Bloomb- to Europe. gotiators from the two sides have reached erg New Energy Finance. A White House off icial, speaking on condition consensus, including agricultural trade and The Trump administration has given of anonymity, confirmed that the plans were in the issuance of both bond writing and set- the go-ahead for a handful of proposed US the works and that Trump’s son-in-law and senior tlement licenses to two qualifi ed US fi nancial LNG ventures to ship their fuel to coun- adviser, Jared Kushner, had played a critical role in institutions. By mid-July, US beef producers tries without free-trade agreements, such the discussions. A representative for Saudi Arabia’s will have broader access to Chinese markets, as China. Public Investment Fund declined to comment. The while America will move forward on allowing Those projects need to secure long-term Ministry of Finance didn’t immediately respond to the import of cooked poultry from China, ac- supply agreements to underpin their fi- requests for comment. cording to a joint statement announcing the nancing before construction can begin. Trump in March offered his support for develop- deal. “This will only help raise the market ing a new US-Saudi programme in energy, industry, The statement didn’t appear to change sentiment, but not change anything ma- infrastructure and technology that could be valued access for Chinese companies to US natural terially in the foreseeable future,” said at more than $200bn in direct and indirect invest- gas exports, but welcomed China to receive Maggie Kuang, a Singapore-based analyst ments within the next four years, according to the shipments and engage in long-term supply at BNEF. White House. contracts with American suppliers. Ross said US President Donald Trump (right) and Chinese President Xi Jinping shaking hands during Ross said the agreement would help to re- The president has said he intends to push offi cials from Dow Chemical Co gave assur- dinner at the Mar-a-Lago estate in West Palm Beach, Florida, on April 07. The agreements duce the growing US trade defi cit with China for$1tn in US infrastructure investments over the ances that increasing exports of natural gas announced yesterday appeared to build on or repeat some commitments that China has — the country’s largest, totalling $347bn in next decade, with $200bn coming from taxpayers wouldn’t harm the US industry or consum- already made. Still, they represented the first negotiated pact on trade for Trump, who 2016 — and help lead to additional negotia- and the rest from the private sector. ers if sales remained less than 30% of total campaigned on promises to get tough on China on trade before softening his tone as he’s tions over the next year that could address Saudi Arabia is planning to expand its sovereign output. sought cooperation on North Korea. other parts of the relationship. wealth fund into the world’s largest as part of its “This will let China diversify, somewhat, “This was pretty much a herculean accom- attempts to diversify away from oil after prices their sources of supply and will provide a “We’d like to see the actions that go with that it said would clear the way for foreign plishment to get this done,” he said. “This is slumped. The kingdom will transfer ownership of huge export market for American LNG pro- the commitments,” Gibbs said in an e-mailed firms. Also in the plan, China agreed to al- more than has been done in the whole history Saudi Arabian Oil Co to the PIF, as well as the pro- ducers,” Ross told reporters at a White House statement. “Past foot-dragging means we low foreign-owned firms to provide credit of US-China relations on trade.” ceeds from the oil company’s initial public off ering. briefi ng on Thursday, using an acronym for won’t celebrate until these promises are ex- ratings by July 16. China’s Ministry of The deal reaffirms a September agree- The fund could eventually control more than $2tn, liquefi ed natural gas. ecuted.” Commerce and National Development and ment to reopen China to US beef exports. Prince Salman has said. The agreements, which grew out of a 100- Chinese Vice Finance Minister Zhu Reform Commission had already proposed This time, China promised to allow Ameri- Since last year, the PIF has funnelled about $50bn day action plan announced during an April Guangyao, speaking at a briefi ng in Beijing draft regulations in December that would can beef into the country after one more of the kingdom’s reserves into investments abroad, meeting between President Donald Trump to announce the agreements, defl ected ques- have opened up that market. China will round of technical consultations, and no almost all of it into technology. It has said it will and Chinese counterpart Xi Jinping, ap- tions about details, repeatedly describing the issue both bond underwriting and settle- later than July 16, according to the joint commit as much as $45bn to partner with SoftBank peared to build on or repeat some commit- measures as “balanced.” ment licenses to two qualified US financial statement. Group Corp to set up a new $100bn vehicle to invest ments that China has already made. Still, “The 100-day China-US economic plan is institutions as well. It also paves the way for China to export in global technology. The fund also invested $3.5bn in they represented the fi rst negotiated pact on a plan of cooperation, a plan of actions and While Trump made the revival of Amer- cooked poultry to the US. The US will publish Uber Technologies last June. trade for Trump, who campaigned on prom- a plan of win-win arrangements,” Zhu said. ica’s coal industry a hallmark of his cam- a proposed rule by July 16 to help jump-start Still, the Saudi government’s economic reforms ises to get tough on China on trade before China agreed to give “full and prompt paign, his administration seems to be ac- the imports, it said. have caused push back at home as residents com- softening his tone as he’s sought cooperation market access” to payments companies, knowledging the potential jobs bonanza Gai Xinzhe, a researcher at the Bank of plained about slashed government spending and the on North Korea. like Mastercard, Visa and American Ex- offered by the two dozen applications un- China’s Institute of International Finance in suspension of some allowances for state employees. Ker Gibbs, chairman of the American press Co. The US brought a case against der review to build LNG export terminals. Beijing, said China appeared to off er more Prince Salman said this month that 50% to 70% of in- Chamber of Commerce in Shanghai, called China on its electronic payment services Ross said a deal for coal exports to China than the US, but called concessions “pretty come from its initial public off ering of Saudi Aramco, the commitments a “good beginning” to- market in 2010. After a World Trade Organ- wasn’t likely, given the far shipping dis- even from both sides.” what may be the largest-ever listing, will be used on ward addressing several market-access is- isation panel ruled against it in 2012, Chi- tances. Gary Cohn, director of the National “The early harvests look like appetizers for domestic investments. sues, “but not a breakthrough.” na issued new industry guidelines in 2015 Economic Council, has voiced support for a big meal,” Gai said. Palestinian officials hope to Egypt, IMF in initial launch e-currency in 5 years pact on aid tranche Reuters There are practical reason why Palestinians might consider a digital Nicosia currency. The authority has no money-printing facilities of its own so all cash and coins currently come in from elsewhere. AFP programme” on economic re- of the Egyptian pound. Before “If we print currency, to get it into the country you would always need Cairo form, the IMF statement said. November, the offi cial rate Palestinian off icials are planning for the territory to have its own clearance from the Israelis and that could be an obstacle,” Shawwa Ratings agency Standard was 8.83 Egyptian pounds to digital-only currency within five years, a move designed to safeguard said. “So that is why we don’t want to go into it.” and Poor’s in a statement said the US dollar, but it has since against potential Israeli interference, the head of the Palestine The Palestinians are not the only ones considering a digital currency. he International Mone- it anticipated “ongoing fi s- weakened and yesterday was Monetary Authority (PMA) told Reuters. Sweden’s central bank has said it may launch an e-currency as the use tary Fund said yesterday cal consolidation in Egypt over averaging 18 pounds per dollar, Palestinians have no currency of their own and use the euro, US of cash declines and low interest rates tempt citizens to hoard money Tit will release the sec- 2017-2020, supported by the according to the Central Bank’s dollar, Israeli shekel and Jordanian dinar in their daily lives. in vaults or at home. ond tranche of a $12bn loan to three-year IMF programme”. website. But with limited control over money supply and ultimately, inflation, The Palestinian pound is still some way off , however. Egypt, in a “vote of confi dence” S&P “affi rmed its ‘B-/B’ Yesterday’s IMF announce- authorities are mulling a bitcoin-style solution, Azzam Shawwa said. The authority has been in a decade-long push to have a recognised in the country’s economic re- long- and short-term foreign ment comes after a visit to Cai- “That is something we would like to see,” Shawwa said. “It will be central bank and the currency plans are part of a wider five-year form programme. and local currency sovereign ro by a delegation charged with called the Palestinian pound.” strategy to be published before the end of the year, Shawwa said. The amount of $1.25bn must credit ratings on Egypt”. reviewing Egypt’s economic re- Bitcoin is a global digital currency and payment system. Other options, such as keeping the status quo of using four still be endorsed by the IMF “The outlook is stable,” its form programme, its statement Shawwa spoke to Reuters on the sidelines of the annual meeting in currencies, or formally adopting one of them are also under board following an “expert- statement said. said. Cyprus of the European Bank for Reconstruction and Development. consideration but Shawwa said the digital route was the preferred level agreement” announced In November last year, the “This agreement is a vote of The EBRD said during the meeting it would start investing in the one. after a visit to Cairo, an IMF IMF approved the $12bn three- confi dence by the IMF staff in West Bank and Gaza via donations. The PMA says on its website that “But it’s not only the currency, you have to see the economy also. statement said. year aid package for Egypt, at the continued implementation it aimed to become a “full-fledged and modern central bank” for an Issuing (a currency) is something, but you also need the backbone of According to Egypt’s fi nance the time releasing an initial of the Egyptian authorities’ independent Palestine. the currency; reserves, gold, oil and that is part of the business plan.” minister, Amro al-Garhi, the $2.75bn. programme,” the statement But it is unclear how the planned e-pound would skirt the 1994 Paris It is already taking the first step towards those goals. tranche should be disbursed in To obtain the IMF lifeline, said. Protocol agreement which gave the PMA the functions of a central Shawwa said the PMA was in the process of moving to a new the second half of June. Cairo undertook to implement “Foreign exchange short- bank but without the ability to issue currency. purpose-built central bank building in Ramallah. “This agreement is a vote of drastic reforms, adopting value ages are resolved and interbank The protocol recommended the use of the shekel and gave Israel an The building “is designed and constructed to be a central bank”, confi dence by the IMF staff in added tax, cutting public en- market activity is recovering. eff ective veto over a Palestinian currency. Shawwa said, adding it had a strong vault. the continued implementation ergy subsidies and in Novem- Egypt has regained investors’ of the Egyptian authorities’ ber fl oated the exchange rate confi dence,” it said. Gulf Times 2 Saturday, May 13, 2017 BUSINESS

AIG said close to naming Duperreault CEO to boost profitability

Bloomberg Duperreault has a lifetime of experi- after divesting life operations in many to lead Marsh & McLennan in 2008, the fourth-quarter loss in February, fueled by home and auto insurance to individuals. New York ence working with clients in industries nations and exiting businesses like plane year in which the company posted its costs on policies written in prior years. Benmosche previously led MetLife, the such as energy, construction, aerospace, leasing. Hancock was stung by higher- fifth-straight annual decline in New York Results improved in the first three months largest US life insurer. manufacturing and shipping. He’ll be AIG’s than-expected claims costs on policies trading. The stock started its rebound in of 2017, when net income was $1.19bn. Hancock also worked to simplify AIG, American International Group is close to first CEO since before its 2008 bailout guarding against environmental liabilities early 2009, a rally that lasted through Some of AIG’s struggles date to the divesting a mortgage insurer, a Lloyd’s naming Brian Duperreault as the compa- whose experience is mostly in commercial and worker injuries, and the insurer Duperreault’s tenure at the end of 2012 legal troubles that also hobbled Marsh & of London business and some interna- ny’s seventh chief executive off icer since property-casualty insurance. He replaces posted four losses in seven quarters and accelerated under his successor, Dan McLennan. Greenberg, who led the com- tional operations. And he cut jobs to help 2005, turning to an industry veteran with Peter Hancock, a former banker who through March 31. Glaser. Duperreault cut jobs at the broker pany over four decades, left AIG in 2005 improve margins. decades of experience helping commer- announced March 9 that he was stepping The new CEO will have to boost the and won back clients’ confidence, which amid then-New York Attorney General If Duperreault continues that strategy, cial clients guard against risks, according down after missing profitability targets company’s reputation among insurance had been dented by a 2004 bid-rigging Eliot Spitzer’s probe into industry abuses. he’ll need to minimise disruption for key to a person familiar with the matter. and losing the support of investors includ- buyers, staff and credit graders. AIG has scandal. Both companies reached settlements with clients and avoid discouraging the manag- An announcement could come soon, ing activist billionaire Carl Icahn. endured the departure of many top execu- He “built a strong executive team, signifi- his off ice. ers that the company wants to retain. said the person, who asked not to be “He is a well-respected P&C executive tives in recent years and a downgrade by cantly improved the company’s operating Subsequent AIG leaders endured Warren Buff ett’s Berkshire Hathaway Inc identified because the insurer hasn’t who could be expected to improve the S&P Global Ratings. results, and established a long-term strat- investment losses and the stain of a 2008 and Greenberg’s Starr Cos. are among released a statement. Duperreault, 70, is underwriting culture at AIG and improve Duperreault’s Hamilton had already egy that continues to serve as the founda- bailout. Management’s focus then shifted rivals that have been recruiting executives the CEO of Hamilton Insurance Group, a investor confidence,” Tom Gallagher, been working with AIG to improve the use tion for the company’s future success,” to slimming down the company. who built up their expertise and industry Bermuda-based carrier that has a business an analyst at Evercore Partners, said of of analytics in underwriting. The two in- Ian Lang, then the chairman of Marsh & The new CEO will face pressure to relationships at AIG. relationship with AIG and is backed by Duperreault in a note on April 21 after surers partnered last year with Two Sigma McLennan, said in 2012 when Duperreault further shrink, and possibly break up, a “Employee morale at AIG is understand- principals of hedge fund firm Two Sigma Bloomberg reported that the board was to form a venture focusing on the $80bn announced he was stepping down. company that was built by Greenberg ably weak, reflecting very significant head- Investments. He was a longtime deputy to considering him. The Wall Street Journal market for small- and medium-sized busi- AIG also presents a turnaround oppor- through dozens of acquisitions and then count reductions, the huge fourth-quarter Maurice “Hank” Greenberg at New York- reported late on Wednesday on the pos- nesses. In 2016, he hired Seraina Macia, a tunity. The company has dropped 6% this had to race into asset sales under Ed Liddy earnings disappointment and subsequent based AIG and later became CEO of rival sible timing of the announcement. former AIG executive, to run Hamilton’s US year in New York trading through Wednes- and Robert Benmosche to repay the gov- senior management uncertainty,” Meyer Ace Ltd and then Marsh & McLennan Cos, AIG has become increasingly reliant on operation. day, compared with the 7.2% gain of the ernment rescue. Liddy is the former leader Shields, an analyst at Keefe, Bruyette & the world’s biggest insurance broker. commercial property-casualty insurance He helped build Ace and was named S&P 500 Index. Hancock posted a $3.04bn of Allstate Corp, which is known for selling Woods, wrote in a March 22 note.

Adidas beats Nike in Home Capital eyes disposals soccer shirt sponsorship to address funding issues league Bloomberg Shares down as much as 20% Frankfurt yesterday; company doesn’t expect deals in the coming weeks; acknowledges uncertainty about fter Manchester United future; Reuters reported on and Ajax Amsterdam Thursday company was in talks Abooked their spots for the over sales; new director Hibben fi nal in soccer’s UEFA Europa taking central role in talks League, one winner is already cer- tain: Adidas. Reuters The German sporting-goods Toronto maker is sponsoring both teams, as well as the fi nalists of Europe’s more prestigious Champions ome Capital Group confi rmed League tournament — Juventus yesterday it is considering as- and Real Madrid. Adidas’s three- Hset disposals to enable it to stripe logo also appears on the refi nance more quickly and pay off jerseys of teams that have won or an emergency loan provided by the are poised to secure the titles of Healthcare of Ontario Pension Plan. at least three of the continent’s Shares in Canada’s biggest non- biggest national competitions, bank lender fell by as much as 20% in England, Germany and Italy. in early trading yesterday before par- The near sweep is unusual in ing losses to trade down 12.1% at 1105 the high-stakes world of soc- EST. cer sponsorship, where Adidas After the market closed on Thurs- competes fi ercely with archrival day, Home Capital issued fi rst-quarter Nike as well as Puma SE, Under results in which it said uncertainty Armour and other providers of around future funding had cast doubt gear, paying hundreds of mil- about whether it could continue as a lions of dollars for the right to going concern. adorn the biggest clubs’ shirts. Depositors have withdrawn nearly Nike last year signed a 15-year 94% of funds from Home Capital’s contract with Chelsea worth high-interest savings accounts since £900mn ($1.1bn), after a deal March 27, when the company termi- with Adidas ends this year. nated the employment of former chief Depositors have withdrawn nearly 94% of funds from Home Capital’s high-interest savings accounts since March 27, when the company terminated the employment of Adidas and Nike for years have executive Martin Reid. former chief executive Martin Reid. been battling for the top spot in The withdrawals accelerated after sales of soccer equipment, with April 19, when Canada’s biggest secu- The lender needs to raise funds to he said would signifi cantly impact the have spoken publicly since the with- to address a “wide range of potential the German company emerging rities regulator, the Ontario Securities help repay a C$2bn loan from Health- company’s performance in 2017. “Giv- drawal of deposits sparked concerns funding sources and strategic trans- as the clear leader in 2016. Adidas Commission, accused Home Capital of care of Ontario Pension Plan (HOOPP), en the cost of the C$2bn credit line re- over the lender’s liquidity. actions”. spent about €2.5bn ($2.7bn) on making misleading statements to in- which provided the high-interest line payment of amounts, repayment of the Hibben said he “fundamentally be- He added, however, that he did not marketing last year, in line with its vestors about its mortgage underwrit- of credit last month, charging interest amounts drawn under this facility in lieved in the funding model of Home expect deals in the coming weeks. guided range of 12% to 13% of rev- ing business. Home Capital relies on of 10% on outstanding balances. a timely fashion is an essential part of Capital and the role that it played in the “We have some breathing room so enue. If it maintains the ratio and deposits from savers to fund its lending Home Capital has so far drawn down management’s plans. market”. that we can address medium and long- lifts sales according to its fi nancial to borrowers, such as self-employed C$1.4bn from the facility but is hoping This may necessitate asset disposi- “This company has faced a crisis in er-term issues in a thoughtful way. targets, it may add another €1bn workers or newcomers to Canada, who to secure alternative funding on more tions,” he said. confi dence and liquidity but a number I don’t expect there to be any new, to its marketing budget by 2020. may not meet the strict criteria of the favourable terms. Alan Hibben, a former Royal Bank of steps have been taken to address signifi cant, transactions within the While both companies are country’s biggest banks. In a conference call with investors of Canada executive who was brought both our governance and near-term next days and weeks,” he said. spending heavily on sponsorship, Reuters reported on Thursday that yesterday, chief fi nancial offi cer Rob- in a week ago to bolster Home Capi- liquidity issues, which will provide a Home Capital disclosed data yester- Adidas has had a better run of luck Home Capital was in talks to divest ert Morton confi rmed the company is tal’s board, replacing company founder platform which we can build on to as- day that showed the rate of withdraw- this year. Nike’s entire Champions about C$2bn in assets to help pay down considering selling assets to enable it to Gerald Soloway, fi elded many of the sess our strategic alternatives,” he said. als by depositors was slowing, a day af- League roster — including Barce- a high-interest loan, according to peo- refi nance quicker and pay off the emer- questions on the call, which was the Hibben said he was taking on a ter the company raised doubts about its lona, Atletico Madrid, Manchester ple familiar with the situation. gency loan provided by HOOPP, which fi rst time Home Capital executives grater role, alongside management, ability to continue as a going concern. City, Monaco and Paris St Germain — bowed out of the pan-European tournament. Puma didn’t fare any better with Dortmund, Arsenal and Leicester; nor did Under Ar- Deutsche Telekom said to mull bid for vehicle tracking firm Abax mour and Tottenham Hotspur. Adidas-sponsored Bayern Munich Bloomberg with the matter. Abax, which is controlled No final agreements had been reached, and Communications agreed last year to buy GPS has already secured the German London by buyout firm Norvestor Equity, could be talks may still falter, they said. A representative vehicle-tracking company Fleetmatics Group Bundesliga title, while Chelsea is worth about $300mn, one of the people said, for Deutsche Telekom declined to comment. in an all-cash deal valued at $2.4bn to expand poised to win England’s Premier asking not to be identified as the information Abax didn’t immediately respond to emails into the automotive-technology market. League and Juventus leads Italy’s Deutsche Telekom is considering a bid for is private. The company, which provides and calls. Norvestor invested in Abax in 2012 and holds Serie A. In Spain’s La Liga it’s still Norwegian technology provider Abax as the technology to track and manage vehicles Telecom operators are embarking on 82% of the firm. The company employs more an open race between Adidas’s telecommunications firm seeks to expand from phones and computers, may also draw acquisitions to generate new sources of than 350 people and has off ices in Norway, Real Madrid and Nike’s Barcelona, its services for vehicle-tracking and fleet interest from other large phone companies, revenue amid a slowdown in traditional Sweden, Denmark, Finland, Poland, the UK, the while in France’s Ligue 1, Nike is set management, according to people familiar the person said. mobile customer growth. Verizon Netherlands and China, according to its website. to come out on top with Monaco or Paris St Germain vying for the title. Corporate champions fi nd relief as crisis shakes Czech politics

