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Monday, October 7, 2019Safar 8, 1441 AH
BUSINESSGULF TIMES
Gold eyes lost mojo as 2019 rally weakens
CNPC no longer part of South Pars project: Iran
GROWTH WOES | Page 3CHINA FIRM | Page 2
INVESTMENT UNCERTAINTY: Page 12
Factory job losses send new warning signal to Trump on trade war
QNB builds on ESG feats to be among top global peers: MSCIBy Santhosh V PerumalBusiness Reporter
QNB has considerably improved its ESG (environment, social and governance) ratings in a short span to occupy the
top slot among the global peers, a top offi cial of MSCI said yesterday.
“QNB is rated A, which means it is very strong on the leadership side,” Raman Aylur Subramanian, global head (equity applied re-search) of MSCI, told a seminar, jointly organ-ised by MSCI and the Qatar Stock Exchange (QSE).
According to the MSCI ESG rating method-ology, analysis begins with a deep governance assessment, followed by the focus on most relevant ESG factors by industry, focus on risk exposure (not just disclosure) and fi nally iden-tifying leaders and laggards with leaders being classifi ed under ‘AA’ and ‘AAA’, average per-formers under ‘BB’, ‘BBB’ and ‘A’; and laggards at ‘CCC’ and ‘B’.
MSCI started covering QNB in October 2015 with ‘BB’ rating and in 2016 and 2017, it became ‘BBB’ and in August 2019, it was upgraded to ‘A’ rating due to ‘strong position for meeting digital banking challenges’.
“So it is a fantastic improvement in the rat-ings and QNB should be product of it,” he said, adding fi nancial system stability is one of the top notches as the bank has spent robustly on cyber security and digitisation of the entire process and that itself gives high rating com-fort on the governance side.
In the fi nancial system stability, it has a score of 6.4 out of 10. The majority of assets of QNB
are based in Qatar, a country with a relatively lower risk of corruption and political instabil-ity, Subramanian said, adding that the lender also has strong anti-money laundering, know-your-customer policies and programmes as well as a group risk committee that consists of more than 50% independent directors
Pointing out that QNB’s overall industry rela-tive score is 5.8 out of 10; he said “it is still very high compared to the peers”. Among the largest peers (banks), QNB stood atop, relegating other global brands as HSBC Holdings, Agricultural Bank of China, China Construction Bank Cor-poration, JP Morgan Chase, Citigroup, Bank of America, Bank of China, Industrial and Com-mercial Bank of China and Wells Fargo.
However, Subramanian highlighted some concerns such as the lack of diversity in the board (absence of females) and those relating to voting rights as well as sovereign interven-tion.
“If the bank can look at the concern areas and address them, it can achieve higher rat-ings,” MSCI offi cial said.
QFBA new ventures yield 25% clients growth
New markets tapped by Qatar Finance and Business
Academy’s (QFBA) relationship management team
in 2019 have yielded a 25% growth in new clients as
it eyes ambitious growth plans for its existing and
future client base.
The achievement comes in light of continuous
demand for growth and sustainability of businesses
and their needs across Qatar’s various sectors and
industries, QFBA said in a statement.
QFBA’s clientele growth includes leading institu-
tions and organisations across various sectors in
Qatar, such as financial services, healthcare, charity,
telecommunications, and higher education.
The academy also saw increase in demand for train-
ing programmes by returning clients in the public
sector whereby QFBA has registered an average
increase of 76% in its training and professional
development programmes for some of the return-
ing clients in government and semi-government
entities.
QFBA said this growth emphasises the commitment
of the academy and organisations within the State of
Qatar to maintain international standards of human
capital performance.
D Mohamed Abdullah al-Emadi, head of Sales and
Marketing at QFBA, said: “Our achievements did not
happen overnight. Our success is the result of our
ambitious vision and disciplined work in the devel-
opment and servicing of programmes around the
needs of institutions and companies in the market.
“To this end, our programmes have come to off er
these organisations human capital development
solutions for their businesses and contingency plan-
ning eff orts through the capacity building of their
talent, enabling them to keep pace with the changes
in the global financial landscape.”
Al-Emadi added: “It is building on this track record
that we earned our credibility among financial
organisations in Qatar and multiplied our eff orts to
grow our client base within various sectors of the
economy.”
Under QFBA’s vision and mission, it has focused its
endeavours on strengthening and growing long-
term relationships with its current clients, following
their training needs, designing programmes around
their professional ambitions, and raising aware-
ness about beneficial courses for corporations and
individuals.
The academy has also exerted continuous eff orts to
open communication lines with prospective clients,
showcasing its eff ectiveness across all levels, and
encouraging them to build up their human capital
resources to meet organisational goals.
QFBA has played an important role in supporting
Qatari institutions with practical solutions to help
them adopt and apply the latest knowledge and
methods in the working space, and consequently
increase productivity.
The academy has serviced a number of Qatari
institutions in the training and the adoption of
worldwide benchmarks in sales, customer service,
and organisational behaviour.
QFBA has also lent its resources to train and upskill
employees and management across few organisa-
tions to elevate their competencies and capabilities
toward transformative change.
Since it was established in 2009 under the auspices
of the Qatar Financial Centre, QFBA has made
strides in elevating financial services sector talent
pool standards, supporting organisations in achiev-
ing their business objectives in line with the Qatar
National Vision 2030.
QSE pitches for mandatory ESG reporting by listed firmsBy Santhosh V PerumalBusiness Reporter
The Qatar Stock Exchange (QSE) has strongly pitched for a mandatory ESG (environment, social and governance) reporting by the listed companies, which helps investors determine a company’s ability to create value on a sustainable basis.“We will work with the regulators to make it mandatory for our listed companies to publish their ESG reports,” QSE chief executive Rashid bin Ali al-Mansoori told reporters on the sidelines of a seminar MSCI Qatar ESG and Climate Change Forum.Asked by when it is expected to be mandatory, he said the exchange is in talks with the regulator. As of now, there is no regulatory requirement for ESG reporting, and adherence to this ESG guidance is entirely voluntary.Also, ESG reporting does not set aside, replace or substitute any reporting obligations of listed companies under existing laws and regulations.The QSE is among the first stock exchanges in the world to encourage transparency and disclosure by promoting the digitalisation of ESG data.ESG factors will have an impact on access to capital; revenue growth potential and market access; risks, costs and productivity; brand value and reputation; human capital, employee recruitment and retention, according to the QSE’s ESG guidelines.“Investors worldwide are increasingly
incorporating sustainability factors into their investment decisions, and we are convinced that companies that effectively communicate their sustainability strategies will improve their capital raising abilities and have an overall competitive advantage,” al-Mansoori told the seminar.The surge in global investor interest, combined with the opportunity for improved performance for companies and their investors, were two key reasons why the QSE joined the Sustainable Stock Exchange Initiative (SSEI) in 2016. As part of the SSEI, the QSE released its guidelines on ESG reporting.In line with SSEI and the World Federation of Exchanges’ recommendations, the
QSE has developed a set of ESG key performance indicators (KPIs).Depending on issuer’s business, some of the ESG KPIs are more critical than others, the report said, highlighting that where the environmental impacts and carbon/GHG emissions are crucial for sectors such as hydrocarbons, industrials and utilities, they may be less relevant for financials.“Issuers should therefore consider expanding on the disclosures on those ESG KPIs that are considered material to their business,” the guidelines said.Globally, the leading advocate of ESG investing is the United Nations Principles for Responsible Investment, which now has more than 2,000 signatories with more than $80tn in assets under management.Investors worldwide are increasingly recognising the positive relationship between sound ESG performance and an entity’s financial performance.Highlighting that ESG is growing fast worldwide; Raman Aylur Subramanian, global head (equity applied research) of MSCI, said investors have become less tolerant of corporate ESG incidents and that ESG is increasingly being considered as part of fiduciary duty. ESG is financially relevant and that asset owners are allocating to ESG strategies, he added.“Growing concerns of long term issues such as climate change, demographic changes and inequality, have led both institutional asset owners and retail investors to take action – in particular from millennials,” he said, pointing out that more than $180bn has been allocated to MSCI ESG equity and fixed income indices since 2014.
QFBA’s achievement comes in light of continuous demand for growth and sustainability of businesses and their needs across Qatar’s various sectors and industries
“Companies that effectively communicate their sustainability strategies will improve their capital raising abilities and have an overall competitive advantage,” says al-Mansoori.
Subramanian: QNB is very strong on the leadership side.
“QNB’s fi nancial system stability is one of the top notches as the bank has spent robustly on cyber security and digitisation of the entire process and that itself gives high rating comfort on the governance side”
BUSINESS
Gulf Times Monday, October 7, 20192
QSE benchmark settles marginally higher amid roller-coaster rideBy Santhosh V PerumalBusiness Reporter
The Qatar Stock Exchange yesterday witnessed a roller-coaster ride throughout the trading session and the index settled marginally higher.Domestic institutions continued to be net buyers but with lesser intensity as the 20-stock Qatar Index settled 0.03% higher at 10,313.84 points.The telecom, insurance and industrials counters witnessed some buying in the market, whose key benchmark is up 0.14% year-to-date.Market capitalisation saw QR84mn, or 0.15%, increase to QR572.51bn
mainly owing to microcap segments.Islamic equities were gaining faster than the other indices in the market, where local retail investors turned bearish.Trade turnover and volumes were on the decline in the bourse, where the industrials, consumer goods and banking sectors together accounted for more than 78% of the total volume.The Total Return Index was up 0.03% to 18,978.34 points, the All Share Index by 0.13% to 3,045.85 points and the Al Rayan Islamic Index (Price) by 0.18% to 2,326.38 points.The telecom index gained 1.38%, insurance (0.54%), industrials (0.32%) and consumer goods
(0.03%); while transport and real estate declined 0.19% and 0.13% respectively.Major gainers included Ooredoo, Al Khaliji, Qatar First Bank, Qatar Oman Investment, Qatari German Company for Medical Devices, Qatar National Cement, Industries Qatar, Aamal Company and Qatar General Insurance and Reinsurance; even as Nakilat, Doha Bank, Dlala, Gulf International Services, Mesaieed Petrochemical Holding and Barwa were among the losers.Non-Qatari institutions’ net selling declined substantially to QR8.5mn compared to QR21.8mn the previous trading day.
Gulf institutions’ net profit booking weakened marginally to QR2.46mn against QR3.11mn last Thursday.However, non-Qatari individuals’ net selling increased perceptibly to QR3.03mn compared to QR0.94mn on October 3.Local retail investors turned net sellers to the tune of QR2.17mn against net buyers of QR3.97mn the previous trading day.Gulf individuals’ net profit booking grew noticeably to QR1.26mn compared to QR0.12mn last Thursday.Domestic institutions’ net buying shrank influentially to QR17.43mn against QR22mn on October 3.Total trade volume fell 22% to
57.39mn shares, value by 25% to QR123.06mn and transactions by 42% to 3,397.There was a 68% plunge in the transport sector’s trade volume to 0.37mn equities, 72% in value to QR0.97mn and 59% in deals to 47.The real estate sector’s trade volume plummeted 37% to 8.91mn stocks, value by 48% to QR8.57mn and transactions by 86% to 190.The market witnessed a 32% shrinkage in the insurance sector’s trade volume to 1.83mn shares, 28% in value to QR6.02mn and 32% in deals to 179.The industrials sector’s trade volume tanked 30% to 18.54mn equities, value by 39% to
QR19.85mn and transactions by 25% to 1,304.The banks and financial services sector saw a 22% erosion in trade volume to 11.63mn stocks, 21% in value to QR57.29mn and 41% in deals to 808.However, the consumer goods sector’s trade volume expanded 16% to 14.84mn shares, while value declined 15% to QR23.15mn and transactions by 29% to 524.There was a 3% jump in the telecom sector’s trade volume to 1.26mn equities, 75% in value to QR7.21mn and 22% in deals to 345.In the debt market, there was no trading of treasury bills and sovereign bonds.
