US BLOW | Page 2 GROWING TIES | Page 4 Iran sanctions Pakistan and move hits China sign 15 Europe fi rms deals, MoUs

Sunday, November 4, 2018 Safar 26, 1440 AH

TOURIST ATTRACTIONS: Page 20 GULF TIMES Nepal is off ering ‘huge potential’ for BUSINESS Qatari investors

Demand for Spanish food exports to Qatar on the rise, says envoy

By Peter Alagos ers and their engagement with our excellent quality, country the chance to sample Spanish cuisine.” from the supply side, participating in exhibitions Business Reporter but very competitive supply of food and beverage, As Spain’s new ambassador to Qatar, Alfaro said under the Spanish pavilion, such as Hospitality make them a close partner for the Spanish provid- she is looking forward to further strengthening the Qatar. The Spanish technology on agriculture pro- ers,” the ambassador said. Alfaro ties between Qatar and Spain, in- duction is also contributing to the local manufac- eading food distributors in the country are pointed out that more companies More companies in Qatar cluding “co-operation relations turing,” Alfaro said. importing more products from Spain, a trend in the Qatari market are eliminat- are eliminating the “middle in all fi elds – political, economic, Earlier, former Spanish ambassador to Qatar, Ig- Lthe Spanish embassy in Doha is determined ing the “middle man” by import- man” by importing products cultural, and educational.” She nacio Escobar, had told Gulf Times that plans are to maintain, according to Spanish ambassador Be- ing the products directly from directly from Spanish food added that the embassy is work- underway for a greenhouse project in Qatar, which len Alfaro. Spanish food producers, which producers, which ensures ing to boost growth in tourism, is expected to contribute to the country’s self-suffi - “Main food distributing chains in Qatar are very means high-quality and fresher high-quality and fresher including the increase of student ciency and sustainable development goals. interested to import more products from Spain be- products at competitive prices. products at competitive prices exchanges between Qatar and Escobar had said the technology would be sup- cause of high quality but competitive prices,” Al- She said the four-day ‘Ex- Spain. plied by Spanish joint venture AgriQatar, using faro told Gulf Times on the sidelines of the launch- travaganza Culinary Festival’ is a “Bringing here wonderful state-of-the-art hydroponics to produce a vari- ing of the culinary event ‘Extravaganza Culinary refl ection of the “continuous trend of Spanish food dishes prepared by our chefs is the best way to ety of fruits and vegetables, assuring Qatar “100% Festival’, which concludes today. exports coming to Qatar.” She said: “The Extrava- encourage the demand of national products. The self-suffi ciency” in specifi c vegetables throughout Alfaro: Looking forward to further “Their collaboration with Spanish manufactur- ganza fair gives Qataris and other residents in the Spanish food promotion strategy is also completed the year. strengthening Qatar-Spain ties. Global growth loses Gibbs set to establish momentum, outlook Humdinga assembly less promising: QNB subsidiary in Qatar While the new global economic projections still suggest a robust performance, especially when compared to the last decade, the outlook is less ibbs Amphibians (Gibbs) is es- promising, QNB has said in an economic commentary. tablishing a strategic partner- In its latest World Economic Outlook, the International Gship with the Madaeen Al Doha Monetary Fund (IMF) downgraded near-term global Group for the supply and assembly of growth prospects to 3.7% from 3.9% for both 2018 and the Gibbs Humdinga amphibian vehi- 2019. cles. Global growth seems to have peaked as downside The subsidiary, called Gibbs Am- risks continue to rise and materialise, QNB said. phitech, will be based in Qatar and will Additionally, there is less potential for upside supply Gibbs products in the region surprises and the expansion has become less and other key markets including Aus- synchronised across countries. tralia, Canada and the UK. Four key factors contributed to the recent mark down On this occasion, Mohamed al- in projections for global activity. Sada, partner, Madaeen Al Doha Group First, recent economic data and key business surveys said, “Today’s announcement about suggest that the global economy has already begun establishing the fi rst factory for Am- to lose momentum. The latest global Purchasing phibian vehicles is a great millstone Managers Index (PMI) survey, released at the for both Qatar and the Arab world. The beginning of October, was the weakest in 24 months. fi rst phase will revolve around assem- Gibbs is establishing a partnership with the Madaeen Al Doha Group While the index of 52.8 is still in expansion territory Fourth, policy uncertainty and trade tensions bling the ‘Humdinga’ in Qatar till the for the supply and assembly of the Humdinga amphibian vehicles (above 50), it is below the 53.8 average in 2017. are high and rising. The Global Economic Policy factory commences production of all Activity has particularly disappointed in key advanced Uncertainty Index, which measures uncertainty Gibbs amphibian models to be able to Al Doha Group does. The fi rst product ing position and can carry up to a tonne economies, such as the euro area and the UK, where based on newspaper coverage frequency in 20 major supply global demand for this technol- we will be focusing on for the region in payload. It reaches speeds in excess growth projections were downgraded respectively to economies, is up 76.7% year-to-date and close to an ogy, which is expected to be available will be the Humdinga.” of 40mph on water and over 80mph on 2% from 2.4% and to 1.4% from 1.6%. all-time high. in the local market before 2022 and Gibbs has locations in the UK land, with 4WD and twin Gibbs pro- Softer growth in Europe seems to have been caused The mounting trade dispute between the US and bear the ‘Made in Qatar’ stamp” (Nuneaton) and New Zealand, utilis- prietary water jets. by both temporary and more lasting cyclical factors, China, the world’s two largest economies, is denting Gibbs founder Alan Gibbs is enthu- ing engineers and expertise from both The Humdinga is a fl exible platform, including weather conditions, high levels of sick consumer and business confidence. The US has siastic about the new opportunities in countries to continue to develop high capable of applications from logis- leaves, industrial strikes, and lower export and already imposed tariffs on $250bn of Chinese imports the region and the performance of the speed amphibian (HSA) technology tics to search and rescue, from police investment growth. with the Chinese retaliating with tariffs on $110bn of Humdinga in the market. and the vehicles designed around it. patrols to private leisure. It has been Second, to mitigate an overheating of the US US exports. “There is a developing global de- Over the last 20 years Gibbs has manufactured under licence in South- economy, the Federal Reserve has started to tighten With the US threatening to impose tariffs on a further mand for the Humdinga, and we are invested hundreds of millions of east Asia, but has never been available monetary policy. Four more 25bp rate hikes are $260bn of Chinese imports by early next year and receiving high levels of interest from pounds, and more than three million to the public, or to such a wide region expected until the end of 2019, which would harness talks between the two countries currently stalled, all kinds of customers, including gov- man hours, in the maturation of the before. US growth from a boom-like 2.9% in 2018 to around a further escalation is expected. This should create ernments and private individuals. This technology. This has resulted in more “This strategic partnership for the 2.5% in 2019, more in line with the estimated potential additional pressure on Chinese authorities as they is the right time and the right oppor- than 400 patents and patents pending supply and assembly of the Gibbs growth rate of c.2.0%. struggle to deliver on their policy targets of fast tunity to further the use of Humdinga, worldwide, making Gibbs the global Humdinga is an achievement for both The euro-area growth is expected to cool off more in growth and financial deleveraging. and I expect we will see them being leader in the HSA technology. parties. With Qatar looking for more 2019 as the European Central Bank finally winds down While the International Monetary Fund maintained widely used in many parts of the world The Humdinga is one of the more ways to achieve its 2030 national vi- quantitative easing by year-end and mulls a rate hike its 6.6% projection for growth in China over 2018, the in the near future. Gibbs products are rugged vehicles created by Gibbs, ca- sion, and Gibbs looking to supply the by end-2019. forecast for next year was revised down to 6.2% from high value and high tech, and we are pable both off -road and on-water ma- increasing global demand for their Importantly, interest rate hikes in key advanced 6.4%. keen to work with partners who share noeuvre. It seats up to nine passengers, products, there is a lot of potential,” economies are expected to add pressure to “Risks are tilted to the downside,” QNB said. China is our vision and values, as the Madaeen with the signature Gibbs central driv- said British ambassador Ajay Sharma. emerging markets (EM) with large external financing the largest contributor to global growth and a ‘harder’ requirements. Portfolio capital outflows and the threat landing in China would likely have knock-on effects of disorderly forex depreciations are already forcing in a number of other economies, particularly net Qatar secures 20th rank in World Bank property registration procedure index several EM central banks to pro-cyclically tighten their commodity exporters and highly competitive Asian monetary policy settings, reining in growth. exporters of manufacturing products. Qatar has risen six places on its The Ministry of Justice had held forge security stamp. The World Bank In fact, EM growth projections were revised to 4.7% The potential for a ‘no-deal Brexit’ and a disorderly property registration procedure index, several meetings with the World said that Qatar has joined the list of for both this year and next, down from 4.9% for 2018 exit of the United Kingdom from the European Union climbing to 20th rank from 26th Bank team, which was briefed on the countries that carry out concrete and 5.1% for 2019. next March could further affect growth prospects in previously in the World Bank’s ‘Doing new procedures and improvements reforms to enhance the business Third, higher oil prices are contributing to reduce advanced economies next year. Business Report 2019’. introduced by the system in the environment and support the ease discretionary spending, weakening consumption and QNB said, “On the upside, the US economy is running This improvement comes in the wake course of work. of practicing business activities, dragging on growth, especially in countries that are at full speed and potential surprises to the downside of the reforms and procedure easing The system has developed property thanks to the procedures added by net oil importers. seem rather unlikely. Despite idiosyncratic problems introduced by the new property registration procedures and title the project of development of real As several countries lifted fuel subsidies during the in more vulnerable economies, overall EM growth is registration and authentication deeds. While procurations have been estate registration and documentation last period of low oil prices in 2015-16, consumers set to be healthy and unlikely to change further in the system, which links all relevant updated and provided in secure systems. are even more exposed to higher oil prices this time absence of severe shocks. In short, global growth is government bodies concerned with templates, existing paper and stamp The project had won the ‘Sheikh Salim around. Brent crude prices averaged $55 for a barrel still robust, but the peak seems to be behind us and property registration and documents procurations have been replaced by Al Ali Information Technology Award in 2017 and $73 so far this year. risks are mounting.” issuance. secured documents with a hard-to- 2018’ in Kuwait. Gulf Times 2 Sunday, November 4, 2018 BUSINESS