Bloomberg services cheaper and curb risk-taking doxically, a welcome development for as Sobotka stepped up verbal attacks company in which the state owns al- ments in Hungary and Poland sought Prague by banks may not be approved before those investors who were concerned against foreign-owned banks and as his most 70%. Babis has been criticising to increase the state’s control over the October general elections, according to there could be too much regulatory confl ict with Babis escalated. the utility’s plan to sell the coal-fi red economy. A European Union mem- the Patria Finance brokerage in Prague. tightening too soon,” Patria analyst The premier proposed last week to Pocerady power plant and has pressed ber since 2004, the Czech Republic he Czech Republic is once again Sobotka’s Social Democrats are try- Ondrej Konak said by phone. “If these dismiss the fi nance minister, alleging for a higher dividend than the 33 koru- has benefited from close business in political turmoil, and that may ing to stem a drop in popularity and re- new rules are adopted only after the he may have evaded taxes and accusing na per share proposed by management ties with Germany and now boasts Tjust be all right — as far as the duce Babis’s wide lead in opinion polls. elections, they may be more business- him of manipulating news coverage by in March. the 28-nation bloc’s lowest jobless country’s largest companies are con- The premier, who plans to tax banks friendly as lawmakers will be less prone media belonging to his business em- “Some investors have been speculat- rate and some of the best-capitalised cerned. and rich people more if he wins again in to try enchant voters.” pire. Babis, the second-richest Czech, ing the minister could use the share- banks. The government, the sixth in the past the ballot, outlined in March the fast- Czech fi nancial markets have been whose main assets are in the chemi- holder meeting next month to simply “We regard political risk for indi- decade, has been rocked by a fi ght be- track adoption of a law boosting com- traditionally resilient to political tur- cal and food industries, has repeatedly force CEZ to pay more,” said Richard vidual Czech industries and the equity tween Premier Bohuslav Sobotka and petition in telecommunications and moil as elections produce multi-party denied any wrongdoing and refused to Miratsky, an equity analyst at Komer- market as low,” said Radim Kramule, billionaire Finance Minister Andrej allowing the regulator to impose higher coalitions often with opposing eco- step down. President Milos Zeman said cni Banka. “But now it looks like Babis a money manager who helps oversee Babis. The spat is paralysing the legis- fi nes on operators. That’s now less like- nomic platforms, which prevents radi- on Thursday he would ask the consti- may be either gone or too busy fi ght- $9.2bn at the country’s second- larg- lative process and may thwart a regu- ly to pass in the fragmented parliament, cal policy changes and other interfer- tutional court whether he’s obliged to ing Sobotka to actually worry about the est investment company, a unit of Erste latory crackdown on the most profi t- which is also delaying the approval of a ence with industries. The country’s PX dismiss the fi nance minister. payout.” Asset Management. “I can’t remember able companies like phone operator O2 central bank proposal to impose stricter equity index has increased more than The government clash may also The nation of 10.5mn has been seen any legislation in the past years that Czech Republic and Komercni Banka. rules for mortgages. 10% this year, slightly outperform- ease political pressure on power pro- as an investment haven within ex- would signifi cantly aff ect the Czech Bills designed to make mobile-phone “The political instability is, para- ing the Stoxx 600 Europe Index, even ducer CEZ, the country’s largest traded communist Europe after the govern- stock market.” Gulf Times Saturday, May 13, 2017 3 BUSINESS London landlord home sales plummet as taxes slash returns

Bloomberg Surrey, said in an interview. “It just International. In March 2016, a month mortgage-interest payments of £10,800 report published this month by lender “It’s no surprise that investors are London makes the whole exercise unprofitable before the higher stamp duty was a year. Kent Reliance. Investors in the capital now buying fewer rental properties in and pointless.” introduced, landlords accounted for “Before, prices were rising fast enough pay an average of £6,535 a year to London and some are even leaving the The number of properties for rent in 29%. to cover extra taxes and you could maintain, insure and fees for a rental market altogether,” Lucian Cook, head Jennifer Pickford, a 39-year-old owner London jumped in the last year as “It’s tough now to be a private landlord still make money,” Spencer West, who home compared to an average of of residential research at Savills, said in of four London rental properties, is not landlords rushed to make purchases unless you have a lot of equity to put owns two London properties, said in an £3,632 for the UK, the report shows. a telephone interview. “The question is only avoiding purchasing more — she’s before the stamp-duty tax increase down,” Tina Riches, a partner at law firm interview. Those figures exclude home-loan how long can that continue before you considering selling the ones she has. took effect and a slow sales market Smith & Williamson, said in a telephone “Now, they have stagnated and there’s payments. end up with not enough to fill the gap” She isn’t alone. prompted more owners to offer their interview. no profit to be made with mortgage Still, London landlords may have some and rents rise. The proportion of homes bought to properties for lease instead. As a “Any high-rate taxpayer landlord whose repayments, repairs and extra reasons to stick it out. While price Pickford says higher rents probably rent out in the capital tumbled after result, the average asking rent for mortgage interest is more than 75% of taxes coming out.” West, a 39-year- growth is slowing, values have jumped won’t be enough to make her keep her an additional 3% tax on second-home homes in Greater London fell 4.2% in their rental income will see all of their old building materials company about 86% since 2009 and it now costs properties. purchases was introduced in April 2016. the first quarter from a year ago to returns erased by 2020.” owner from the London borough of buyers 14.2 times their gross annual “Even if rents rise after a blip, the Now landlords are facing a second hit £1,937 ($2,490) a month, according to Under the changes, a landlord who Havering, said he may sell his rental salary to purchase a London home, prospect of an extra 100 pounds a with a reduction in tax relief for rental property website Rightmove. pays 40% tax and has an annual rental properties and reinvest in his pension the highest level on record and more month won’t cancel out the extra I will income introduced last month. Homes bought to rent out in London income of £15,000 will see profits plan. than double the rate for the UK as a have to pay when the tax relief is fully “If I thought stamp duty was bad, the dropped to 12% of the total in February fall 86% to £360 in 2020 compared London landlords pay the highest whole, Hometrack data show. That may phased out.” she said. “I may as well sell tax relief issue really was the nail in the from 20% a year earlier, according to with last year, according to mortgage costs in the UK for running an cause rents to rise in the longer term as and put the money into another area coff in,” Pickford, an accountant from data compiled by broker Hamptons broker John Charcol. That’s based on investment property, according to a people rent for longer. with better returns.”

Deutsche United Internet buys Drillisch to Bank fi ned for delayed stir up German telecoms market Bafi n fi ling Deal to create business with €3.2bn on CEO annual sales; total deal value of more than €8bn; new player to fuel competition at low-end of market; changes united Internet up 11.6%, Drillisch up 8.7% Bloomberg Reuters Frankfurt Frankfurt eutsche Bank was fi ned erman Internet service provider by German regulators for United Internet plans to buy a Dbeing too slow to give the Gmajority stake in mobile op- reasons for why it delayed con- erator Drillisch in a staggered stock and fi rmation that ex-CEOs Anshu cash deal which will boost competition Jain and Juergen Fitschen were at the low end of the crowded German stepping down. telecoms market. Bafi n, the German fi nan- United Internet plans to combine cial watchdog, deemed the de- Drillisch and its own 1&1 consumer lay to be a violation of securi- fi xed-line and mobile business within ties rules and fi ned it €550,000 the group, maintaining Drillisch’s in- ($598,000) for that and three dependent listing and “attractive” other probes, according to an dividend policy, the companies said emailed statement yesterday yesterday. from the regulator. Magazine The proposed transaction values the WiWo earlier reported the size of 1&1 Telecommunication retail business the fi nes, without giving details. at €5.85bn ($6.36bn) and will create a The bank’s supervisory board business with annual sales of more than was meeting on a Sunday in June €3.2bn and more than 12mn customers, 2015 when news organisations the companies said. began reporting the news that That would put it in fourth place be- the executives were planning to hind Deutsche Telekom, Vodafone and leave, according to people with Telefonica Deutschland, all of whom knowledge of the matter, who have their own mobile networks. asked not to be identifi ed because Drillisch has extensive access to Tel- the matter is private. The su- efonica’s mobile network. pervisory board hadn’t voted on The total transaction has a value of Jain’s departure yet and decided more than 8bn euros, excluding debt, it should wait before confi rming making it the biggest M&A deal an- the reports, the people said. nounced in Germany so far this year. Deutsche Bank, led by chief Incuding synergies a company executive offi cer John Cryan, has worth more than 10bn will be created, resolved legal issues including a a person familiar with deal told Reu- settlement with the US Justice ters. United Internet plans to combine Drillisch and its own 1&1 consumer fixed-line and mobile business within the group, maintaining Drillisch’s independent listing and Department in December that “The combination with 1&1 Tel- “attractive” dividend policy, the companies said yesterday. resulted in a penalty of $3.1bn. ecommunication is a tremendous While the total amount of liti- opportunity for Drillisch and our Internet Chief Executive Ralph Dom- three-month volume-weighted aver- logical next step in the consolidation “Deutsche Telekom is best posi- gation expenses in 2017 are “to shareholders and is a leap for our com- mermuth. age share price. of retail branding and commercial ca- tioned to weather the heightened near- some extent uncertain,” they are pany into a completely new dimen- The companies aim to execute the The off er is expected to run from the pacity in the crowded German mobile term competitive intensity due to the expected to remain at last year’s sion,” Drillisch chief executive Vlasios deal through two capital increases by end of May to the end of June. market,” said Dhananjay Mirchandani strength of its second brand Congstar,” level of €2.4bn ($2.61bn), Depu- Choulidis said. Drillisch to buy a stake in and then ac- Drillisch would then buy the rest of an analyst at Bernstein. he said. ty CEO Marcus Schenck said on “In terms of sales, Drillisch will be quire all of 1&1, consequently lifting 1&1 Telecommunication for 108mn new In Germany, there were around Deutsche Telekom shares were 1.3% an analyst call in late April. about fi ve times as large as it is today.” United’s stake in Drillisch in exchange. Drillisch shares, in exchange for which 122mn activated mobile SIM cards at higher yesterday at the top of Germa- “Bafi n has completed the Drillisch said that Choulidis would Drillisch will initially sell 9mn new United’s stake in Drillisch would rise to the end of last year, in a population of ny’s blue chip index. probe into a potential violation step down from operational man- shares to buy 7.75% of 1&1 Telecommu- 72.7%. Shares in Drillisch were up 8.7% about 80mn people, according to the The two companies said they envis- by Deutsche Bank of ad-hoc agement and become chairman of nication, which will take United Inter- in early trade at €52.77 and above Unit- Federal Networks Agency. aged annual savings of 150mn euros publication requirements in con- Drillisch’s supervisory board if the net’s stake in Drillisch to a little more ed Internet’s off er price. Bernstein’s Mirchandani added from 2020, rising to €250mn by 2025, nection with the CEO change,” it transaction goes through as planned. than 30% from 20% and trigger a full Shares in United Internet rose 11.6% that competition on the German mar- and costs of 50mn euros for the trans- said. “In relation to the publica- The combined company would be takeover off er. to the top of the German TECDAX. ket would increase in the near term, action. tion of the ad-hoc release about led by Drillisch fi nance chief Andre That off er will be at €50 per share, Telefonica Deutschland shares were threatening Telefonica Deutschland Bank of America Merrill Lynch ad- the CEO change in June 2015, the Driesen, as well as 1&1 Telecommu- which the companies said represented up 5.4%. and Vodafone’s price sensitive prod- vised Drillisch on the deal and JP Mor- notifi cation about the reasons of nication CEO Martin Witt and United a premium of 8.2% over Drillisch’s “This transaction represents the ucts. gan was United Internet’s adviser. self-release to Bafi n was too late.” Sprint, SoftBank in informal Nordea must come under ECB deal talks with T-Mobile oversight, says Finnish regulator

Bloomberg A Sprint merger with T-Mobile comes fraught with regulatory Bloomberg to questions on Thursday. Nordea’s mind branches with a market share New York risk and won’t be easy to structure. Sprint had been interested Helsinki future status is growing increasingly of 2%, whereas Nordea’s market in acquiring T-Mobile in 2014, though the deal fell apart on uncertain. The Nordic region’s only share is around 30%,” Tuominen regulatory concerns. Since then, T-Mobile’s market valuation global systemically important bank said. And while there have been ef- Sprint Corp has started preliminary conversations to merge has soared to $55bn — about $23bn more than Sprint’s. ordea Bank needs to change this year changed its subsidiaries into forts to coordinate bank supervi- with T-Mobile US, the latest attempt to consolidate in a market A merger proposal would be a major test of the Trump the status of its operations in branches, taking regulatory pow- sion across Nordic borders, she says watched closely by US regulators, according to people administration’s attitudes to telecommunications mergers at NFinland, the only Nordic euro ers away from Norway, Finland and they’ve ultimately fallen short in familiar with the matter. a time when it’s already weighing AT&T’s $85.4bn purchase of member, according to the regulator Denmark and giving more responsi- light of the challenges Nordea poses. Executives of both SoftBank Group Corp, Sprint’s largest Time Warner in Helsinki. bility to Sweden, where the bank has The current non-binding memo- shareholder, and Sprint itself have had informal contact Although it’s now larger, it’s unclear if T-Mobile has the desire Anneli Tuominen, director-general its headquarters. But because Sweden randum of understanding between with T-Mobile owner Deutsche Telekom about a transaction, to be the acquirer in any deal since Sprint has struggled to of the Financial Supervisory Author- has stricter fi nancial rules than the the region’s regulators “is not satis- said the people, who asked not to be identified because the retain customers even after off ering the industry’s cheapest ity, says the country can’t accept hav- rest of the region, Nordea now says factory,” she said. “The fi nancial cri- discussions are private. unlimited data plans. Sprint is languishing in fourth place in ing a bank the size of Nordea’s branch it’s considering moving its base to an- sis showed us that we need a single Merger talks in the wireless industry had been on hold for the US wireless market. in Finland unless those operations other Nordic country. supervisor with strong powers and a almost a year because of a government spectrum auction In addition to T-Mobile, Sprint also believes it could receive are overseen by the European Central Finland has put itself forward more intrusive supervisory approach that required participants to avoid negotiating deals with overtures from cable companies, such as Comcast Corp, Bank through the single supervisory as the obvious choice, with Prime versus national supervisors.” each other until April 27. Charter Communications and Altice, which have expressed mechanism. Nordea either needs to Minister Juha Sipila personally talk- Nordea has said it hopes to make SoftBank chairman Masayoshi Son and Deutsche Telekom an interest in the US wireless market, people with knowledge change its Finnish branch back into ing with the bank, according to STT. a decision on its domicile before the chief executive off icer Tim Hoettges separately told investors of the matter said last month. a subsidiary, move its headquarters Finland is seeing an opportunity fi - summer, though chief executive of- this week they’d be open to discussions about consolidation. Comcast and Charter recently agreed to work together on to Finland or fi nd some other model nally to bring the largest Nordic bank fi cer Casper von Koskull this week Banks haven’t been formally hired, although financial firms any deal with a wireless carrier for the next year, making a that would bring it under the regula- into the banking union that all euro signalled he may need more time are jockeying for roles if a deal comes together, the people Sprint sale to a cable company more complicated. tory wing of Europe’s banking union members are a part of. That would to reach a conclusion. Meanwhile, familiar with the matter said. Representatives for Sprint, Any deal involving T-Mobile would need the backing of its inside the eurozone, she said. double the size of the banking sector Denmark is trying to entice Nor- SoftBank, T-Mobile and Deutsche Telekom, which owns about controlling shareholder Deutsche Telekom. “The least preferable alternative to about four times Finnish gross do- dea with laxer rules. The minister 65% of T-Mobile, declined to comment. T-Mobile has become the main earnings and growth driver is the current one, where a systemi- mestic product. Nordea’s operations in charge of banking legislation has Deutsche Telekom gained 3.7% to 17.34 euros at 12:50pm in for the German parent in recent years, transforming from a cally important branch operates in there account for almost one-third gone so far as to say he prefers fewer Frankfurt after earlier gaining as much as 4%, the biggest unit Hoettges tried to sell into one he has called a “kingmaker Finland and the supervisor is lack- of the country’s banking market. rules and taxes. Sweden’s response intraday gain since June. asset.” ing adequate powers to supervise In the European Union, “the cur- was to reject what it called a regula- it,” she said in an emailed response rent legislation is drafted having in tory “race to the bottom.” Gulf Times 4 Saturday, May 13, 2017 BUSINESS German economic growth picks up speed, good news for Merkel

GDP grows 0.6% q/q in first Europe’s biggest economy grew by (SPD), who are junior partners in the cur- while households and state authorities growth so far. “Companies are increasing The French economy, the second- quarter; up from 0.4% in the fourth 0.6% in the quarter from the quarter be- rent coalition and want to replace Merkel increased their expenditures slightly at the their spending on machinery and equip- largest in the eurozone, grew 0.3% in the quarter of 2016; analysts see fore, when it expanded 0.4%, the Federal with their chancellor candidate, Martin beginning of the year. ment in order to seize the opportunities first quarter, slowing from 0.5% in the ‘boom without end’ in Germany; Statistics Off ice said yesterday. Schulz. Trade also gained momentum and sup- of digitisation, remain internationally final quarter of 2016, preliminary data ECB’s low interest rates support That was the strongest quarterly “A boom without end in Germany... and ported growth as exports grew more than competitive and drive innovation.” showed. upswing; data helps Merkel to growth rate since the first quarter of 2016, despite all the risks,” Bankhaus Lampe imports, it said. The BGA trade and wholesale associa- For Italy, the third-biggest economy in burnish economic credentials when the economy grew 0.7%. It was analyst Alexander Krueger said, calling it a On the year, gross domestic product tion said Germany’s economic engine the 19-member bloc, the national central in line with the consensus forecast in a good sign that the upswing was based on grew 1.7% seasonally unadjusted, also in was running smoothly, supporting overall bank has projected quarterly growth of Reuters Reuters poll. a broad foundation. line with the consensus forecast. growth in the eurozone. 0.2%. Berlin The figures are the latest in a batch of “However, it should be noted that the “The economy continues to benefit “Unemployment is low, publics finances Preliminary data are due next Tuesday. solid data that are likely to help Chancel- economy would be humming less without from a doping cocktail of low interest are sound, tax revenues are soaring — and The Spanish economy powered ahead, lor Angela Merkel and her centre-right the support of interest rates, which are too rates, favourable oil prices and an export- countries like France, Italy and Spain also however, with a stronger-than-expected The German economy defied increased CDU/CSU bloc to burnish their economic low for Germany,” he added, in reference boosting exchange rate,” DIHK managing benefit from our success thanks to rising growth rate of 0.8% in the first quarter, political risks and picked up speed in the credentials before a September 24 federal to the European Central Bank’s ultra-loose director Martin Wansleben said. imports of intermediate goods,” BGA head above the eurozone average of 0.5%. first quarter of 2017 as companies invested election, when she will seek a fourth term. monetary policy. He added that numerous risks, such as Anton Boerner said. Outside the eurozone, Britain’s more, consumers and the state continued Merkel’s conservatives have already The Federal Statistics Off ice said US President Donald Trump’s protection- The data also underlines the strength economy slowed to 0.3% in the first three to spend and exports soared despite the widened their lead in opinion polls over investments in buildings and equipment ist threats and the uncertain outcome of the German economy compared with months of 2017 from 0.7% in the fourth threat of rising protectionism. the main opposition Social Democrats grew strongly, partly due to a mild winter, of Brexit negotiations, had not slowed its peers. quarter.