China’s CNPC is no longer part of South Pars gas project: IranBloombergTehran/Dubai
China National Petroleum Corp is no longer a partner in Iran’s biggest natural gas
project, and the Gulf nation will develop Phase 11 of the giant South Pars fi eld on its own, Oil Minister Bijan Namdar Zanganeh said, ac-cording to the ministry’s Shana news service.
CNPC was the only international partner left in the project, after To-tal SA of France withdrew last year when US President Donald Trump abandoned the 2015 nuclear accord and reimposed sanctions on Iran.
Phase 11 was the biggest infra-structure development project with major foreign participants that Iran arranged after the accord took ef-fect.
The Chinese company was “dis-missed” from the project, Shana reported, without giving details. Iran’s Petropars will take over CN-PC’s stake and be sole participant in Phase 11, Zanganeh told reporters in Tehran, according to Shana.
Calls for comment to the CNPC spokesman’s offi ce in Beijing after normal business hours went unan-swered.
Iran had awarded Total, CNPC and Petropars Ltd a contract in July 2017 to develop Phase 11 of South Pars gas fi eld. Total, which initially held a 50.1% stake, pulled out in Au-gust 2018. CNPC had a 30% share in the project, while Petropars held 19.9%.
International energy companies have been reluctant to work in Iran since the US reimposed curbs on the country, due to their concerns that Washington might blacklist them for engaging with the Islamic Republic.
China remains one of the biggest buyers of Iran crude oil, in spite of US sanctions.
Phase 11 will produce 500mn cu-bic feet a day of gas by March 2020, Zanganeh told reporters yesterday, suggesting that the project is ahead
of schedule. It was due to start up in 2021, according to a statement Total issued when it was awarded the de-velopment contract.
CNPC’s role in the project had been uncertain for several months. The company had not carried out any of its share of the work, Zan-
ganeh said in February. It was still in negotiations to remain a partner as recently as August, according to the head of Iran’s Pars Oil and Gas Co.
Who will buy Lebanon Eurobond? Not us, say foreign fund managersReutersLondon
Lebanon may need support from loyal local banks, or even friendly Gulf states, to buy a new Eurobond as foreign investors look set to shun the sale, citing the country’s long list of troubles.A Eurobond of around $2bn is being prepared for sale this month, with cash raised earmarked for refinancing maturing debts and shoring up Lebanon’s shaky public finances.But international appetite appears muted, with fund managers wary of putting money into one of the world’s most indebted countries as it grapples with a multitude of national and geopolitical concerns.“I wouldn’t touch it with a very large stick,” said Aberdeen Standard portfolio manager Viktor Szabo. “It looks like they are getting closer and closer to an implosion.”Hopes that sovereign wealth funds or other regional allies may ride to the rescue are also fragile.With its debt-to-GDP ratio already at 140%, Lebanon needs to plug a widening balance of payments deficit
and precariously low foreign exchange reserves.Worsening its plight has been a slowing of capital inflows from abroad, which Beirut has long relied upon to help meet its financing needs.The country has a heavy schedule of FX debt payments coming up, with $1.5bn due in November and a further $2.5bn between March and June next year, according to Refinitiv data.Central bank governor Riad Salameh said last week it was ready to make those payments, but observers are sceptical about the sustainability of its debt burden without an injection of Gulf funds or reforms.Lebanon has FX reserves of around $50bn but analysts say that once money designated for specific things is subtracted, the useable amount is far smaller.As the country’s economic malaise has deepened this year, its dollar bonds have tumbled around 16% in price and the cost of insuring its debt against the risk of default has surged beyond most countries bar Argentina’s.Lebanon might have to pay an interest rate of around 15% to access the market, said fund managers.
“With existing paper trading at a significant discount to par, it may be challenging to attract off shore interest for new bonds issued around par,” said Yacov Arnopolin, PIMCO’s senior portfolio manager for emerging markets external debt.In the absence of institutional investor support for its Eurobond sale, Lebanon may have to rely on domestic banks that already hold much of its existing debt.Local lenders have helped to keep Lebanon afloat for years by depositing fresh dollars at the central bank in an operation described by some analysts as financial engineering.Nadim Munla, senior adviser to Lebanese Prime Minister Saad al-Hariri, told Reuters he hoped upcoming trips by Hariri to the Gulf would yield “something concrete” after “encouraging signs” of a readiness by Gulf allies to deposit funds in Lebanon.Regional tensions that have flared between Iran on one side and Saudi Arabia and the US on the other have added to the challenges facing Lebanon.Lukewarm debt markets are also not helping.
After a glut of supply in September, conditions have turned.A tepid reception for Ukrainian steel and mining firm Metinvest’s international bond sale last week suggests the market might be closing for riskier names, said Sergey Dergachev, a manager of emerging market debt at Germany-based Union Investment. “I think this window of heavy supply is not a good signal for Lebanon,” he said.Any foreign support is likely to hinge on a speeding up of long-awaited structural reforms, such as fixing the power sector and fighting corruption.Lebanon won pledges of $11bn in financing at the “Cedre” conference in Paris last year.But foreign governments including France first want to see Beirut follow through on reforms. The same goes for many institutional investors.“Lebanon’s sovereign risk profile looks increasingly challenging,” said Leo Hu, senior portfolio manager at NN Investment Partners.“If the government would agree on an executable fiscal reform budget, it could send a very positive signal to the market, hence help the country to access capital markets.”
‘Iran will use every means possible to export its oil’ReutersDubai
Iran will not succumb to US pressure and will use every possible way to export its oil, Ira-nian Oil Ministry’s website Shana quoted Oil
Minister Bijan Zanganeh as saying yesterday.Iran’s crude oil exports were reduced by more
than 80% when the US re-imposed sanctions on the country last November after President Don-ald Trump pulled out of Iran’s 2015 nuclear deal with world powers.
“We will use every possible way to export our oil and we will not succumb to America’s pressure because exporting oil is Iran’s legitimate right,” Zanganeh said.
In response, Iran has gradually scaled back its commitments to the 2015 nuclear deal, under which Tehran accepted to curb its nuclear activi-ties in return for lifting most international sanc-tions.
The increasing US pressure on Iran has scared away foreign investors from doing business in the country.
Last year, China’s National Petroleum Corp (CNPC) replaced French oil company Total as the operator of Phase 11 project at South Pars gas fi eld after the French company ended its participation rather than violate US sanctions.
But late last year, CNPC suspended investment in the fi eld in response to US pressure.
“China’s CNPC has totally pulled out of the South Pars Phase 11 development and Iran’s Petropars company will carry out the job,” Reu-ters quoted Zanganeh as saying.
Iran has the world’s second-largest reserves of natural gas, but it has not yet become a major exporter because of international sanctions im-posed on the country for decades.
Reuters also quoted Zanganeh saying that Iran wanted to improve ties with Gulf Arab countries.
“We want to be friends with all regional coun-tries... they must not regard us as their enemy... Our mutual enemy is outside the Middle East,” he said.
Iran and Saudi Arabia have repeatedly clashed at meetings of the Organization of Petroleum Ex-porting Countries over oil output policies.
Tensions between the two countries fl ared after Saudi Arabia blamed Iran for an attack on Saudi oil facilities on September 14, a charge Te-hran denies.
“We have no dispute with Saudi Arabia...I have no problem to meet with Saudi Arabia’s oil min-ister,” Zanganeh said.
Separately, Iran’s Atomic Energy Organisa-tion (AEOI) reiterated yesterday that the country would reduce its commitments under the deal further if the European parties to the pact did not meet promises to shield Iran’s economy from US sanctions.
A money exchange vendor displays Lebanese pound banknotes at his shop in Beirut (file). With its debt-to-GDP ratio already at 140%, Lebanon needs to plug a widening balance of payments deficit and precariously low foreign exchange reserves.
A general view of a part of the South Pars gas field in the southern Iranian port of Assaluyeh, some 1,000km south of Tehran (file). International energy companies have been reluctant to work in Iran since the US reimposed curbs on the country, due to their concerns that Washington might blacklist them for engaging with the country.
BUSINESS3Gulf Times
Monday, October 7, 2019
Gold looks for lost mojo as cooling economy fails to spark gainsBloombergNew York
Gold bulls are fi nding that the global econ-omy isn’t the only thing coming under increased scrutiny from investors. The
metal’s 2019 rally is showing signs of fatigue after prices fell for the fi rst month in fi ve in September.
While disappointing economic data under-pinned prices this week, signs of cooling glo-bal growth and mounting geopolitical tensions haven’t been enough to sustain haven demand and push the metal out of its recent range.
Prices fell for four of the past six weeks, and are down more than 3% from a six-year high reached last month.
Bullion’s ascent is encountering some turbu-lence amid a stronger dollar and higher hurdles for luring additional investors after a rally that sent futures in the metal to an 18% gain this year.
Mining companies are also exhibiting caution, with many emphasising cost discipline rather than expansion, and a report on Friday showed hedge funds cut their bullish position in the metal by the most since May.
Economic reports have been “not-great news from a long-term perspective, but gold hasn’t re-ally responded,” Steve Dunn, head of exchange-traded funds at Aberdeen Standard Investments, which oversees $669.5bn in assets. “In order to test new highs you might need new fuel or one of the existing ones to ratchet up more.” Part of that fuel could include any additional increase in geo-political tensions, including those surrounding the US-China trade war, frictions in the Middle East or Brexit, Dunn said.
The strength of the dollar has also had its fair share of weight on gold’s performance, accord-ing to Andy Warwick, a portfolio manager at Newton Investment Management, which man-ages $61.7bn. An index of the greenback rallied to a
two-year high this month, weakening demand for gold as an alternative asset.
The head of Russia’s top gold-mining com-pany joined a chorus of CEOs touting spending restraint. Gold producers are putting into prac-tice hard lessons learned during the metal’s last bull surge. Prices reached an all-time high in 2011, only to subsequently collapse as gains in the equity market and a resilient economy meant the metal fell out of favor as a haven.
“Gold had a decent performance from the post-crisis up to 2011 and then from 2012 onward it a came under pressure,” Warwick said. “That was probably painful for people who were holding gold at the time, so some people have been scared by it.”
Gold futures for December delivery slipped 0.1% to $1,512.90 an ounce Friday on the Comex in New
York. Some bulls are banking on the dollar even-tually running out of steam. US President Donald Trump has called for lower US interest rates to help weaken the currency and boost global com-petitiveness of US manufacturers. Weaker-than-expected fi gures on global manufacturing may also point to a resumption in demand for bullion as a haven, with signs that the slump could be spread-ing to service industries employment growth.
Warwick said he could see his fund nearly dou-bling its allocation in gold to 20%. That share cur-rently sits at 11%, roughly in line with the fund’s equities.
“We think gold could easily push to $2,000 an ounce or more in the next five years or so, par-ticularly if we’re right about this race to the bot-tom in currencies.”