Bloomberg QuickTake Q&A How US can force the world to squeeze Iran’s oil

By Laurence Arnold and Nick Wadhams cutting Iran’s oil exports from 2.7mn to Washington 1.6mn bpd, according to US estimates. Secretary of State Mike Pompeo had repeatedly said the US goal is to reduce Once a major customer, the US hasn’t exports to zero, even as he acknowledges bought oil from Iran for more than 25 years. that some countries may need to continue How, then, can it lead a global movement buying oil from Iran. to stop Iran from selling its chief export? 4. Where does Iran sell most of The answer is simple: “Do business in Iran its crude? or in the US,” State Department off icial Brian Hook said. The last, and largest, Iran ships mostly to buyers in Asia, with US sanctions on Iran go back into eff ect Europe running a close second. China and tomorrow, targeting the nation’s energy India, two of the biggest oil importers, and financial sectors and capping a feature prominently on its list of buyers, campaign by President Donald Trump’s as does Turkey, Japan and South Korea. administration to drive companies out of Depending on the terms of the waivers, Iran. Even though the US has said it will the buyers may be allowed to purchase grant temporary waivers to eight countries dwindling amounts of Iranian crude, paying – including Japan, India and South Korea for it through an escrow account that will – the global squeeze on Iran has already limit the proceeds to purchases of food and begun. medicine. Pompeo has said the US won’t 1. How can the US tell other grant a blanket waiver for the European countries what not to buy? Union, as happened under the Obama administration. As with other sanctions campaigns, 5. Where else will oil come US leverage rests with the central role from? American banks – and the US dollar – still play in the global economy. So any country, Three countries – Saudi Arabia, Iraq and company or bank that violates the terms of Russia – are in the strongest position to the US sanctions could see their US-based fill the expected shortfall in the heavier, or assets blocked or lose the ability to move more viscous, oil that Iran provides. Heavy money to or through accounts held in the crudes like Iran’s are better for making US In essence, the Trump administration is diesel, jet fuel and other middle distillates, betting that nations, banks and businesses while lighter crudes, such as US West Texas worldwide will decide they’d rather do Intermediate, are generally more valuable business with the US. for refiners because they readily yield French energy giant Total announced in August it was pulling out of a massive natural gas project in Iran 2. Will everybody co-operate in more high-value light products including this? gasoline. The White House said it expects US oil production, which climbed 2.1mn bpd Perhaps, though there’s been talk in the in August from a year earlier, to grow “by European Union of finding some sort of 1mn barrels per day or more” in the next alternative mechanism that would allow year. Iran sanctions move companies to continue to do business with 6. How did we get here? Iran without falling afoul of US sanctions. But EU off icials have struggled to detail this The 2015 Iran nuclear deal – which eased strategy and the US has already warned economic sanctions on the Islamic Republic that the Swift messaging service used by in exchange for restrictions on its nuclear financial institutions could be targeted if it programme – allowed Iran to resume selling allows transactions with Iran to continue. oil widely. Despite broad international hits European firms support for the accord, Trump and his 3. How much oil is at risk? allies said the deal never addressed what AFP Volkswagen had said last year it total outstanding order book of Shipmaker Fincantieri, engineering Opec’s third-largest producer was pumping they see as “Iran’s malign behaviour in the Paris planned to resume business after a some 7,168 planes at end-June. firm Maire Tecnimont and gas boiler close to 4mn bpd earlier this year, with Middle East, its support for terrorism or its 17-year break but was very guarded Oil is the key issue with global maker Immergas all signed a string more than half of that going to exports. ballistic missile programme.” Trump wants in response to the latest US decision. implications for all concerned as of deals with Iran which are also Buyers have already been reducing a new, tougher deal, and to get it, he’s US President Donald Trump’s VW “conforms with all the applicable Washington aims to cut off Iran’s key threatened. purchases in anticipation of the sanctions, reimposing the sanctions. decision to pull the US out of the national and international laws and source of foreign income. Italy was Iran’s largest European 2015 nuclear accord with Iran and regulations concerning exports,” a French energy giant Total trade partner in 2017, with its reimpose a raft of sanctions puts spokesman said. announced in August it was pulling exports rising 12.5% to €1.7bn. European businesses on the spot. French automakers Renault and out of a massive natural gas project. Iran is potentially a major tourist While the European Union insists PSA, who make nearly half the cars Italian energy giant ENI meanwhile destination but European it will stick by the nuclear accord sold in Iran, were cautious. has a contract to take 2mn barrels of companies were quick to pull back to allow trade to continue with PSA, behind the Peugeot, Citroen oil per month which it will not renew after the August US announcement. Iran, European companies are and Opel brands, said in June it was after it finishes this year. British Airways and Air France wary of being caught out by the preparing to suspend activities in German engineering giant Siemens halted services in September, saying US sanctions regime and many Iran. signed a contract in 2016 to supply the flights were not commercially have already cut back their Renault says it intends to keep its gas turbines to Iranian company viable. presence. activities in Iran but stands ready Mapna. German carrier Lufthansa, Austrian The sanctions introduced in August “to reduce the scale very sharply” if A spokesman told AFP the company Airlines and Alitalia for the moment spooked the major automakers who need be. “will take the appropriate measures continue flights to Tehran. were already cautious about their Aviation saw large contracts to bring its aff airs into conformity French hotel chain AccorHotels, future in Iran and mindful of their reached following the 2015 with the multilateral framework which opened an establishment in much bigger business interests in nuclear accord as Iran set about concerning Iran.” Iran in 2015, declined to comment the US. modernising an ageing fleet. Italy stands to lose most in these on its plans for the future. Germany’s Daimler, which was Airbus booked deals for 100 jets and sectors, national railway operator Spain’s Melia Hotels International teaming up with two Iranian firms was looking forward to many more. Ferrovie dello Stato Italiano having chain, which signed a 2016 deal to to assemble Mercedes-Benz trucks, However, the potential loss of signed a deal in 2017 to build a high- run a five star hotel in Iran, the Gran said it had decided against going business in Iran would not weigh speed line linking Qom to Arak in Melia Ghoo, said in November it was ahead. overly heavily on Airbus given its northern Iran. still going ahead.

It’s the Iran oil guessing game: Bears are winning

Bloomberg New York

il sceptics have been proved right in downplaying sanctions against Iran. O Hedge funds reduced bets on rising West Texas Intermediate crude prices for an eighth straight week, the longest streak of reductions on record, even as curbs on Iranian oil are set to kick in. After sanction fears propelled the benchmark to four-year highs early last month, futures have since plunged almost 20% as signs mount that the impact might not be so bad. “The teeth around these sanc- tions aren’t as sharp as what may have been telegraphed by the administration going into September and October,” said Chris Kettenmann, chief energy strategist at Macro Risk Advisors LLC. “The other piece of the story is the Saudis would move to fi ll these volumes into the fourth quarter.” While it’s still a guessing game how much Iranian oil will be removed from the market, US Secretary of State Michael Pompeo said on Friday that the US will grant eight tempo- rary waivers for countries to keep importing crude from the Middle Eastern nation. And Opec also is signalling it’s will- ing to fi ll any supply gaps-the group’s output jumped to the highest since 2016 in October. Meanwhile, oil market volatility has spiked to levels last seen in more than a year as investors try to estimate the out- come of the sanctions coming to eff ect next week. “You are seeing a real fundamental shift in the market from concern about a shortfall to now real concern about maybe there is too much supply in the market,” said An- drew Lebow, senior partner at Commodity Research Group. “That was hammered home this week.” Hedge funds’ net-long position - the diff erence between bets on higher prices and wagers on a drop - in WTI crude slid 5% to 196,196 futures and options in the week ended October 30, the lowest level since September 2017, accord- ing to the US Commodity Futures Trading Commission. Longs fell 3.7%, while shorts edged up to the highest since late last year. Gulf Times Sunday, November 4, 2018 3 BUSINESS

US oil titans flood Permian zone with armada of rigs Canadian producers turn to oil trucks as supply glut grows

Bloomberg Hiring a truck to ship crude from Calgary the Permian basin of West Texas to Houston, a distance of almost 500 miles, costs about $15 a bar- he highways of Saskatch- rel one way, or double that if the ewan show just how des- tanker returns empty, said Sandy Tperate Canadian oil pro- Fielden, director of research for ducers are to get their crude to the commodities group at Morn- market. ingstar Inc. Tanker trucks laden with oil Pipeline constraints in Can- are journeying almost 500 miles ada, combined with a surge (800km) to pipeline and rail of new oil-sands production, terminals. It’s a phenomenon have created more demand for that Ken Boettcher, president of oil trucks. One export pipeline, Three Star Trucking Ltd in Ali- Enbridge Inc’s Line 3, is sched- da, Saskatchewan, started to see uled to be expanded by late next three or four months ago when year, but other projects continue oil shippers around Kindersley, to face delays, including the near the Alberta border, be- planned expansion of the Trans gan requesting trucks to move Mountain pipeline to the British their crude, in some cases, as far Columbia coast. south as North Dakota. As bottlenecks have wors- “It’s never been a common ened, crude shipments by rail practice before,” he said in a have gradually picked up. A phone interview. “They can record 229,544 bpd exported on probably buy it cheaper and trains in August, National En- bring it down here and blend it.” ergy Board data shows. But the An oil drilling rig stands in Reeves County, Texas. Once an afterthought, the Permian Basin is now first and foremost for the biggest American oil producers, according to Canada’s pipeline bottlenecks rise in crude-by-rail exports has Bloomberg. The arid backwater of West Texas and New Mexico was a prime driver in the outsized profit reports on Friday from Exxon Mobil Corp and Chevron Corp that are pushing Canadian crude been limited as rail companies investors cheered. Decades after Big Oil gave up on the Permian to drill new frontiers like the North Sea and West Africa, the titans of American energy have returned in prices to the lowest in at least a demand long-term agreements force. Exxon has already surpassed its plan to mobilise about 30 rigs in the region by year’s end: The company has 38 drilling Permian wells now, a 40% increase in just decade, which has made ship- at fi xed volumes. Some oil-pro- six months. For Chevron, which only recently began drilling assets it controlled for more than a century, the jump in rig count was even more dramatic at 59%. In fact, ping oil by truck more cost ef- ducers may be turning to trucks Chevron is so busy in the Permian that the region now accounts for about one in every 10 barrels the company pumps worldwide. Permian gushers have been so prolific fective. At Hardisty, Alberta, out of reluctance to “essentially that Chevron is a year ahead of its production target in the area, chief financial off icer Pat Yarrington said during a conference call on Friday. heavy Western Canadian Select submit” to the terms of rail com- sold for $52.40 a barrel less than panies, Fielden said. West Texas Intermediate crude Earlier this year, Ceres Global futures earlier this month, the AG Corp was getting ready to biggest discount in Bloomberg start taking shipments of crude data going back to 2008. trucked in from West Central Almost 230,000 barrels of Saskatchewan, as far as 800km crude were exported by truck in (497 miles) away, at its North- August, the most in data going gate rail terminal in the south- back to January 2015, according to east section of the province, data provided by Statistics Cana- chief executive offi cer Robert Democrats regaining da. Every month since December, Day said by phone. Those plans more than 100,000 barrels have changed after BNSF Railway Co been exported by truck. A typi- began requiring more secure and cal tanker truck can carry about hard-to-obtain tanker cars after House seen raising odds 250 barrels of oil, Boettcher said. a derailment and oil spill in Iowa. Nigeria sees Opec of anti-Opec bill in US holding fi rm as $70

Bloomberg diff erent this time around is that price suits all Washington President Donald Trump has repeat- edly attacked the Organisation of the Petroleum Exporting Countries both Bloomberg renewed surplus, Russia said it f the Democrats take over the before after being elected. London could increase production be- US House of Representatives in “Our impression is that the Dem- yond record levels amid risks of a Ithis week’s midterm elections, it ocrats see Saudi Arabia as a winning shortage. could renew momentum in favour of game for them and they would like to pec and its allies are likely New supply from around legislation targeting Opec. keep it in the news as much as possi- to keep oil-production the world, from US shale oil to “The odds of passage are a little bit ble, with the understanding that even Opolicy steady when they projects in Nigeria itself, could higher” in the event that the Demo- if they think it’s not the best policy, it meet in December as current swell global output by between crats take over the House in the No- would box in President Trump and prices near $70 a barrel suit all 1mn and 2mn bpd next year, vember 6 vote, according to Glenn be watered down or killed in the Sen- members, Nigeria’s oil minister Kachikwu said. That could force Schwartz, director of energy policy at ate,” Schwartz said. said. the Opec+ alliance to consider re- the Rapidan Energy Group in Wash- Trump’s antitrust chief has said “I’d be surprised to see any- straining supplies again, he said. ington. that the administration is “still thing dramatic” when the coali- Opec will meet on December 6 They may be more inclined to studying that legislation,” in refer- tion gathers, Petroleum Minister in Vienna and hold a follow-up use anti-Opec legislation to pres- ence to NOpec. “We don’t have an Emmanuel Ibe Kachikwu said in meeting with its partners outside sure the Trump administration over administration position on that,” US an interview in London last week. the organisation the next day. its response to the death of Jamal Assistant Attorney General Makan “We’re likely to push the can for- Nigeria aims to add about Khashoggi, he said, referring to the Delrahim said after a Senate Judiciary ward” as “$70 is the comfort lev- 200,000 bpd at the Egina oil fi eld journalist killed at the Saudi consu- subcommittee hearing on October 3. el, for us and for everybody.” in the fi rst quarter of next year, late in Istanbul earlier this month. Still, a renewed surge in oil prices Mixed signals from the Or- bringing total output of crude While the House introduced a ver- could spur momentum for the NOpec ganisation of Petroleum Export- and condensates to the country’s sion of the “No Oil Producing and bill in the post-election “lame- ing Countries and its partners target of 2.2mn a day, accord- Exporting Cartels Act” bill in May, duck” session, ClearView Energy have roiled markets over the past ing to Kachikwu. Other projects, the Senate has also revived legisla- Partners, a Washington-based con- week. While a committee repre- such as Bonga and Zabazaba, tion against the oil alliance. Although sultancy, said earlier this month. It senting the alliance signalled late are still awaiting a fi nal invest- past presidents have threatened to sees high energy prices rather than the previous week it could re- ment decision and aren’t likely use their veto power to prevent pre- the Khashoggi aff air as a more likely A TV camera is seen inside the Opec headquarters in Vienna, Austria. US President Donald strain output in 2019, and Saudi to produce before the end of the vious bills from becoming law, what’s catalyst. Trump has repeatedly attacked the group both before after being elected. Arabia warned of a potential decade. Oil majors churn out cash and (mostly) hand it back to investors