Brexit-hit banks faced G7 ministers seek common with growing offi ce shortage in Frankfurt ground with Donald Trump Bloomberg New York AFP Bari, Italy ermany’s Bundesbank has just made life harder 7 fi nance ministers met here Gfor the banks that are yesterday, looking for common considering Frankfurt as their Gground amid concern among new European Union base after the United States’ partners about Brexit. the implications of Donald Trump’s The central bank confi rmed this ‘America First’ economic agenda. week that it has agreed to lease an The talks, the fi rst Group of Seven additional 7,000 square metres outing for US Treasury Secretary Ste- (75,000 square feet) of space in the ven Mnuchin, followed the overnight city’s Trianon tower. In the proc- announcement of a surprise trade ac- ess, it snapped up one of the few cord between Washington and China. large premises left in Frankfurt’s The deal, securing better access to fi nancial district, whose high-rise the Chinese market for US beef, natu- skyline has earned it the nickname ral gas and some fi nancial services, was Mainhattan. welcomed by Mnuchin. Frankfurt’s overall offi ce va- “We are excited about US trade poli- cancy rate of about 9% is higher cies and I think you probably saw we than most other major German made an announcement of a 100 day cities. However, the business area economic plan with the Chinese so I lacks modern, high-quality blocks think we’re very happy with how were of space that would appeal to in- proceeding with the Chinese,” the ternational lenders that decide former banker said. to beef up their presence in the Among US partners in the club of country, according to a survey by wealthy democracies there is con- property broker Savills. cern that Trump’s arrival in the White “Several big international House could herald a new era of pro- banks are currently looking for tectionism — although offi cials com- offi ce space in Frankfurt, not plain mainly that they don’t have any least because of Brexit — in some visibility on Washington’s intentions. cases they’re looking for more European Finance Commissioner than 10,000 square metres,” said Pierre Moscovici said he hoped the US Benjamin Remy, head of Savills’ administration would stick with the offi ce agency in the city. “On existing system of rules-based, largely closer inspection, it turns out liberalised global trade. European Union Commissioner for Economic and Financial Aff airs, Taxation and Customs Pierre Moscovici arrives for a G7 summit of Finance Ministers on Thursday. that there aren’t that many suit- “The Americans are free to choose Moscovici said he hoped the US administration would stick with the existing system of rules-based, largely liberalised global trade. able properties available.” their policy,” he said. “What I hope is Britain’s decision to leave the that this policy will be within the in- still vague agenda, and the priorities including the policing of web-based in, 54, has defi ned his essential role as most benefi cial tax regimes, as currently EU has encouraged banks to look ternational framework, which means of Washington’s chief European part- multinationals, combating the fi nanc- delivering higher wages for American happens. One idea in a package dubbed for alternative European hubs to also multilateralism, which means also ners (Britain, France, Germany, Italy), ing of terrorism, defending fi nancial workers. “web tax” by the Italian media would London to secure continued ac- attachment to free trade.” Canada and Japan. institutions from cyber attacks and Italy tends to frame the issue in require companies like Facebook to col- cess to the bloc. Goldman Sachs The US and Europe could have dif- “There won’t be a specifi c session on how to ensure that the benefi ts of terms of taking active steps to reduce lect VAT on all advertising revenues in Group and Citigroup are consid- ferent views of specifi c issues but had issues of trade and protectionism but it growth are more evenly shared. inequality, rather than assuming that the countries they are generated in. ering choosing Frankfurt as their to have ways of resolving their diff er- could come up in the broader discus- The latter is an issue that has been growth will deliver better living stand- This might not signifi cantly boost EU base, people with knowledge ences, he added.”We are in the same sion on the state of the world econo- on the G7 agenda since the 2007-08 ards for those struggling to get by. revenues but would give national gov- of the situation said in January. world, all in the same boat. my,” said an Italian offi cial involved in fi nancial crisis. “Inclusive growth means fi rst of all ernments an exact idea of how much In its report, Savills said there “We are getting to know each other preparing the meeting. But it has been given added urgency that growth has to be shared with all a company like Facebook is earning on are just six prime offi ce build- better, so let’s work together.” Trade was however expected to fea- by Britain’s vote to leave the European segment and regions of society,” Fi- its soil, making corporation tax claims ings in central Frankfurt with Diff erences over trade had initially ture in bilateral talks, particularly with Union and Trump’s election triumph, nance Minister Pier Carlo Padoan said more straightforward. more than 10,000 square metres been expected to dominate the meeting Japan and Germany, both large net ex- shocks attributed to the negative im- yesterday. “The so-called web tax is some- available to rent. Three more in Bari, a fortifi ed port on Italy’s south- porters suspected by Trump of benefi t- pact of recent economic trends on key Italy has also fl oated proposals to thing that is taking form,” Padoan said. properties have between 5,000 ern Adriatic coast. ing unfairly from their respective dollar demographics. ensure web-based multinationals pay “There are diff erent national positions and 10,000 square metres on But the issue has been pushed to the exchange rates. Trump’s statements during and after more tax in the countries where they but the the purpose of the G7 is to get off er. More than 60,000 square sidelines with hosts Italy seeking to to Among the issues offi cially on the his election campaign suggest he fa- generate profi ts, rather than being able convergence towards a common vision metres in three separate build- fi nd areas of overlap between Trump’s table are transnational tax evasion, vours “inclusive growth” and Mnuch- to declare them in countries with the on these issues.” ings will be added next year.

GE’s Immelt bets big on digital factories; shareholders are wary

Reuters GE’s technology — and similar sys- than it was in 2008. That performance In addition to improving its own systems that were installed in the last more expected in 2017. Those gains are Grove City, Pennsylvania tems by IBM, Siemens and others — is has some pressing for more urgency productivity, GE sells the “Brilliant 18 months time workers down to the being reinvested into Predix and ap- a hot new battleground in manufactur- from Immelt. Factory” as a product, promising a second. plications, so they have not had a large ing. When activist investor Nelson Peltz combination of its digital systems with Flat screens over work bays count eff ect on GE’s earnings, the executives t a General Electric Co factory The companies promise they can bought a $2.5bn GE stake in 2015, he advanced manufacturing techniques, how long crews are spending and turn said. in this rural town, Keith Spahn, spot problems before machines break pressed for asset sales and cost cut- 3-D printing and lean production prin- red when jobs are taking too long. The gains are not broken out for in- A60, used to take measurements down, yield cost savings of 30% or ting, and barely mentioned GE’s digital ciples pioneered by Toyota Motor Corp. “I can look at that screen and see vestors to see. of parts from railroad locomotives that more, and raise labour productivity strategy as a source of growth. Take the industrial operating system everything I need to know about how GE’s digital business expects new or- are in for repair by hand. that has slowed sharply in recent years. Trian declined to comment for this called Predix. things are running,” said Richard Simp- ders to jump 25% to $5bn this year, said Now he uses a tool that reads the By 2020, spending on such systems article. GE spent more than $1bn to create it son, vice president of supply chain at GE digital division CEO Ruh, resulting dimensions automatically and sends is expected to exceed $500bn a year, In March, Peltz reached an agree- along with applications that can ana- GE Transportation, pointing to a dis- in $4bn in revenue for the division from them wirelessly to his computer, where up from $20bn in 2012, according to an ment with GE that tied the bonuses of lyse terabytes of data from jet engines play. sales to companies such as Exelon Corp software decides whether the part can estimate cited by consulting fi rm Ac- top executives to cutting $2bn in costs or factory machines along with other Even though it is still a grimy, greasy and BP. be reused or must be scrapped. centure. and hitting profi t targets through 2017. data, such as weather or energy costs. industrial shop, Grove City is one of 17 By 2020, GE expects $15bn in revenue “It’s defi nitely faster,” he says. GE says the market for the sectors it Those targets don’t rely on GE’s dig- GE’s venture capital arm is buying “showcases” GE plans to have by year- from its digital division. Spahn’s workbench in this is in will be $225bn by 2020. ital strategy. stakes in startups that adapt robots, end, helping it sell its systems to out- Charlie Smith, chief investment of- 240,000-square foot plant is one small The company has spent $5bn set- “People aren’t saying they don’t like optical scanners and augmented reality side customers. fi cer at Fort Pitt Capital Group, with example of a multibillion-dollar bet by ting up new US factories in the last fi ve the technology” or that GE is investing to work with Predix. When a massive railroad engine rolls $2.1bn under management, owns GE, GE chief executive Jeff Immelt: digital years. too much in digital, said Deane Dray, Last year, GE spent $1.1bn on two in for repair, workers check the digital IBM and other industrial companies technology will transform GE’s facto- As it now adds digital technology to an analyst at RBC Capital Markets.”But makers of industrial 3-D printers, twin to see what parts need to be fi xed. and believes digital will ultimately pay ries, generate new revenue and boost its plants, it needs fewer, and higher how does it translate into profi t mar- planning both to use the printers and The system ensures spares are in off . profi ts. skilled, workers than in the past. gins and cash?” sell them. stock. But he shares the scepticism of many The $4bn GE has spent on develop- “We’re going to have a smarter work- GE poses an important test of the Predix systems work, in part, by cre- Older engines are fi tted with sensors investors. ing digital products — ranging from er,” Immelt said in an interview.”We’re digital factory idea. ating a computerised model, or “digital so they can supply that data next time. “I’m not completely all in on GE,” tiny sensors in jet engines to augment- not going to have as many workers.” It has more than 500 factories around twin,” of a machine that shows in real The process saves labour by elimi- Smith said. “There’s very little revenue ed reality and software that can crunch But as investment grows, so have the globe that produce jet engines, time how it is performing, and when nating unnecessary work. from digital so far.” large volumes of data — is on the scale concerns about whether these bets will power plants, medical CT scanners and parts are wearing out. “Instead of full tear downs, the fac- GE Chief Financial Offi cer Jeff Born- of investments Google and Facebook pay off — and about the cost and com- other large, sophisticated equipment This can eliminate unplanned break- tory workers can refurbish just the stein said in an interview that the digit- Inc made to build their businesses, Bill plexity of keeping networked machines adaptable to the technology. downs, GE says, saving time and mon- parts that need it,” said Anup Sharma, al division “will become real for inves- Ruh, CEO of GE’s digital division, told running and secure from hackers. GE also earns very little from selling ey. a general manager at GE Digital. “That tors” when it begins to boost revenue Reuters. GE investors are especially impatient hardware. The system also creates a “digital frees them up to do value added work and profi ts, starting in 2019 or 2020. Now that GE has shed non-essential for returns. Nearly half of its revenue and most of thread” that logs, like a medical record, and gets the engine back to the cus- GE has no choice but to invest in the operations, including most of its large Since Immelt became CEO in 2001, its profi t come from selling services, a every aspect of a machine’s life — from tomer sooner.” strategy, he added. fi nancial unit, its fortunes will rise or GE shares have fallen 29% while the natural fi t for the monitoring and data initial assembly to repairs during its GE executives say the company has “If we don’t do this then somebody fall depending on whether that invest- S&P 500 index has more than doubled. analysis that are the core of a compu- years of operation. reaped $1bn in productivity gains dur- else is going to,” Bornstein said. “That ment delivers. GE’s dividend is seven cents lower terised factory. At GE’s Grove City factory, digital ing the last two years, with $700mn is not a good thing.” Gulf Times Saturday, May 13, 2017 5 BUSINESS