Latest lender hit by India shadow bank stresssays the worst is overBloombergMumbai
IndusInd Bank Ltd, which saw a fifth of its market value wiped out over the past week on concern about its creditors, says the crisis of confidence engulfing India’s financial system is fading away.Outstanding loans to overstretched borrowers dipped at the Mumbai-based bank last quarter, lenders including IndusInd are working to resolve defaults at Dewan Housing Finance Ltd, and Indian authorities are taking steps to contain future delinquencies at shadow banks, IndusInd’s chief executive officer Romesh Sobti said in an interview in Mumbai on Friday.“All we need now to turn the tide of caution completely is a resolution of a large delinquent account,” Sobti said. “Banks are already beginning to look more positively at lending to non-bank financiers and the real estate segment as the worst is behind us.” IndusInd joins Axis Bank Ltd and Edelweiss Financial Services Ltd in predicting that the Indian financial sector’s woes will ease soon. Most banks have been beaten down for more than a year since the collapse of Infrastructure Leasing & Financial Services Ltd and defaults by other shadow lenders including Dewan and Altico Capital India Ltd.Shares of IndusInd have fallen about 20% over the past week amid speculation that it was owed money by Indiabulls. As of September 29,
gross exposure to the housing finance company concerned, its units and associate finance companies stands at about 0.35% of the loan book and is backed by adequate collateral, IndusInd said in a September 30 filing without naming any firm.Concerns over exposure to the troubled companies have also dragged another lender Yes Bank Ltd shares by 81% in the past year, prompting the bank to lodge a complaint with the police on the dissemination of fake news and rumours about its financial health on social media platforms.IndusInd’s gross bad loan ratio stands at about 2.2% as of June end, compared with more than 9% for the nation’s banking system. Its return on assets rose to 2.1% in June from 1.9% in the year-ago period, filings show.IL&FS group is seeking to resolve most of its debt obligations by March, chief operating officer of the company said this month. Meanwhile, Dewan, the largest mortgage lender to default so far, has prepared a plan to resolve stress on its books. IndusInd, which has exposures to Dewan, IL&FS and Indiabulls, has seen repayments from some embattled borrowers in the September quarter, Sobti said, without providing further details.“The elephant has passed through, though the tail is still wagging,” Sobti said. “As far as most of the big risks to the system are concerned, whether from non-bank financing companies or real estate, we have turned the corner.”
Bullion’s ascent is encountering some turbulence amid a stronger dollar and higher hurdles for luring additional investors after a rally that sent futures in the metal to an 18% gain this year
Pakistan’s sales taxcollection from imports climbs to Rs200.72bnInternewsKarachi
Sales tax collection from imports rose 18.5% to Rs200.72bn in the fi rst quar-
ter of the current fi scal year of 2019/20 as the government raised duties and withdrew certain ex-emptions to mobilise revenue, sources said on Saturday.
The sources said the collection rose due to abolishing of incentives in sales tax regime and imposition of higher customs duty rates.
Sales tax collection from imports amounted to RsRs169.4bn in the corresponding period of the last fi scal year, said the sources in large taxpayers unit, which has jurisdic-tion over collection of sales tax and federal excise duty on import stage.
The government took a series of steps in the budget 2019/20 to re-duce trade defi cit. It withdrew ze-ro-rated scheme, “which resulted in impact on the collection of sales tax on import stage,” a source said.
Zero-rating has created loop-hole and the benefi t is being availed by unintended benefi ciar-ies/non-exporters.
Reduced rates of sales tax for fi nished goods are also harming revenues. Further, huge misuse of zero-rated on import of fabric and processed fabrics has been identifi ed. Therefore, the government abolished the zero-rated scheme and restored fl at sales tax rate of 17%.
The sources said customs duty on imported goods is collected at the fi rst stage and an importer
pays sales tax on the enhanced value, inclusive of customs duty. “Sales tax collection also grew due to increase in rate of additional customs duty for non-essential items,” said the source. Increase in sales tax collection is encouraging in the wake of declining trade vol-ume during the period.
Federal Board of Revenue chair-man Shabbar Zaidi said the import volume has contracted to the tune of $3bn during the fi rst quarter. The contraction in import value impacted the revenue of around Rs125bn, he said.
All the customs collectorate in Karachi collect sales tax at clear-ance stage and transfer the amount of sales tax to Large Taxpayers Unit, Karachi. The collection of sales tax by Port Qasim Collector-ate posted a 29% growth during the period under review.
The collectorate collected Rs95.5bn as sales tax during July-September 2019 when compared with Rs74.2bn in the correspond-ing period of the last fi scal year. Customs Collectorate Appraise-ment (East) Karachi collected Rs54.3bn as sales tax, showing growth of nine% when compared with Rs50.3bn in the same period of the last fi scal year.
The Large Taxpayers Unit Ka-rachi has jurisdiction over col-lection of federal excise duty on imports. The collection of federal excise duty posted a 23% growth to Rs2.54bn during July-Septem-ber 2019 when compared with Rs2.07bn in the corresponding pe-riod of the last fi scal year.
Pakistan’s central bank stresses rapid digitisation of paymentsInternewsKarachi
There is a need for rapid digitisation
of payments in order to realise full
benefits for the economy as cash is
still the preferred mode of payments
for routine and day-to-day activities
emphasised State Bank of Pakistan
(SBP) governor Reza Baqir.
Addressing a workshop on “Digital
Payment Reforms” on Saturday, Baqir
highlighted the issues that had long
been outstanding and needed the
attention from all the stakeholders.
The event, organised by the
central bank in collaboration with
the World Bank, was aimed at
sharing the draft National Payment
Systems Strategy and seeking the
input of key stakeholders involved
in its implementation. The governor
noted that heavy reliance on cash
and limited use of digital chan-
nels reduced economic eff iciency,
hindered financial and economic
development and impeded the goal
of documenting the economy.
To address these issues, he em-
phasised the importance of building
a modern and robust payment sys-
tem in the country that could enable
the provision of cost-eff ective and
easily available digital financial serv-
ices to the general public. “This is a
key strategic objective of the SBP.”
Elaborating, Baqir shared with the
audience the central bank’s plans
for leading aggressive adoption
and implementation of the National
Payment Systems Strategy in the
country. He stressed that interoper-
ability was the key to achieving
faster digitisation goals.
The governor informed the par-
ticipants that a new faster payment
gateway would be launched next
year to facilitate instant transfer
of funds. He identified govern-
ment payments and receipts, and
merchant payments to be the key
elements in accelerating the digitisa-
tion of payments in the country.
Japan star electronics stock will be vital to Intel and SamsungBloombergTokyo
Japan’s best-performing electron-ics stock this year is a little-known company just outside of Tokyo that
has the world’s biggest chip manufac-turers lining up to buy its equipment.
Lasertec Corp is the only company in the world that builds the testing ma-chines required to verify chip designs for the nascent extreme ultraviolet lithog-raphy (or EUV) method of chipmaking.
After two decades in development, EUV is the long-awaited next generation of semiconductor-making, promising to pack even more transistors within every processor.
It’s fi nally entering the mass produc-tion phase and anticipated demand has sent Lasertec’s shares up almost 150% in 2019. That makes it the best performer on the Topix Electric Appliances index, whose members include Sony Corp and Fanuc Corp.
The Yokohama-based company has been working on a ¥16bn ($150mn) order for its testing equipment from one chip-
maker and is in talks with multiple other customers, Lasertec President Osamu Okabayashi said in an interview.
While he declined to name the cus-tomers, it’s a very small world: only In-tel Corp, Samsung Electronics Co and Taiwan Semiconductor Manufacturing Co have announced plans to use EUV in mass production. Memory chipmakers SK Hynix Inc and Micron Technology Inc may follow later.
“All of these are potential customers,” Okabayashi said. “Logic foundries will probably lead the way in commercialis-ing EUV, with memory makers coming one or two years after.”
In 2017, Lasertec solved a key piece of the EUV puzzle when it created a ma-chine that can inspect blank EUV masks for internal fl aws. Last month, it cleared another milestone by unveiling equip-ment that can do the same for stencils with chip designs already printed on them.
Spotting mask fl aws is key to increas-ing yields and making EUV commercial-ly viable, because even a tiny defect can render an entire batch of chips unusable.
Lasertec expects that each customer
will probably need several of its test-ers, which could cost well over $40mn apiece and take as long as two years to build. A chipmaker would need at least one machine in its mask shop to make sure the stencils come out right.
Another would go into a wafer fab to keep an eye on the microscopic wear-and-tear that results from concentrated light being projected repeatedly through the chip design stencils.
The lithography processes involved in this production involve printing circuits smaller than the width of a few strands of DNA.
The move to EUV is the culmination of a decades-old trend and the push for smaller geometries is now approaching its fi nal stages. Masks, which sandwich about 80 alternating layers of silicon and molybdenum and can cost as much as $100,000 each, have until recently been a major sticking point. It took La-sertec six years to develop the mask-testing technology that’s now made it an investor darling.
The last remaining hurdle to effi cient mass production is the need for a poly-silicon mask cover that prevents con-
tamination. The so-called pellicle has to allow as much light as possible through while surviving the thermal shock of be-ing heated to over 1,000 degrees Celsius. While Lasertec is not involved in pellicle development, it has future-proofed its newest testers by making sure they work with or without one, Okabayashi said.
In August, Lasertec forecast its fourth straight year of record revenue and prof-its. Sales will climb 39% to ¥40bn in the period ending June 2020 and profi t will jump 64%, the company said.
EUV-related gear will contribute about ¥17.6bn to sales this year, com-pared to just ¥7bn last period, Okaba-yashi said without giving a breakdown by product. The company also expects its order backlog to swell 12% to ¥58.3bn this fi scal year.
Lasertec’s shares have leapt almost fi ve-fold since April 2017, when the company unveiled its blanks tester. Of the nine analysts tracked by Bloomberg, six recommend buying the stock.
“Until three years ago, the future of EUV was still pretty uncertain,” Okaba-yashi said. “But now we are fi nally in a position to reap the rewards.”
Traders work at the Tokyo Stock Exchange (file). Japan’s Lasertec Corp, a little-known company, is the best performer on the Topix Electric Appliances index in 2019, whose members include Sony Corp and Fanuc Corp.
BUSINESS
Gulf Times Monday, October 7, 20194
PayPal bails on Facebook-led Libra cryptocurrency dreamBloombergNew York
PayPal Holdings Inc pulled out of the Libra Association, a blow to Facebook Inc’s eff orts to de-
velop a digital currency. “PayPal has made the decision to forgo further participation in the Libra Association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to de-mocratise access to fi nancial services for underserved populations,” the pay-ments company said in a statement e-mailed to Bloomberg News on Friday. A Facebook spokeswoman declined to comment.
Several founding members of the Facebook-led project have been wa-vering over whether to fully embrace the eff ort because they’re concerned about maintaining positive relation-ships with regulators who have reser-vations about the initiative, people fa-miliar with the matter told Bloomberg earlier this week.
Concerns that PayPal might back
away from the project intensifi ed on Thursday when the company was mys-teriously absent from a meeting of As-sociation members in Washington.
All of the other original partners were in attendance, according to peo-ple familiar with the situation who asked not to be identifi ed discussing a private meeting.
PayPal’s decision to bail is notable because David Marcus, the Facebook executive leading the initiative, used to be president of PayPal. Facebook’s blockchain team also has many former PayPal employees.
The Libra Association, the group of companies Facebook has assembled to oversee the cryptocurrency, has 28 founding members. The organisation has asked these members to reaffi rm their commitment to the project later this month. Before Libra was unveiled, the companies signed nonbinding let-ters of intent to explore joining the as-sociation.
Dante Disparte, head of policy and communications for the Libra As-sociation, confi rmed PayPal’s deci-sion, and said the fi rst Libra Council
meeting will take place on October 14. “This journey to build a genera-tional payment network like the Libra project is not an easy path,” he added in a statement. “We recognise that change is hard, and that each organi-sation that started this journey will have to make its own assessment of risks and rewards of being committed to seeing through the change that Li-bra promises.”
Disparte also noted that 1,500 “en-tities” have indicated “enthusiastic interest” in being part of the Asso-ciation. Some of those entities already have contracts in the works to join Li-bra, according to people familiar with the matter, though they’ll have to wait until original partners sign the offi cial charter later this month.
“We remain supportive of Libra’s aspirations and look forward to con-tinued dialogue on ways to work to-gether in the future,” PayPal said on Friday. “Facebook has been a long-standing and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities.”
People exit PayPal Holdings headquarters in San Jose, California. PayPal pulled out of the Libra Association, a blow to Facebook’s efforts to develop a digital currency.