Bloomberg company could produce. “We London like the direction of travel,” said Alasdair McKinnon, lead fund manager at Shell investor Oil companies saw soaring Scottish Investment Trust. profits during the third quarter 2. Show me the money as they emerge worst-in-a- generation crude slump. The The big question from main takeaway is that while shareholders: Are companies results are mostly above or in going to use all that money line with expectations, it’s getting to pay us? The answer is yes. harder to impress investors, even Most companies accelerated with large buybacks. or continued share repurchase Here are five key themes from programmes, signalling third quarter earnings season: confidence the dark days of the 1. It’s all about the cash crude slump are gone. There were contrasts, though – Shell is There may be no number more going faster than anyone, while important to Big Oil bosses right Exxon Mobil Corp has yet to now than cash flow. Royal Dutch discuss resuming buybacks. Shell Plc in particular has made 3. Saving for a rainy day it a priority to turn itself into a well-oiled cash machine. It’s While oil companies may be focused on getting the highest- enjoying surging cash – and margin barrels out of the ground, handing some of it back to shareholders. The value of the Having low debt means having their capital budgets again. Shell’s monster cash numbers the stock price catch up. and churning money out of its investors – almost no one has companies eroded from 2014, more firepower and flexibility 5. Crisis of confi dence posted on Thursday didn’t “While quarterly volatility may liquefied natural gas trading any interest in boosting capital after they found themselves to do deals as well as ride out prevent a sell-off . Investors were be off -putting for some, even business. spending, at least for now. Every locked into expensive mega- the next market downturn. Yet Even after all their hard work, more enthusiastic about Exxon when to the upside, we think Q3 In the third quarter, the Anglo- major company except for projects during a major crude debt hasn’t really declined that investors are still uncertain of and Chevron - both rose in New provides good evidence that Dutch oil major brought in its Exxon pledged to keep capital price collapse. much from a year ago, reflecting the industry’s commitment to York after reporting earnings. Shell’s financial framework can biggest cash haul in a decade, expenditure at a near-decade low 4. Debt dilemma the fact that these companies financial discipline. Shares of oil Even for Shell, most analysts work,” said Biraj Borkhataria, at excluding working capital for the foreseeable future. have only recently started companies in both Europe and think the discipline is real, and RBC Capital Markets, in a note. “In movements. That obliterated They see this as important to The other big question from generating enough cash to cover the US have lagged the gains in it will just take more quarters of our view the shares are materially analyst estimates for what the winning back the confidence of shareholders: what about debt? shareholder distributions and the crude price throughout 2018. consistently good delivery to see undervalued at these levels.” Gulf Times 4 Sunday, November 4, 2018 BUSINESS

Pakistan inflation Pakistan and China ink 15 deals, jumps to 4-year high MoUs on bilateral co-operation of 7% in Oct

Internews Internews Beijing Karachi

akistan Prime Minister Imran Annual consumer price infla- Khan met his Chinese counter- tion has shot up in Pakistan to Ppart Li Keqiang yesterday and 15 four-year high of 7% in October agreements and memorandums of un- after the government increased derstanding (MoUs) for co-operation in prices of fuels, electricity and diverse fi elds were signed between the gas, paving the way for further two countries. monetary tightening. The agreements were signed during Pakistan Bureau of Statistics delegation-level talks between the two (PBS) data showed that con- countries at the Great Hall of the People sumer price inflation clocked in in Beijing. at 5.1% year-on-year in Septem- Khan, who is on his fi rst offi cial visit ber and 3.8% in October 2017. to China after assuming charge as prime On month-on-month basis, minister, led the Pakistani delegation CPI inflation increased 2.6% which included Foreign Minister Shah in October compared to a Mehmood Qureshi and Finance Minis- decrease of 0.1% in the previous ter Asad Umar among others. month and increase of 0.7% in The Chinese delegation was led by October last year. Prime Minister Li Keqiang. Mohammad Sohail, chief Agreements pertaining to poverty executive off icer at Topline alleviation in Pakistan, strengthening Securities, said the largest con- co-operation in agriculture and indus- tributors to October inflation trial sectors and technical training were were non-perishable food items, signed by the two sides. housing, water, electricity, gas, It was also agreed that China will fuels and transport sectors, support Pakistan in establishing special which contributed 1.61, 2.66 economic zones, according to sources. and 1.08 percentage points, A document on strategic-level talks respectively. between foreign ministers of two coun- Economists selected by the tries was also signed. government to overcome its The two countries also signed MoUs economic woes are demand- for co-operation in forestry, earth sci- ing patience in pass-through of ences and transfer of electronics. international price hikes to con- Agreements were also signed be- sumers as gas and domestic oil tween Higher Education of Pakistan prices were sharply increased. and Science Academy of China and be- “It (inflation) is a logical out- tween Chinese Academy of Science and come of rupee depreciation and Pakistan Metrological Department. increases in prices of petroleum Further, the two sides expressed sat- products,” economist Ashfaque isfaction over the multi-faceted bilater- Pakistan Prime Minister Imran Khan (3rd from right) and China’s Premier Li Keqiang (2nd from left) attend a meeting at the Great Hall of the People in Beijing. Agreements Hasan Khan, a member of the al relations and reiterated their resolve pertaining to poverty alleviation in Pakistan, strengthening co-operation in agriculture and industrial sectors and technical training were signed by the two countries. Economic Advisory Council, to continue to deepen the relationship formed by the government, said. and explore new avenues of practical of regional and global importance. In prove to be a game-changer for the en- gic partnership between Pakistan and through diplomatic channels,” sources “My personal view is prices of collaboration. his remarks, the Chinese premier ex- tire nation.” China. added. Upon arrival at the Great Hall petroleum and energy products PM Imran and Keqiang expressed pressed his desire to work closely with “China stands with Pakistan,” the Sources said PM Imran also extended of the People, the Chinese premier ac- should not abruptly be passes confi dence on the importance and fu- PM Imran to further strengthen the all- Chinese premier further assured. an invite to his Chinese counterpart to corded warm welcome to PM Imran and on to the consumers. The ture development of CPEC. weather strategic partnership. PM Imran thanked the Chinese Pre- visit Pakistan which he accepted. “The an offi cial welcome ceremony was held government should not use oil The two leaders expressed their com- Keqiang noted, “CPEC will not only mier for the warm hospitality and re- Chinese premier will visit Pakistan soon during which a guard of honour was pre- as a tool for tax collection,” he mitment to maintain close ties on issues benefi t Pakistan and China but will affi rmed the message of strong strate- and the date of the visit will be fi nalised sented to the Pakistani prime minister. opined. Annual consumer price inflation was recorded at 5.8% in October 2014 after having eased from 7.7% in the previous month. Zeeshan Afzal, executive director of Research at Insight ONGC profi t gets a boost from oil price surge Securities, said the inflation is cost-push and “will phase out with the passage of time”. Bloomberg planned share sale. Rising oil “There is no need to control Mumbai prices off set a drop in produc- it if one wants to do reforms,” tion. Afzal said. The price of Brent crude, the The SBP has already pre- il and Natural Gas benchmark for half the world’s dicted headline inflation for Corp’s second quarter oil including India’s, averaged FY2019 exceeding the six per Oprofi t rose 61% rid- about $76 a barrel in Septem- cent target “primarily due to ing on a surge in oil prices and ber quarter, 46% more than a lagged pass-through of the PKR higher gas production. year ago. depreciation and the upward The biggest Indian oil and A weaker rupee also helped trajectory of global oil prices”. gas producer’s profi t rose to the company as oil prices are “Headline CPI inflation stayed Rs82.6bn ($1.1bn) in the quar- marked in dollars but it reports below the annual target for the ter ended September from earnings in the Indian cur- fourth consecutive fiscal year Rs51.3bn a year ago, according rency. during FY18, and clocked in at to an exchange fi ling yesterday. The rupee averaged about its second lowest level since That beat the Rs72.2bn av- 70.10 for a dollar in the quarter, FY03,” the SBP said in its annual erage estimate from 15 analysts 9% lower than a year ago. report on state of the economy. polled by Bloomberg. Also, India increased the CPI inflation in FY2018 was Sales increased 48% to price of domestically produced recorded at 3.9% compared to Rs279.9bn. gas to $3.06 per million British 4.2% in FY2017. The company’s coff ers were thermal units for six months While monetary policy drained last year after it paid starting April 1, about 23% shifted gears during the last a record dividend and was or- higher than a year ago. fiscal year with growing imbal- dered to buy India’s stake in a The country’s top explorer ances in the economy and a refi ner. earned an average $73.07 a bar- challenging outlook, the central The group needs to cut debt rel in the quarter, about 48% bank swung into real action in as it targets spending of Rs- more than a year ago. the second half. 860bn to boost output. ONGC’s total oil output fell It hiked its main interest rate It also has to deal with policy 5.8% to 6.08mn tonnes, while by 275 basis points to 8.5 per Oil and Natural Gas Corp’s Q2 profit rose 61% riding on a surge in oil prices and higher gas production. The biggest Indian oil and gas producer’s uncertainties over fuel sub- gas production increased 1.8% cent since January. profit rose to Rs82.6bn ($1.1bn) in the quarter ended September from Rs51.3bn a year ago, according to an exchange filing yesterday. sidies in India that aff ected a to 6.368bn cubic meters. EU chamber urges China to go beyond rhetoric at import fair

Bloomberg line of reform.” Xi is set to address the commerce chambers regularly complain Beijing China International Import Expo that be- that they’re barred from accessing mar- gins in Shanghai on November 5, putting kets in China that are open to Chinese his personal stamp on an event geared to companies in their own countries. low progress in implementing demonstrate China’s willingness to open Forty-six per cent of European compa- China’s vows to open up makes it its economy. nies said they miss out on business oppor- Simperative for the nation to move China is under pressure from Donald tunities in China as a result of regulatory beyond rhetoric – and it can start at the Trump and elsewhere to wind back its barriers or market access restrictions, China International Import Expo next $423bn goods trade surplus, and Xi has and the same percentage of companies week. already pledged that China will import said they expect regulatory obstacles to That’s according to a report on doing $24tn dollars of goods from abroad over increase over the next five years, accord- business in the country by the European the next decade and a half. ing to an EU Chamber survey published in Chamber of Commerce in China’s Shang- European business has high expecta- June. hai chapter. tions of the import fair, which builds on The long stagnation in actual steps of The reform deficit has sparked tensions commitments made by Xi – as well as opening up has frustrated some European with China’s major trading partners, in other senior Chinese officials – since ear- firms, which have instead been rooting part because of raised expectations fol- ly 2017, according to the report released for restriction of Chinese investments in lowing President Xi Jinping’s promise of on Friday. their home countries, according to Adam further opening in a speech to the World Some 3,000 companies from over 100 Dunnett, the chamber’s secretary general, Economic Forum last year, the paper said. countries are due to exhibit at the fair, to who described such a mindset as “a fun- “The CIIE can be the way to reduce trade connect with buyers from the world’s big- damental change.” “This is not our policy deficit with some countries, but we be- gest market by population. or our position or what we are advocating, lieve it won’t be the way to resolve struc- That the event is happening at a time but the fact that we have members talking tural reform deficit that China is suffer- when China is facing higher tariffs on that way is of real concern to us,” he said. ing at this stage,” Carlo Diego D’Andrea, all of its goods sent to the US increases “We don’t want China to be relatively the chamber’s Shanghai chairman, told its importance, as the global economy is more open; we want China to be open. reporters on Friday. “What we would like facing an escalating and growth-sapping It’s the world’s second-largest economy,” China’s President Xi Jinping at a press conference in Beijing. Xi is set to address the China International Import to see from this expo, from the speech of trade war with little resolution in sight. Dunnett said. “Is what we are asking for Expo that begins in Shanghai tomorrow, putting his personal stamp on an event geared to demonstrate President Xi on Monday, is a clear time European and US companies via their that unreasonable?” China’s willingness to open its economy. Gulf Times Sunday, November 4, 2018 5 BUSINESS

Kim blasts US charges two former Goldman ‘vicious’ sanctions bankers, fi nancier in 1MDB scam squeezing