DJIA WORLD INDICES Company Name Lt Price % Chg Volume Indices Lt Price Change Dow Jones Indus. Avg 20,894.52 -24.90 Apple Inc 156.03 1.35 18,013,711 S&P 500 Index 2,391.20 -3.24 Microsoft Corp 68.30 -0.23 7,300,996 Nasdaq Composite Index 6,121.84 +5.87 Exxon Mobil Corp 82.62 0.01 2,585,474 S&P/Tsx Composite Index 15,552.46 +1.91 Johnson & Johnson 123.98 0.63 1,749,007 Mexico Bolsa Index 49,358.38 -172.15 General Electric Co 28.16 -2.47 26,183,309 Brazil Bovespa Stock Idx 68,351.40 +813.78 Jpmorgan Chase & Co 86.62 -0.62 3,927,812 Ftse 100 Index 7,435.39 +48.76 Procter & Gamble Co/The 86.16 -0.02 2,112,688 Cac 40 Index 5,405.42 +22.00 Wal-Mart Stores Inc 75.97 -0.21 2,605,962 Dax Index 12,770.41 +59.35 Verizon Communications Inc 46.02 0.01 4,915,669 Ibex 35 Tr 10,897.00 +35.60 Pfizer Inc 33.00 -0.14 6,425,701 Nikkei 225 19,883.90 -77.65 Visa Inc-Class A Shares 92.43 0.35 2,566,470 Japan Topix 1,580.71 -6.15 Chevron Corp 106.04 -0.16 1,524,574 Hang Seng Index 25,156.34 +30.79 Coca-Cola Co/The 43.64 -0.07 2,703,100 All Ordinaries Indx 5,870.91 -41.12 Intel Corp 35.63 -0.17 6,660,927 Nzx All Index 1,368.94 -6.32 Merck & Co. Inc. 63.62 -1.26 5,237,040 Bse Sensex 30 Index 30,188.15 -62.83 Cisco Systems Inc 33.28 -1.04 8,901,001 Nse S&P Cnx Nifty Index 9,400.90 -21.50 Home Depot Inc 156.57 0.24 1,137,485 Straits Times Index 3,255.29 -15.82 Intl Business Machines Corp 150.43 -0.15 1,360,242 Karachi All Share Index 35,355.64 +161.45 Walt Disney Co/The 109.72 0.13 2,111,027 Jakarta Composite Index 5,675.22 +22.21 Unitedhealth Group Inc 172.30 -0.59 770,798 3M Co 196.89 0.07 411,388 Mcdonald’s Corp 145.03 0.57 1,344,387 Nike Inc -Cl B 54.32 0.15 2,526,632 TOKYO United Technologies Corp 120.85 -0.35 711,458 Boeing Co/The 182.89 -0.57 810,461 Company Name Lt Price % Chg Volume Goldman Sachs Group Inc 222.75 -0.89 856,089 Rakuten Inc 1,237.00 6.55 26,688,400 American Express Co 77.49 -0.56 1,037,770 Kyocera Corp 6,666.00 0.03 1,967,600 Du Pont (E.I.) De Nemours 79.10 0.18 842,391 Nissan Motor Co Ltd 1,107.50 3.02 26,607,300 Caterpillar Inc 100.53 -0.46 1,011,416 Hitachi Ltd 624.60 -1.12 19,036,000 A logo is seen on an interactive sculpture in the main atrium of the London Stock Exchange headquarters. The FTSE 100 Travelers Cos Inc/The 120.60 0.05 284,723 Takeda Pharmaceutical Co Ltd 5,619.00 -0.07 2,876,000 closed up 0.7% to 7,435.39 points yesterday. Jfe Holdings Inc 1,860.00 -0.13 2,906,200 Ana Holdings Inc 346.40 0.41 12,266,000 FTSE 100 Mitsubishi Electric Corp 1,639.50 -0.58 5,202,200 Sumitomo Mitsui Financial Gr 4,205.00 -1.08 5,331,200 Company Name Lt Price % Chg Volume Honda Motor Co Ltd 3,199.00 -1.57 7,097,300 Fast Retailing Co Ltd 38,410.00 -0.41 1,108,900 Wpp Plc 1,706.00 0.06 3,039,432 Ms&Ad Insurance Group Holdin 3,717.00 -0.40 1,299,900 Worldpay Group Plc 316.30 0.67 3,504,725 Kubota Corp 1,676.00 -1.03 5,155,500 Europe markets upbeat Wolseley Plc 4,975.00 -0.28 323,964 Seven & I Holdings Co Ltd 4,820.00 0.40 2,191,900 Wm Morrison Supermarkets 242.30 0.08 5,238,715 Inpex Corp 1,111.00 0.50 6,913,100 Whitbread Plc 4,066.00 -0.64 299,886 Resona Holdings Inc 608.40 -1.23 8,155,700 Vodafone Group Plc 211.05 2.33 96,223,063 Asahi Kasei Corp 1,111.50 -1.29 5,445,000 United Utilities Group Plc 1,027.00 0.49 1,509,922 Kirin Holdings Co Ltd 2,265.50 0.31 3,124,900 Unilever Plc 4,102.50 0.42 1,946,765 as data cloud Wall St Marubeni Corp 717.20 -0.62 7,012,900 Tui Ag-Di 1,190.00 0.85 966,417 Mitsubishi Ufj Financial Gro 730.00 -1.27 47,645,900 Travis Perkins Plc 1,604.00 -0.80 594,039 Mitsubishi Chemical Holdings 883.50 -2.58 7,847,400 Tesco Plc 178.85 -0.83 18,855,100 while, were modestly optimistic fol- back ahead of the weekend with confi - Fanuc Corp 22,715.00 -0.76 1,374,800 AFP Taylor Wimpey Plc 196.10 -1.26 12,967,854 lowing strong German growth data as dence rattled by a series of below-par Daito Trust Construct Co Ltd 16,755.00 -1.24 361,600 London Standard Life Plc 392.60 1.95 5,360,133 they awaited political developments in Chinese data and the lingering fallout Otsuka Holdings Co Ltd 5,206.00 0.89 2,019,300 Standard Chartered Plc 745.60 -0.92 5,345,546 Oriental Land Co Ltd 6,882.00 0.73 864,400 coming days. of Donald Trump’s shock fi ring of the St James’s Place Plc 1,180.00 1.20 1,285,049 Sekisui House Ltd 1,905.00 -0.18 3,034,200 uropean stock markets were hap- Emmanuel Macron will be sworn in head of the FBI, which some fear could Sse Plc 1,444.00 -0.35 3,509,670 Secom Co Ltd 8,270.00 -1.25 1,334,300 py yesterday to carry the week’s as French president on Sunday and is lead to a crisis that will knock the pres- Smith & Nephew Plc 1,321.00 0.92 1,739,281 Tokio Marine Holdings Inc 4,925.00 -0.93 2,340,200 record-breaking gains into the expected to line up a government the ident’s economy-boosting agenda off Sky Plc 996.50 -0.05 2,990,587 E Aeon Co Ltd 1,695.00 0.36 2,347,300 Shire Plc 4,750.50 1.45 2,087,037 weekend, while Wall Street’s wor- following day, giving a fi rst indication centre. Mitsui & Co Ltd 1,560.00 -0.16 5,581,800 Severn Trent Plc 2,435.00 0.41 525,497 ries about retail weakness were com- of the outlook for his economic reform Tokyo’s Nikkei index closed down Kao Corp 6,690.00 -0.33 2,487,000 Schroders Plc 3,224.00 -1.29 517,259 pounded by soft core infl ation data. plans. 0.4% from a 17-month high, but Hong Dai-Ichi Life Holdings Inc 1,960.00 -0.51 4,379,000 Sainsbury (J) Plc 264.80 -0.11 6,137,678 Mazda Motor Corp 1,578.00 -1.03 4,467,300 Department store chain JC Penney He has already presented hundreds Kong rose 0.1% extending a rally to fi ve Sage Group Plc/The 689.50 0.29 2,263,523 Komatsu Ltd 2,795.50 -2.26 7,476,900 reported disappointing sales yester- of candidates for next month’s par- days. Sabmiller Plc 0.00 0.00 - West Japan Railway Co 7,571.00 0.04 622,100 day, adding to concerns over retail sec- liamentary election, many of whom Bloomberg News reported, without Rsa Insurance Group Plc 616.50 0.24 1,799,456 Murata Manufacturing Co Ltd 16,100.00 -1.26 771,500 Royal Mail Plc 430.50 1.77 4,824,991 tor businesses sparked by giant Macy’s are inexperienced in politics, but that naming sources, that China had made Kansai Electric Power Co Inc 1,554.50 0.00 4,312,000 Royal Dutch Shell Plc-B Shs 2,193.50 -0.07 6,901,887 fi gures the previous day. could actually be an asset, said Jasper preparations to support the Hang Seng Denso Corp 4,900.00 -1.65 1,989,900 Royal Dutch Shell Plc-A Shs 2,145.00 0.59 4,566,940 US infl ation data for April, while Lawler at London Capital Group. Index if needed ahead of the expected Sompo Holdings Inc 4,455.00 -0.13 915,200 Royal Bank Of Scotland Group 258.70 -0.81 7,480,010 visit of President Xi Xinping to the city Daiwa House Industry Co Ltd 3,604.00 -0.19 3,570,500 showing a higher headline fi gure, con- “Many of Macron’s candidates have Rolls-Royce Holdings Plc 863.50 -0.92 6,349,178 Jxtg Holdings Inc 526.10 3.54 30,597,300 tained weaker-than-expected core in- never held offi ce and this may improve for the July 1 handover celebrations. Rio Tinto Plc 2,970.00 -0.67 3,863,399 Nippon Steel & Sumitomo Meta 2,501.00 -0.79 2,466,000 fl ation, making the Federal Reserve’s the chance of election with France’s Shanghai — which has fallen about Rexam Ltd 0.00 0.00 - Suzuki Motor Corp 4,871.00 -2.58 3,265,300 7% in the past month on worries about Relx Plc 1,625.00 1.31 2,700,894 job of pinpointing the right time for its disgruntled voters — and the likelihood Nippon Telegraph & Telephone 5,119.00 0.67 3,796,900 Reckitt Benckiser Group Plc 7,356.00 0.75 767,119 next rate hike more complicated, deal- of economic reform once in offi ce,” he a state crackdown on leveraged invest- Ajinomoto Co Inc 2,257.00 0.31 2,313,300 Randgold Resources Ltd 7,225.00 1.05 571,991 ers said. said. ing — ended up 0.7% with speculation Mitsui Fudosan Co Ltd 2,559.00 -0.68 4,976,300 Prudential Plc 1,759.50 -0.06 3,604,443 The dollar weakened in response, Germany’s most populous state mainland shares were also being given Ono Pharmaceutical Co Ltd 2,398.50 2.63 4,532,500 Provident Financial Plc 3,192.00 -2.24 478,706 Daikin Industries Ltd 10,960.00 -0.86 1,542,500 and so did the New York stock market North Rhine-Westphalia votes in a re- state backing. Persimmon Plc 2,360.00 -1.87 1,400,361 Bank Of Yokohama Ltd/The 0.00 0.00 - as earlier optimism about solid jobs gional election Sunday, a key test for The dollar declined against the yen Pearson Plc 698.00 -1.55 5,660,119 Toray Industries Inc 944.50 -0.19 10,938,500 data faded. Angela Merkel’s re-election chances as and euro, having enjoyed a surge on Paddy Power Betfair Plc 8,325.00 0.60 120,160 Astellas Pharma Inc 1,403.50 -1.78 18,995,300 Old Mutual Plc 194.70 -0.46 5,785,227 T-bond prices rose as investors be- chancellor. Thursday on comments from a top Bridgestone Corp 4,792.00 -0.25 3,609,300 Next Plc 4,345.00 1.00 345,726 came less sure about an early rate hike. London’s benchmark FTSE 100 in- Federal Reserve offi cial backing three Sony Corp 4,046.00 -0.66 5,588,200 National Grid Plc 1,043.00 1.02 5,931,014 “Treasury yields and the US dol- dex, meanwhile, reached a new record more interest rate hikes this year. Hoya Corp 5,528.00 0.44 1,835,800 Mondi Plc 2,014.00 0.70 1,233,911 lar are lower, as the data included a closing high as sterling weakness In London, the FTSE 100 closed up Sumitomo Mitsui Trust Holdin 3,978.00 -1.00 1,444,800 Merlin Entertainment 502.50 0.50 1,346,256 Japan Tobacco Inc 3,932.00 1.05 7,556,400 cooler-than-expected read on con- boosted the earnings outlook for big 0.7% to 7,435.39 points; Frankfurt — Mediclinic International Plc 847.50 0.95 1,061,165 Osaka Gas Co Ltd 423.50 0.64 6,020,000 sumer price infl ation,” said analysts at British exporters. Frankfurt also ended DAX 30 rose 0.5% to 12,770.41 points Marks & Spencer Group Plc 377.30 0.08 6,123,243 Sumitomo Electric Industries 1,879.00 -0.77 3,603,700 Charles Schwab. at a new closing high. and Paris — CAC 40 ended up 0.4% to London Stock Exchange Group 3,454.00 0.67 1,057,725 Daiwa Securities Group Inc 668.60 -1.09 7,182,000 Lloyds Banking Group Plc 68.70 -1.38 213,505,674 European equity markets, mean- Earlier in Asia, traders took a step 5,405.42 points at the close yesterday. Softbank Group Corp 8,657.00 -2.46 8,835,000 Legal & General Group Plc 255.30 0.24 14,813,292 Mizuho Financial Group Inc 209.00 -0.57 77,230,400 Land Securities Group Plc 1,132.00 0.27 1,858,877 Nomura Holdings Inc 694.50 -0.64 12,124,700 Kingfisher Plc 349.90 1.39 10,026,872 HONG KONG HONG KONG Daiichi Sankyo Co Ltd 2,524.50 -0.65 2,693,100 Johnson Matthey Plc 3,130.00 0.00 421,749 Subaru Corp 3,945.00 -1.25 6,271,900 Itv Plc 192.20 1.69 21,071,860 Ntt Docomo Inc 2,719.50 0.09 3,555,800 Company Name Lt Price % Chg Volume Company Name Lt Price % Chg Volume Intu Properties Plc 279.00 -0.32 3,589,516 Sumitomo Realty & Developmen 3,150.00 -0.25 3,690,000 Intl Consolidated Airline-Di 599.00 0.17 8,549,524 Aluminum Corp Of China Ltd-H 3.57 0.28 9,851,093 Hong Kong & China Gas 15.74 0.25 5,966,542 Sumitomo Metal Mining Co Ltd 1,423.00 -4.14 7,777,000 Intertek Group Plc 4,169.00 0.12 302,491 Bank Of East Asia Ltd 32.65 -0.15 605,716 Hong Kong Exchanges & Clear 195.50 -0.10 2,904,663 Orix Corp 1,745.00 -1.13 3,650,400 Intercontinental Hotels Grou 4,270.00 0.23 407,170 Bank Of China Ltd-H 3.80 0.53 302,046,463 Hsbc Holdings Plc 68.10 0.22 28,096,544 Asahi Group Holdings Ltd 4,400.00 0.05 1,803,800 Inmarsat Plc 770.50 2.05 1,121,572 Bank Of Communications Co-H 5.90 0.34 29,139,534 Hutchison Whampoa Ltd 0.00 0.00 - Keyence Corp 48,090.00 -0.52 292,200 Informa Plc 653.00 0.85 1,832,339 Belle International Holdings 6.09 0.66 9,928,534 Ind & Comm Bk Of China-H 5.08 -0.39 277,618,586 Nidec Corp 10,745.00 -0.14 774,200 Imperial Brands Plc 3,717.00 0.80 1,253,263 Boc Hong Kong Holdings Ltd 32.80 0.31 5,083,319 Li & Fung Ltd 3.19 -1.54 48,022,833 Isuzu Motors Ltd 1,554.00 -0.38 2,470,100 Hsbc Holdings Plc 678.10 0.01 17,534,570 Cathay Pacific Airways 10.90 -0.55 4,793,496 Mtr Corp 46.65 0.21 3,810,870 Unicharm Corp 2,897.50 1.88 2,843,000 Hargreaves Lansdown Plc 1,440.00 0.21 553,522 Ck Hutchison Holdings Ltd 101.60 -0.29 4,955,540 New World Development 9.83 0.20 10,961,795 Shin-Etsu Chemical Co Ltd 9,936.00 0.40 1,590,100 Hammerson Plc 591.00 0.17 2,308,470 China Coal Energy Co-H 3.48 0.00 8,658,733 Petrochina Co Ltd-H 5.31 0.00 65,219,644 Smc Corp 32,870.00 3.63 650,700 Glencore Plc 285.00 -1.74 41,340,100 China Construction Bank-H 6.37 0.16 154,032,054 Ping An Insurance Group Co-H 46.05 0.88 45,815,293 Mitsubishi Corp 2,311.00 -1.22 7,342,500 Glaxosmithkline Plc 1,665.00 2.30 12,086,543 China Life Insurance Co-H 24.55 0.82 56,987,096 Power Assets Holdings Ltd 71.15 -0.35 4,143,815 Nintendo Co Ltd 29,480.00 -0.22 1,374,500 Gkn Plc 345.70 -1.68 7,724,991 China Merchants Port Holding 21.65 -0.69 1,854,469 Sino Land Co 13.28 -1.63 1,943,091 Eisai Co Ltd 5,996.00 -0.23 1,306,600 Fresnillo Plc 1,521.00 1.20 1,011,573 China Mobile Ltd 85.10 -0.18 16,172,877 Sun Hung Kai Properties 116.00 -0.51 2,933,849 Sumitomo Corp 1,530.00 -0.13 3,537,200 Experian Plc 1,687.00 0.96 1,716,551 China Overseas Land & Invest 22.05 0.23 16,507,523 Swire Pacific Ltd - Cl A 75.00 0.87 1,494,770 Canon Inc 3,809.00 -0.24 4,993,800 Easyjet Plc 1,294.00 -0.54 3,048,864 China Petroleum & Chemical-H 6.25 0.16 42,962,108 Tencent Holdings Ltd 258.20 1.41 25,854,155 Japan Airlines Co Ltd 3,430.00 -0.46 1,559,300 Dixons Carphone Plc 325.40 -0.18 3,648,209 China Resources Beer Holdin 18.38 -0.65 4,745,440 Wharf Holdings Ltd 65.95 -1.57 6,225,307 Direct Line Insurance Group 356.60 0.71 1,952,033 China Resources Land Ltd 20.70 0.24 4,967,516 China Resources Power Holdin 14.44 0.42 12,654,830 Diageo Plc 2,305.00 0.35 2,941,020 SENSEX Dcc Plc 7,445.00 0.54 78,676 China Shenhua Energy Co-H 18.26 1.00 31,764,804 GCC INDICES Crh Plc 2,878.00 -0.48 1,178,847 China Unicom Hong Kong Ltd 10.40 1.17 21,757,300 Compass Group Plc 1,601.00 0.44 2,903,066 Company Name Lt Price % Chg Volume Citic Ltd 11.48 0.17 9,028,156 Indices Lt Price Change Coca-Cola Hbc Ag-Di 2,184.00 -0.27 645,520 Clp Holdings Ltd 82.90 -0.36 1,694,110 Doha Securities Market Zee Entertainment Enterprise 526.40 -3.37 4,701,603 10,110.84 +119.17 Centrica Plc 192.40 0.10 19,473,131 Cnooc Ltd 9.06 0.55 42,371,958 Saudi Tadawul Yes Bank Ltd 1,483.10 -5.97 10,891,289 6,882.51 -47.81 Carnival Plc 4,748.00 -0.57 626,380 Cosco Shipping Ports Ltd 8.68 -1.14 903,536 Kuwait Stocks Exchange Wipro Ltd 507.05 0.48 1,182,065 6,670.47 +14.50 Capita Plc 551.00 -1.61 3,330,211 Esprit Holdings Ltd 5.97 -0.50 1,413,490 Bahrain Stock Exchage Vedanta Ltd 236.75 0.32 12,658,221 1,307.09 -0.96 Burberry Group Plc 1,645.00 -0.18 1,271,360 Fih Mobile Ltd 2.66 0.00 5,707,581 Oman Stock Market Ultratech Cement Ltd 4,404.35 -0.18 212,451 5,432.14 +2.05 Bunzl Plc 2,453.00 0.49 466,051 Hang Lung Properties Ltd 19.12 -2.45 3,972,710 Abudhabi Stock Market Tech Mahindra Ltd 442.25 1.73 2,962,112 4,608.28 +26.52 Bt Group Plc 305.95 2.72 33,573,392 Hang Seng Bank Ltd 162.90 0.06 437,385 Dubai Financial Market Tata Steel Ltd 436.70 -1.01 6,494,261 3,420.19 +24.98 British Land Co Plc 672.00 0.75 4,002,177 Henderson Land Development 49.65 0.00 1,649,120 Tata Power Co Ltd 82.30 -0.36 1,695,401 British American Tobacco Plc 5,408.00 1.29 2,209,923 Tata Motors Ltd 430.85 0.80 4,287,163 Bp Plc 460.00 0.89 42,085,174 Tata Consultancy Svcs Ltd 2,360.65 0.48 1,325,606 Bhp Billiton Plc 1,164.00 -0.81 6,154,732 Sun Pharmaceutical Indus 655.10 1.03 2,180,000 Berkeley Group Holdings/The 3,344.00 -0.65 380,891 “Information contained herein is believed to be reliable and had been obtained from sources believed to be reliable. The State Bank Of India 297.90 -0.07 15,762,427 Barratt Developments Plc 605.50 0.41 4,375,516 Reliance Industries Ltd 1,350.45 -0.67 2,109,565 accuracy and completeness cannot be guaranteed. This publication is for providing information only and is not intended Barclays Plc 205.90 -0.31 26,667,182 Punjab National Bank 169.15 -1.66 9,263,143 as an off er or solicitation for a purchase or sale of any of the financial instruments mentioned. Gulf Times and Doha Bank Bae Systems Plc 640.00 -0.16 5,673,597 Power Grid Corp Of India Ltd 206.25 -0.94 3,243,788 or any of their employees shall not be held accountable and will not accept any losses or liabilities for actions based on Babcock Intl Group Plc 899.50 0.67 1,196,032 Oil & Natural Gas Corp Ltd 184.85 0.68 6,549,359 this data.” Aviva Plc 538.50 0.19 5,795,956 Ntpc Ltd 158.85 -0.87 2,459,483 Astrazeneca Plc 5,176.00 9.03 6,760,141 Maruti Suzuki India Ltd 6,730.20 -0.48 272,114 Associated British Foods Plc 2,873.00 0.00 457,188 Mahindra & Mahindra Ltd 1,367.85 -0.60 1,769,465 Ashtead Group Plc 1,597.00 -1.48 808,669 Lupin Ltd 1,253.95 -0.46 949,667 CURRENCIES Arm Holdings Plc 0.00 0.00 - Larsen & Toubro Ltd 1,740.60 0.22 1,337,748 DOLLAR QATAR RIYAL SAUDI RIYAL UAE DIRHAMS BAHRAINI KUWAITI Antofagasta Plc 774.00 -0.45 2,051,066 DINAR DINAR Kotak Mahindra Bank Ltd 954.65 1.91 4,461,433 Anglo American Plc 1,041.00 -1.05 5,502,824 Itc Ltd 274.95 -0.61 4,984,359 Admiral Group Plc 2,035.00 -0.15 534,164 Infosys Ltd 964.25 2.13 6,329,327 3I Group Plc 831.50 0.00 1,790,941 Indusind Bank Ltd 1,411.75 -1.02 622,157 #N/A 0.00 0.00 - Idea Cellular Ltd 92.35 1.71 17,681,723 Icici Bank Ltd 296.55 -1.22 15,877,946 TOKYO Housing Development Finance 1,549.80 -0.99 1,322,491 Hindustan Unilever Ltd 980.20 0.15 938,219 Hindalco Industries Ltd 191.05 -1.34 12,794,250 Company Name Lt Price % Chg Volume Hero Motocorp Ltd 3,541.50 2.30 660,231 East Japan Railway Co 10,380.00 1.07 912,500 Hdfc Bank Limited 1,551.65 0.34 1,584,022 Itochu Corp 1,663.50 0.15 7,033,100 Hcl Technologies Ltd 847.65 1.07 1,870,715 Fujifilm Holdings Corp 4,280.00 -0.09 1,857,400 Grasim Industries Ltd 1,149.20 -0.70 553,028 Yamato Holdings Co Ltd 2,410.00 0.73 1,865,700 Gail India Ltd 409.20 0.22 2,588,620 Chubu Electric Power Co Inc 1,464.50 -0.17 1,513,600 Dr. Reddy’s Laboratories 2,580.80 -0.51 1,379,858 Mitsubishi Estate Co Ltd 2,084.00 -4.80 13,242,600 Coal India Ltd 276.60 0.88 2,895,900 Mitsubishi Heavy Industries 462.90 -0.81 14,250,000 Cipla Ltd 567.95 1.07 888,765 Toshiba Corp 253.10 -1.25 127,857,000 Cairn India Ltd 285.35 0.00 26,579,537 Shiseido Co Ltd 3,246.00 0.65 2,053,500 Bosch Ltd 23,485.80 0.08 10,352 Shionogi & Co Ltd 6,169.00 0.73 1,603,600 Bharti Airtel Ltd 365.10 -0.25 3,947,800 Tokyo Gas Co Ltd 553.80 0.84 7,467,000 Bharat Petroleum Corp Ltd 733.15 0.34 1,151,264 Tokyo Electron Ltd 15,085.00 -0.20 1,810,800 Bharat Heavy Electricals 170.90 -1.87 4,512,230 Panasonic Corp 1,349.00 -2.07 12,495,100 Bank Of Baroda 186.40 -0.80 10,737,913 Fujitsu Ltd 788.60 -1.46 16,708,000 Bajaj Auto Ltd 3,004.80 0.21 445,514 Central Japan Railway Co 18,585.00 0.57 386,500 Axis Bank Ltd 503.00 -2.69 11,528,089 T&D Holdings Inc 1,715.50 -0.46 1,959,400 Asian Paints Ltd 1,132.95 -2.87 3,622,235 Toyota Motor Corp 6,047.00 -1.24 8,216,700 Ambuja Cements Ltd 258.40 -0.73 2,030,104 Kddi Corp 3,083.00 0.72 10,641,200 Adani Ports And Special Econ 357.95 -0.58 3,148,253 Nitto Denko Corp 9,319.00 2.19 1,930,200 Acc Ltd 1,679.85 -0.56 401,304 Gulf Times 6 Saturday, May 13, 2017 BUSINESS/LEISURE