World’s best-run pension funds say it’s time to start worryingBloombergCopenhagen
Back in 2012, the world’s best-managed pension market was thrown a lifeline by the Danish government to help contain liabilities. That was when interest rates were still positive.Seven years later, with rates now well below zero, even Denmark’s $440bn pension system says the environment has become so punishing that it may be time for a change in European rules.Henrik Munck, a senior consultant at Insurance & Pension Denmark, an umbrella organisation, says the way liabilities are currently calculated “could cause a negative spiral” that forces funds to keep buying low-risk assets, drive yields lower and the value of liabilities even higher.The warning comes as pension firms
across Europe struggle to generate the returns they need to cover their growing obligations. In Denmark, some funds saddled with legacy policies guaranteeing returns as high as 4.5% have had to use equity to meet their obligations.To calculate liabilities, pension firms use a complex mathematical formula constructed by the European Insurance and Occupational Pensions Authority (EIOPA). The formula is intended to shield funds from erratic market swings that artificially inflate or hollow out balance sheets. But with negative rates more entrenched, there are signs the EIOPA curve, as it’s called, may not be working as intended.“When pension funds across Europe de-risk simultaneously, it may actually become pro-cyclical: it increases the price movements, and it could result in yet more downward pressure on the
EIOPA yield curve, exacerbating the problem,” Munck said.The curve is comprised of several elements. Its backbone – the euro interest-rate swap curve – has sunk since its implementation about four years ago, driving up the value of liabilities.The European Commission has started reviewing the regulatory framework around insurers – Solvency II – with a view to proposing improvements by the end of next year. Insurance Europe, an industry group, is urging the commission to address the curve in its evaluations.In the meantime, pension funds have been coping by buying up riskier assets. The Dutch, ranked with Denmark as the world’s best performing pension providers by Mercer, have complained to the European Central Bank about the fallout on the industry.
And then there’s the headache of what’s called the volatility adjustment (VA), which is set on a country-by-country basis and is designed to cushion the impact of erratic markets. According to Bloomberg Intelligence senior analyst Charles Graham, there’s “widespread” agreement that VA is “flawed.” “It is something that EIOPA is considering recommending changing, but the challenge is still what to replace it with, or how to fine tune it,” Graham said.Earlier this year, EIOPA unexpectedly slashed Denmark’s VA to roughly a third its previous level, causing considerable alarm in the industry.According to Anders Damgaard, the chief financial off icer of Denmark’s biggest commercial pension fund, PFA, which has about $100bn in assets, EIPOA’s reason for the adjustment made sense: The new VA incorporates
call options that let Danish borrowers buy back the bonds that fund their mortgages. The long-term covered bonds to which those call options are attached are a cornerstone of Danish pension funds’ investment portfolios.With interest rates at unprecedented lows, a record number of borrowers are now taking advantage of those call options to refinance their mortgages. Damgaard says the way EIOPA calculates the volatility adjustment means the very device that’s intended to mute market swings has itself become more volatile. Worse, because it’s “an artificial number,” pension funds can’t hedge it, he says.“That’s really where the main challenge is for us,” Damgaard said. “We have an unhedgeable component of the yield curve – which is actually active on the entire yield curve – and you can’t hedge
it, which means that the balance sheet posts are very volatile.”PFA, like many Danish pension funds, started scaling back guaranteed products for retirees many years ago. That’s given it a buff er to help absorb some of the shock of growing liabilities. But not everyone’s as well prepared. “If the discount curve is more volatile and you can’t hedge it, you can – if you don’t have enough capital – be forced to lower risk on the more hedgeable space, to compensate,” Damgaard said.Olav Jones, deputy director general of Insurance Europe, says the pension industry “does not see any need to change the way the risk-free curve is generated, but there is a need to improve how the VA is generated.”Right now, it’s “generally too low and generally leads to liabilities that are inflated” and creates artificial volatility in insurers’ balance sheets, he said.
Rates traders hunt for clues on Treasuries rally, future of repoBloombergNew York
The days ahead will have something for everyone across the spectrum from
money-market traders to long-bond investors.
Short-end participants rat-tled by recent turmoil in repur-chase agreements will be clam-ouring for insight from minutes of the Federal Reserve meeting that took place at the height of that upheaval.
And that in turn could provide clues about future growth of the central bank’s balance sheet. Investors across the curve will also be trying to dissect whether the bond rally will continue and where offi cials stand on bench-mark rates. Meanwhile, data on infl ation and a fresh deluge of debt supply from the Treasury could also shape the outlook for longer maturities.
Treasuries have rallied over the past week in the wake of poorer-than-anticipated manu-facturing and services gauges from the Institute for Supply Management, with the two-year yield dropping to a level unseen since 2017.
Traders largely maintained bets on further Fed easing after the monthly jobs report con-fi rmed the labour market is los-ing steam, with almost 18 basis points priced in by futures trad-ers for its October 30 decision. Upcoming reports this week on the consumer price index and re-tail sales, as well as the minutes, could prove pivotal for traders wagering on the Fed’s next move.
“On the data front, the focus over the next week will be on CPI and retail sales to get confi rma-tion if the weakness in ISM is in fact more than just a blip,” said Subadra Rajappa, head of US rates strategy at Societe Generale.
Two-year Treasury yields ended last week at 1.40%, af-ter touching a two-year low of 1.36% on Friday, while 10-year rates fell to 1.53%. Fed chairman Jerome Powell, speaking on Fri-day a few hours after the release of the monthly labour report, said that the US economy is in
a good place, although it faces some risks.
Further bad news on the economic front risks pushing Treasury yields even lower still, although a slate of debt sales could provide upward pressure. The US government is preparing to auction a combined $78bn of 3-year, 10-year and 30-year se-curities in the days ahead.
It could be a big week for repo too. While the Fed has assuaged concerns for now about liquid-ity and extended its operations through the end of the month, details from the minutes may still be crucial. These could help determine whether funding-market volatility returns and also dictate, to some extent, what the central bank might have to do with the size of its balance sheet.
The Fed’s diagnosis about what happened in short-term markets last month “is very im-portant in determining what the Fed’s policy decision is going to be,” said Mark Cabana, Bank of America‘s head of US interest-rate strategy. “If it’s just a dis-tribution issue and the pipes not working properly, you can aff ord to rely on temporary operations.
But if it’s reserve scarcity, it means you need to add reserves and permanently grow the bal-ance sheet.”
What to watch in the com-ing week: Several Fed speakers scheduled, including the chair-man: October 7: Minneapolis Fed’s Neel Kashkari discusses the central bank’s work on Na-tive American Reservations. Oc-tober 8: Chicago Fed’s Charles Evans speaks in Chicago; chair-man Jerome Powell speaks at NABE conference in Denver; Kashkari participates in a town hall in Minnesota.
October 9: Powell takes part in a Fed listens event in Kan-sas City. October 10: Cleveland Fed’s Loretta Mester at an event in Ohio; Atlanta Fed’s Raphael Bostic participates in a fi reside chat with Jesse Jackson Sr. Oc-tober 11: Kashkari speaks on the economy in New York; Boston Fed’s Eric Rosengren speaks at an event in Madison, Wisconsin; and Dallas Fed’s Robert Kaplan speaks at event in San Francisco.
Morgan Stanley, Goldman Sachs make their owndirect-listing pitchesBloombergNew York
Silicon Valley investors are touting direct listings to startups as a way to sidestep Wall Street banks and the
IPO process. The biggest investment banks want to make sure they stay in the mix.
Morgan Stanley is organising an event about direct listings on October 21 in San Francisco, according to people with knowledge of the programme. It will take place at the West Coast outpost of the New York Stock Exchange, the people said, asking not to be identifi ed because the information hasn’t been made public.
Goldman Sachs Group Inc held a ses-sion on direct listings during its Private Innovative Company Conference in Las Vegas on Thursday.
The gatherings follow a closed-door confab of venture capital fi rms, investors and entrepreneurs on Tuesday, in which organisers promoted the alternative to initial public off erings that wrests power away from banks and avoids a fi rst-day price pop.
In one of this year’s highest profi le examples, shares of Beyond Meat Inc surged 163% on their fi rst day of trading after the company’s May IPO. While in-vestors that took shares in the IPO made a big profi t, the day-one price surge sug-gests it was priced below its actual value.
Under a direct listing, a company makes its shares available for trading on a stock exchange without the formali-ties of a traditional IPO. That means no road show, no underwriter and no off er-ing price, according to a blog post by John Tuttle, NYSE’s vice chairman and chief commercial offi cer.
“There’s an understanding that capital raising can be decoupled from becoming a public company, and that’s sparking a lot of questions about how and when a company should go public,” NYSE President Stacey Cunningham said in an interview at an equity-market conference in Washington.
“A direct listing is a new tool.” Repre-sentatives for Morgan Stanley and NYSE declined to comment on the October 21 event. Speakers at the Goldman Sachs conference included Will Connolly, the
bank’s head of technology equity capital markets, Spotify Technology SA Chief Financial Offi cer Barry McCarthy and Greg Rodgers, a partner at Latham & Watkins LLP. “It was a great event with an interesting blend of founder-led com-panies matched with some of the best venture-capital investors in the world,” said Jake Siewert, a bank spokesman who moderated the panel.
Some investors and startups are con-cerned about fi rst-day price surges that often capture headlines, Joe Mecane, head of execution services at Citadel Securities, said on Wednesday in Wash-ington. Even as this year featured sev-eral fl ops of high-profi le IPOs, fi rst-day pops have generated billions of dollars in gains for investors in US off erings. Ven-
ture capitalists “feel like they’ve gotten shortchanged by the IPO process,” said Mecane, whose fi rm was the designated market maker on the direct listings of Slack Technologies Inc and Spotify. The two companies’ chief fi nancial offi cers will speak at Morgan Stanley conference in San Francisco, one of the people said.
“We are bullish on direct listings,” Co-lin Stewart, Morgan Stanley’s global head of technology equity capital markets, said in an e-mail. “On the back of Spot-ify and Slack, we believe every company that is considering going public should be having discussions in the boardroom about the direct listing option.”
Morgan Stanley, this year’s top-ranked underwriter of IPOs globally, worked on those two deals, creating the new role of
adviser to the designated market maker. Goldman was also hired as an adviser to both companies. The two banks earned signifi cant fees on the transactions be-cause fewer banks were splitting the fee pool than on a traditional IPO.
“It’s interesting to see people try-ing diff erent methods of listing,” Hester Peirce, a commissioner at the US Securi-ties and Exchange Commission, said in an interview. “There haven’t really been so many at this point that we have a lot of data, but it’s a trend we’re all watching. I’m watching it for sure.”
The interest in direct listings comes as the IPO outlook is slowing for the rest of the year. Companies interested in selling shares will probably wait for markets to stabilise in 2020, Mecane said.
Morgan Stanley headquarters in New York. Morgan Stanley is organising an event about direct listings on October 21 inSan Francisco, according to people with knowledge of the programme.