Reuters New York/Kuala Lumpur N Korean

S prosecutors unveiled crimi- economy nal charges on Thursday Uagainst two former Goldman Sachs Group Inc bankers and Malay- Bloomberg sian financier Low Taek Jho tied to Seoul the alleged theft of billions of dollars from Malaysian sovereign wealth fund 1MDB. im Jong-un lashed out at Prosecutors in the US Attorney’s the “vicious” sanctions Office in Brooklyn announced that Kregime against North Ko- Tim Leissner, former partner for rea in the latest sign of his frus- Goldman Sachs in Asia, had pleaded tration with the pace of peace guilty to conspiracy to launder money talks with the Trump adminis- and conspiracy to violate the Foreign tration. Corrupt Practices Act, and agreed to Kim levelled some of his most forfeit $43.7mn. blunt criticism yet of the sanc- Roger Ng, the other charged former tions restricting the fl ow of Goldman banker, was arrested in Ma- goods and capital to his country laysia at the request of US authorities while visiting a construction and is expected to be extradited, ac- site in a northeastern coastal cording to John Marzulli, a spokesman city of Wonsan, according to the for the prosecution. The third person, state-run Korean Central News the financier popularly known as Jho Agency. Low, remains at large. Limits on trade and travel had Malaysian authorities have revoked put North Korea’s attempts to his passport and issued an arrest war- develop the area into a regional rant for him, and have also applied for tourist hub in a “diffi cult and an Interpol red notice seeking assist- tense situation.” ance from the United Arab Emirates, “The hostile forces are fool- Indonesia, India, Myanmar, China and ishly keen on vicious sanctions Hong Kong. to stand in our way toward pro- James Haggerty, a spokesman for motion of people’s well-being Low, said in an e-mailed statement and development and to lead that Low “maintains his innocence.” us to change and submission,” “Low simply asks that the pub- An estimated $4.5bn was misappropriated from 1MDB by high-level off icials of the fund and their associates between 2009 and 2014, the US Justice Department has alleged. KCNA cited Kim as saying, lic keep an open mind regarding this without specifying who he was case until all of the evidence comes to 1MDB, in 2009. An estimated $4.5bn funds were used for the personal ben- ahead of the proper operation of its Practices Act, a federal law targeting referring to. “They will be made light, which he believes will vindicate was misappropriated from 1MDB by efit of defendants, including purchas- compliance functions.” official bribery abroad. to clearly see over time how our him,” Haggerty said. high-level officials of the fund and es of luxury US real estate and art. On at least three occasions, Leiss- At least six countries, including country that has built its own A lawyer for Leissner could not be their associates between 2009 and Goldman said in an emailed state- ner and Ng tried to get the bank to Malaysia, the United States and Swit- strength hundreds of times de- reached for comment. 2014, the US Justice Department has ment that it “continues to co-operate accept Low as a client, according to zerland, have been investigating al- fying hardship.” A lawyer for Ng did not immediately alleged. with all authorities investigating this court documents, but compliance leged thefts from 1MDB. US President Donald Trump, respond to a request for comment. Najib has consistently denied matter.” It has previously denied any staff blocked the efforts over concerns The 1MDB investigations in the who pledged to re-establish ties Goldman has placed its former co- wrongdoing in connection with al- wrongdoing. about the source of Low’s money. United States and Malaysia have with North Korea during a land- head of Asia investment banking, leged graft involving 1MDB. According to prosecutors, the in- Nevertheless, Ng and Leissner con- gathered pace since Najib unexpect- mark summit in June, has none- Andrea Vella, on leave over his role in According to the indictment against vestment bank generated about cealed Low’s involvement and pushed edly lost a general election in May to theless insisted on maintaining the firm’s involvement with the case, him, Low never held a formal posi- $600mn in fees for its work with deals through the bank’s control func- Mahathir Mohamad, who returned the international economic em- pending a review of allegations, ac- tion with the fund but he worked as 1MDB, which included three bond of- tions to obtain “very lucrative busi- to power 15 years after he retired as bargo on the country. cording to a person familiar with the an intermediary in numerous 1MDB ferings in 2012 and 2013 that raised ness for Goldman Sachs, themselves prime minister. The administration says Kim decision. transactions involving Goldman and $6.5bn. Leissner, Ng and others re- and others,” according to the docu- Since the election, Malaysian au- must take more concrete steps The Wall Street bank said in a se- others. ceived large bonuses in connection ments. thorities have brought 38 charges toward giving up his nuclear ar- curities filing on Friday that it may Prosecutors say Low, Ng, and Leiss- with that revenue. While US prosecutors have previ- against Najib. Many of the charges – senal before getting sanctions also face penalties from dealings with ner conspired to launder the proceeds Prosecutors described the bank’s ously filed civil asset forfeiture suits multiple counts of corruption, money relief, including 10 rounds of 1MDB and is cooperating with various of fraud involving 1MDB through the system of internal accounting con- for assets allegedly bought with some laundering and criminal breach of United Nations penalties and a government probes. US financial system. trols as “easily circumvented,” and of the stolen funds, these are the first trust – are linked to 1MDB. raft of measures by the US and The government of former Malay- Some of the laundered funds were said its culture in Southeast Asia was criminal charges the Justice Depart- Najib has pleaded not guilty to all its allies. sian Prime Minister Najib Razak set then allegedly used to pay bribes to “highly focused on consummating ment has brought against individuals the charges and has consistently de- Separately, a commentary up 1Malaysia Development Berhad, or obtain business for Goldman. Other deals, at times prioritising this goal in the case under the Foreign Corrupt nied wrongdoing. published on North Korea’s Uriminzokkiri news site spe- cifi cally urged South Korea to lift the so-called May 24 sanctions, which among other things re- strict the country’s citizens and companies from travelling and Australia trade minister to visit China in sign of thaw investing north of the border. South Korean President Moon Reuters leverage over poorer South Pacific is- ship with China”. The minister’s press Jae in last month walked back Sydney land nations. offi ce said the hope is that Birmingham a suggestion that the sanctions In August, Australia banned Huawei will meet with his Chinese counterpart, might be repealed after a rebuke Technologies Co Ltd from supplying Commerce Minister Zhong Shan while in from Trump. ustralia’s trade minister will travel equipment for a 5G mobile network cit- Shanghai. The North Korean leader made to China today, in a sign that po- ing national security risks, a move the Later in the week, Birmingham will similar complaints about sanc- Alitical tensions between the two Chinese telecoms gear maker criticised as visit Hong Kong where he is expected to tions during his previous visit countries may be easing. being “politically motivated”. meet with Secretary for Commerce and to Wonsan in August, saying the Simon Birmingham, the fi rst senior China, however, remains Australia’s Economic Development Edward Yau, “to area was in an “acute standoff Australian government offi cial to visit top goods and services trading part- move forward negotiations on the Aus- with hostile forces to stifl e the China in a year, will attend the China In- ner, accounting for 24%, or A$183.4bn tralia-Hong Kong Free Trade Agreement”. Korean people through brigan- ternational Import Expo, or CIIE, seen as ($132bn), of total trade in 2017, according Chinese President Xi Jinping is expect- dish sanctions and blockade.” an attempt by Beijing to allay foreign con- to data from the Department of Foreign ed to open the CIIE with a speech tomor- The remarks came during a cern about its trade practices. Aff airs and Trade. row. low in the Trump administra- Relations between Australia and the Birmingham said in a statement yester- No offi cials from the United States, tion’s up- and-down relation- world’s No 2 economy have been at low day that Australia’s “high-level” delega- China’s top trading partner, will attend, ship with North Korea, and Australia’s trade minister Simon Birmingham at a press conference in ebb over accusations of China’s influ- tion, which includes representation from although leaders from 18 countries and days later Trump postponed a Sydney. Birmingham, the first senior Australian government off icial to visit ence in Australia’s media, universities state and territory governments, “refl ects thousands of foreign companies will be planned Pyongyang trip by Sec- China in a year, will attend the China International Import Expo. and politics and its use of loans to build our ongoing commitment to our relation- present. retary of State Michael Pompeo.

Ping An plans $2bn Chinese pursuit of year’s biggest outbound deal said to slow

health tech unit IPO WBloomberg continuing to work with a full suite SA. In addition, the Chinese government The prospects for the Portuguese utility Hong Kong of advisers in discussions with the suddenly replaced the Three Gorges have also worsened. Bloomberg which raised $1.1bn in a Hong regulators in diff erent jurisdictions, chairman and another key executive At the end of September, the Lisbon- Hong Kong Kong IPO in April, has fallen and in the fulfilment of all the prior in August with little explanation, the based company cut its profit outlook for 31% from its off er price through China Three Gorges Corp’s pursuit of conditions for the launching of the people said. this year, citing a government decision Wednesday. utility EDP-Energias de Portugal SA has voluntary tender off ers,” the company The move temporarily delayed talks alleging that certain power plants were Ping An Insurance Group Co, Deliberations are at an early slowed as the Chinese energy producer said in an e-mailed statement. “The with regulators, government off icials overpaid, and said its operations in China’s biggest insurer by market stage, and details of the plan grapples with unexpected obstacles current timings and calendar for and EDP as newly appointed Chairman Portugal would report a loss for the first value, is planning a Hong Kong could change, the people said. to creating a global renewable-energy such approvals is in line with other Lei Mingshan and colleagues got up to time since its initial public off ering. initial public off ering of its health- A representative for Ping An powerhouse, people with knowledge of comparable transactions of this speed, they said. Three Gorges’s off er was also linked to care technology unit that could declined to comment. the matter said. magnitude and complexity.” Another stumbling block is EDP’s a simultaneous bid for a renewable- raise about $2bn, people with Any deal will add to the A sudden leadership change at expectation of a bid higher than €3.26 energy business, EDP Renovaveis SA, knowledge of the matter said. $32.5bn of first-time share sales state-owned Three Gorges, lingering Increased scrutiny a share, which was off ered and rejected which is 83%-owned by EDP. A listing of Ping An Healthcare in Hong Kong this year, data com- regulatory and political concerns as well The company is trying to execute in May, even as its profit outlook dims Three Gorges, the Portuguese firm’s Technology, which provides plat- piled by Bloomberg show. as pressure to raise the €9.1bn ($10.4bn) the deal amid increased political and and its stock trades below that price, the biggest shareholder, is concerned that forms used by hospitals, insurers Ping An Medical & Healthcare off er have led the Chinese company to regulatory scrutiny of proposed Chinese people said. American regulators could stymie and pharmacies, could take place Management Co, as the unit is reassess the merits and hurdles of the takeovers in Europe and the US, as well A representative for the Portuguese eff orts to acquire control of the US as soon as next year, according to formally known, provides services deal, said the people, who asked not to as a trade war. company declined to comment. portfolio of the renewables business, the people. The Chinese insurer including expense control and be identified because the deliberations Heightened concerns about national A €9.1bn deal for EDP would be this which is of particular interest as the is talking to potential advisers medical-resource management. are private. interests and the security of energy and year’s biggest Chinese overseas Chinese group tries to build a global about the planned share sale, Operating profit from Ping An’s While Three Gorges is still working technology-related assets globally has acquisition, data compiled by alternative energy powerhouse, the the people said, asking not to be technology units jumped eight- on the bid to increase its 23% stake in already slowed or dealt death blows to Bloomberg show. people said. identified because the informa- fold in the first nine months of the Portuguese power generator, the some proposed Chinese investments, EDP’s shares fell 1.6% to €3.06 at Three Gorges is discussing various tion is private. the year to 5.4bn yuan ($775mn). timeline to achieve regulatory approval including Germany’s decision in August 10:55am on Friday in Lisbon, the worst structures and divestments that would Ping An Healthcare Technol- They accounted for about 6% of in Europe and the US has slipped to to block such a takeover for the first performing stock in the benchmark PSI facilitate approval from the Committee ogy raised $1.15bn from investors total operating profit, surpass- early next year from the end of this year, time. 20 Index. on Foreign Investment in the US, or including SoftBank Group Corp’s ing contributions from Ping An’s two of the people said. European off icials may also raise The stock had gained 8% this year CFIUS, but allow it to retain large parts Vision Fund in a series A funding brokerage arm and trust business. A final decision on the bid – pursuing, concerns about China’s growing through Thursday. of the business, the people said. round announced in February. Ping An Healthcare Technology increasing or abandoning the off er – influence over Portugal’s power Three Gorges, formed more than two Chinese President Xi Jinping is poised to It would join Good Doctor, a covers the medical data of more won’t be made until there’s more clarity generator and grids, the people said. decades ago to build a hydroelectric visit Portugal in December, according to separate Ping An subsidiary that than 800mn Chinese citizens, its on the regulatory demands, the people State Grid Corp of China already holds dam on the Yangtze River, began local news reports, which may present off ers online medical consulta- parent company’s deputy chief said. partial ownership of the operator of acquiring a stake in EDP more than an opportunity for both parties to get tions, in seeking to sell shares to executive off icer, Jessica Tan, told “China Three Gorges continues to Portugal’s electricity and natural gas five years ago as part of a Portuguese more clarity on both governments’ fund expansion. Good Doctor, investors in November last year. progress with all regulatory filings, grids, REN-Redes Energeticas Nacionais government bailout. appetite for and stance toward the deal. Gulf Times 6 Sunday, November 4, 2018 BUSINESS