Highest-paid women in America reap rewards of technology boom

Bloomberg New York

inni Rometty, Meg Whit- man and Safra Catz have Gbeen trailblazers in the technology industry, and now they’re America’s highest-paid female executives. Rometty, 59, the chief ex- ecutive offi cer of International Business Machines Corp (IBM), was awarded a $96.8mn package for last year, making her the top- ranked woman on the Bloomberg Pay Index, a ranking of the 200 best-compensated executives at companies that submit details to US regulators. That puts her at Rometty Whitman Catz No 6 on the list, after fi ve men, and marks the fi rst time a wom- grant big equity awards to execu- for 2016 pay, compared with 17 500 Technology Hardware and outgoing CEO, took fourth with Phebe Novakovic, 59, who’s to comment or didn’t respond to an has cracked the Top 10 since tives in their fi rst year on the job. a year earlier. The index values Equipment Index climbed 15%, $32.8mn for the year she orches- led General Dynamics Corp since requests for comment. the index was created in 2015. Catz, 55, who was the top- equity awards at each company’s outpacing the 9.5% advance for trated a sale of the fi rm to Ve- 2013, was fi fth with $30.6mn Topping the Bloomberg Pay Whitman, 60, the CEO of paid female executive for 2015 fi scal year-end. Compensation the broader benchmark, and the rizon Communications Inc The in awarded compensation. The Index for 2016 is Wal-Mart Hewlett Packard Enterprise Co, after she was promoted to co- fi gures can therefore diff er from tech-heavy Nasdaq Composite board withheld her 2016 bonus value of her options and stock Stores Inc’s online chief Marc is No 2 with $52.5mn in her fi rst CEO of Oracle Corp, is third with those disclosed in regulatory fi l- Index logged its fi fth straight after it was revealed that hacks grants, some of which are linked Lore, who received $236.9mn in year leading the maker of cor- $39.2mn. Her compensation fell ings, in some cases by a lot, de- year of gains. of the web portal had exposed to performance targets set by the awarded compensation, the bulk porate software and hardware, since the board scaled back ex- pending on stock-price moves Rometty’s awards include a hundreds of millions of users’ maker of Abrams tanks and nu- of it from shares that were part following its split from parent ecutive awards following years and dividend payouts. one-time grant of premium- personal information. Part of clear submarines, jumped along of the purchase price for his Jet. Hewlett-Packard Co. Her pack- of shareholder complaints, and Those at the top of the rank- priced stock options that surged her pay comes in stock that’s with defence stocks in the wake com Inc, Apple Inc’s Tim Cook age includes stock options and she didn’t get an annual bonus ing benefi ted as tech stocks in value after IBM shares rallied linked to performance. Mayer, of Donald Trump’s election. took second and Evercore Part- restricted shares linked to per- after Oracle’s profi t slid. were among the best perform- 21% in 2016. 41, will leave when the deal is The top-ranked executives or ners Inc’s John S Weinberg was formance. Companies often Fourteen women made the list ers in the US last year. The S&P Marissa Mayer, Yahoo! Inc’s completed. their representatives declined third.

Sudoku Adam

Pooch Cafe

Sudoku is a puzzle Weekly’s Solutions based on a 9x9 grid. The grid is also divided into nine (3x3) boxes. You are given a selection of values and to complete the puzzle, you must fill the grid so that every column, every row and every 3x3 box contains the digits 1 to 9 and none is repeated.

Super Cryptic Clues Garfi eld

Bound And Gagged

Across Down 3. It will be simpler, too, to convert the capital (10) 1. Control so not a dime goes out (8) 8. As a doctor, I can treat her (6) 2. Attractive girls featured in washing-up ads 9. Flat race, perhaps, left unfinished (4) (6) 10. Did he attack travellers on the Alpine pass? (10) 3. Runs the same wild horse in it (7) 11. Coming back to dress irritated one (3) 4. Parking the vehicle first, walk (5) 13. The singer is a b-booby (4) 5. Start with the duck coop (4) 14. For a spell, try to make yourself look big (7) 6. Yearns to have the toy cricketer (4-4) 15. Photograph of the marksman (4) 7. Goes over to - and turns on (8) 17. Warmed a little the day I had the favourite 12. Run or back in the race (4) backed (5) 14. Worry when the point breaks (4) 20. Measures and tries on the ornamental textiles 16. Contain, in the cargo compartment (4) (5) 17. I have put back the article about stealing (8) 22. From which the cowherd can tell we’ll have 18. Sure after I have trapped one (8) bad weather? (4) 19. As a surname, was attractive (4) 24. Alternatively, I will have a set and cut (7) 21. Once having rotted badly, was pulled out (8) 25. Sharp, for a start, and attractive (4) 23. Dusted ridiculously round one while one 27. Examine and remove the ring from the bar (3) worked (7) 28. Term used by Norfolk people for ‘weapon’ (5-5) 25. He’s afraid to swallow the raw minced fish 29. Unused, being useless (4) (6) 30. Having been a student, left off and went to 26. She is, therefore, in a mess (5) work (6) 28. They may be spelling the letters aloud (4) 31. How those about to putt go, on the turf (10)

Weekly’s Solutions

Across: 1 Gemini; 5 Amused; 8 Nooks; 9 Olivia; Down: 1 Grotto; 2 Maid; 3 Inasmuch; 4 Good 10 Tartan; 11 Sedge; 14 Overturn; 16 Nettle; 18 enough to eat; 5 Astern; 6 Site; 7 Dangle; 12 Go without saying; 20 Lament; 22 Huntress; 25 Trailed; 13 Stayers; 15 Viola; 17 Lines; 19 Sinister; Pools; 27 Turnip; 28 Teller; 29 Erase; 30 Remind; 20 Litter; 21 Tipped; 23 Sorrel; 24 Grim; 26 Blue. 31 Reveal.

Gulf Times 8 Saturday, May 13, 2017 BUSINESS EM killjoys issue warning on China and commodities

Bloomberg team. For now, bulls are firmly in London charge. On Monday, DoubleLine Capital’s Jeff rey Gundlach was Dissenters in the face of the the latest investor to tout the relentless emerging-market rally trade, with a call to short the are speaking out. S&P 500 Index and go long the A drop in oil prices and China’s iShares MSCI Emerging Markets crackdown on leverage - spurring exchange-traded fund, which has this month’s rout in industrial returned 16% this year. The bullish metals and iron ore - is setting positioning is eff ectively a bet on the stage for a correction in devel- stability in China: Over a quarter oping-country assets, according of the benchmark EM ETF is to a growing chorus of investors weighted to either Chinese-domi- and analysts. ciled companies or those based in While still in the minority, they Hong Kong, according to Bespoke warn a tide of capital inflows and Investment Group. a jump in bullish positions have From South Africa to Chile, cur- The headquarters of ThyssenKrupp is seen in Essen, Germany. The steel major, already struggling to win over unions and lawmakers to a plan to merge its European business, left valuations at an inflated level rencies of resource-rich nations is now facing growing scepticism from the investment community. after gains in emerging-market are snubbing weak commodity stocks, bonds and currencies prices, as implied by weak 30-day this year. correlations. That’s a sign, for Global markets have largely some, of investor complacency. shrugged off Beijing’s move to Only Russia’s rouble has experi- tighten the credit spigot - which enced an uptick in its ties to oil, has sparked a rout in domestic notching a four-month high of stocks and bonds - driven by 0.53. A correlation of 1 suggests ThyssenKrupp is facing sanguine projections over the assets are moving perfectly in outlook for China’s output, ex- lock step. change rate and capital account. Equity investors are also ex- But bears say that investors are pressing pronounced apathy over discounting the risk that the commodity-price risks. reduction in leverage will slow The four-month performance growing scepticism from growth in other developing na- of emerging- market equities, tions as well. adjusted for volatility, relative “Sell the strength,” said Arthur to commodities is near record Budaghyan, a strategist at highs. And investors’ overweight Montreal-based BCA Research. positions are at the highest level “When the rally cracks in the in five years, according to Bank of weeks ahead, investors should America Corp’s monthly survey of investment community establish short positions because fund managers. the potential downside will be Strategists at the US bank Bloomberg gaining almost 5% on the day the news worst performance on Germany’s would strengthen its balance sheet. Chief considerable, he said.” recommend investors snap up Dusseldorf broke in April 2016 and adding almost benchmark DAX index. “History has fi nancial offi cer Guido Kerkhoff in January The extra yield investors put options as cheap bets on an 20% over the following weeks. proven that steel mergers don’t always said he sought to double the company’s eq- demand to hold emerging-market uptick in developing-country Despite opposition from Germany’s work well,” Michael Shillaker, an analyst uity ratio to 15%, helping to bolster fi nances. sovereign debt instead of Treasur- stock volatility. hyssenKrupp, already struggling largest labour union and politicians fear- at Credit Suisse Group, said by phone. Still, the North Rhine-Westphalia ies has tumbled over the past “EM will temporarily struggle to win over unions and lawmak- ing job cuts, investors welcomed the “Losing the free cash fl ow of the steel government is against the steel merger, month, while inflows to equity with the twin drag of lower com- Ters to a plan to merge its European prospect of Essen-based ThyssenKrupp business is a risk when you sell it at the Economy Minister Garrelt Duin said this and bond funds have gathered modity prices and China delev- steel business, is now facing growing hiving off its cyclical and capital- in- wrong point of the long-term cycle.” month. steam. Investors put more than eraging policy,” says Koon Chow, scepticism from the investment com- tensive steel operations. Yet, with talks Thyssenkrupp’s predicament can be The state’s Prime Minister Hannelore $2.5bn in emerging-market bond a strategist at Union Bancaire munity. dragging on for more than a year, doubts traced to its worst-ever investment deci- Kraft is on the trustee board of the Al- funds in the week to May 3, a 14th Privee Ubp SA in London. Analysts are worried management is are surfacing. sion in 2005, an expansion in the Americas fried Krupp von Bohlen und Halbach- week of net gains, according to A stronger selloff in commodi- only focused on the proposed steel ven- Chief executive offi cer Heinrich Hies- that led to €8bn ($8.7bn) of losses. Adding Stiftung foundation, which owns 23% of consultancy EPFR Global, while ties could also be the catalyst ture with Tata Steel and hasn’t prepared inger has staked his leadership since tak- to this is a fl ood of Chinese imports that the steelmaker. equity funds took in $2.4bn last to undo the emerging-market an alternative, such as spinning off the ing the reins in 2011 on transforming the weakened prices and forced the company The foundation declined to comment week, the seventh consecutive momentum. operations or the company’s profi table steelmaker, which has roots dating back to downgrade profi t estimates. when contacted by Bloomberg. Thys- week of inflows. If the Bloomberg Commodity elevator unit, in case talks fail, accord- more than two centuries, into a diversi- The steelmaker’s elevator unit is its senKrupp, due to report fi rst-half profi t “Flows have been rotating Index hits a key technical level of ing to Kepler Cheuvreux’s Rochus Brau- fi ed industrial group amid a global glut standout operation, contributing almost on Friday, also declined to comment, out of US high-yield debt and 81.9555, less than 1% from current neiser. of the alloy. To succeed, he needs to win 60% of adjusted earnings before inter- spokesman Robin Zimmermann said. into emerging markets, which levels, it could quickly tumble as “A greater number of investors judge it over investors and overcome resistance est and taxes, and developing technology “The management seems to have has papered over the vulner- much as 9% more, spurred by more skeptically,” Brauneiser, an analyst from IG Metall, Germany’s largest union, that uses magnets in place of cables. It gone all in on a steel joint venture,” said ability of emerging markets to softer data from China, according at the brokerage, said in a phone inter- as well as politicians who maintain an in- also makes up part of Hiesinger’s strat- Hans-Peter Wodniok, an analyst at Fair- higher rates, a stronger dollar and to Rabobank emerging-markets view. “The issue is that there’s no plan B.” fl uence over the biggest shareholder. egy to build up industrial divisions and esearch GmbH & Co. The supervisory weaker commodities,” said Ed currency strategist Piotr Matys. The initial reaction to the negotiations The company’s stock, which soared combine the weaker European steel busi- board would unlikely approve the main Al-Hussainy, a senior analyst on “A break below this key with Tata on a venture to combine the 23% in 2016 on a recovery in prices nesses into the Tata venture. alternative of spinning off the profi table Columbia Threadneedle Invest- trendline support could unleash companies’ European steel businesses and hopes for a profi t turnaround, has Investors hoped that separating part of elevator unit, he said. “I wouldn’t like to ment’s global rates and currency carnage,” he said. was positive, with ThyssenKrupp shares dropped about 1% this year, the fourth- the steel operations from ThyssenKrupp be in Hiesinger’s shoes.” Gulf Times Saturday, May 13, 2017 9 BUSINESS