Zad Holding CoWidam Food CoVodafone Qatar
United Development CoSalam International Investme
Qatar & Oman Investment CoQatar Navigation
Qatar National Cement CoQatar National Bank
Qatar Islamic InsuranceQatar Industrial Manufactur
Qatar International IslamicQatari Investors Group
Qatar Islamic BankQatar Gas Transport(Nakilat)Qatar General Insurance & ReQatar German Co For Medical
Qatar Fuel QscQatar First Bank
Qatar Electricity & Water CoQatar Exchange Index Etf
Qatar Cinema & Film DistribAl Rayan Qatar Etf
Qatar Insurance CoQatar Aluminum Manufacturing
Ooredoo QpscNational Leasing
Mazaya Qatar Real Estate DevMesaieed Petrochemical Holdi
Al Meera Consumer Goods CoMedicare Group
Mannai Corporation QscMasraf Al Rayan
Al Khalij Commercial BankIndustries Qatar
Islamic Holding GroupInvestment Holding Group
Gulf Warehousing CompanyGulf International Services
Ezdan Holding GroupDoha Insurance Co
Doha Bank QpscDlala Holding
Commercial Bank PsqcBarwa Real Estate Co
Al Khaleej Takaful GroupAl Ahli Bank
13.50
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1.24
1.38
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112,500
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QATAR
Company Name Lt Price % Chg Volume
KUWAIT
Company Name Lt Price % Chg Volume
OMAN
Company Name Lt Price % Chg Volume
KUWAIT
Company Name Lt Price % Chg Volume
KUWAIT
Company Name Lt Price % Chg Volume
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Oman PackagingOman Oil Marketing Company
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Oman Cement CoOman Cables Industry
Oman & Emirates Inv(Om)50%Natl Aluminium Products
National Real Estate DevelopNational Mineral Water
National Life & General InsuNational Gas Co
National Finance CoNational Detergent Co Saog
National Biscuit IndustriesNational Bank Of Oman Saog
Muscat Thread Mills CoMuscat Insurance Co Saog
Muscat Gases Company SaogMuscat Finance
Muscat City Desalination CoMajan Glass Company
Majan CollegeHsbc Bank Oman
Hotels Management Co InternaGulf Stone
Gulf Mushroom CompanyGulf Investments Services
Gulf Invest. Serv. Pref-SharGulf International Chemicals
Gulf Hotels (Oman) Co LtdGlobal Fin Investment
Galfar Engineering&ContractGalfar Engineering -Prefer
Financial Services Co.Financial Corp/The
Dhofar TourismDhofar Poultry
Dhofar Intl DevelopmentDhofar Insurance
Dhofar Generating Co SaocDhofar Fisheries & Food Indu
Dhofar CattlefeedDhofar Beverages Co
Construction Materials IndComputer Stationery Inds
Bankmuscat SaogBank Nizwa
Bank Dhofar SaogArabia Falcon Insurance Co
Aloula CoAl-Omaniya Financial Service
Al-Hassan Engineering CoAl-Fajar Al-Alamia Co
Al-Anwar Ceramic Tiles CoAl Suwadi Power
Al Sharqiya Invest HoldingAl Maha Petroleum Products M
Al Maha Ceramics Co SaocAl Madina Takaful Co Saoc
Al Madina Investment CoAl Kamil Power Co
Al Jazerah Services -PfdAl Jazeera Steel Products Co
Al Jazeera ServicesAl Izz Islamic Bank
Al Buraimi HotelAl Batinah PowerAl Batinah Hotels
Al Batinah Dev & InvAl Anwar Holdings Saog
Al Ahlia Insurance Co SaocAhli Bank
Acwa Power Barka SaogAbrasives Manufacturing Co S
A’saff a Foods Saog0Man Oil Marketing Co-Pref
#N/A Invalid Security#N/A Invalid Security
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Al-Madar Finance & Invt CoGulf Petroleum Investment
Mabanee Co SakcInovest Co Bsc
Al-Deera Holding CoMena Real Estate Co
Amar Finance & Leasing CoUnited Projects For Aviation
National Consumer Holding CoAmwal International InvestmeEquipment Holding Co K.S.C.C
Arkan Al Kuwait Real EstateGfh Financial Group Bsc
Energy House Holding Co KscpKuwait Co For Process PlantAl Maidan Dental Clinic Co KNational Shooting CompanyAl-Ahleia Insurance Co Sakp
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Aqar Real Estate InvestmentsHayat Communications
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Alargan International RealBurgan Co For Well Drilling
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Palms Agro Production CoMubarrad Holding Co Ksc
Shuaiba Industrial CoAan Digital Services Co
First Takaful Insurance CoKuwaiti Syrian Holding Co
National Cleaning CompanyUnited Real Estate Company
AgilityKuwait & Middle East Fin Inv
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International Resorts CoNational Industries Grp Hold
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Mobile Telecommunications CoEff ect Real Estate Co
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Specialities Group Holding CAbyaar Real Eastate Developm
Dar Al Thuraya Real Estate CKgl Logistics Company Kscc
Combined Group ContractingJiyad Holding Co Ksc
Warba Capital Holding CoGulf Investment House Ksc
Boubyan Bank K.S.CAhli United Bank B.S.C
Osos Holding Group Co
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738.00
62.00
11.70
38.20
45.00
437.00
55.00
40.00
15.40
78.10
71.50
18.30
212.00
1,240.00
10.80
430.00
27.00
40.50
65.20
40.00
116.00
5.20
109.00
98.10
54.50
116.00
59.00
58.60
160.00
16.20
42.50
31.50
58.40
61.00
734.00
78.60
51.00
190.00
14.20
223.00
64.00
31.00
89.90
100.00
534.00
20.50
298.00
17.40
259.00
61.30
1,099.00
315.00
200.00
35.30
136.00
313.00
219.00
16.00
329.00
74.00
53.50
30.10
11.80
35.30
500.00
31.00
51.00
82.00
17.00
35.00
22.30
266.00
26.00
13.00
39.00
84.00
71.00
12.40
162.00
36.00
231.00
43.70
66.00
44.50
555.00
270.00
103.00
-0.71
-1.46
-0.27
0.00
-2.50
-0.52
0.00
-0.68
0.00
8.11
-1.28
0.00
2.14
0.00
0.95
0.00
0.00
-0.23
0.00
-0.74
0.00
-18.37
0.00
0.00
0.00
0.00
-4.22
-0.85
0.00
0.00
0.00
0.62
0.00
-5.12
0.00
0.00
0.55
1.81
0.00
0.53
0.00
0.45
-8.44
-3.13
-0.11
0.00
0.56
0.00
6.81
1.16
-0.38
-4.22
2.14
0.00
0.00
3.82
-0.73
0.32
0.00
1.27
0.00
0.00
0.00
1.35
-1.67
-5.61
1.01
-2.52
-1.54
0.00
0.00
5.11
0.00
0.00
0.00
-0.76
0.00
0.00
0.00
0.81
0.00
0.28
1.76
0.00
-1.49
1.14
0.91
1.12
0.00
5,000,206
3,612,692
172,990
-
106,000
331,896
-
2,113
-
75
780
-
508,271
-
41,277
-
-
21,774
-
233,595
-
2,000
9,287
-
-
-
102,543
11,662
-
-
-
177,034
-
230,001
-
-
919,245
1,880,848
-
54,150
-
1,141,869
253
54,001
201,725
-
1,209,908
-
2,305
697,371
155,010
138,620
4,350
-
-
737,828
128,443
213,569
66,866
200
10,000
-
691,955
6,415,192
1,392,047
306,800
10
65,540
349,000
-
-
1,000
-
55,262
1,470,412
542,555
-
-
297,844
553,530
-
63,607
770,858
-
2,980
70,936
285,426
3,254,331
-
Al-Eid Food KscQurain Petrochemical Industr
Advanced Technology CoEkttitab Holding Co Sak
Real Estate Trade Centers CoAcico Industries Co Kscc
Kipco Asset Management CoNational Petroleum Services
Alimtiaz Investment GroupRas Al Khaimah White Cement
Kuwait Reinsurance Co KscKuwait & Gulf Link Transport
Humansoft Holding Co KscAutomated Systems Co Kscc
Metal & Recycling CoGulf Franchising Holding Co
Al-Enma’a Real Estate CoNational Mobile Telecommuni
Sanad Holding Co KsccUnicap Investment And Financ
Al Salam Group Holding CoAl Aman Investment Company
Mashaer Holding Co KscManazel Holding
Tijara And Real Estate InvesJazeera Airways Co Ksc
Commercial Real Estate CoNational International Co
Taameer Real Estate Invest CGulf Cement Co
Heavy Engineering And Ship BNational Real Estate Co
Al Safat Energy Holding CompKuwait National Cinema CoDanah Alsafat Foodstuff Co
Independent Petroleum GroupKuwait Real Estate Co Ksc
Salhia Real Estate Co KscGulf Cable & Electrical Ind
Kuwait Finance HouseGulf North Africa Holding Co
Hilal Cement CoOsoul Investment Kscc
Gulf Insurance Group KscUmm Al Qaiwain General Inves
Aayan Leasing & InvestmentAlrai Media Group Co KscNational Investments CoCommercial Facilities CoYiaco Medical Co. K.S.C.C
Dulaqan Real Estate CoReal Estate Asset Management
54.50
308.00
900.00
16.00
22.70
128.00
97.00
1,030.00
124.00
58.50
158.00
71.10
3,144.00
71.00
35.50
160.00
48.30
713.00
0.00
43.50
29.80
55.00
68.60
27.50
39.00
990.00
89.00
67.00
28.00
54.00
406.00
78.50
19.40
770.00
29.30
431.00
81.70
331.00
460.00
674.00
58.50
90.00
74.00
680.00
59.00
54.70
38.40
125.00
199.00
66.50
350.00
95.40
-3.54
0.65
0.00
0.00
9.66
-1.54
-1.02
0.00
0.00
0.00
0.00
0.00
0.93
0.00
0.00
0.00
1.26
-0.83
0.00
-5.43
3.47
-1.79
-2.00
3.77
3.45
0.00
-1.11
3.08
-3.45
1.69
0.50
-0.38
0.52
0.00
0.00
0.00
2.13
0.00
-0.65
1.20
0.00
0.00
0.00
0.00
-8.95
0.18
0.00
0.81
-0.50
0.00
0.00
0.00
130,000
127,462
-
-
10
28,518
170,052
-
474,169
-
-
-
10
-
-
-
12,297,509
3,518
-
199,500
542,920
51,083
96,200
90,062
250
92,761
124
310
3,692,982
30,000
287,120
384,318
50,100
-
-
-
565,684
-
114,447
3,227,069
-
-
11,000
-
65
88,565
3,000
302,288
92,000
-
-
-
OMAN
Company Name % Chg Volume
Voltamp Energy SaogVision Insurance Saoc
United Power/Energy Co- PrefUnited Power Co Saog
United Finance CoUbar Hotels & Resorts
Takaful OmanTaageer FinanceSweets Of OmanSohar Power Co
Sohar International BankSmn Power Holding Saog
Shell Oman Marketing - PrefShell Oman Marketing
Sharqiyah Desalination Co SaSembcorp Salalah Power & Wat
Salalah Port ServicesSalalah Mills Co
Salalah Beach Resort SaogSahara Hospitality
Renaissance Services SaogRaysut Cement Co
Phoenix Power Co SaocPackaging Co Ltd
OoredooOminvest
Oman United Insurance CoOman Telecommunications Co
Oman Refreshment CoOman Qatar Insurance Co
0.18
0.11
1.00
2.40
0.08
0.13
0.12
0.10
0.55
0.09
0.12
0.07
1.05
1.05
0.29
0.13
0.60
0.50
1.38
3.15
0.27
0.35
0.09
2.21
0.53
0.34
0.25
0.57
1.42
0.10
0.00
0.00
0.00
0.00
0.00
0.00
-0.83
0.00
0.00
-9.90
0.88
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
-2.55
0.00
0.00
0.00
0.38
0.00
1.22
-0.35
0.00
3.13
-
-
-
-
-
-
10,091
-
-
5,250
1,045,810
-
-
-
-
-
-
-
-
-
269,435
-
328
-
81,910
-
102,000
20,000
-
10,600
Sultan Center Food ProductsKuwait Foundry Co Sak
Kuwait Financial Centre SakAjial Real Estate Entmt
Kuwait Finance & InvestmentNational Industries Co Ksc
Kuwait Real Estate Holding CSecurities House/The
Boubyan Petrochemicals CoAl Ahli Bank Of Kuwait
Ahli United Bank (Almutahed)National Bank Of Kuwait
Commercial Bank Of KuwaitKuwait International Bank
Gulf BankAl-Massaleh Real Estate Co
Al Arabiya Real Estate CoKuwait Remal Real Estate Co
Alkout Industrial Projects CA’ayan Real Estate Co Sak
Investors Holding Group Co.KAl-Mazaya Holding Co
0.00
2.92
-0.43
0.77
-3.00
0.00
0.00
1.67
0.00
-1.33
1.90
0.53
0.00
0.00
0.72
8.57
3.59
0.00
0.00
0.00
2.41
0.36
615,010
21,370
11,932
20,500
1,436,655
-
-
47,300
22,572
120,005
111,397
923,469
11,500
2,656,864
4,432,834
45
412,300
206,330
-
264,589
855,803
20,786
44.00
494.00
93.00
131.00
48.50
170.00
27.00
42.60
770.00
296.00
322.00
945.00
500.00
267.00
280.00
38.00
26.00
25.00
840.00
65.40
8.50
55.70
Lt Price
Macro confusion stops traders from making currency betsBloombergLondon
Facing macro threats on both sides of the Atlantic, traders of currency options appear either
remarkably calm or paralysed by un-certainty. Right now, investors are weighing everything from the impact of monetary easing in Europe against US rate cuts, to President Donald Trump’s impeachment drama and the global trade confl ict. Yet those dramas barely show up in prices for euro-dol-lar derivatives.