Top Thai asset Alibaba adopts caution amid manager planning $700mn signs of US-China trade deal public issue Bloomberg Bloomberg Singapore Hong Kong Bangkok Commercial Asset libaba Group Holding Ltd Management Pcl, Thailand’s adopted a cautious tone on the biggest distressed asset Aoutlook for the global economy manager, is planning an initial even as signs emerged of a possible end public off ering that could to a US and Chinese trade war. raise at least $700mn, people China’s largest e-commerce com- with knowledge of the matter pany reported quarterly earnings well said. above analysts’ estimates, while also BAM, as the company is trimming its prediction for full-year known, aims to list in Bangkok sales by as much as 6%. as soon as the first half of Shares slid as much as 2.7%. next year, according to the Alibaba co-founder Jack Ma has people. warned that confl ict between the The Thai central bank plans world’s two largest economies could to reduce its stake in BAM to last 20 years, raising concerns about less than 50% through the the toll that tensions would have on share sale, down from 100% Alibaba and its core customers. currently, the people said, Yet the Hangzhou-based com- asking not to be identified pany managed to record 54% revenue because the information is growth by adjusting its e-commerce private. formula and expanding into newer The off ering will target both businesses like cloud computing. domestic and international US President Donald Trump is said investors, one of the people to have asked his cabinet to draft terms said. for a potential trade deal. BAM was set up during the “The fact Alibaba’s guiding down is Asian financial crisis two telling, it means they’re seeing some- decades ago to manage thing,” said Mitchell Kim, an analyst assets of a failed lender, with Kim Eng Securities. “It’s either according to its website. that they see consumer confi dence de- It has since expanded by clining signifi cantly, or merchant con- acquiring assets from other fi dence declining signifi cantly.” local banks, buying up Alibaba posted second-quarter distressed debt backed by earnings-per-share of 9.60 yuan real estate. ($1.40), well above the 7.43 yuan ex- Chantavarn Sucharitakul, pected by analysts. assistant governor at the However, for the fi scal year ending Bank of Thailand, declined to March, the company is now predicting comment. revenue of 375bn yuan to 383bn yuan, BAM president Somporn equating to growth of as much as 53% Alibaba co-founder Jack Ma speaks at a press conference in Beijing. Ma has warned that conflict between the US and China could last 20 years, raising concerns about Moonsrikaew couldn’t versus the 60% it guided towards pre- the toll that tensions would have on Alibaba and its core customers. immediately be reached for viously. comment. “Consumers see uncertainty in high-margin business of helping mer- Domestically, Alibaba’s main e- stepping up its marketing services and who succeeds Ma as chairman next Record low interest rates, the future and are cutting back,” vice chants with marketing, grew 25% – commerce platforms are grappling investing in its own grocery stores and year, will preside over the November economic expansion and a chairman Joseph Tsai told analysts. down a tad from the previous quarter’s with a migration of smaller merchants delivery to boost sales. 11 event as it broadens the shopping current-account surplus have He pointed particularly to big-ticket 26%. to cheaper platforms such Pinduoduo The company is just over a week categories to include purchases made kept Thai investors’ demand items such as automobiles and home Other divisions however remained Inc, backed by nemesis Tencent Hold- away from its annual Singles’ Day in affi liated shopping malls and food for new share sales strong appliances, as well as consumer elec- humming – the cloud business grew ings Ltd. shopping festival, a litmus test of not deliveries. despite a slump in global tronics. 90%. “Platforms like Pinduoduo are just the company’s health but also “This is the third time in Alibaba’s equity markets. Despite reducing its sales outlook, Youku, its Netfl ix-style video serv- charging much lower in commissions, China’s overall consumption. 19-year history that we’ve encoun- Thai companies and the Alibaba said it will continue to invest ice, more than doubled its average dai- posing signifi cant competition to Ali- Chinese online retail sales growth tered a setback in the global economy,” government raised about in new sectors. ly subscribers, while the international baba,” said Steven Zhu, an analyst with is already slowing, to 24% in the third Zhang said. $2bn through IPOs in October, The closely watched customer man- business – a relatively smaller piece of Pacifi c Epoch. quarter from 36% in the second. “The global economy is in a state of the most for a single month agement revenue, which includes the the pie – grew 55%. Alibaba is trying to counter that by Chief executive offi cer Daniel Zhang, uncertainty.” since 2013, data compiled by Bloomberg show. Thailand’s richest man is planning an IPO of a domestic property business that could raise at least $1.5bn, India sees shadow banking default on debt repayment Bloomberg News reported last month. The government said this Bloomberg India is grappling with rising week it’s considering listing a New Delhi oil prices and a weakening cur- new infrastructure fund next rency. year holding assets from two Infrastructure Leasing & Fi- state telecommunications ndia’s non-bank lenders nancial Services Ltd, one of the providers. may default on repaying country’s non-bank fi nancier, The central bank owns Idebt raised from the na- was taken over by the govern- BAM through its bailout tion’s money market within ment last month after it started arm, known as the Financial the next six weeks if additional defaulting on its debt. Institutions Development liquidity is not provided im- Finance Ministry spokes- Fund. mediately, a person familiar the man DS Malik was not im- It first announced plans to matter said, citing a letter writ- mediately available for a com- list BAM in 2013 as it sought ten by the fi nance ministry. ment. The letter was fi rst ways to repay debt it took on Non-bank fi nanciers and reported by fi nancial news to save local banks during mortgage lenders have Rs2.7tn website Moneycontrol.com on the 1997-1998 Asian financial ($37bn) of debt maturing in the November 1. crisis. next fi ve months, the person Financing costs throughout BAM has been upgrading said, asking not to be named as India’s credit markets have its accounting practices the information is not public. ticked higher, meaning that and internal systems in According to the letter sent rolling over all this debt will preparation for a planned to the corporate aff airs minis- cost more. listing on the Thai stock try, a default could adversely ET Now, a local television exchange, according to its impact productive sectors of station, said on Wednesday latest annual report. the economy, the person said. that if the Reserve Bank re- Its net income fell 8% last Bloomberg News has re- fused to act on liquidity con- year to 4.5bn baht ($137mn). viewed the correspondence. straints, the government will BAM had about 99.9bn baht Fixing the cash fl ow crisis not shy away from taking steps of assets at the end of 2017, at shadow banks is vital to re- against it. up from 93.7bn baht a year vive confi dence in the nation’s The channel didn’t identify earlier. credit markets at a time when the people for the information. Tech titan takes $9.2bn rollercoaster ride in China

Bloomberg He’s worth more than $4bn, according er than the US. What’s more, his for- Hong Kong to the Bloomberg Billionaires Index, and is tune may take another jump as 360 still better off than when his company was Finance Inc, a financial arm of 360 listed in New York. Group, plans to raise up to $200mn in hou Hongyi made a savvy move this an initial public offering in New York. year when he shifted his company The 36 Chinese billionaires on the A company owned by Zhou’s two children Zlisting to Shanghai from New York. Bloomberg index have lost $74bn is the largest shareholder of the unit, ac- The February switch added $12bn over- this year as of Thursday. Pony Ma of cording to the prospectus. night to his fortune. Tencent Holdings has lost the most Zhou’s also doing better than other Chi- The 48-year-old chairman of 360 Secu- with a $12bn plunge nese magnates. rity Technology Inc has since experienced The 36 Chinese billionaires on the the downside of listing in China, after He told reporters a year ago that aligning Bloomberg index have lost $74bn this year stocks tumbled on concerns about a US himself with China’s national interest was as of Thursday. trade war and a slowing economy. among the reasons he moved the listing to Pony Ma of Tencent Holdings Ltd has The Chinese tycoon’s net worth has his homeland, where the Communist Party lost the most with a $12bn plunge. shrunk by $9.2bn as shares of the online has been tightening the country’s “cyber- China Evergrande Group’s Hui Ka Yan, security software developer plunged more security sovereignty.” He also benefited the Chinese mogul who gained the most than 60%. from richer tech valuations in China. last year, is also down almost $8bn since Zhou Hongyi, 360 Security Technology, speaks during an interview in Beijing. The Chinese tycoon’s net Zhou isn’t exactly hurting. That gap has shrunk, but it’s still wid- January. worth has shrunk by $9.2bn as shares of the online security software developer plunged more than 60%. Gulf Times Sunday, November 4, 2018 17 BUSINESS

he Qatar Stock Exchange (QSE) total trading value. The industrials QSE Index and Volume index increased 127.60 points, sector was the second biggest con- Tor 1.26%, during the trading tributor to the overall trading value, week to close at 10,280.96. Market accounting for 18.6% of the total trad- capitalisation increased by 1.47% to ing value. QNBK was the top value QR578.5bn versus QR570.1bn at the traded stock during the week with end of the previous trading week. Of total traded value of QR258.2mn. the 45 listed companies, 22 ended Trading volume decreased by the week higher, while 21 declined 21.7% to reach 25.6mn shares versus and two remained unchanged. Qa- 32.7mn in the prior week. The number tar Islamic Bank (QIBK) was the best of transactions decreased by 13.9% to performing stock for the week with a reach 15,264 versus 17,726 in the prior Weekly Market Report gain of 7.1% on 558,689 shares traded. week. The banks and financial servic- On the other hand, Gulf International es sector led the trading volume, ac- Services was the worst performing counting for 39.2%, followed by the stock for the week with a decline of industrials sector, which accounted 9.8% on 1.9mn shares traded. for 18.3% of the overall trading vol- Source: Qatar Exchange (QE) Qatar Islamic Bank (QIBK), QNB ume. Qatar First Bank (QFBQ) was Group (QNBK) and Barwa Real Estate the top volume traded stock during Co (BRES) were the primary contribu- the week with 2.8mn shares. Weekly Index Performance tors to the weekly index gain. QIBK Foreign institutions remained bullish was the biggest contributor to the in- with net buying of QR232.1mn versus dex’s weekly gain, adding 76.7 points net buying of QR134.7mn in the prior Source: Qatar Exchange (QE) to the index. QNBK was the second week. Qatari institutions turned bear- biggest contributor to the mentioned ish with net selling of QR13.8mn versus gain, contributing 50.1 points to the net buying of QR2.5mn in the week be- index. Moreover, BRES tacked on fore. Foreign retail investors remained 15.1 points to the index. On the other bullish with net buying of QR3.6mn ver- hand, Qatar Navigation (QNNS) de- sus net buying of QR3.5mn in the prior leted 20.0 points from the index. week. Qatari retail investors remained Trading value during the week in- bearish with net selling of QR221.9mn creased by 4.4% to QR994.1mn ver- versus net selling of QR140.8mn the sus QR952.9mn in the prior week. week before. The banks and financial services sec- Foreign institutions have bought tor led the trading value during the (net basis) $2.03bn worth of Qatari Source: Bloomberg week, accounting for 54.0% of the equities year-to-date. Source: Qatar Exchange (QE)

DISCLAIMER

This report expresses the views and opinions of Qatar National Bank Financial Services SPC (“QNBFS”) at a given time only. It is not an off er, promotion or recommendation to buy or sell securities or other investments, nor is it intended to constitute legal, tax, accounting, or financial advice. We therefore strongly advise potential investors to seek independent professional advice before making any investment decision. Although the information in this report has been obtained from sources that QNBFS believes to be reliable, we have not independently verified such information and it may not be accurate or complete. Gulf Times and QNBFS hereby disclaim any responsibility or any direct or indirect claim resulting from using this report.

Qatar Stock Exchange Top Five Gainers Top Five Decliners

Most Active Shares by Value (QR Million) Most Active Shares by Volume (Million)

Investor Trading Percentage to Total Value Traded Net Traded Value by Nationality (QR Million)

Source: Bloomberg

Technical analysis of the QSE index he general index closed at tion (if breached downwards). As a 10,280.96, up by 1.24% from result, we push our expected week- Tlast week. The index created ly support level to 9,600 points a rising-wedge price formation, while keeping the resistance at the which is a bearish reversal forma- 11,000 level.