Hong Kong dollar China said to prepare selloff risks stocks Bloomberg The last time the Authority inter- Hong Kong vened to purchase local currency was in May 2005, when it traded close to HK$7.80. The Hong Kong The Federal Reserve is playing dollar weakened for a third day, to havoc with the Hong Kong dollar $7.7922 on Friday. – and the stock market could be HK$7.80 is the midpoint of that HK market support next. range, and dropping to that level The pegged currency has been would unleash expectations for torpedoed this year, sliding to a intervention, fuelling risk aversion 15-month low versus the green- in equities, said Castor Pang, head back as a mortgage war deters of research at the investment local banks from tightening along bank Core-Pacific Yamaichi in with the Fed. Hong Kong. for handover day As the interest-rate diff erential “The chance of a US interest- with the US widens, strategists are rate hike in June looks high, which Bloomberg tipping further losses, and equity is likely to further drive funds out Beijing investors are taking note. of Hong Kong dollars and in to The Hong Kong dollar is within dollars – seeking higher returns,” 0.2% of HK$7.80 per US dollar, a he said. hina’s government has made level that could trigger outflows Andrew Clarke, director of trad- preparations to support the Hong from the stock market, accord- ing at Mirabaud Asia in Hong Kong CKong stock market if needed to ing to Ample Capital and Core- said the currency moving out of create a positive atmosphere before July Pacific Yamaichi. Their theory? the HK$7.755 to HK$7.77 range 1, when Xi Jinping is expected to visit the Traders start ditching rate- that it spent most of 2016 within is city for the fi rst time as president to mark sensitive equities on concern unnerving investors. 20 years of Chinese rule. the weakness will spur officials While the reasons behind this State-backed institutions have set to start buying the currency to bout of Hong Kong dollar weak- aside funds to ensure stable trading be- shore up the peg, thereby boost- ness are diff erent to the start of fore the anniversary of Hong Kong’s 1997 ing borrowing costs. last year, when it spiked weaker handover, according to people with di- “7.80 would be the psychologi- as gyrations in Chinese markets rect knowledge of the matter, who asked cal level to have some impact on whipsawed global investors, this not to be named as the information isn’t Hong Kong stocks,” Alex Wong, decline will still put pressure on public. It’s unclear how much money has a director of asset management equities, he said. been earmarked or what market condi- at Ample Capital, which oversees There will be less demand for tions would trigger government action. about $120mn. That level – which the currency in anticipation of rate The Hong Kong and Macau Aff airs Offi ce currency strategists expect to be increases, which weighs on stocks, of China’s State Council didn’t imme- reached mid-year – would be a bonds and property as people re- diately reply to a faxed request for com- signal that short-term Hong Kong patriate funds back into US dollars ment. The offi ce of Hong Kong’s Chief dollar interest rates may be poised for the higher returns. Executive declined to comment. to increase. Tommy Ong, managing direc- While state-directed funds intervene “People would not be comfort- tor for Treasury and markets at regularly to manage swings in China’s able,” Wong said. DBS Hong Kong says there’s not $6.6tn equity market, the government The Hang Seng Index tradition- enough loan demand in Hong hasn’t been known to take an active ally moves in tandem with the Kong to provide support for the role in Hong Kong. The former British city’s currency, falling when the currency. The Hong Kong dollar colony, which sits near the top of global Hong Kong dollar moves towards may weaken to HK$7.80 sometime free-market rankings, is supposed to the weak end of its HK$7.75 to before mid-June if the interest rate enjoy a high degree of autonomy under HK$7.85 per dollar trading band, diff erential widens to 1%, Ong said. the “one country, two systems” princi- as it did at the start of 2016. Pressure on the stock market will ple enshrined in China’s power-transfer Demand for Hong Kong shares be temporary as sentiment will agreement with the UK. Any attempt to as buyers flee a selloff in mainland be supported by gains in global infl uence Hong Kong stock prices risks The Hong Kong Exchanges and Clearing logo is displayed at the entrance of the bourse’s building in Hong Kong. China’s China has helped dilute that rela- equity markets, especially those in provoking critics who say China is inter- government has made preparations to support the Hong Kong stock market if needed to create a positive atmosphere before tionship, however, with the Hang the US which are rising on expec- fering too much in the city’s aff airs under July 1, when Xi Jinping is expected to visit the city for the first time as president to mark 20 years of Chinese rule. Seng rallying to its highest point tations for fiscal stimulus. Xi’s leadership. since July 2015. Property stocks Stephen Innes, a senior cur- It could also add fuel to the debate over makers were said to intervene during the in January 2016, intervention by Chi- under Hong Kong law. The city’s Securi- – likely the most vulnerable to an rency trader at Oanda Corp isn’t Hong Kong’s future as a fi nancial centre. last two annual meetings of Chinese law- na’s central bank led to a short squeeze ties and Futures Commission didn’t im- uptick in concern about rising overly worried, though. Much of the city’s appeal to international makers in Beijing. in Hong Kong. The episode dented the mediately reply to an emailed request for rates – have driven this year’s 14% The Hong Kong dollar will investors and businesses comes from its Authorities may be especially keen to yuan’s appeal as an international cur- comment. advance. probably weaken further as strong rule of law and minimal govern- project an image of stability in 2017 as rency, but criticism of the government’s “The government’s intervention is un- Hong Kong has been tighten- markets price in Fed rate hikes, ment interference, attributes that set it they prepare for a twice-a-decade Com- actions was limited because infl uencing welcome in Hong Kong as it could boost ing: the city’s de facto central but the downside will be limited apart from mainland China. munist Party leadership reshuffl e toward foreign-exchange markets is a common risk premiums and pressure the valu- bank boosted its base rate twice at HK$7.8, he said. Interest rate Lines between the two markets have year-end. economic-management tool for govern- ation of stocks in the long term,” Dan- since the start of December, diff erentials are likely to narrow blurred in recent years with the intro- China hasn’t confi rmed that Xi will ments around the world. iel So, a Hong Kong-based strategist at tracking the Fed because of as there was a gradual normalisa- duction of cross-border exchange links visit Hong Kong, but past leaders have Meddling in Hong Kong’s stock mar- CMB International Securities, said by the demands of the peg, which tion on that front when US policy and cooperation agreements between tended to make the trip for every fi fth ket may be a diff erent story. Aside from phone. “Though it could boost stock was put in place 34 years ago to makers started to move rates the Chinese and Hong Kong securities year of the handover anniversary. Xi is a Hong Kong government rescue package prices in the near term.” stymie capital outflows in the previously. regulators. expected to make a three-day visit for during the Asian fi nancial crisis in 1998, The government may decide it doesn’t lead up to the territory’s return Philip Li, a senior fund manager “The stock connect has already this year’s celebrations, the South China shares in the city have been thought to be need to intervene. Hong Kong’s bench- to Chinese rule. But local lenders’ at Value Partners, whose parent brought mainland markets closer to Morning Post reported this month. largely free of offi cial interference. mark Hang Seng Index is trading at reluctance to pass that increase oversees about $14.5bn of invest- Hong Kong, but there will be a lot of The anniversary comes against a If China’s government were to inter- the highest level since July 2015 after on has seen the premium on ments, doesn’t see the currency people who will be dissatisfi ed with this, backdrop of elevated political tension in vene, the purchases could run contrary climbing 14% this year, outperform- Libor – the one-month US inter- hitting HK$7.85. Hong Kong dollar at least in principle,” said Peter Garnry, Hong Kong. The Occupy protests para- to Hong Kong regulations on maintain- ing the MSCI All-Country World Index bank rate – over Hong Kong’s weakness is caused by the dollar’s head of equity strategy at Saxo Bank in lysed parts of the city in 2014 and many ing an orderly market, Low Chee-keong, by about 5 percentage points. The Hong Hibor rate swell to more than gains on the back of tightening Copenhagen. “Expect some political residents are still angry over the lack of an associate professor at the CUHK Kong gauge is valued at 14 times trailing 61 basis points, the most since monetary policy and improve- noise.” a direct election for their chief executive. Business School and a former member of 12-month earnings, the most expensive December 2008. ment in US economic fundamen- China has a history of infl uencing do- Behind-the-scenes backing from China the Hong Kong exchange’s listing com- level since December 2010, according to There’s a higher chance of the tals, Li said. mestic markets during important politi- helped Carrie Lam win a resounding mittee, said before Bloomberg News re- data compiled by Bloomberg. The gauge Hong Kong dollar reaching the That retreat may be tempered cal events. In the latest example, regu- victory among the business and politi- ported on China’s preparations. Low said rose 0.4% on Thursday. weak end of the trading band, after the Fed hikes rates again. lators have stepped up scrutiny of local cal elites who picked the city’s leader in that proving market manipulation is of- “I don’t think anyone needs to support Goldman Sachs analysts said in There’s unlikely to be a panic in stock traders as the government prepares March. She beat an opponent more pop- ten diffi cult. Hong Kong shares or the Hang Seng In- a note earlier this month. Once equity markets. Inflows of capital to host representatives from more than ular with the general public. A Hong Kong Exchanges & Clearing dex,” said Sandy Mehta, chief executive the currency gets to HK$7.85, the from China are helping buoy 100 countries at a summit attended by Xi Not all Hong Kong markets have been spokeswoman said the bourse doesn’t offi cer of Value Investment Principals Hong Kong Monetary Authority is liquidity in Hong Kong, which is this weekend, according to people with insulated from Chinese interference. comment on market rumours, adding Ltd in Hong Kong. “It’s one of the world’s obligated to step in and support it. keeping a lid on rates, he said. direct knowledge of the matter. Policy When the yuan sank in off shore trading that market manipulation is an off ence top-performing markets.” Sensex sheds 63 points; rupee strengthens Asia bourses slip on Wall Street fall

AFP Agencies Infosys rose 2.12%, Hero MotoCorp Hong Kong Mumbai 2.11%, Cipla 1.00%, Sun Pharma 0.81%, Tata Motors 0.70%, TCS 0.50% and Coal India 0.45%. ost Asian markets fell yester- Taking a breather after a four-day Meanwhile the rupee strengthened day following a healthy run- rally, Indian markets eased from against the US dollar ahead of the key Mup in the week, tracking a record highs yesterday as investors macro data. sell-off on Wall Street where a plunge stayed on the sidelines amid mixed Rupee closed at 64.31 up 0.10% from its in retail giant Macy’s fanned concerns cues. Caution set in as participants Thursday’s close of 64.38. about the key US retail sector. awaited a clutch of macroeconomic The rupee opened at 64.32 a dollar and Optimism has been high the past data before making their next move, touched a high of 64.26 and a low of four days on solid US jobs data and brokers said. 64.38. moderate Emmanuel Macron’s land- The 30-share Sensex slipped 63 According to a Bloomberg poll, CPI will slide French presidential win on Sun- points to end at 30,188.15, while the be at 3.3% in April from 3.81% a month day, pushing some markets to multi- broader NSE Nifty finished 21.50 ago, and WPI will be 4.5% from 5.7% a year highs. points lower at 9,400.90. Both the month ago, IIP will be at 1.9% for March But traders took a step back ahead benchmarks had soared to record from 1.2% a month ago. of the weekend with confi dence rat- highs in the previous two sessions on So far this year, the rupee has gained tled by a series of below-par Chinese sustained buying by both domestic 5.62%, while foreign institutional data and Donald Trump’s shock fi ring and foreign investors. investors have bought $6.35bn and of the head of the FBI, which some fear After resuming higher, the 30-share $8.2bn from local equity and debt could lead to a crisis that will knock Sensex advanced to the day’s high of markets, respectively. the president’s economy-boosting 30,299.74. The 10-year bond yield was trading at agenda offl ine. However, it succumbed to profit- 6.912% compared to its previous close On Thursday, New York’s three main booking and fell to 30,111.45, before of 6.942%. Bond yields and prices move indexes turned negative after Macy’s finally settling at 30,188.15, down 62.83 in opposite directions. announced a 39% fall in net profi t, its Employees work on the trading floor of the Tokyo Stock Exchange. The Nikkei 225 closed down 0.7% to 19,883.90 points points, or 0.21%. Asian currencies were trading mixed. latest in a series of weak readings that yesterday. Likewise, the 50-stock NSE barometer Philippines peso 0.205%, Indonesian have underscored the deterioration of Nifty finished lower by 21.50 points, rupiah 0.120%, Taiwan dollar 0.070%, bricks-and-mortar stores due to the slipped. But Hong Kong rose 0.1% ex- mainland shares were also being given And on oil markets both main con- or 0.23%, at 9,400.90 after shuttling Malaysian ringgit 0.064%, China rise of e-commerce. tending a rally to fi ve days. state backing. tracts pressed on with their recovery between 9,437.75 and 9,372.55. renminbi 0.049%, South Korean The fi gures hit other big-name Bloomberg News reported, without The dollar turned lower against the from last week’s sharp losses, with FIIs bought shares net worth won 0.038%. However, Singapore stores and with the retail sector a cru- naming sources, that China had made yen and euro, having enjoyed a surge investors cheering a bigger-than- Rs1,306.71 crore yesterday, as per dollar 0.078, Thai baht 0.049% Hong cial driver of the world’s top economy, preparations to support the Hang Thursday on comments from a top expected drop in US inventories and provisional figures issued by the stock Kong dollar fell 0.050% and China there are fears about the outlook for Seng Index if needed ahead of the ex- Federal Reserve offi cial backing three signs an Opec output cut was kicking exchanges. off shore 0.001%. Japanese yen remain top retailers. pected visit of President Xi Xinping more interest rate hikes this year. in. Major losers were Asian Paints 3.04%, unchanged. Tokyo’s Nikkei index closed down to the city for the July 1 handover cel- The unit “is weighed down by In Tokyo, the Nikkei 225 closed Axis Bank 2.80%, ICICI Bank 1.23%, The dollar index, which measures the 0.4% from a 17-month high, while ebrations. the Trump/Comey sideshow which down 0.7% to 19,883.90 points; Hong Adani Ports 1.20%, HDFC 0.96%, Power US currency’s strength against major Sydney shed 0.7% and Singapore gave Shanghai — which has fallen about has seen the greenback move lower Kong — Hang Seng edged up 0.1% Grid 0.94%, ITC 0.85%, Tata Steel 0.83%, currencies, was trading at 99.634, up up 0.3%. Seoul, which closed Thurs- 7% in the past month on worries about against” major currencies, Stephen to 25,156.34 points and Shanghai NTPC 0.78% and M&M 0.54%. However, 0.01% from its previous close of 99.623 day at a record high, eased 0.5%. a state crackdown on leveraged invest- Innes, a senior trader at forex fi rm — Composite rose 0.7% to 3,083.51 Wellington, Taipei and Manila also ing — ended up 0.7% with speculation OANDA, said in a commentary. points at the close yesterday. Gulf Times 10 Saturday, May 13, 2017 BUSINESS

Japan’s GDP seen to grow Xi’s $500bn push to reshape for fi fth straight the world in China’s image quarter

Bloomberg China has invested more than $50bn Reuters Hong Kong in Belt and Road countries since 2013, Tokyo according to the offi cial Xinhua News Agency. Credit Suisse Group said this hina is one of the few countries month that China could pour more apan’s economy is expected in the world today with money than $500bn into 62 countries over fi ve to expand for a fi fth straight Cto spend, and Xi Jinping is ready years. Jquarter in January-March led to write some checks. China’s state-run companies like by a recovery in consumer spend- China’s president will host almost China National Petroleum Corp and ing and solid off shore demand, a 30 world leaders in Beijing tomor- China Mobile Ltd – the world’s larg- Reuters poll found, suggesting a row at the fi rst Belt and Road Forum, est wireless carrier – are positioned to fi rm trend in the making. the centrepiece of a soft-power push reap the rewards. Executives from six of Analysts project the economy backed by hundreds of billions of dol- China’s largest state-run fi rms sought will continue to expand as ex- lars for infrastructure projects. More to reassure the public this week that the ports rise, while capital spending than 100 countries on fi ve continents risks were manageable. is expected to recover refl ecting have signed up, showing the demand China’s three development banks, strong corporate earnings and for global economic cooperation de- its Silk Road Fund and the China-led growing business confi dence. spite rising protectionism in the US and Asian Infrastructure Investment Bank But the analysts noted that US Europe. were involved in $39bn of lending out- trade policy will be closely watched For Xi, the initiative is designed to side of the country last year, up about for developments as President solidify his image as one of the world’s 50% from 2014, according to data com- Donald Trump’s protectionist pol- leading advocates of globalisation piled by Bloomberg. icies could hurt Japan’s exporters. while US President Donald Trump cuts Learn how to track international The economy was expected to overseas funds in the name of “America lending by China’s policy banks expand at an annualised rate of First.” The summit aims to ease con- “One Belt, One Road – I think, it is 1.7% in the fi rst quarter, the fast- cerns about China’s rise and boost Xi’s potentially a plus,” JPMorgan Chase est growth rate since a 2.2% rise profi le at home, where he’s become the International Chairman Jacob Frenkel in April-June 2016, the poll of 18 most powerful leader since Deng Xi- told Bloomberg Television on Friday. analysts showed. aoping died in 1997. “And we should not worry about it be- The forecast fi gure would The Belt and Road Initiative “will cause what it does is basically connects translate into 0.4% growth on likely be Xi’s most lasting legacy,” said Xi: New initiative to become one of the world’s leading advocates of globalisation. hundreds of millions of people, hun- a quarter-on-quarter basis fol- Trey McArver, the London-based di- dreds of millions of markets. And you lowing a revised 0.3% rise in the rector of China research for TS Lom- others will,” said Paul Haenle, a former tions about the European Union’s vi- Denmark, Finland, Switzerland, France know what? If somebody gains from it, fi nal quarter of last year. bard, an investment research company. China director on the US National Se- ability, while Trump’s withdrawal from and Italy – openly voiced support for that’s perfectly fi ne.” “The economy in fi scal 2017 “It has the potential to remake global curity Council who now heads the the Trans-Pacifi c Partnership gutted the initiative. Still, fi nancial hurdles are starting is expected to continue to pick – particularly Asian – trade and eco- Carnegie-Tsinghua Center in Beijing. the biggest US push to shape global On trips to China in February, Ital- to appear. China’s slowing economic up with a tailwind of such as the nomic patterns.” For countries like the US, he said, “it’s economic rules. ian President Sergio Mattarella pro- growth has left fewer resources to global economic recovery and a The strategy also carries risks. The impossible not to view the BRI through “It was very disappointing, and it posed plans for the ports of Genoa spend overseas. Its international re- weak yen,” said Hidenobu Toku- initiative is so far little more than a a geopolitical lens – a Chinese eff ort to makes us feel that there is a big vacu- and Trieste, while French Prime Min- serves have fallen about 6% over the da, senior economist at Mizuho marketing slogan that encompasses all build a sphere of infl uence.” um that Belt and Road can help to fi ll,” ister Bernard Cazeneuve attended the past year, and China needs a healthy Research Institute. sorts of projects that China had initiat- In September 2013, when Xi fi rst Cheah Cheng Hye, chairman and co- arrival ceremony of a freight train amount to defend the yuan. “Uncertainty over the overseas ed overseas for years, and major world pitched the plan at an obscure Kaza- chief investment offi cer at the Hong from Lyon. Some previous Chinese ventures political situation has eased but leaders like Trump, Angela Merkel and khstan university, he focused on the Kong-based Value Partners Group. “So The summit will feature the likes abroad have turned sour. While Chi- risks such as the prospects for Shinzo Abe are staying away. How Xi Eurasia landmass. Since then, it has re- all of sudden, we begin to appreciate of Russia’s Vladimir Putin, Greece’s na’s no-strings-attached approach to the Chinese economy remain.” answers a range of outstanding ques- peatedly changed names and expanded this Chinese initiative.” Alexis Tsipras and the Philippines’ Ro- investment is generally welcomed by Private consumption, which ac- tions will go a long way in determining to include the entire world, with the Xi wasted no time fi lling the void. drigo Duterte. The US will send Matt developing countries, they often have counts for roughly 60% of gross its success. main goal of rebuilding the ancient With exporting nations looking for a Pottinger, a special assistant to Trump poor credit ratings and questionable domestic product (GDP), was Key to reducing uncertainty will be trading routes from China to Europe free-trade champion, he told the glo- and senior director for East Asia on the governance. seen rising 0.4% in the fi rst quar- addressing the concerns of strategic ri- overland and by sea. bal elite in Davos, Switzerland, to resist National Security Council, according China has struggled to recoup loans ter, after it showed no growth in vals like India, Russia and the US, par- One key driver was economic: China protectionism and join China in boost- to State Department spokesman Justin in Venezuela and Africa, and several the October-December period. ticularly as China’s growing military wants to spur growth in underdevel- ing global commerce. Higgins. projects in Central Asia have spurred Off shore demand — or exports prowess lets it be more assertive over oped hinterlands and fi nd more mar- The US and Europe “almost unwit- A draft communique circulated be- protests. Announcements with big dol- minus imports — was expected disputed territory. kets for excess industrial capacity. tingly” created space for Xi to push fore the event combined a commitment lar signs often fail to materialise. to add 0.1 percentage point to Chinese moves to spend more than With more than $3tn in international China’s interests, according to Peter to open markets with endorsements of Nonetheless, Chinese scholars see growth, the third straight quar- $50bn on an economic corridor in Pa- reserves – more than a quarter of the Cai, research fellow at the Lowy Insti- China’s diplomatic goals, Bloomberg the sum of Xi’s plan as bigger than any terly positive contribution to the kistan, build a port in Djibouti and con- world’s total – China has more resourc- tute for International Policy. reported on Wednesday, citing people individual project. It represents a “pro- economy, the poll showed. struct oil pipelines in central Asia are es than developed economies strug- “China is off ering an alternative to familiar with the document. found change” in how China interacts Analysts say global recovery in all creating infrastructure that could be gling to hit budget targets. the US version of globalisation,” Cai It also generated some controversy with the world, according to Wang Yi- the manufacturing sector is be- used to challenge traditional powers. The plan gained steam last year when said. “In the Chinese case, it’s globali- among Beijing-based diplomats who wei, director of at Renmin University’s hind strong exports — especially “China needs to recognise that the populist movements spurred a back- sation paved by concrete: railways, said they didn’t have enough time to Institute of International Aff airs in in Japan’s shipments to Asia. way it perceives the Belt and Road Ini- lash against trade and immigration in highways, pipelines, ports.” vet the document, underscoring the Beijing, who has written three books on Capital spending likely tiative is not necessarily the same way the US and Europe. Brexit raised ques- This year, fi ve European countries – initiative’s potential to cause confl ict. the initiative. slipped 0.4% in the fi rst quarter after a robust 2.0% gain the pre- vious quarter, the poll found. But analysts believe, given upbeat business sentiment, that fi rms’ willingness to invest has China mortgage lending jumps as banks shun corporates not diminished. The Cabinet Offi ce will an- nounce the GDP data on May 18. Reuters na’s big fi ve banks since the push began Many cities have introduced a raft of ers with retail experience have been quests for comment. Again, there was A separate Reuters’ survey last Shanghai in earnest last year. measures to cool property prices that promoted to head many of the lender’s no evidence its bankers were side- month showed that confi dence Mortgage lending was up around have surged beyond the reach of many sub-branches, they added. stepping loan rules. among Japanese manufacturers 30% for the big fi ve in 2016, the fast- Chinese, posing growing fi nancial To incentivise bankers, Ping An is While the high pressure practices had risen for an eighth straight hina’s lenders are swapping est growth in fi ve years, while property risks. providing higher commissions for re- have drawn some comparisons to the month to a level not seen since struggling corporates for more lending in China accounted for 40.4% China’s central bank did not respond tail wins. US property bubble, analysts noted before the 2008 global fi nancial Cpromising retail borrowers — of new loans in the fi rst quarter, data to requests for comment, though gov- Bankers who don’t hit their targets Beijing can exert far more control on its crisis, refl ecting output and ex- restructuring branches, teams and even from the People’s Bank of China (PBoC) ernor Zhou Xiaochuan has cautioned for the sale of an unpopular product banking system, much of which is state port gains led by overseas eco- overhauling bankers’ commissions in showed. on the need for “balance” as mortgages face penalties, according to the Ping owned. nomic recovery. an unprecedented push that is fuelling Mortgages in China are among the jump, according to local media. An bankers. There was no suggestion Mortgage-backed securities and Key data next week include a record jump in home loans. safest loans — they are secured, of The China Banking Regulatory Com- bankers at Ping An had skirted mort- other fi nancial instruments that helped March core machinery orders, Yet the speed of the switch, the pres- course, and conservative borrowing mission also did not respond to re- gage rules. aggravate the US problems are also less which are expected to show sure to pull in more borrowers and also means loan-to-value ratios (LTV) quests for comment. Ping An said it disputed some ele- developed in China, although volumes a 2.1% rise from the previous soaring house prices are also worrying as low as under 40%. However, bank- Among the concerns is the pressure ments of the bankers’ account, without are growing steadily. month, up for a second straight loan offi cers, analysts and regulators, ers, investors and analysts say the lat- on bankers to radically accelerate the clarifying which parts. Residential mortgage-backed secu- month.The core orders, a highly with the central bank governor among est retail push has seen unprecedented number of loans they push through. But similar accounts emerge across rities in 2016 tripled from a year earlier volatile data series regarded as a those sounding a note of caution. pressure, tough targets and hard-hit- “It doesn’t matter whether you were the sector. to 138.2bn yuan ($20bn), according to good indicator of capital spend- Corporate lending has long made up ting sales tactics — with some drawing from the corporate team, or SME team, Rival lender CITIC Bank has changed China Central Depository & Clearing ing in the coming six to nine the bulk of many Chinese banks’ loan comparisons to the pre-fi nancial crisis now 50% of your targets are retail bor- its sub-branches from handling both Co. With average property deposits last months, were seen rising 0.6% books: the deals are larger and loans years in the United States. rowing targets,” said one banker at Ping corporate and retail lending to just fo- year of close to 50%, risks are manage- in March from a year ago follow- have more attractive rates. “There was quite a lot of (skirting An Bank. cusing on one or the other, with more in able, said Huatai’s Chen. ing a 5.6% rise in February. But with fi rms faltering, economic mortgage rules) last year,” said Chen Ping An increased its retail assets some areas focused on retail, according Still, a report by Moody’s Investors The Bank of Japan’s corpo- growth slowing for key sectors and Shujin, a banking analyst from Huatai under management by 13.6% in the to the website and two bankers. Services this month noted that while rate goods price index (CGPI) banks under pressure to deleverage, Securities. “We do think this will have fi rst quarter alone as part of a major “We’re slowly moving towards retail Chinese mortgages have historically due on Monday, which meas- lenders are eyeing other options. an impact on the quality of mortgages strategic shift in focus from corporate by hiring more bankers with retail ex- shown very low risk, “the latest loan ures the price companies While retail lending also includes and bank assets.” to retail. At one branch, many bankers perience,” said one vice-president of a originations are likely to entail a high charge each other for goods and credit cards and consumer loans, mort- Mortgage growth is also set to slow now have to open 60 retail accounts a CITIC Bank sub-branch. level of risk, because of the sharp rise in services, was forecast to rise an gage lending has been a focus for Chi- this year, credit analysts say. year, two Ping An bankers said. Bank- CITIC Bank did not respond to re- property prices in 2016.” annual 1.8% in April. Kuroda concedes pace of JGB buying is well below BoJ guideline