That suggests market participants are reluctant to take strong directional bets on the world’s most-traded cur-rency pair. Risk reversals, a gauge of options sentiment and positioning, are trading at similar levels in all tenors from one month out to 10 years. That’s rare, according to Morgan Stanley.
“Valuation arguments and Fed rate cuts would suggest the euro should be stronger,” said Athanasios Vamvakidis, head of G-10 foreign-exchange strat-egy at Bank of America Merrill Lynch. “However, the ECB’s policy, and trade tensions would suggest the euro should be weak against the dollar.”
The previous quarter was the sin-gle currency’s worst in more than a year. It fell 4.2%. That suggests a lot of bad news may have already been in the price, said Ned Rumpeltin, the European head of currency strategy at Toronto-Dominion bank.
Europe’s single currency, underval-ued according to the Bank for Interna-tional Settlements’ model, has stayed fairly resilient as the Trump admin-istration got the green light to impose tariff s on as much as $7.5bn worth of European exports in retaliation for il-legal government aid to Airbus SE.
A composite purchasing managers
index for the euro area on Thursday showed growth in the region is stag-nating.
Yet there is a sense in the market that the ECB is probably at the end of the line as far as policy ammunition is concerned. Rumpeltin forecasts the euro will hold around $1.09 by the end of the year before appreciating a touch to $1.10 in the fi rst quarter of 2020.
“I suspect it is a once-bitten, twice-shy market psychology,” said Rumpel-
tin. “Having seen a multitude of false breaks in both directions in recent months, investors may have learned the hard way not to chase the market and overload the boat.”
A lack of conviction in euro-dollar trading is also apparent in the volatil-ity market, said Philippos Kassimatis, a co-founder at hedging advisory fi rm Maven Global.
He noted that implied volatilities below 6% for both the one-month and
six-month horizon - as well as the low spread between realised and implied price swings - have shown the market is not expecting sharp moves in either direction.
“While we have seen a number of European corporates increasing their hedges as the euro moves lower, the pace is gradual,” he said. “They don’t expect any sharp moves down, but also they don’t anticipate a strong reversal of the current dollar trend either.”
BUSINESS5Gulf Times
Monday, October 7, 2019
Swiss franc weakness seen short-lived as haven allure may returnBloombergAthens
The franc is trading near a two-week low versus the euro on Swiss data weak-
ness, with both positioning and charts signalling more short-term pain. Yet, losses may be limited as the currency’s haven appeal should eventually prevail amid the deep-ening global economic gloom.
The franc has pared its year-to-date advance to about 3% on ex-pectations the Swiss National Bank may need to ease monetary policy amid slowing infl ation and a man-ufacturing slump. It had run into resistance even before the recent poor data when it traded at levels stronger than 1.09 per euro, which are historically associated with in-creased currency intervention by the SNB.
Scheduled events over the com-ing week off er limited scope to un-settle ongoing currency trends and while trade and Brexit headlines may stir up some volatility, market reactions are unlikely to extend be-yond the knee-jerk.
The franc’s weakening poten-tial looks limited even on any SNB move to add stimulus, as the insti-tution would only be joining peers such as the European Central Bank and Federal Reserve in leaning more dovish.
While Swiss policy makers are scheduled to meet next on De-cember 12, offi cials would actually break a longstanding habit if they acted then. The SNB’s trademark style has been to deliver surprises between meetings – such as when it scrapped the franc’s 1.20 per euro cap in 2015.
Technically, the euro has scope to strengthen due to a bullish crossover of short-term mov-ing averages. This developed Thursday when traders noted a very large buying clip in dollar-franc, which was seen as a one-off transaction. History suggests that such a pattern, when it oc-curs within a firm downtrend, re-sults in a relief rebound without triggering a big change in market sentiment.
What to watch: Chinese Vice Premier Liu He visits Washington for trade talks with his US coun-terparts on Thursday, October 10. The Brexit impasse continues as UK Prime Minister Boris Johnson attempts to make a deal with the EU before a key summit later this month; opposition legislators will probably continue to plan a strategy to prevent a no-deal Brexit.
The UK parliament will be sus-pended on October 8 ahead of the Queen’s Speech and State Open-ing of Parliament, scheduled for October 14. FOMC minutes will be released on October 9 from the September 17-18 policy meeting.
Series of FOMC speakers include chair Jerome Powell, Kansas City Fed President Esther George, Bos-ton Fed President Eric Rosengren and Chicago Fed President Charles Evans.
Policy maker speeches also in-clude BoE governor Mark Carney, ECB chief economist Philip Lane, Norges Bank governor Oystein Olsen. Economic releases include euro area confi dence index, US in-fl ation, UK GDP, Norway and Swe-den infl ation.
The US and North Korea are set to hold working-level talks on ending Pyongyang’s nuclear programme.
BUSINESS
Gulf Times Monday, October 7, 201910
Signs of shale-patch slowdown found even on the West Texas windBloombergHouston
Barry Marks can hear the Permian Basin
slowing down.
It’s right there on country-music station
96.1 FM in Odessa, Texas, where com-
mercials for shale-patch jobs used to fill
the airways. Those kinds of radio ads have
fallen by two-thirds, said Marks, the gen-
eral manager for ICA Broadcasting LLC,
which runs five stations in the area.
“A lot of those people working in the
Permian Basin do not reside here,” Marks
said. “So they’re heading home every
two weeks. And they may just be staying
home.”
Signs of a slowdown permeate the
Permian Basin, the 55mn acres (22.3mn
hectares) in West Texas and New Mexico
whose abundant oil and widespread
fracking fuelled America’s quest for
energy independence. Dragged into the
downdraft of this year’s 19% drop in drill-
ing are orders for everything from giant
earth movers that build well-site roads
to chemicals used to kill bacteria during
hydraulic fracturing. Rig counts are down,
hotel proceeds are declining, home sales
are slowing and fewer jobs are available
than just last year.
“If you can’t wring out any costs savings
then you’ve got to buy less stuff if you
want to get your costs down, and that’s
the phase we’re entering into,” said Jesse
Thompson, senior business economist
at the Houston branch of the Federal
Reserve Bank of Dallas. “You’ve seen this
work its way through on the manufactur-
ing side as quickly if not more quickly
than we saw in the rig count on the oilfield
services side.”
Through August, Permian employment
has grown at an annualised rate of 0.7%,
far less than the 11.4% growth of the same
period last year, the Dallas Fed said on
Wednesday in its latest monthly report.
Unemployment in August, the latest pe-
riod available, is at 2.3%, inching up from
the region’s low of 2% in May.
Caterpillar Inc, which makes a wide range
of equipment for the industry, such as
generators and pumps used by drillers in
the field, blamed the Permian for its lower
second-quarter sales in oil and gas equip-
ment. The company warned investors in
July that annual profit will probably come
in at the lower end of its forecasted range,
in part because it has cut expectations for
West Texas revenue.
Balchem Corp, which sells chemicals used
in hydraulic fracturing, has been counting
on a return to pressure-pumping in the
Permian during the second half of this year.
“But we’ve not seen any indication of that
yet,” Martin Bengtsson, chief financial
off icer for the New Hampton, New York-
based company, said on an August confer-
ence call with analysts and investors. “We
remain cautious about this historically
cyclical market and it’s hard to accurately
forecast the ups and downs.”
Lights warning of reduced oil production
have been flashing.
Last month, oil explorers slashed drilling
work by the most in a single week since
January 2016, when crude prices were
headed to their lowest in 12 years. The
number of Permian crews, who come in
after the drilling teams to get wells ready
for production, has tumbled every week
since the end of July and now sits at a
30-month low.
With fewer workers drilling and frack-
ing, hotels are taking a hit. Revenue per
available room declined 32%, year over
year, in August, and year to date is down
21%, according to STR Inc, a research and
consultant firm that tracks tourism data.
By comparison, the figure for the US as a
whole, year to date, is a rise of 1.1%.
Double-digit changes in either direction
are “very, very rare,” said Jan Freitag, an
STR senior vice president. Talking about
the big moves in Odessa and Midland,
the Permian’s biggest cities, he added:
“Normally, you get that when something
like a hurricane hits.”
Sales of existing homes in the Permian
climbed 5.7% in August compared with
the same period last year, according to
the Dallas Fed’s Permian Basin Economic
Indicators report. But even that gain was
below the increases in 2017 and 2018, the
bank said. Home prices, on the other hand,
continue to climb. In August, the median
rose 8.3% year over year to $308,634, ac-
cording to the Dallas Fed.
Marks, who’s lived in the region for 35
years, said this time last year was a diff er-
ent tune for job-recruiting commercials
on the radio — it was the most he’d ever
experienced.
“Employers were trying to grab people
wherever they could, including stealing
them from their competition,” he said.
Today, however, he talks more about “a
shrinking employer base.”
“We don’t see any increase in the number
of workers seeking work at this point,”
Marks said.
A gas flare burns at dusk in the Permian Basin in Texas. Signs of a slowdown permeate the Permian Basin, the 55mn acres (22.3mn hectares) in West Texas and New Mexico, whose abundant oil and widespread fracking fuelled America’s quest for energy independence.
BUSINESS11Gulf Times
Monday, October 7, 2019
Zuckerberg seeks ‘superstar’ analysts for investment build-outBloombergBoston
Mark Zuckerberg’s philanthropic venture is staff ing up its new investment off ice in the mold of the Ivy League.The Chan Zuckerberg Initiative, backed by billions of dollars of Facebook Inc stock, recently hired three professionals under chief investment off icer David Lee, who relocated to Silicon Valley earlier this year. It’s also looking for a couple of “superstar” analysts, according to a LinkedIn job posting.Zuckerberg, who famously dropped out of Harvard to start the social media giant, is returning to the Ivy League for talent. He and his wife, Priscilla Chan, a Harvard grad, recruited Yale’s David Swensen to chair the investment committee, in addition to tapping
Princeton’s endowment for Lee and an associate staff er.Yale distinguished itself by piling into alternative assets and international equities, making it the top performing endowment over the last decade. But it has lagged in recent years, returning 5.7% in fiscal 2019, as foreign stocks suff ered losses.The Chan Zuckerberg Initiative appears to be creating a similar global endowment-style portfolio, looking to hire analysts with expertise in public equities, hedge funds, buyout and venture capital funds, and real assets, according to the posting.Andrew Walling, who joined the team in August, brings hedge fund chops to the job of director of investments. The Princeton alum had been co-deputy CIO at Aetos Alternatives Management, which picks hedge fund managers for institutional investors.