Definitions of key terms used in technical analysis andlestick chart – A candle- stick represents one trading day) stick chart is a price chart in our analysis. Cthat displays the high, low, Doji candlestick pattern – A open, and close for a security. The Doji candlestick is formed when ‘body’ of the chart is portion be- a security’s open and close are tween the open and close price, practically equal. The pattern while the high and low intraday indicates indecisiveness, and movements form the ‘shadow’. based on preceding price actions The candlestick may represent and future confirmation, may in- any time frame. We use a one-day dicate a bullish or bearish trend candlestick chart (every candle- reversal. Gulf Times 18 Sunday, November 4, 2018 BUSINESS Forget gridlock, Bulls sit still as Wall St Republican win may be better equity reversals land for US stocks Reuters Representatives, and possibly San Francisco the Senate, could stifle Trump’s policy aims and perhaps lead to attempts to impeach him. US President Donald Trump It could also lead to resistance has warned that his favourite to increasing the government’s with record force measure of success, the stock debt limit next year.”Our econo- market, is imperilled if voters mists believe that two likely con- Bloomberg favour Democrats in next week’s sequences of a divided Congress New York congressional elections. would be an increase in investiga- While not fully accurate — tions and uncertainty surround- stocks tend to rise regardless of ing fiscal deadlines, which could nowing when to get in and out of who controls the government — it raise equity volatility,” Goldman stocks is hard, even in the best of does bear out that the market Sachs said in a report this week. Ktimes. This year it’s been an exer- has delivered a slightly stronger Over the past 50 years, grid- cise in futility. performance on average when lock has been the norm rather Already, traders have endured two Republicans dominate in Wash- than the exception in Washington, sell-off s that while relatively shallow ington. with the presidency and Congress still rank among the fastest ever record- A Reuters analysis of the past won by one party in just seven ed from an all-time high, going by data half century shows stocks fared out of 25 congressional election from Sundial Capital Research. The fi rst better in the two calendar years years. is long gone. The second just gave way to after congressional elections Looking at the two calendar the biggest weekly rally since March. when Republicans control Con- years following each congres- Don’t bother trying to get out of the gress and the presidency than sional election, the S&P 500 had way, says Bruce McCain, chief invest- when Democrats controlled the a mean annual increase of 12% ment strategist at KeyBank. This late in two branches, and at least as well under Republican-controlled a bull market, stocks are liable to reprice as during times of gridlock. governments, compared to an with blinding speed as markets assess the Many investors are now hoping increase of 9% for Democrat-con- impact of rising interest rates and wage for a continuation of the Republi- trolled governments and a 7% rise infl ation. With the Nasdaq 100 Index al- can agenda.”There is Trump ‘the for gridlocked governments. most 6% above its lows on Monday, the person’, who is very controver- However, using median averag- advice has seemed reasonable. sial,” said Stephen Massocca, es, which exclude outliers, diff er- “We were not inclined to advise any Senior Vice President at Wedbush ences are less clear, with the S&P action one way or another,” McCain said Securities in San Francisco. “And 500 seeing annual increases of by phone. “You want to ride this volatil- there’s also Trump ‘the agenda’. 11% under Republican-controlled ity through and do comparatively little. The Trump agenda, the stock governments and under gridlock, We’re not seeing the signs that this cycle market loves. and 10% gains under Democrat- is coming close to the end.” To the extent it continues, the controlled governments. Everyone knows you shouldn’t time market will like that.” Republicans An analysis by BTIG brokerage the market. What if you bail too soon? traditionally push pro-business of data going back to 1928 also Missing roughly the 200 best days be- “crowded trades” like Alphabet and Net- crowdedness remains well above its historic sulting practice at Alpha Theory, said by policies such as tax cuts and indicates gridlock is not neces- tween 1928 and 2010 cut annual returns fl ix were at ground zero of the sell-off . average. Just before Monday’s bottom, the phone. “There has been very little fun- deregulation, which boost stock sarily ideal. It showed US stocks in equities from positive 4.9% to minus Too many hedge funds were chasing too 50 most popular stocks still made up 32% damental news out of this reason to sway prices. The market has, on the performing better under united 7.1%, a study by Cambria Investment few stocks and everyone got out of the of long positions among hedge fund clients. most of the investors that I speak to from whole, given Trump a thumbs-up, governments. “While government Management said. pool at once. A month in, is there reason While that was down from a peak of 35% in their thesis in any direction.” with the market rising almost control is by no means the sole At Harris Associates in Chicago, Win to believe the concentration has eased? August, it’s still above 87% of readings since Another way of framing it is that the 20% during his presidency so far. determinant of market perform- Murray tunes it all out. His fi rm’s $19bn Some, though the evidence is mixed. the bank began tracking the data in 2010. same excesses that gave rise to October Polls show strong chances that ance, investors clearly favor a uni- Oakmark Fund owns Alphabet and Netf- JPMorgan’s prime brokerage unit found The idea that crowded trades exacer- haven’t been cured. the Democratic Party may win fied regime,” BTIG strategist Julian lix, both of which plummeted in October that “net exposure” among hedge funds, bate routs is popular but its logic isn’t “Maybe we’ve had a modest reset, control of the House of Represent- Emanuel wrote in his report. as traders bailed out of the companies a measure of how much long positions universally accepted. After all, every but the extent to which investors are atives in the November 6 midterm Interest rates, economic that led the bull market. exceed shorts with leverage factored in, share that is sold is bought by someone jumping back into some of the most elections after two years of wield- growth, company earnings and “We’re not going to look at any given dropped from a near record in September else, and a case can be made that outsize crowded names tells me that we are far ing no practical political power inflation are widely viewed as six-week period, which is part of a won- to the lowest since 2015 as the downdraft ownership by hedge funds signals a com- from some sort of capitulation,” said in Washington, with Republicans strong influences on stock prices, derful multi-year period, and say ‘Oh rolled on. Strategists there said chances pany is doing something right. Gina Martin Adams, chief equity strat- likely to keep the Senate. making the balance of power in gosh, what’s wrong?”’ said Murray, di- were rising that a “squeeze” would lift “That hedge funds didn’t take their egist at Bloomberg Intelligence. “I am Trump warned in a tweet on Washington just one of many fac- rector of US research at Harris. “You stocks in November and December. exposure down says to me that they be- amazed at how everyone is trying to get Tuesday that a change in Congress tors aff ecting investor sentiment. can’t just look at sentiment.” At the same time, going by data from Mor- lieve in their core positions,” Benjamin back into the FANGs again, with the ex- would be bad for the market, Two Democratic presidents — Bill By now it’s accepted wisdom that gan Stanley’s brokerage unit for institutions, Dunn, president of the portfolio-con- clusion of Facebook.” saying: “If you want your Stocks to Clinton and Barack Obama — have go down, I strongly suggest voting presided over the strongest S&P Democrat.” Investors often favour 500 performances since 1952, with Washington gridlock because gains of 208% and 166%, respec- it preserves the status quo and tively. Wall Street has applauded reduces uncertainty. “Traditionally, Trump since he took power in Berkshire doubles profi t, repurchases $900mn stock in Q3 gridlock is good for the markets. January 2017 and quickly pushed But I think this election is very through measures to deregulate Reuters latest quarter. Operating profi t in the come out of a United States corporation,” a reduction of the corporate tax rate that tricky; I’m not sure that’s the pre- banks and other companies. New York third quarter doubled to $6.88bn from said Bill Smead, chief executive of Smead President Donald Trump signed into law ferred market outcome because Last December, his Republican $3.44bn a year earlier, and higher than Capital Management in Seattle, a Berk- in December. a lot of the benefits of the past party passed sweeping corporate the $6.11bn expected by Wall Street, ac- shire shareholder. Many US companies’ reported results two years have come from not tax cuts that have S&P 500 com- erkshire Hathaway, the conglom- cording to IBES data from Refi nitiv. Berkshire said third-quarter net in- have been skewed by the law’s impact. being in a gridlock environment,” panies on track this year to grow erate run by billionaire Warren Helping the company’s massive insur- come rose more than 355% to $18.5bn, Insurance provides a stream of cash that said Mike O’Rourke, Chief Market their earnings per share by over BBuff ett, yesterday said its quarterly ance operations were lower estimated though that refl ected a new accounting Berkshire can invest around the world. Strategist at JonesTrading. 20%, the biggest jump since 2010, operating profi t nearly doubled as its in- liabilities from property and casualty rule requiring it to report unrealised in- Float, or insurance premiums collect- Should his fellow Republicans according to Refinitiv IBES data. surance business dodged hurricanes and insurance in prior years and lower taxes. vestment gains with earnings. ed before claims are paid and which help maintain or extend their grip “Volatility may rise regardless of benefi ted from lower taxes. The year prior included major losses due Buff ett said the rule could lead to “wild fund Berkshire’s growth, ended Septem- on Congress, Trump may be the outcome, but, based on his- The strong result gives Buff ett more to three US hurricanes and an earthquake and capricious” results and can mislead ber at $118bn. emboldened to pursue more of torical relationships, equities may cash to deploy even as the well-known in Mexico. Insurance underwriting income investors, who he said should look at op- After relaxing a policy that had ef- his political agenda, including be more likely to rise if Republi- bargain-hunter has admitted struggling was $441mn in the third quarter, compared erating profi t instead. fectively prevented Buff ett from buying further tax overhauls. By contrast, cans manage to maintain control to fi nd a place to put those earnings to to a loss of $1.4bn in the year-ago period. Berkshire’s eff ective tax rate for the back the company’s shares at current Democratic gains that allow the of Congress,” Deutsche Bank said work and resorted to buying back nearly “This is absolutely one of the biggest third quarter was 19.2% compared to prices, Berkshire said it bought $928mn party to control the House of in a recent report. $1bn in his own company’s stock in the quarterly earnings reports that has ever 25.3% in the year-ago period following of its own shares in the third quarter. Modest wage gains constrain US yields despite job growth Barclays, Lloyds shock in EU health check

Reuters pace, with the yield on the two-year Reuters New York note up 2.4 basis points, last at 2.891%. London The Fed is not expected to raise rates at its policy meeting next week, but Modest wage gains constrained US analysts believe October’s strong ritain’s Barclays and Lloyds were the sur- Treasury yields on Friday despite an labour market data could spur the Fed prise laggards in a European Union “stress otherwise strong payrolls report that to signal an increase in December. Btest”, alongside Italian lender Banco BPM, showed job growth rebounded sharply The Fed raised borrowing costs in which was more widely expected to struggle in the in October, pointing to further labour September for the third time this year. health check. market tightening that could encourage Traders’ expectations that the Fed will The EU’s banking watchdog published results the Federal Reserve to raise interest raise rates in December jumped to 75% for 48 banks on Friday in its toughest test since rates again in December. from 68.8% on Thursday, according to 2009, when it began the exercise to identify capi- The Labour Department’s closely CME Group’s FedWatch tool. tal holes and avoid any repeat of the government watched monthly employment report Worries that the United States and bailouts triggered by the 2008 fi nancial crisis. showed that wage growth slowed in China would not reach a trade While there is no pass or fail, banks failing to October, despite recording the largest agreement sank yields prior to the complete the “adverse” or toughest part of the annual gain in 9-1/2 years. release of the nonfarm payrolls report. European Banking Authority (EBA) test without Average hourly earnings rose five cents, A senior Trump administration official preserving a capital ratio of well above 5.5%, when or 0.2%, in line with expectations after on Friday dismissed as untrue a media all new and planned capital rules are applied, risk advancing 0.3% in September. report that US President Donald Trump having to raise more capital or sell risky assets. That boosted the annual increase in was readying a possible trade deal with None of those tested dropped below 5.5%, but wages to 3.1%, the biggest gain since China, a CNBC reporter said in a post on Barclays ended up with 6.37%, Banco BPM with April 2009, from 2.8% in September. Twitter. 6.67%, and Lloyds with 6.8%, while Italy’s UBI “These were excellent job growth Treasuries act as a safe-haven had 7.46%. Capital at the British banks was par- numbers and excellent revisions. investment during moments of political ticularly hit in the test due to their exposure to Inside the wage growth figures, you instability, even when the actors credit other than secured loans like mortgages, the A pedestrian walks past a branch of Barclays bank in central London. Barclays and Lloyds were the now have this annualised growth rate involved include the White House. EBA said in a statement. surprise laggards in a European Union “stress test”, alongside Italian lender Banco BPM, which was above 3%. Investors also believe that although British banks have chased riskier business to try more widely expected to struggle in the health check. So, we’ve got almost exactly what we trade disputes will hurt US growth, the and boost returns, as rock-bottom interest rates expected without a blowout in wage country’s trading partners will be hurt and cut-throat competition from upstart rivals by 395 basis points when all new and planned cap- measured banks’ ability to withstand theoretical growth,” said Jim Vogel, interest rate more. fuelled a boom in consumer lending. ital rules are applied, higher than in the last test in market shocks like a rise in political uncertainty strategist at FTN Financial in Memphis, “The bigger factor (driving yields) is the The Bank of England has repeatedly warned 2016 due to credit losses. against a backdrop of falling economic growth, Tennessee. trade news. banks to take a more prudent approach towards “The outcome...shows that banks’ eff orts to build a disorderly Brexit or a sell-off in government The benchmark 10-year government The employment news is having a such lending. up their capital base in recent years have contrib- bonds and property. note yield was last at 3.176%, up slightly lesser impact so far. The Bank of England, which will release its own uted to strengthening their resilience and capacity Europe’s banks still lag US counterparts in prof- just over two basis points from the Trump has leaked idea about a trade stress test results next month, said on Friday that to withstand the severe shocks and material capital itability, quality of loans and cost discipline and announcement. deal with China, but that could change the British banks tested showed they could absorb impacts of the 2018 exercise,” Mario Quagliariello, the region’s banking index has lost more than 20% Yields at the short end of the curve, on a whim,” said John Canavan, the eff ect of the EBA’s worst stress scenario in director of economic analysis at the EBA, said. this year. Thirty-three of the banks in the test are which reflect traders’ expectations of market strategist at Stone & McCarthy their capital buff ers. Supervisors will use the test results to deter- in the eurozone, where the main supervisor is the interest-rate hikes, rose at a similar Research Associates. The EBA said the adverse scenario dented the mine how much capital banks should be holding European Central Bank, which is separately test- core equity capital ratio across the 48 banks tested or which assets should be sold. The latest EBA test ing a further 60 smaller banks. Gulf Times Sunday, November 4, 2018 19 BUSINESS Brexit silence can’t hide hints that a deal is getting closer