Bloomberg bond purchase regime is unsustainable the central bank’s target is to control stimulus, and with his term set to end Tokyo and as consumer prices in Japan are interest rates rather than the amount of in April 2018, Kuroda is still far from expected to pick up later this year. bond purchases. his goals while his Federal Reserve The most likely way for the BoJ to “This development signals to me that counterpart Janet Yellen is taking rates Governor Haruhiko Kuroda begin tightening would be scrapping they are going with rates without higher and policy makers in Europe acknowledged that the Bank of Japan’s the ¥80tn guideline, according to a talking about a quantitative target,” said debate tapering. These three central bond holdings are currently growing Bloomberg survey last month. Atsushi Takeda, an economist at Itochu banks have all run up huge balance at a pace of around ¥60tn ($527bn) – “The Bank of Japan appears to be Corp in Tokyo. “That will be better when sheets since the financial crisis after well below the guideline in its policy ramping up its eff orts to improve they think about an exit.” buying bonds and other assets. statements. communication with the market to Kuroda rejected the idea, as he Kuroda also revealed some of the While the slowdown in purchases has lay the groundwork for its next move had before, that there were any BoJ’s modelling on balance sheet risks, been plain to see for some time in data – tapering,” Bloomberg Intelligence impediments to future purchases of indicating that in a simulation found released by the central bank, Kuroda’s economist Yuki Masujima wrote in a government bonds. He repeated that that a 1 percentage point increase acceptance of this reality in parliament report on Kuroda’s remarks. He added meeting Japan’s 2% inflation target in long-term yields could mean a on Wednesday marks a change. Until that the “central bank is unlikely to shift would be challenging and that the valuation loss of 23tn yen on its bond now he’d been at pains to emphasise policy soon.” BoJ needed to stick with its current holdings. that the annual pace could vary from Kuroda’s comments didn’t appear powerful monetary stimulus. Separately, in a summary of opinions an indicative ¥80tn, depending on the to have any significant impact on Speaking in an interview with from the April 26-27 policy meeting state of the economy and financial the yen, which would be reassuring Kuroda: Monetary stimulus to continue. Bloomberg in April, Kuroda said the released earlier Wednesday, one BoJ markets, and he’d avoided stating other for the BoJ and could buttress any BoJ would keep as a reference point board member, who wasn’t identified, numbers. arguments in favour of dropping the nuclear program that’s supporting who noted that the pace of bond the aim of increasing its holdings of said there was no conflict between Investors are watching for any hint of 80tn yen reference point. The currency demand for safe haven assets. accumulation by the BoJ had slowed, government bonds at a pace of around BoJ’s guideline figure for bond tightening in monetary policy amid strengthened about 0.3% in Tokyo, Under questioning from opposition Kuroda said the trend could continue, ¥80tn per year. purchases and the actual amount in speculation that the central bank’s amid concern about North Korea’s party lawmaker Seiji Maehara, without elaborating. He noted that After four years of aggressive monetary current market operations. Gulf Times Saturday, May 13, 2017 11 BUSINESS Bond haven in Europe is duration time bomb in credit markets

Bloomberg stimulus. Now, if those yields rise just the Netherlands is at 5.7 years, with money manager at Union Investment, levels, are a negative for investor de- year, from just shy of seven years in London a little from their near rock-bottom the same movement in yields erasing which has shrunk its covered-bond mand,” said Schuller. “If trading levels 2016 and 2015, according to data com- levels, investors face punishing losses. 2.8%, he calculated. Euro-area covered holdings to €19bn from €21bn in 2014. become attractive enough again, we piled by Bloomberg. “Bonds with the highest duration notes have returned just 0.07% for the “If that happens then holding longer may even see some investors return to There were €2bn of covered bonds, he safest corner of Europe’s will be most at risk if yields rise and year, according Bank of America Mer- tenors is not a smart idea.” this market.” The securities have his- or just three% of the €63.5bn of issu- credit markets is getting a whole trying to sell your longer-dated debt rill Lynch index data. Any increase in While a blow out in yields may hurt torically been attractive to investors ance this year, with maturities of four Tlot riskier. in that environment will be very hard,” yields almost guarantees losses in the investors that mark their securities to because they’re guaranteed by the is- years or less, Bloomberg data show. New covered bonds are being sold said Ruben van Leeuwen, an analyst at market for the fi rst time in 17 years. market, many including insurers and suer and backed by a pool of assets, That’s because euro-area lenders were with the longest maturities since 2001, Rabobank in Utrecht. “If the market Economic data in the region, from pension funds hold the debt to matu- typically mortgages. The notes are also able to get free loans with maturities of with tenors averaging almost eight re-prices, some investors could get rising gross domestic product to rity and are less concerned about du- excluded from European regulations up to four years from the ECB. years, according to data compiled by wiped out or suff er a lot of pain.” stronger manufacturing output, is sig- ration risks, said Richard Kemmish, a that will make bondholders share the The ECB’s actions may have a big- Bloomberg. That’s threatening to wipe Duration, a metric that measures the nalling recovery. That strengthens the former Credit Suisse Group executive, burden of bank failures. ger impact when they start winding out investors if yields rise - which they sensitivity of the price of fi xed-income case for the ECB to end extraordinary who runs a consulting fi rm that focus- The market has evolved to become a down stimulus measures. When that will do imminently, according to ana- securities to changes in interest rates, stimulus measures, which will push es on covered-bond legislation. key source of fi nancing for mortgages happens, yields will rise and issuance lysts from Deutsche Bank to JPMorgan explains just how painful things could yields higher. Higher yields could also entice across Europe. Covered bonds were will likely decline because banks will Chase & Co and UniCredit. get for investors. Deutsche Bank, JPMorgan and some investors back to the market that pioneered in Prussia in 1769, when choose to sell cheaper types of debt, Average yields on the securities, The average duration of German UniCredit all estimate German 10-year have left when ECB measures started Frederick the Great let aristocrats, said Henrik Stille, a Copenhagen- which promise two layers of protec- covered bonds is 4.7 years, meaning a sovereign debt, which currently yields squashing yield premiums, according churches and monasteries raise money based money manager at Nordea Asset tion and often garner the highest credit 50 basis-point increase in the coun- about 40 basis points, will rise to at least to Maureen Schuller, head of fi nancials by pledging their estates as collateral. Management. ratings, were among the fi rst after try’s sovereign bond yields would re- 80 basis points by the end of the year. research at ING Group in Amsterdam. The average maturity of euro-denom- “Investors should try to position sovereign bonds to plunge below zero duce returns by 2.35%, according to “We’re forecasting higher yields,” “Ultimately, I don’t think that high- inated covered bonds sold by European more in the shorter end out to fi ve because of European Central Bank Rabobank’s van Leeuwen. Duration in said Daniel Rauch, a Frankfurt-based er underlying yield and wider spread banks rose to almost eight years this years,” said Stille. It’s platinum week, weaker, weakest LME’s hunt for elusive as miners to meet

Bloomberg blood. For the first time since London records began in 2006, they’ve taken a net-short position on the metal. Bets on falling prices t’s more than a decade outnumbered wagers on gains volumes could cause since miners and trad- by 4,945 futures and options Iers have met at London’s contracts last week. annual Platinum Week with Some in the industry even prices as low as they are right say platinum prices may drift now. below those of palladium for Soft prices, currency moves the first time in 15 years. Palla- that have boosted mining costs dium, a metal that can be used further shrinkage and an uncertain demand as a substitute for platinum in outlook are weighing on the some industrial applications, Reuters producers who’ll gather under now trades at almost $810 an London the medieval stone arches of ounce. the City of London’s Guildhall “A crossover could be immi- next week. nent,” said Anish Lal, a research he London Metal Exchange (LME) “It’s an incredibly tough analyst at brokerage ADS is intent on enticing more investors market out there and likely Securities London. “The way Tto halt a slide in trading volumes, to be tough for the rest of the platinum is dumping, this could but users fear its plans could cause further year and maybe next,” Anglo happen by the end of the year.” erosion and even shake the foundations of American Platinum chief execu- Others such as Bernard its benchmark contracts. tive off icer Chris Griff ith said in Dahdah of Natixis SA and Joni The 140-year-old exchange is bat- an interview. “Market sentiment Teves of UBS Group, two of the tling to reverse declines triggered by large is negative towards platinum top forecasters in a survey by increases in trading fees in 2015 and an at present and that begins to the London Bullion Market As- economic slowdown in China, which ac- feed on itself irrespective of sociation, say it will take longer counts for nearly half of global consump- the long-term fundamentals of for palladium to catch up, and tion of base metals. supply and demand.” in any event the situation will While it remains a dominant force in The commodity, mainly used be short-lived as buyers would global markets, rival CME has been en- to cut pollution from diesel switch back to platinum. croaching on its territory. cars, is down more than 20% Either way, it’s bad news for Copper volumes in the fi rst four from its highs of nine months South African producers, which months of 2017 on the CME Group leapt ago to about $925 an ounce. deliver about two ounces of 21% over the same period last year, while Prices are even lower than platinum for every ounce of the LME posted a drop of more than 7%. during 2016’s event, when the palladium dug, according to This is mainly because many funds pre- industry was already heaving Rene Hochreiter, an analyst at fer the CME’s copper contract as it can be from a 10% slump from a year Noah Capital Markets in Johan- bought, sold and settled in one day. earlier. nesburg. The country is the top The LME’s benchmark three-month Griff ith is still bullish on long- producer of platinum, bringing contracts — the lifeblood of the market — term prospects for platinum up more than 70% of freshly are used as reference prices in contracts and its sister metals palladium mined metal, research firm Met- around the world by traders, consumers and rhodium. als Focus says. and producers for buying and selling cop- Diesel has fallen out of On the flipside, supply looks per, aluminium, zinc, lead and nickel. Traders stand outside the open outcry pit following a trading session at the London Metal Exchange. The LME is intent on enticing favour with consumers since set to tighten, say analysts and “We use the LME because it has liquidi- more investors to halt a slide in trading volumes, but users fear its plans could cause further erosion and even shake the foundations some automakers admitted miners. ty for all the metals we trade, not just cop- of its benchmark contracts. fiddling emissions tests to Griff ith, who is scheduled to per,” a fund manager focused on natural secure regulatory approval for speak at a Bloomberg forum resources said. called implied pricing to extrapolate syn- over the next three months totalled 9,000 under pressure to boost volumes, which their vehicles, in what became during the London Platinum “The structure is not a problem for us, thetic prices for contracts that mature on lots, averaging would leave only about last year tumbled 7.7%. “An alternative known as Dieselgate. and Palladium Market associa- the accounting aspects are. the third Wednesday of each month from 900 going through the LME. “At $2.70 would be to create liquidity points for the The cars’ market share in tion’s annual gathering, says I have to carry all positions to maturity trading activity on other dates. per lot that’s roughly a revenue loss of third Wednesday of the front month, the Europe sank below half of weak prices are discouraging on my balance sheet, it ties up capital.” It hopes the idea can spread liquidity $22,000 in fees.” second month and the third month, which new registrations for the first investment in production. Growth in the physical market peak- from its rolling three-month contracts to Loss of volume on the three-month for- would help keep the date structure and time in seven years during Vehicle and industrial markets ed some years ago, so the exchange monthly dates that fund investors fi nd wards is also expected by banks and bro- the carry trades,” metals industry veteran 2016, European Automobile still off er good prospects, with needs to look elsewhere to boost rev- easier to trade. kers, which already off er funds monthly Jeremy Goldwyn said. Manufacturers’ Association further potential in jewellery enues for parent Hong Kong Exchanges A fund wanting to bet on higher prices prices calculated using three-month con- “The nuclear option of going solely to data shows. and investment markets, he & Clearing, which paid $2.2bn for the on the LME buys the three-month con- tracts and carry trades. monthly dates would mean the carries At the same time, a surge in said. LME in 2012. tract today and when it sells, perhaps a A metals trading source at a bank said market disappears and shreds volumes.” the currencies of South Africa Still, a slow, steady drop in To facilitate a boost in volumes, the LME few days later, has to reconcile the two the “downside” was loss of volume on the An LME spokeswoman said the ex- and Russia, the biggest produc- output may not keep produc- last month published a discussion paper dates with another transaction known as three-month contracts.”Moving to the change was aware of a “broad spectrum ing nations, has pushed up the ers in business, according to listing alternatives to the status quo. New the carry trade. monthlies is a risky proposition because of views in the market on the subject of cost of digging up platinum those who think a more radical LME chief executive Matt Chamberlain These carry trades occur at random you become interchangeable with the monthly electronic liquidity”. relative to dollar income from shakeup lies ahead. The cost favours the option of extrapolating pric- dates in the future and are covered sepa- CME.” “The exchange...looks forward to re- sales of the metal for compa- of producing an ounce of es for three-month contracts and carry rately. If the monthly contracts became The head of a metals brokerage said: “It ceiving feedback from all segments of nies such as Griff ith’s Amplats platinum in South Africa in trades to populate the monthly contracts the most liquid, only the average exposure risks the benchmark status of the three- the market on this topic and formulating and Impala Platinum Holdings. 2016 was $868, according to on its electronic system. would be traded on the LME. months, a unique selling point.” a clear strategy that takes account of the Hedge funds already smell Metals Focus. The exchange favours a technique One broker estimated that if his carrys But, the bank source said, the LME was views of its user base.” Russia is all talk on rouble as no measures said to be in works