John McNamara, a senior associate, was hired in September from Princeton’s endowment, which is run by Swensen acolyte Andy Golden. Peyton Hurrle was also brought on as a director of investments.A spokeswoman for the venture in Redwood City, California, confirmed the hires and declined comment. Walling and McNamara didn’t respond to requests for comment. Hurrle couldn’t be reached.The initiative last year planned to commit more than $10bn to the portfolio to produce returns that support operations. More than 95% of Zuckerberg’s fortune is still invested in Facebook shares and he remains a controlling shareholder. According to the social media company’s filings, 356mn shares, or $64.3bn, are held by CZI Holdings LLC as of October 2.Zuckerberg is worth $69.4bn, according
to the Bloomberg Billionaire’s Index. Some of Zuckerberg’s fortune has been invested with Iconiq Capital, a Silicon Valley wealth adviser that oversees money for several early Facebook employees.At an internal meeting at Facebook, Zuckerberg was asked by an employee to respond to a comment from Democratic presidential candidate Bernie Sanders that billionaire’s shouldn’t exist. While acknowledging that “no one deserves that much money,” Zuckerberg added that his wealth made possible investment to eradicate diseases that might not happen with public money.The Chan-Zuckerberg Initiative, which was formed in 2015 and is run by Chan, seeks to eradicate disease, improve education and reform the criminal justice system.
Byron Trott’s $4.7bn burger deal comes with Texas warningBloombergNew York
Morgan Belski may have had a seated dinner at her wedding, but the Texan knew she want-
ed her guests to end a night of dancing and celebration with Whataburger.
Just after 10pm, servers handed out Honey Butter Chicken Biscuits in the orange and white parchment paper recognisable to any regular of the fast-food chain.
“It’s a quintessential nightcap in Texas,” said Belski, 25, of Sugar Land, a city on the outskirts of Houston. “If your night ends without Whataburger, you’re doing it wrong.”
That kind of fervour has kept What-aburger in business for 69 years and sparked a social-media fi restorm this summer when Byron Trott’s Chicago-based BDT Capital Partners bought a majority stake. Locals fretted about the
future of an institution whose burgers, spicy ketchup and A-frame restau-rants are so beloved in the Lone Star State that when Belski asked her wed-ding coordinator about getting What-aburger catered as a late-night snack, she responded, “Don’t worry — I have a contact.”
The BDT deal, which valued the chain at $4.7bn, underscores the de-sirability of such brands in the hyper-competitive world of burger joints. The Dobson clan — who founded the company and retain a minority stake — have a $2bn fortune, according to estimates by the Bloomberg Billion-aires’ Index. The Dobsons declined to comment on their net worth.
Justifying that price tag will require expanding the business without dilut-ing the brand.
“The big challenge will be how they can take that and move it into other ar-eas and still get that emotional attach-ment,” said John Bowen, a professor at
the Conrad N Hilton College of Hotel & Restaurant Management at the Univer-sity of Houston.
Customers at a Houston branch were certainly wary of change on a recent weekend.
“I don’t want them to take it away from Texas,” said Sandra Perez, 37, after fi nishing dinner with her family. “We’re going to have to move to Chicago,” her brother, Julian Frausto, 43, said jok-ingly.
BDT and Whataburger said new ownership means business as usual above all else.
“Our partnership with BDT has been a natural fi t because they respect the brand we’ve built,” Whataburger presi-dent Ed Nelson said in a statement.
Tiff any Hagge, the BDT Capital Part-ners managing director who led the in-vestment, said her fi rm will support Whataburger and help it explore ex-pansion plans.
“We have no intention to change a
winning formula that’s clearly work-ing,” she said.
Such patience is enabled by the deep pockets of other wealthy clans that Trott, a former Goldman Sachs Group Inc banker, has cultivated to invest in family and founder-led companies. Trott built his reputation advising clients such as Warren Buff ett, the Kochs, as well as the Mars and Walton families, who have also invested with him.
Burger chains are an appetising prize. The size of the market in the US was $114bn in 2018, according to Eu-romonitor International, and there are plenty of such ventures that generate juicy returns.
In California, another regional fa-vourite, In-N-Out Burger, has made Lynsi Snyder one of the world’s young-est female billionaire’s. Then there’s New York’s Danny Meyer, who made his name with high-end Manhattan restaurants before launching Shake
Shack Inc, which is now worth $3.5bn, comprises the bulk of his fortune. Even Hollywood star Mark Wahlberg has gotten in on the act with his What-aburger franchise.
It doesn’t stop at burgers. Dan and Bubba Cathy both appear on the 500-member Bloomberg Billionaires’ Index thanks to the success of Chick-fi l-A.
“With a fast-casual concept you can build it out, you can make a lot of money,” said Bob Goldin, co-founder of Pentallect, a food industry consulting fi rm. “You don’t need chefs, you don’t need wait staff . It’s a much simpler concept you can operationalise.”
There’s certainly room for What-aburger to expand. The chain, with about $2bn of annual sales, has more than 800 locations in Texas and nine other states. McDonald’s Corp, by comparison, has about 38,000 loca-tions in over 100 countries.
Not that chains like Whataburger
or Chick-fi l-A are necessarily look-ing to go toe-to-toe with the likes of McDonald’s or Burger King parent Restaurant Brands International Inc. Their relative scarcity is part of the appeal.
“It’s about being selective enough that they can maintain this exclusiv-ity,” said Miranda Lambert, a research analyst at Euromonitor. “People want it 10 times more — not necessarily be-cause it is so great but because they can’t get it.”
Such a delicate balance is now no longer the sole concern of the Dob-sons. They’re expected to focus more on philanthropy and investing through investment fi rm, Las Aguilas.
Still, for all of their wealth, don’t ex-pect to hear or read too much about this particular burger dynasty.
“The company in general, and the family in particular, keep a very low profi le,” Goldin said. “The limelight isn’t for everyone.”
Zuckerberg, who famously dropped out of Harvard to start the social media giant, is returning to the Ivy League for talent. He and his wife Priscilla Chan recruited Yale’s David Swensen to chair the investment committee, in addition to tapping Princeton’s endowment for Lee and an associate staff er.
Apple approves controversial Hong Kong app after rejectionBloombergSan Francisco
Apple Inc’s App Store reversed a recent decision to reject a Hong Kong app that shows police ac-
tivity in the midst of increasingly vio-lent pro-democracy protests in the city.
The app, known as HKmap.live, is a mobile version of a website that helps users avoid potentially dan-gerous areas, according to the de-veloper, who uses the alias Kuma to remain anonymous. It was rejected from Apple’s App Store because it “facilitates, enables, and encourages an activity that is not legal,” Apple told the developer, according to a copy of the rejection notice seen by Bloomberg News. “Specifically, the
app allowed users to evade law en-forcement,” Apple wrote.
On Friday, Apple reversed the deci-sion and the app has been approved for sale in Hong Kong. “Apple fi nally made the right decision,” the developer said.
Police offi cers patrol the Admiralty district on October 2.
The developer said the app is built to “show events happening” in Hong Kong, but what users choose to do with that information is their choice. “We don’t encourage any advice on the map in general. Our ultimate goal is safety for everyone.”
On Twitter, the developer had argued that the rejection was unfair because other apps, such as Google’s Waze, help drivers avoid traffi c cameras and police. Apple is assuming that HKmap.live users are lawbreakers “and there-
fore evading law enforcement, which is clearly not the same,” the developer wrote on Twitter. By contrast, the app was approved for download on Android phones via a “quick process,” the de-veloper added.
The app was submitted to the App Store on September 21. It was initially rejected on September 26 for another reason related to rules on payment op-tions and what additional functions apps can tap, the developer said. After addressing that issue, the app was re-submitted and rejected again on Oct. 2 for helping users evade law enforce-ment. The app was submitted for re-view again later that day, according to the developer.
Apple has to walk a fi ne line in China. The company sells millions of iPhones in the country and indirectly
supports millions of jobs there. But it must also follow local laws that have become increasingly tough when it comes to digital information. In 2017, the company set up a data centre in China to abide by laws that require global companies to store information within the country. Apple also pulled some VPN apps from its App Store in China, limiting users’ ability to bypass a local web fi rewall and access over-seas sites.
“We would obviously rather not re-move the apps, but like we do in other countries, we follow the law wherever we do business,” Apple Chief Executive Offi cer Tim Cook said at the time. “We strongly believe participating in mar-kets and bringing benefi ts to customers is in the best interest of the folks there and in other countries as well.”
Apple couldn’t immediately be reached for comment on the approval.
Reviewing app decisions several times is a common practice. According to Apple’s website, the company rejects 40% of the 100,000 apps considered each week. It has what is known as an App Review Board to evaluate rejec-tions.
As part of its latest review of HKmap.live, Apple likely researched if the soft-ware violated local laws. Apple typi-cally examines such laws before mak-ing approval or rejection decisions on third-party apps.
The developer had hoped Apple would change its mind. The person had to buy an iPhone and a Mac computer to build the app for the company’s plat-form. “At least let me publish my app,” the developer said.
Customers wait in line outside an Apple store during the launch of the iPhone 11 and Apple Watch Series 5 devices in Hong Kong on September 20. Hong Kong app HKmap.live was rejected from Apple’s App Store because it “facilitates, enables, and encourages an activity that is not legal,” Apple told the developer, according to a copy of the rejection notice seen by Bloomberg News.
Netflix to make movies in Italy with Berlusconi’s Mediaset
BloombergMilan
Netflix Inc is teaming up with Silvio Berlusconi’s Italian broadcaster Mediaset SpA in a movie-making alliance to capture more viewers in Europe’s fourth-biggest economy.The companies will co-finance seven titles and Netflix will contribute most of the funding, according to people familiar with the matter. Netflix chief executive off icer Reed Hastings will be in Rome next week for an event to announce the multi-year deal, said the people, who asked not to be named because the plans are not public.While the tech giant will bring Mediaset a global audience for the movies, the deal shows the shifting balance of power in the TV industry as national networks lose viewers to a growing array of US streaming platforms.Mediaset is trying to lead a counterattack and has called on other European broadcasters to join forces and achieve the scale they need to compete.Netflix is cranking up production of TV shows and films all over the world to give its content a local flavour and capture more non-US viewers. The importance of those eff orts was underlined in July when it reported a drop in US subscribers and slower growth overseas, sending its shares tumbling.The company has produced more than 60 international series in 2019, more than double last year’s tally. Recent foreign-language hits include La Casa De Papel, a Spanish heist series, and German drama The Dark.It’s reached more than 30% of available customers in European markets such as the UK, Germany and Sweden, according to estimates, but has more room to grow in southern countries. Representatives for Mediaset and Netflix declined to comment.
BUSINESSMonday, October 7, 2019
GULF TIMES
BoE to dust off war games if no-deal Brexit becomes realityBloombergLondon
Bank of England Governor Mark Carney will soon fi nd himself thrust once more unto the breach
if the UK crashes out of the European Union without a transition.
The last time he was front and centre — just after the referendum on June 23, 2016 — he immediately provided reas-surance during an unexpected shock that rocked markets and left a power vacuum in Britain’s political class. At least there should still be a govern-ment afterwards this time, unlike when Prime Minister David Cameron re-signed the day following the vote.
A disruptive exit could have a broad-er economic impact, requiring a faster response that policy makers admit can only go so far. The central bank has made sure banks are ready, but Carney
has warned that “fi nancial stability is not the same as market stability.”
The BoE has experience in planning for the worst case scenario. The Scot-tish referendum in 2014 gave a dry run dealing with a disruptive event, even if Carney never had to deploy the “con-siderable resources” planned in case of a separatist victory.
“It’s a tried and tested playbook,” said Sanjay Raja, UK economist at Deutsche Bank AG in London, which expects the BoE to ease policy immediately at its November meeting. “Cut rates and try to get ahead of it as soon as possible, try and make sure fi nancial and credit conditions remain as accommodative as possible.”