Bloomberg signs that a deal is being done away up new barriers between Northern Ire- The UK and the EU are “certainly team. If they say too much in public, ing the whole divorce deal on Tuesday. London from the public gaze. land and the British mainland. very close to resolving” the border is- the delicate trade inside the negotiat- A Cabinet meeting has been called as In private, offi cials on both sides say Even on this most vexed of all issues, sue, May’s de facto deputy David Lid- ing room could be fatally disrupted, usual for Tuesday morning, but - ex- the next time major Brexit news breaks the so-called Irish border backstop, ington said during a visit to Dublin on they fear. ceptionally - ministers invited to at- cloak of secrecy surrounds is likely to be when they have agreed there’s evidence of progress. Friday. He said he “expects and hopes” When the Times newspaper report- tend have not yet been told what’s on the negotiations on the UK’s to the terms of the divorce. And that The Financial Times reported on for a deal in the coming weeks. Liding- ed that the negotiators had agreed the the agenda, one person familiar with A exit from the European Un- could be sooner than many observers Thursday that the EU is ready to make ton said he wouldn’t predict the timing terms of a future trade deal for fi nan- the matter said. ion. Neither side has reported in any think. a fresh compromise off er on how the of a deal but pointed out that a Cabinet cial services on Thursday, May’s offi ce The secrecy is raising suspicions detail what’s going on behind closed In London, Prime Minister Theresa backstop should be structured. The meeting could be called at any time. hit back unusually hard, urging report- that May and her aides are planning doors in Brussels since Prime Minis- May’s offi cials believe intensive nego- bloc would agree to May’s call for a May’s offi ce also sounded positive. ers in London not to follow the story to stitch up a deal with the EU and try ter Theresa May updated Parliament tiations will deliver the decisive step UK-wide customs deal with the EU as “We’ve put forward our proposals and and telling the media to calm down. to force the cabinet to agree to it, the on October 22. But the lack of pub- needed for an agreement within the a way to avoid goods checks either be- the EU are engaging with them and ne- But even if a deal is done in Brussels person said. The crucial test inside lic comment doesn’t mean nothing’s next few weeks, according to two peo- tween mainland Britain and Northern gotiations continue,” Alison Donnelly, in the coming days, May will have to the Cabinet will be if May can per- happening. ple familiar with the matter. Ireland, or at the frontier with the Re- the prime minister’s spokeswoman, sell it in London - fi rst to her own Cab- suade Attorney General Geoff rey Cox British and European negotiators The key sticking point remains how public of Ireland. Crucially, this would added on Friday. “Beyond that, there’s inet, and then to Parliament. to back her plan. If he does, other sen- are locked away trying to break the to avoid customs checks taking place at be a legally binding commitment under not much I can say.” In private, some pro-Brexit offi cials ior ministers who are worried about deadlock and with just fi ve months left the border between Northern Ireland the terms of the separation treaty, the Donnelly’s guarded approach re- in the government fear she’s prepar- the proposals will also get behind the before the UK is due to leave, there are and the Irish Republic, without putting paper reported. fl ects acute sensitivity among May’s ing to bounce the Cabinet into agree- deal, the person added.

Hedge fund winner on Greek retailer’s Investors have plenty to worry demise shorts biggest bank

Bloomberg about as market clouds gather Istanbul The London-based hedge Bloomberg fund that placed bets against New York FF Group long before the Greek retailer asked for protection from creditors is ust when you thought we were past amassing a short position in the worst of it. Markets were fi nally the country’s biggest lender Jmanaging to rally after October’s by assets. tumble. The S&P 500 may have fallen Oceanwood Capital 10% from its record to its worst levels Management LLP increased in the month, but last week it logged its short position in National three straight days gaining more than Bank of Greece SA by 40% to 1%. In the backdrop is a US economy 0.7% of the company’s stock that is fi ring on all cylinders, as shown last month, according to a by Friday’s strong payrolls report. November 1 filing. That’s the But on the horizon, multiple factors fourth biggest of the 10 short are converging that could signal trouble positions reported by the for markets into next year. fund, according to Bloomberg US business economists see a reces- data. Oceanwood declined to sion coming by the end of 2020. JP- comment. Morgan Chase & Co said Oct. 26 that The wager comes as Greek equities turn sometimes only when the bank shares buckle amid economy enters recession, though also concerns they need to raise sometimes a year before the slump - so fresh capital to off set their they are looking at potential for a rota- piles of bad loans, as well tion to defensive positioning around as uncertainty over the mid-2019. country’s future after its Even after the market’s recent tur- bailout program ended in moil, some positioning still appears August. Greek lenders have stretched. Allocation to equities is been recapitalised three times the highest since the tech bubble, since the start of the country’s while cash is at a record low and al- debt crisis. location to debt is below average, ac- The FTSE/Athex Banks Index cording to a Goldman Sachs Group fell as much as 6.2% on Friday, Inc report on Thursday from strate- extending the decline from gists led by Arjun Menon, who said a peak in April to more than they expect investors to reduce port- 50%. The slide was led by folio risk in 2019. Eurobank Ergasias SA and Then, there’s geopolitics. JPMorgan NBG. strategist John Normand said on Thurs- Oceanwood said in May it day in an interview that the number of had been betting against the material political and geopolitical risks Pedestrians walking past the New York Stock Exchange (file). The S&P 500 may have fallen 10% from its record to its worst levels in October, but last week it logged three FF Group, owner of the Folli “seems to be quite high going into the straight days gaining more than 1%. Follie brand in Greece, over next year,” which he attributed partially the past two years. to the way President Donald Trump’s market, will result in higher volatility to US equities, as higher bond yields are 2019,” CrossBorder wrote in a separate strong fundamentals and positioning The company defaulted on administration approaches its policy in 2019.” London-based CrossBorder starting to have an impact. report on Friday. turning more attractive, we maintain its bonds in October after objectives. Capital weighed in as well. They think a 10-year US Treasury “A major realignment of global our view this sell-off is temporary and a probe sparked by claims With the Federal Reserve expected “We have been concerned through- yield of 3.25% could take the S&P 500 capital towards Asia and away from see equity upside into year-end,” JP- by Quintessential Capital to continue to raise rates in 2019, some out this year that the US Fed is hitting to around 2,482, which would be almost the US looks to us underway, fueled Morgan strategists led by Dubravko Management found its Asia have started to worry that tighter con- the brakes harder than widely believed a 10% drop from Thursday’s close. The by future growth opportunities and Lakos-Bujas wrote on Friday, reiterat- sales were almost 90% short ditions will encroach on growth. because rate hikes are occurring on top 10-year was recently around 3.20%. the prospects of higher profits from ing a view from the fi rm earlier in the of figures reported in financial Morgan Stanley’s Andrew Sheets and of balance-sheet shrinkage,” Cross- “A break back over 3.25% defi nitely Chinese expansion into Central week suggesting potential for a “rolling statements. Cantor Fitzgerald LP’s Peter Cecchini Border wrote in a note emailed Friday. could spark some equity angst,” Dave Asia.” Of course, many experts don’t squeeze” higher. The hedge fund is also are also watching the Fed, with Sheets “Reliable bond market metrics point to Lutz of JonesTrading Institute wrote on see these issues coming to a head for But the clouds are building on the carrying a short position in writing on October 28 that the Fed was the real risk of an upcoming slowdown, Friday. some time. horizon, and investors would do well to Greece’s Alpha Bank SA, but unlikely to come to the rescue of equity while the recent collapse in investors’ Then there are the changing global As of late August, the median fore- watch for signs of further trouble. has reduced that to 0.6% of investors. risk appetite warns that an economic dynamics. cast for the S&P 500’s year-end level “If you’re going into a year where the shares outstanding from “The odds are increasing for a Fed infl ection point is close.” “Set against crashing global liquid- was 3,000, according to strategist there are reasons to be concerned about 1%, according to an October overshoot,” Cecchini wrote on Thurs- Treasury yields could be problemat- ity, we are concerned that the recent predictions compiled by Bloomberg. the business cycle itself,” with “geo- 5 filing. Greek bad loans day. “A burgeoning global slowdown (in ic, as well. Societe Generale SA strate- huge build-up of $4tn of speculative That would be about a 9% gain from political risk” on top of that, Normand make up around 50% of emerging markets and Europe) com- gists led by Alain Bokobza on Wednes- foreign capital in US fi nancial assets Friday’s close. said, “it should make you concerned their total assets. bined with a weakening US housing day recommended cutting allocations fl ags an upcoming US dollar sell-off in “With selling disconnected from about where markets are going to be.”

FOCUS Rising US rates and dollar may break the global economy

By John Hardy economy, and both together would likely before something – or rather more things – level at 15 basis points in early Q4. Democratic Unionist Party – when the deal break the global economy, particularly the break. In Q3, we saw much of EM bending In theory, any further rises in global eventually moves to a parliamentary vote. emerging markets that most indulged in under the weight of a stronger USD and bond yields will not be absorbed by Swiss franc: The Swiss franc has been The US Treasury market set the invest- USD-denominated borrowing via the Fed’s higher US rates, and the Turkish lira and Japanese sovereign debt at 10 years too strong for too long, and Q4 could be ment world on edge in early October zero interest-rate policy years after the Argentine peso suff ered outright breaks and shorter maturities and have to be the quarter in which this is realised, with when long US Treasury yields climbed global financial crisis. while other current account weaklings in transmitted to the yen, as long as the BoJ policy beginning to normalise around the to new multi-year highs – the US 10-year For its part, China has vowed that it EM like Indonesia and India were under defends the 10-year yield cap. DM world and the CHF in a very diff erent benchmark cleared 3.13% for the first time will not pursue such a course. This makes severe pressure. But just how unmovable is the BoJ if place versus long-term levels relative to in more than seven years, and the big eminent sense on multiple fronts. First, If the USD does not weaken from here, yields continue to rise? In other words, the rather weak JPY. CHF could be in for a 30-year T-bond yield passed the massive a strong and stable yuan would help to we will move into a phase of default and where is the breaking point? Surely the particular rout if we do in fact see a Brexit 3.25% yield for the first time since early deepen interest in settling China-bound USD-denominated debt repudiation that BoJ knows that a breaking point is out breakthrough in Q4, which could drive 2014, a level it had approached on no less trade in yuan, a key component of China’s will mark first the end of the USD’s ‘Reign there somewhere and such policy caps a GBPCHF upside theme in the coming than four occasions since late 2016. strategic One Belt, One Road policy mix. of Terror’, and second a more profound and floors and pegs are dangerous quarter and more. Driving the move was a spate of strong Second, China’s current account is almost search for global currency alternatives animals, as the Swiss National Bank’s EM currencies: While EM currencies US data and Federal Reserve chair Jerome balanced at zero now after years of large that is already under way. franc ceiling in 2015 and sterling’s as a group could find some relief once Powell suggesting that the Fed funds surpluses as the country’s consumption of Euro: The euro badly wants to rally Exchange Rate Mechanism crisis in USD strength fades and US rates (we rate is “nowhere near neutral” in off hand imports – particularly energy – has grown of spreading to Europe and even Japan, from undervalued levels against the USD 1992 showed. assume) eventually peak, the cost of comments. The reactivity of the US dollar more rapidly than its exports. is the dominant theme around the world, as the European Central Bank’s quantita- Pound: Sterling is entering Q4 on a capital has risen for good and globally, to developments in US yields has been an A weaker currency would likely erode and a higher cost of capital will act as a tive easing policy draws to a close, even if strong note as the market is taking a cheap USD and even euro and yen on-again, off -again aff air, but a sharp rise Chinese purchasing power of key imports strong headwind for global asset markets it is doing so as the eurozone economy is more optimistic stance on Brexit after the funding will increasingly be a thing in US yields in late Q3, after strong wage faster than any growth in exports could and eventually global growth via its eff ects likely set to weaken. It’s doubly unfor- Tory party conference saw a solid show of the past. In other words, there is inflation data were reported for August, off set it, particularly as Chinese exports on the credit cycle, with varying conse- tunate for the eurozone to see global of solidarity and the EU suggested that plenty of room for an accident or two resulted in a weaker dollar for much of move up the value chain, where the coun- quences for the currencies of developed economic weakness as it is the single a “Canada+++” is still on the table if the in leveraged EM economies, particu- September. try isn’t competing on price anyway. and emerging markets. economic bloc with the largest current two sides can figure out a solution to the larly in those that have already been From here, whether rising US yields We’re entirely unsure how China will Our main thesis is that the direction account surplus to the world, which makes thorny Northern Ireland border issue. Ei- under pressure with their weak balance continue to squeeze global USD liquidity play its cards from here but lean towards of the US dollar remains the key driver it the most sensitive to the trajectory of ther way, the path to a potent sterling rally sheets, heavy exposure to foreign- and especially emerging markets could China maintaining the value of its cur- of the action as we go from the late US global growth. is only straight if a deal appears on the denominated loans, and weak current depend on China’s intentions for the rency, which would be a key component monetary policy cycle to potentially the Yen: The yen is at a critical inflection way that both suff iciently preserves UK account fundamentals – think Turkey, renminbi. in the USD turning lower sooner rather end of that cycle in a more concentrated point due to the 10-year Japanese gov- sovereignty (i.e., does not resemble Prime South Africa, Argentina, et cetera. Regardless, if US rates and the USD both than later. and immediate timeframe than the market ernment bond yield, the long end of the Minister Theresa May’s Chequers plan) rise further, the first would quickly break Regardless, the rise in yields, most or the Fed anticipates. The US dollar and Bank of Japan’s “controlled” yield curve, and satisfies the minority government’s „ John Hardy is head of FX strategy the US markets and eventually the US urgent now in the US, but showing signs US rates can only rise so far from here having reached its supposed BoJ control tiny supporter – the Northern Ireland at Saxo Bank. Sunday, November 4, 2018 GULF TIMES BUSINESS