Bloomberg outlook for oil by the Economy Min- the government, which expects the that may prove better suited for some Moscow istry, which forecasts a drop of about rouble to be weaker at year-end than it companies. 16% against the dollar by end-2017 on is now.” Putin, the fi nal arbiter on all mat- the back of a decline in Russia’s Urals Russia has little to show for the ef- ters of policy, has so far avoided call- ussian eff orts to tether the rou- crude to $40 a barrel. forts it’s made so far to guide the rou- ing the central bank’s free fl oat into ble will likely come down to Boxed in by the central bank’s free ble weaker. It hasn’t budged since late question. Still, he off ered sympathy Rwords but no action. fl oat, the government has tried to bluff March as the central bank surprised to an entrepreneur last month by say- While President Vladimir Putin said the market into thinking more force- by delivering 75 basis points of easing ing the Kremlin and the government last month the government is looking ful intervention could be imminent as with two rate cuts. Purchases of for- are monitoring the “key” issue of the for “market-based measures” to aff ect the currency keeps up the world’s big- eign currency by the Finance Ministry, rouble’s stability “practically on a daily the exchange rate, no concrete steps gest rally since touching a record low which have totalled 253.5bn roubles basis.” His spokesman later reiterated are under discussion now, according in January 2016. By taking additional ($4.4bn) in the three months it’s con- that the president won’t make his view to three senior offi cials with knowl- measures off the table, it’s leaving the ducted the operations, have also barely of the exchange rate public, declining edge of the matter, who asked not to rouble at the mercy of oil and carry put a dent in the rally. to comment on what market tools can be identifi ed as the information isn’t traders drawn to one of the highest- Investors now have even less reason be used. public. Instead, the authorities will yielding currencies. The gains have to brace for pushback. The central bank Back in 2015, with public fi nances use verbal signals to infl uence senti- threatened the competitiveness of ex- has pledged to stay out of the currency under strain after oil’s crash, Putin ment among business leaders and the porters while eroding Russia’s budget market, refraining from buying foreign took a more expansive view. A month market and alert them to the risk that intake from energy sales. exchange to boost international re- after foreign-currency purchases by the rouble is on course to weaken, the The rouble, among the top perform- The rouble, among the top performers in emerging markets in 2017 serves until it’s sure such actions won’t the central bank helped push the rou- people said. ers in emerging markets in 2017 with a with a gain of almost 7%, traded 0.4% weaker at 57.2775 versus the lead to faster infl ation or aff ect the rou- ble 8% weaker, he told the Russian Believing depreciation is a matter gain of almost 7%, traded 0.4% weaker dollar yesterday ble’s rate. That’s left government offi - industry leaders that the approach of time, the government is taking no at 57.2775 versus the dollar in Moscow. cials to make a public show of trying to served their companies well at a time measures even though the president Its real eff ective exchange rate, meas- April to the highest since 2014, central Sberbank CIB analysts including An- talk down the currency. The ministers the government could off er little else. has been fi elding complaints over rou- ured against the currencies of Russia’s bank data show. ton Stroutchenevski said in a report. of fi nance, economy, agriculture and “The diff erence in the exchange rate ble strength from big exporters, said major trading partners while stripping “The sustainability of the rouble’s “The biggest question now is how long industry have all pitched in to make a is much more potent and works more another person familiar with the delib- out the eff ects of infl ation, has appre- strength will increasingly depend on foreigners will tolerate such a situa- case that the rouble is overvalued or effi ciently than measures of budget erations. That view hinges on a bearish ciated 8.3% in the year to date through the sustainability of capital infl ow,” tion. Given this, we share the view of suggest a level of the exchange rate support,” Putin said. Saturday, May 13, 2017 GULF TIMES BUSINESS

QSE WEEKLY REVIEW Lifted by telecom and industrials, bourse becomes best performer in the Gulf

By Santhosh V Perumal The QSE’s year-to-date (YTD) losses banking and real estate sectors account trading ring in volume and value. The Insurance, Mazaya Qatar, Vodafone Qatar, volume plummeted 39% to 1.36mn stocks, Business Reporter were at 3.12% against 6.06% in Muscat, for more than 80% of the volumes. telecom sector shot up 4.25%, industrials Nakilat and Qatari German Company for value by 4% to QR105.62mn and transac- 4.55% in Saudi Arabia and 3.13% in Dubai; Telecom sector accounted for 36% of the (1.83%), realty (1.52%), insurance (1.45%), Medical Devices were among the losers tions by 14% to 1,551. whereas Kuwait, Bahrain and Abu Dhabi total volume, banks and financial services banks and financial services (1.27%) and this week. The banks and financial services sec- Rebounding from five-month low, the added 16.05%, 7.1% and 1.36% respectively. (24%), realty (20%), transport and industri- transport (0.34%); whereas consumer Non-Qatari institutions’ net profit tor saw 28% shrinkage in trade volume Qatar Stock Exchange (QSE) traded above Buying was skewed towards large cap als (7% each), and insurance and consumer goods declined 0.81% this week. booking weakened to QR31.15mn from to 10.76mn shares, 35% in value to 10,100 levels this week, mainly lifted by scrips this week which witnessed Qatar goods (3% each) this week which saw QNB Market capitalisation expanded 1.59% QR62.04mn the previous week. However, QR325.37mn and 9% in deals to 4,693. telecom and industrials stocks. Thus, it Islamic Bank’s (QIB) QR3.4bn financing project Qatar’s real growth to rise to 2.6% to QR540.53bn as large, small and midcap domestic funds’ net buying declined sub- The industrials sector’s trade volume became the best performer among the deal with Gulf Drilling International. this year and 3.6% in 2018. stocks gained 1.76%, 0.72% and 0.36% stantially to QR95.49mn from QR111.85mn tanked 13% to 3.28mn equities but value Gulf bourses. Islamic stocks however under-per- Banks and financial services’ share in to- respectively, while microcaps fell 0.03% the week ended May 4. rose 5% to QR210.35mn despite 19% lower Domestic institutions continued to be formed the main indices this week which tal trade turnover was 27%, industrials (18%), this week. Local individual investors’ net selling transactions to 3,113. net buyers, albeit with lesser intensity, as saw Doha Bank to soon file an application telecom (14%), real estate (13%), transport Mid, large, small and microcap equities’ strengthened perceptibly to QR58.47mn However, the market witnessed 82% the 20-stock Qatar Index gained 1.74% and for its proposed exchange traded funds, (12%), consumer goods (9%) and insurance YTD losses were seen at 10.41%, 3.8%, from QR48.51mn the previous week. surge in the transport sector’s trade capitalisation added QR8bn this week, which would carry a fee of 0.5%, one of (7%) this week which saw no trading of 3.55% and 2.69% respectively. Non-Qatari individual investors’ net volume to 2.93mn stocks to almost triple which saw the QSE contemplating multi- the lowest in emerging markets. treasury bills and sovereign bonds. More than 58% of the stocks gained profit booking also rose to QR5.75mn from value to QR147.22mn on 47% rise in deals pronged measures to enhance market Foreign funds’ weakened net selling Opening the week weak at 9,834 points, with major movers being Ooredoo, Indus- QR1.3mn the week ago. to 1,405. liquidity to ensure lower trading costs and helped maintain positive momentum this the market witnessed marginal gains for tries Qatar, Qatari Investors Group, Qatar Total trade volume fell 13% to 44.8mn The insurance sector’s trade volume better price discovery. week which saw a global credit rating the next two days but to see stronger General and Reinsurance, Ezdan, Milaha, shares, value by 8% to QR1.2bn and trans- soared 53% to 1.38mn shares, value by Bahrain bourse plunged 1.81%, Kuwait agency Standard and Poor view that a additions for the remaining days to finally QIB, QNB, Doha Bank, Masraf Al Rayan and actions by 7% to 14,974 this week. 85% to QR81.59mn and transactions by (1.22%), Muscat (0.8%), Saudi Arabia (0.6%) sharp increase in external debt leaves settle 173 points higher this week. Qatar Insurance this week. The real estate sector reported 40% 30% to 466. and Abu Dhabi (0.19%); while Dubai was Qatari banks more vulnerable to global The 20-stock Total Return Index rose Nevertheless, Gulf International plunge in trade volume to 9.13mn equities, There was 24% expansion in the up 0.01% this week which saw Mannai liquidity conditions. 1.74%, All Share Index1.41% and Al Rayan Services, Commercial Bank, Qatar First 34% in value to QR160.72mn and 12% in telecom sector’s trade volume to 15.96mn Corporation’s strategy to lift its holding in Overall trade turnover and volumes Islamic Index 1.34% this week which saw Bank, Woqod, Qatar National Cement, deals to 2,248. equities, 13% in value to QR167.27mn and France’s Gfi Informatique to 95% by 2018. declined this week, which saw telecom, Vodafone Qatar and Ezdan dominate Aamal Company, Al Khaleej Takaful, Doha The consumer goods sector’s trade 10% in deals to 1,498.

UK start-up Improbable breaks $1bn valuation US retail sales rise with SoftBank deal

Reuters power across thousands of servers London to create highly detailed digital models, functioning like a vast supercomputer. broadly; consumer Improbable, a British tech simulation The size of the investment puts it on company dreamt up at Cambridge a par with the few world renowned University, has raised $502mn in tech startups to come out of Europe a funding round led by Japan’s in recent years, including Skype and SoftBank, valuing it at over $1bn and Spotify, and will help the company propelling it into the top ranks of the to invest in the platform and recruit European industry. more staff . prices rebound Britain has a thriving tech start-up The investment gives SoftBank a scene but few companies secure non-controlling stake and a seat Core retail sales gain 0.2%; services, medical care, motor the large investments they need to on the board for Deep Nishar, its CPI rises 0.2%; up 2.2% vehicles and apparel. Rental become fully-fledged businesses, managing director. year on year; core CPI up costs increased 0.3% after a meaning many list in the United “Along with Machine Learning and 0.1%; rises 1.9% year on similar gain in March. States or sell out to American giants Internet of Things, Improbable’s year The core CPI increased such as Google or Microsoft. distributed computation technology 1.9% on a year-on-year basis, Improbable was founded only five represents a critical next frontier in Reuters the smallest gain since Octo- years ago by three friends, two of computing,” he said. Washington ber 2015, after rising 2.0% in whom met while studying computer Martin Garner, SVP at market March. science at Cambridge and the other research group CCS Insight, said Still, April’s increase was who went to Imperial College in Improbable now needed lots of S retail sales increased above the 1.8% average annual London. developers using the platform to broadly in April while increase over the past decade. It uses cloud-based computing to build momentum. Uconsumer prices re- “To some extent, this new digitally simulate complex real-world It could then become attractive for a bounded, pointing to a pickup weakness in price infl ation is locations. wider set of applications and users, in economic growth and a due to competitive pressures The software can be used in hyper- such as city planners, electricity grid gradual rise in infl ation that rather than weak demand, so realistic gaming but also to design owners or transport systems to map could keep the Federal Re- the Fed can aff ord to discount infrastructure and scenarios for designs. serve on track to raise interest it,” said Paul Ashworth, chief self-driving vehicles. “That is the prize,” he said. “They rates next month. US economist at Capital Eco- “This is only just the beginning of need scale as a platform and then The reports yesterday nomics in Toronto. where we need to go,” 29-year-old there is lots of potential.” added to labour market data Consumer spending is be- Improbable CEO Herman Narula told Improbable’s Narula said the deal in suggesting the near stall in ing supported by a tighten- Reuters. showed that Britain remained an economic activity in the fi rst ing labour market, marked by The $502mn marks the biggest attractive destination for foreign quarter was an anomaly. an unemployment rate at a ever early stage investment for a investment, but he warned that But a moderation in year- 10-year low of 4.4%. A third venture-backed European company could change if it takes the vote on-year infl ation led fi nancial Cars are parked in a lot at an auto dealership in New York. The US Commerce Department said report yesterday showed con- and comes from SoftBank CEO to leave the European Union markets to dial down expecta- retail sales rose 0.4% last month after an upwardly revised 0.1% gain in March. sumer sentiment rose in early Masayoshi Son who is building a as a reason to clamp down on tions of at least two more rate May as the outlook for wages $100bn tech fund in his drive to immigration. increases this year. and food services, retail sales was the fi rst in 13 months, Prices of US Treasuries rose improved. become the Warren Buff ett of the “Many of my early co-founders “The economy picked it up gained 0.2% after advancing was an aberration. In the 12 and the US dollar weakened Motor vehicle sales in- industry. were foreign nationals that came to a notch from the slow start 0.7% in March. months through April, the against a basket of currencies creased 0.7% in April after SoftBank bought Britain’s largest study in places like Cambridge and earlier this year, but the in- These so-called core retail CPI increased 2.2%. While after the release of yesterday’s three straight months of de- tech company ARM for £24.3bn last Oxford,” said Narula, who was born fl ation fi res are not burning sales correspond most closely that was a slowdown from data. creases. There were hefty year, its largest takeover. in India but moved to Britain aged brightly and this will likely with the consumer spending March’s 2.4% increase, it still US stocks were trading gains in sales at building ma- Narula and his co-founders have not three. keep the Fed on just a gradual component of gross domestic exceeded the 1.7% average an- mostly lower, pulled down by terial and electronics and ap- disclosed how much their own share “As long as the UK remains pace for interest rate hikes product. nual increase over the past 10 weak fi nancial and industrial pliance stores. of the company is now worth but somewhere that is open to talent later this year,” said Chris The economy grew at a years. sectors. But sales at clothing stores will be sitting on fortunes — at least from all over the world.. Rupkey, chief economist at 0.7% annualised rate in the Financial markets are pric- Gasoline prices jumped fell 0.5%. Department store on paper. I don’t think it will be a concern. MUFG Union Bank in New fi rst quarter, held back by the ing in more than a 70% chance 1.2% in April after falling retailers have been hurt by The computer science graduate “But if those things cease to be York. weakest increase in consumer of a rate hike at the Fed’s June 6.2% in March. declining traffi c in shopping founded Improbable with fellow true, or if the country ceases being The Commerce Depart- spending in more than seven 13-14 policy meeting, accord- Food prices rose 0.2% as malls and increased competi- Cambridge student Rob Whitehead, a welcoming place, then I think it ment said retail sales rose years. ing to CME Group’s FedWatch prices for fresh vegetables re- tion from online retailers, led 26, after they met at a dissertation will impact, and maybe even fatally 0.4% last month after an up- The Atlanta Fed estimates programme. corded their biggest increase by Amazon.com. review. impact, the UK tech industry.” wardly revised 0.1% gain in GDP will rise at a 3.6% pace in But the likelihood the US since February 2011. Retailer JC Penney Co said They later moved to London Early investors include British March. the second quarter. central bank will raise rates The so-called core CPI, yesterday its net loss widened and joined forces with Goldman entrepreneur turned investor Saul Sales rose 4.5% in April on a In a separate report yester- twice before the end of the which strips out food and to $180mn, or 58 cents per Sachs employee Peter Lipka, 28 Klein and Andreessen Horowitz, year-on-year basis. day, the Labor Department year fell after yesterday’s data. energy costs, edged up 0.1% share, in the fi rst quarter. who had studied for a masters one of Silicon Valley’s main venture Economists had forecast said its Consumer Price Index The Fed lifted its bench- last month, reversing March’s On Thursday, Macy’s re- in engineering in computing at capital firms. overall retail sales increasing rose 0.2% after dropping 0.3% mark overnight interest rate 0.1% dip. ported a 4.6% drop in fi rst- Imperial. Prior to the new funding round, it 0.6% last month. in March. by 25 basis points in March The monthly core CPI quarter sales. Employing nearly 200 people, had disclosed just over $22mn in Excluding automobiles, The rise in prices suggested and has forecast two more was restrained by declines in Sales at online retailers Improbable distributes computing earlier funding. gasoline, building materials that March’s decline, which hikes this year. the prices of wireless phone jumped 1.4% in April. Azeri bank IBA says debt to be restructured totals $3.3bn

Azerbaijan’s economy hit by low oil out of a prolonged slump on the global The plan did not set out the size of Pavel Mamai, a portfolio manager trade opened yesterday. But prices later Muslim country that borders Rus- prices; bank laden with bad debts; oil market, even though prices recov- the “haircut” that creditors will be at UK hedge fund Promeritum Invest- recovered to 89 cents while Azerbai- sia and Iran, news of the restructuring it is to suspend repayment on debt; ered some lost ground in early to mid- asked to take under the restructuring. ment Management, said IBA’s creditors jan’s manat currency was largely un- broke on mainstream media on Thurs- creditors likely to face “haircut”, 2016. Typically, creditors are asked to would be hard-pressed to resist what- moved. day night. says analyst An economic slowdown caused by agree to accept a sum less than they are ever terms Azerbaijan off ers because Investors said Azerbaijan had enough Television stations did not report in the oil prices — which remain around owed by the debtor. $1bn of the debt earmarked for restruc- of a fi nancial cushion to prevent conta- detail what was happening. Reuters half 2014 levels — left many of the In the preliminary restructuring turing is held by state sovereign wealth gion into the wider economy. A Reuters reporter who visited sev- Baku/Tbilisi bank’s creditors unable to repay their plan, the bank said it plans to exchange fund SOFAZ. “The government still has plenty of eral IBA branches in the capital, Baku, loans. at least some of the bank’s liabilities for With SOFAZ already on board, IBA money available in its sovereign wealth yesterday said there was no rush by de- That built up non-performing debts Azeri sovereign debt. will be able to get the approval of the fund, it still has a lot of assets it can ac- positors to withdraw money. nternational Bank of Azerbaijan, that a previous government rescue Azerbaijan’s Finance Minister, Samir required two-thirds of creditors, es- cess in order to underpin its banks, and An employee at one branch said the the energy exporting country’s big- package failed to fi x. Sharifov, has said he will meet the pecially with the help of trade fi nance I imagine that is what they will do,” said bank was paying out money as normal, Igest lender, said yesterday it needed The bank published yesterday what bank’s creditors in London on May 23 fi rms, Mamai predicted. Alan Shipman, economist and consult- with no special restrictions on with- to restructure more than $3bn of its it said was its proposed restructuring to seek their approval for the plan. “Creditors will be told either accept ant for Oxford Economics. drawals. debt, most owed to foreign creditors, plan. Commerzbank, Bayerische Landes- the deal or we declare bankruptcy,” he The bank said it expected 2016 fi nan- Several bank customers said they had to tackle bad loans left over from the According to this, the total level of bank and SocGen declined to comment added. “I don’t think creditors will have cial results to show a net loss of around not heard about the restructuring. slump in oil prices. debt subject to restructuring stood at about how they viewed the bank’s pro- a lot of choice.” 1.9bn manats ($1.115bn). It attributed None who spoke to Reuters said they The state-controlled bank an- $3.34bn as of April 18. posal. However the blow will be softened this to extra provisions against its loan planned to close their accounts. “I nounced on Thursday it was suspend- This included debt owed to entities Lazard Frères and White & Case, if creditors receive sovereign bonds in portfolio, and the fall in the manat’s think it’s a state bank and nothing is go- ing payments on some liabilities and including commodities trader Cargill, hired by IBA to handle the restructur- the exchange, leaving them with a bet- value. ing to happen with our accounts,” said seeking creditors’ support for restruc- Italian lender Intesa Sanpaolo, Ger- ing, also declined comment. ter-quality asset, said Richard Segal, Its Tier 1 capital ratio — a safety Valida Husseinova, a teacher. turing. many’s Commerzbank and Bayerische People familiar with the views of emerging debt strategist at Manulife cushion against shocks and bad loans — There were, however, rumblings of The news sent IBA’s dollar-denomi- Landesbank, and France’s Societe Gen- several creditor institutions, who did Asset Management. is expected to be approximately -4.7% anger on social media. nated bond tumbling to its lowest level erale. not want to be identifi ed, said the in- “But they will have to take a haircut, as of the end of last year. One Facebook user, Samir Aliyev, in over a year. The debt the bank wants to restruc- stitutions will participate in the re- that’s just burden sharing,” he said. For eurozone banks, by contrast, the asked what had happened to the money The bank’s problems show how Az- ture include the $500mn Eurobond due structuring talks and try to minimise The bank’s $500mn bond fell by minimum Tier 1 capital ratio is set at that the state had already spent on res- erbaijan is still wrestling with the fall- on June 11, 2019. any losses. more than 17 cents to 82.6 cents as plus 6%. Inside Azerbaijan, a mainly cuing the bank.