Here’s a look at how the BoE may re-spond to a no deal Brexit, assuming it takes place at the end of this month.
Should a no-deal exit become offi cial government policy, the BoE will likely immediately kick start contingency
plans. The Financial Policy Committee will have a fi nal chance to weigh in this week with the summary of its October 2 meeting on Wednesday.
While the BoE stresses that the fi -nancial system is prepared, it also says that it can do little to curtail the inevi-table market ructions. Carney says the goal is to prevent problems in the fi nan-cial plumbing so that the sector doesn’t make things worse.
Before the Brexit vote, the BoE said its plans included “intensive supervi-sion” of banks, additional funding and activation of swap lines with other cen-tral banks.
If markets are in freefall, Carney may repeat his 2016 move of reassuring in-vestors that the BoE stands ready to in-ject liquidity if needed. He may hint at the possibility of more policy action at the November 7 interest-rate decision.
To further ease concerns the BoE could off er lenders extra liquidity pro-
visions. The BoE’s Indexed Long-Term Repo operations are already occurring on a heightened scheduled — hav-ing been held on a weekly basis since around the time of the UK’s original March exit date — and could be further stepped up.
The BoE will also step up market intelligence and meetings with their network of agents, said Tony Yates, a former BoE offi cial.
“Most of things about monitoring and war-gaming, I imagine they are doing that now,” he said. “There will be a permanent frenzy of activity.”
In 2016, Carney said he napped for about two hours before watching the fi rst results on television and going to the BoE’s Threadneedle Street head-quarters at around 3:30 a.m. to oversee coordination with central banks around the globe.
The BoE will be alive to any liquidity crunches. Some volatility is likely, es-
pecially if traders are hoping for a last minute reprieve from the EU or British legal system.
Analysts see sterling dropping to $1.11 the day after a no-deal Brexit, from about $1.23 now. But no matter how violently the pound swings, the BoE is unlikely to intervene directly. Carney said in September that there’s almost no chance of that unless there was breakdown in the market.
There’s also real time observations. Chief Economist Andy Haldane said the BoE had developed a “system for monitoring traffi c fl ow around the UK’s main ports using geospatial data from Google Maps.”
The BoE’s fi rst major set piece will be the November 7 Infl ation Report. That’s a chance to unveil forecasts un-der a no deal for the fi rst time, and ad-dress any economic turmoil with mon-etary policy.
While officials have stressed their
response won’t be automatic — partly as it will be hard to ascertain whether the outcome is more damaging to de-mand or supply — almost all econo-mists expect a messy divorce to be met with easing. That’s even if infla-tion surges well above the BoE’s 2% goal.
There could be a rate cut — possibly to the barely positive level that offi cials consider to be their zero-lower bound — more quantitative easing, macro-prudential measures, or, more likely, a package of strategies. Bloomberg Eco-nomics, which expects a no-deal Brexit in January, expects the BoE to cut the benchmark rate by 70 basis points to 0.05%.
Still, policy makers are also likely to also indicate they can’t solve the prob-lems of a no deal on their own. Michael Saunders told Parliament last year that “if you have queues at Dover, the an-swer is not lower interest rates.”
US airlines grapple with ‘unfair tax’ that adds to aircraft supply disruptionReutersWashington/Chicago
US airlines are scrambling to digest a new 10% tariff on European-made Airbus planes that threaten additional havoc in an aircraft supply market already reeling from frozen deliveries of Boeing Co’s 737 MAX.In a statement, Delta Air Lines called the proposed levy on aircraft from Europe that are already under contract for purchase “an unfair tax on US consumers and companies.”The tariff on Airbus planes creates uncertainty for aircraft delivery terms
much like the global grounding of Boeing’s 737 MAX in March after two fatal crashes and comes at a time of threats to international air travel demand in the midst of slowing global economic growth and trade disputes.No 2 US carrier Delta is not a 737 MAX customer but with some 266 Airbus orders is the most exposed to aircraft levies due to take effect on October 18 after the World Trade Organization gave Washington the right to impose tariffs on $7.5bn worth of EU goods annually in a long-running case.Delta spokeswoman Lisa Hanna called on the Trump administration and EU to resolve the 15-year trade dispute
“in a manner that respects existing contractual rights.” Still, it welcomed Washington’s decision to exempt aircraft production and deliveries from Airbus’ plant in Mobile, Alabama.The exemption means that the impact for US airlines with orders for Airbus aircraft assembled in Alabama can be mitigated, Cowen analyst Helane Becker said, pointing to no-frills carrier Spirit Airlines as one carrier whose order book would mostly come from Alabama.Airbus’ Alabama plant produces four A320-family narrowbody jets a month, and Credit Suisse analyst Jose Caiado estimated that the plant could fulfil
at least half of the US backlog over the next year at a rate of five jets per month.Most of budget-friendly carrier JetBlue Airways’ orders for narrowbody A321s and A220s would also be among those exempt, but the carrier still warned of a hit to travellers and commercial aviation.“We are concerned about the detrimental impact aircraft tariffs will have on the ability for low-cost carriers like JetBlue to grow and compete, which will harm customers who rely on us to offer competitive, low fares,” spokesman Derek Dombrowski said.
JetBlue continues to advocate for a resolution, he said.Delta and JetBlue, with the second-largest Airbus order among US carriers, had both lobbied for the tariff s to be applied only to new orders.Delta and United Airlines have the most orders for A350 and A330neo widebody jets, which Airbus cannot finish in Alabama.Widebody jets, with more premium seats, tend to have higher margins for airlines.Just last week Delta pledged to buy 14 more A350s as part of a strategy to grow in Latin America through the acquisition of a 20% stake in LATAM
Airlines Group. American Airlines Group and Alaska Air Group also have Airbus orders, as do lessors like Air Lease Corp Most aircraft leases place the burden of taxes, maintenance and insurance on the operator, Macquarie analyst Sarah Stein said, but noted “it is unclear as to how far reaching the definition of taxes are in lease agreements in a unique scenario such as this one.”The head of Ireland’s Ryanair urged the United States and European Union to pull back from a tariff war over aircraft subsidies and said he would ask Boeing to “eat” any counter-tariff s imposed on the US firm by the EU.
Factory job losses send new warning signal to Trump on trade warBloombergWashington
President Donald Trump lauded a tight labour mar-ket on Friday as the unem-
ployment rate hit a 50-year low. He didn’t mention job losses ap-pearing in manufacturing, a key industry for his base of support-ers.
Total payrolls at factories contracted by about 2,000 in September, when economists had expected a 3,000 gain. The data was released as part of the monthly jobs report on Friday, which this time hap-pened to fall on Manufacturing
Day, the industry’s unofficial holiday. The fi gures are the lat-est indication of the hit factories are taking amid slowing growth globally and the ongoing trade war with China, which not only increases prices for companies but also causes investment un-certainty.
The monthly decline in facto-ry jobs was the second this year, and comes after gains through-out the tail-end of 2017 and all of last year. Companies added about half a million manufac-turing jobs since Trump took of-fi ce in January 2017, continuing a trend of sector growth since the 2008-2009 fi nancial crisis. While the number of losses is
still far off from the cuts work-ers faced during that downturn, it doesn’t bode well for an in-dustry the president promised to revive.
Manufacturing jobs cut in the month amid industry slowdown.
It’s just the latest crack in the industry, which slipped into a recession this year. One major gauge showed manufactur-ing contracted for the second straight month to the lowest level since 2016, with employ-ment being one of the laggards. Capital equipment orders – a proxy for investment – rose at the weakest pace in four months in August, the most recent data show, indicating
goods-producers taking a step back.
Boston Federal Reserve Presi-dent Eric Rosengren said on Friday expectations for weaker exports and manufacturing are being realised. Regionally, the job losses in manufacturing have impacted key states for Trump in the 2020 presidential elec-tion: Pennsylvania and Wiscon-sin. Those two swing states lost the most jobs in the sector in the past year.
Trump campaigned in 2016 on a message to strengthen US factories and the average worker. But his presidency has coincided with declining growth for coun-tries globally, including some of
the largest trading partners, and his tariff s on metals and billions of dollars in Chinese goods have swung import-export data and business investment decisions.
The president was bullish on the jobs report on Friday.
“The unemployment num-bers just came out, and they’re the best numbers we’ve had in over 50 years,” Trump told re-porters. “Wages are up by almost 3%, that’s a fantastic increase for everybody out there working. We’re very happy about those numbers.”
Wage growth is a silver lining for factory workers. They saw a tick up in pay, something not all sectors experienced.
Workers carry a truck engine cooling module component at the MAHLE Behr Charleston auto parts facility in Charleston, South Carolina. Total payrolls at factories contracted by about 2,000 in September, when economists had expected a 3,000 gain.
Stop penalising loyal customers, UK regulator tells car, home insurers
ReutersLondon
Britain’s markets watchdog
threw down the gauntlet to car
and home insurers, saying they
could avoid mandatory pricing
restrictions if they voluntarily
stop penalising loyal customers.
The Financial Conduct Author-
ity (FCA), in long-awaited
interim conclusions from a study
launched a year ago into how
car and home insurers treat
customers, said on Friday firms
use complex pricing practices
that allow them to raise prices
for consumers that renew with
them year on year, known as
“price walking”.
“Remedies are inevitable,” Chris-
topher Woolard, the watchdog’s
executive director for competi-
tion, told reporters.
“Whether those are remedies
imposed through FCA rules, to
some extent is up to industry.
They can be remedies that are
agreed on a voluntary basis,”
Woolard added.
The watchdog is not interested
in extended dialogue with insur-
ers over changes, Woolard said.
“The ball is now very much in
the hands of the industry.”
The Association of British Insur-
ers said it agreed home and
motor insurance markets could
work better for customers who
do not shop around at renewal,
and that it would work with the
regulator on the issue.
Sixmn car and home insurance
policyholders paid high prices
in 2018 in the £18bn ($22bn)
market, the watchdog said.
If they had paid the average
price for a policy, they would col-
lectively have saved £1.2bn.
This includes one in three peo-
ple whose financial position is
potentially vulnerable.
“It is shocking that insurance
firms have got away with
increasing prices for those
customers who are least able to
switch,” said Helen Undy, chief
executive of the Money and
Mental Health Policy Institute.
The FCA is considering curbs on
firms charging higher prices to
consumers who do not switch,
for example, by restricting or
banning “margin optimisation”
based on consumers’ likelihood
of renewing.
JPMorgan Cazenove analysts
said the FCA scrutiny would
“act as an overhang” on general
insurers, highlighting Direct
Line, Saga, and Admiral as most
at risk.
Shares in Saga, which off ers
insurance and travel to the over-
50s, tumbled as much as 11%
after the watchdog announced
its proposals, before recouping
some losses.
Direct Line Insurance, Aviva and
Hastings also dropped.
“At the moment these are just
proposals. The FCA must now
follow through on these bold
ideas to stop loyal insurance
customers being penalised,” said
Gillian Guy, chief executive of
consumer group Citizens Advice.
Citi analysts said the report was
“frustratingly light on actual sug-
gestions and is more of a rehash
of the options... available”. Insur-
ers have already been drawing
up new policies on how to deal
with vulnerable customers, one
industry source said.
More than 45mn home and
motor insurance policies were
written in 2018, and home and
motor insurance generated
£18bn in gross premiums last
year.
The FCA said 82% of adults in
Britain have at least one general
insurance policy.
It plans to publish a final report
and consultation on remedies in
the first quarter of next year.
Woolard declined to comment
on potential enforcement action.
“There is no suggestion in this
of an industry that has been
breaching rules on a wholesale
basis,” he said.
A logo sits on display in the headquarters of the Financial Conduct Authority (FCA) in the Canary Wharf business district in London. The FCA said firms use complex pricing practices that allow them to raise prices for consumers that renew with them year on year, known as “price walking”.