LuLu wins ‘Brand of the Year Award’ Qatar Chamber and Iraqi trade Leading hypermarket and shopping malls team discuss joint investment chain LuLu won the ‘Brand of the Year Award’ in the Retail Category at the ‘2018 World Branding Award Ceremony’ held yes- rivate sector leader Qa- terparts from Al Anbar Prov- terday at the Kensington Palace in London. tar Chamber and an Iraqi ince, and invite the Iraqi side to The annual event evaluates brands from P trade delegation held a organise a visit to Qatar to dis- around the world through a three-step meeting recently in Doha to cuss issues related to enhancing procedure, including brand evaluation, discuss ways to boost joint eco- trade and investment co-opera- public online voting, and consumer market nomic and trade co-operation, tion and to view the investment research. Ashraf Ali M A, executive director it was announced yesterday. opportunities available in both of LuLu Group, received the top award Qatar Chamber chairman countries. from Richard Rowles, the chairman of Sheikh Khalifa bin Jassim bin During the meeting, Farhan World Branding Forum, in the presence of Mohamed al-Thani met the discussed the advantages and top business leaders and dignitaries from delegation from Iraq led by investment opportunities in the around the world. Dr Ali Farhan, the governor of province, which is a gateway to World Branding Awards are the top rec- Anbar Province. Sheikh Kha- the markets of Jordan, Syria, ognition given to an organisation or brand lifa said the Chamber is keen to and the Gulf region. for its path-breaking and innovative brand- strengthen co-operation rela- He said Qatari investments in ing, marketing, and communication initia- tions between the two coun- the province “will strengthen tives over the years and are regarded as tries. the brotherly and historical ties the top benchmark in the industry. “We are LuLu Group executive director Ashraf Ali M A joins LuLu Financial Group MD Adeeb Ahamed, Tablez CEO Shafeena Yusuff ali, He pointed out that the Iraqi between Qatar and Iraq.” obviously very delighted and proud to be director Mohamed Althaf, and LuLu Group CCO V Nandakumar with the ‘Brand of The Year’ trophy during the ‘World Branding province of Anbar has invest- He said many investment op- chosen as the top global brand and the fact Award Ceremony’. ment opportunities “that will portunities are available to Qa- that this award is primarily based on public be studied by Qatari business- tari businessmen in areas such survey and customer feedback, makes competition, the main reason for LuLu brand awareness, and brand communica- brands awarded at the ceremony included men.” as phosphate, raw materials, this recognition much more valuable for getting this coveted award was primarily tion,” according to World Branding Forum, British Airways, Nestle, Omantel, and Nip- He said Qatar Chamber would and metals, as well as a promis- us,” says Ashraf Ali M A. “In spite of heavy because of their sustained brand credibility, the organisers of the event. Other global pon, among others. host a joint meeting of Qatari ing investment opportunity at businessmen and their coun- Habbaniyah Airport.

Beirut’s ghost apartments haunting the economy Nepal is off ering ‘huge Bloomberg The collapse in oil prices in Beirut 2014 has deterred the country’s moneyed expatriates. The slump is mainly “due to the overall he ghost apartments of wait-and-see attitude among Beirut are haunting the investors because of the macro Teconomy. Permanently- and political uncertainties,” said potential’ for Qatari drawn curtains on the city’s Marwan Barakat, chief econo- empty luxury high-rises and mist at Bank Audi. dust gathering over shuttered Lebanon has been without a storefronts in the Beirut Souks government for over six months. mall off er a glimpse of the eco- While political deadlock is noth- nomic gloom gathering over one ing new, this time, about $11bn of the world’s most indebted in loans and grants pledged by investors, says envoy countries. international donors are at stake. Prolonged confl ict in neigh- The economy is creaking under epal is off ering “huge poten- bouring Syria and political di- the strain of public debt, which tial” for Qatari investors in vari- visions at home have hit con- the World Bank warns is on “an Nous sectors such as hydropower, fi dence. Economic growth has unsustainable path” toward tourism, agriculture, infrastructure, and been stagnant for years, but a 155% of gross domestic product other sectors, according to the country’s sharp downturn in the property by end-2018, while economic top diplomat in Doha. sector risks wider spillovers as growth could slip to 1%. Nepal’s ambassador Ramesh Prasad cash-strapped developers post- A typical apartment in Beirut, Koirala made the statement during an in- pone payments to contractors wedged between the Mediter- teractive business meeting at the Shera- and run late servicing debt to ranean Sea and verdant moun- ton Grand Doha Resort & Convention creditors. The recent withdrawal tains, can cost between $2,000 Hotel hosted under the auspices Nepal of a central bank-subsidised and $7,000 per square meter, President Bidya Devi Bhandari. housing loan scheme has pushed depending on the neighborhood. During the meeting held in the pres- even more potential buyers away. Though listed residential ence of Bhandari and Qatar’s ambassador It’s what Houssam Batal, chief prices have not fallen signifi- to Nepal, Yousuf bin Mohamed al-Hail, executive offi cer of Premium cantly, developers are offering Doha Bank CEO Dr R Seetharaman high- Projects, calls the “almost cata- more flexible payment plans. lighted Qatar-Nepal bilateral relation- strophic scenario” confronting One development in Dbayyeh, ships. Lebanon’s real estate sector. just outside Beirut, allows He said Nepal and Qatar established “We’ve witnessed a delay in customers to rent for up to diplomatic relations on January 21, 1977. collection and had a very hard three years with the right to One of Nepal’s major tourist attractions time to sell,” said Batal, whose purchase later. includes the highest peak of the world, development and construction In urgent need of cash, some Mount Everest, and Lumbini, the birth company’s main focus is high- developers are off ering steep place of Buddha. end central Beirut. After strug- discounts on new units, though Citing the IMF October 2018 Outlook, gling to sell apartments valued most are holding out despite the Seetharaman said Nepal’s economy is at $1.2mn, Batal says demand is collapse in sales. expected to grow by 6.3%. The main sec- now shaky for units worth half Philippe Tabet, CEO of Har tor of the economy is agriculture, which as much. Properties, said the developer employs over 70% of the population and The health of the real estate had to restructure its fi nancial accounts for 33% of GDP. industry bears watching because model after the downturn. “Cli- “As Nepal is home to the highest it contributes an estimated 15% ents are delaying payments and mountains in the world, tourism has to economic output. banks have increased interest been steadily growing in importance and According to a study by Bank rates, making it harder to obtain is an important source of revenue. The Audi, property sales plunged funds,” Tabet said, though he growth rate is the result of stable govern- 17% in the fi rst nine months of hadn’t heard of many companies ment, good monsoon, and implementa- this year while the number of defaulting so far. tion of big projects,” Seetharaman said. construction permits granted Seeking to rescue the sector On fi scal and monetary developments, fell 23%. from crisis, a group of develop- Seetharaman said Nepal presented a Doha Bank CEO Dr R Seetharaman hands over a token of recognition to Nepal President Bidya Devi Bhandari during an event held A construction boom that ers and investors have set up the budget of $12.15bn for the 2018-2019 recently in Doha. began before the Syrian confl ict country’s fi rst real estate invest- fi scal year, with a target of achieving an took its toll, means some apart- ment platform. economic growth rate of 8%. “The government has sought to en- residents in Qatar, Nepal is the second On India-Nepal bilateral relationship, ments have been on the market Legacy One will purchase va- The development of highways, rail- courage foreign direct investment in largest expatriate community in the he said India and Nepal trade was above for years. Few expected the war, cant apartments in about 100 ways, irrigation, energy, and urban in- export-oriented sectors. Nepal Rastra country. Nepalis are contributing in the $7bn in 2017-2018. Nepal’s main imports which began in 2011, to drag on projects in Beirut and its suburbs frastructure, post-earthquake recon- Bank (NRB), the country’s central bank, construction and development of Qatar, from India are petroleum products, mo- so long, devastating trade, push- and resell them to buyers abroad, struction, and good governance were is currently supervising 196 banks and he said. tor vehicles, and spare parts, rice, and ing some 1.5mn refugees into said Samir Cortas, head of the the other priorities of the budget, ac- fi nancial institutions, including 28 com- On Kuwait-Nepal relations, Seethara- vegetables. their tiny neighbor of 4mn and Real Estate Developers Associa- cording to Seetharaman, adding that it mercial banks, for an economy of just man said Kuwait and Nepal established Nepal’s export basket to India mainly costing Lebanon’s economy an tion of Lebanon and a partner in aims to create additional employment for $21bn,” he said. diplomatic relations in 1972, and since comprises jute goods, zinc sheet, textiles, estimated $18bn. the project. 500,000 people in the next fi scal. Koirala said with more than 400,000 then relations “have grown steadily.” threads, and polyester yarn, he said. Iran sanctions seen keeping oil above $75, but demand outlook darkens

Reuters Brent neared $87 a barrel earlier in even higher oil price could be a major London the year following US eff orts to isolate risk to the global economy in 2019,” Iran through renewed sanctions, but Schallenberger added. prices have since edged off those Despite concerns about supply, Oil is likely to stay above $75 a bar- highs and Brent is now around $76. analysts said headwinds to global rel, fuelled by supply disruptions Analysts worry that there is a growth could hurt demand in the exacerbated by US sanctions on Iran, lack of spare capacity to deal with coming year, particularly as the but further gains could be limited as potential outages elsewhere once the United States and China engage in a economists and analysts see demand sanctions take eff ect today. trade war that has imposed billions growth slowing next year due to trade “On the supply side, concerns of dollars in tariff s on each other’s wars and economic weakness. (about) falling supplies from a goods. A survey of 46 economists and number of Opec producers — pri- On Tuesday, at the Reuters Com- analysts forecast Brent crude to aver- marily Iran, owing to the renewed modities Summit, Vitol chief execu- age $76.88 a barrel in 2019, up from US sanctions — and also Venezuela, tive Russell Hardy said the firm had the $73.75 forecast in September. Angola, Libya and Nigeria, will lowered its outlook for oil demand The price is expected to average maintain upward pressure on prices,” growth to 1.3mn bpd from 1.5mn $74.48 in 2018, versus the $73.57 aver- said Cailin Birch, an analyst at the previously. age so far this year. Economist Intelligence Unit. “Potential variables for global Analysts who spoke to Reuters said The US sanctions against Iran’s oil demand include US-China trade demand is expected to decelerate in crude exports are expected to tighten protectionist policies, emerging- 2019, if concern over a widespread supply, especially to Asia, which takes market currency woes and the eff ects economic slowdown proves to be most of the country’s shipments. of tighter monetary policy,” said justified. Apart from Saudi Arabia and Rus- Benjamin Lu, a commodities analyst Overall, global oil demand is sia, few producers can fill any gap left with Phillip Futures. projected to grow by between 1.1 and by Iran, according to Frank Schallen- The IEA said world oil consump- 1.5mn barrels per day (bpd) in 2019, a berger, head of commodity research tion would top 100mn bpd in the range that generally falls short of the at LBBW. final quarter of this year, putting 1.4mn bpd forecast for next year by “I expect (Saudi Arabia and Russia) upward pressure on prices, although the Paris-based International Energy to raise output if necessary — as a emerging-market crises and trade Agency in October. shortage on the supply side and an disputes could dent this demand.