Friday, October 25, 2019Safar 26, 1441 AH

BUSINESSGULF TIMES

Economy slows in Q3 on trade war

Turkish central bank cuts rates on infl ation dip

S KOREA HIT | Page 5STEADIER LIRA | Page 2

WEAK SENTIMENTS : Page 12

Business investment in US still stays soft ; jobless claims fall

Sweden is exploring opportunities in Qatar to bolster trade tiesSweden is exploring business opportu-

nities, especially in the areas of trans-port solutions and health, in Qatar as

part of its strategy to enhance bilateral eco-nomic and trade relations between the two countries.

This was discussed by Krister Nilsson, State Secretary at the Ministry for Foreign Trade and Department for Nordic aff airs, during his visit to Qatar. He was accompa-nied by Hakan Emsgard from the Ministry for Foreign Aff airs and Ulf Rudebark from the Swedish Trade and Invest Council.

“This is a good opportunity for Qatar and Sweden to further develop our relations and to co-operate in new areas such as innovative transport solutions as well as areas of health and safety at work and corporate social re-sponsibility,” Nilsson said.

During their one-day visit, the delegation met with high-level Qatari representatives from the transportation sector, the Ministry of Transport and Communications, the Min-istry of Administrative Development, Labor and Social Aff airs, the International Labour Organisation’s (ILO) Project Offi ce as well as the Swedish business community in Qatar.

“We are very satisfi ed with the state secre-tary’s visit. I strongly believe that our meet-ings here today will contribute to foster our bilateral relations even more,” Swedish envoy to Qatar Anders Bengtcen said.

Draghi winds down ECB tenure with gloomy take on economy

IQ posts 9-month net profit of QR2bn on QR10.2bn revenues

BloombergZurich/Frankfurt

Mario Draghi off ered a gloomy assessment of the euro-area economy in his last press conference as European Central Bank president, just weeks after he unleashed the most controversial round of stimulus in his tenure.Draghi said that “weaker growth momentum” is delaying the pass-through of stronger wage growth to inflation, and indicated that the labour market has lost some strength. He dropped a reference to “robust” employment growth, and said risks to the outlook are “on the downside,” a change from previous language saying it was “tilted” that way.In what the ECB chief termed a unanimous decision, policymakers kept monetary stimulus unchanged yesterday, six weeks after cutting interest rates and restarting bond purchases. A slew of both

current and former rate setters, including Germany’s Jens Weidmann and Austria’s Robert Holzmann, have spoken out against Draghi’s final monetary push in September.The euro strengthened against the dollar after the decision, and was up 0.1% at 1.1142 at 3.20pm in Frankfurt.With Germany probably in recession and data showing weakness in the manufacturing is spreading to the labour market, “everything that’s happened since our monetary policy decisions has shown abundantly that the Governing Council’s determination to act in a substantive manner was justified,” Draghi said.Three words – whatever it takes – define Mario Draghi’s time as European Central Bank president.After eight years in charge, the Italian is departing at a time of slower economic growth and a depleted ECB monetary arsenal. Germany, the regional powerhouse, is hamstrung by problems in

the automobile industry, and the trade war is sapping confidence and investment.Draghi changed the course of the region’s debt crisis with his famous phrase “whatever it takes,” but hasn’t succeeded in meeting the institution’s inflation goal. Price growth is less than 1%, compared with the aim of just below 2%.At the press conference, Draghi said there’s a need for a “highly accommodative stance of monetary policy for a prolonged period.”“Measures of underlying inflation remained generally muted and indicators of inflation expectations stand at low levels,” he said.The deposit rate is at a record-low minus 0.5%, with a pledge to cut again if needed, and won’t rise until inflation “robustly” converges with the goal. Quantitative easing will start next month with asset purchases of €20bn ($22bn) a month, and won’t end until “shortly” before the first rate hike.

Market heavyweight Industries Qatar (IQ) has reported net profit of QR2bn on revenues of QR10.2bn in the first nine months of this year.Both net profitability and revenues witnessed year-on-year decline, impacted by uncontrollable external factors such as the slowdown in global economies, volatility in commodity prices and the ongoing trade conflicts.These directly translated to a higher pressure on commodity prices and

an imbalance in the supply-demand dynamics for petrochemicals, fertilisers and steel products, an IQ spokesman said.The product prices on average declined 11% year to date, which contributed to a decrease of QR1.1bn in IQ’s financial performance in the review period.Unfavourable market conditions had led to 6% fall in sales volumes.It was also impacted by planned and unplanned maintenance shutdowns during the year, which are in line with

its commitment in enhancing health and safety, plant life, quality assurance and reliability, which would ultimately lead to improved operational eff iciency in the long-term.The balance sheet remained healthy with liquidity at the end of the third quarter remaining robust, including QR9bn in cash and bank balances, after accounting for a dividend payout of QR3.6bn for 2018, indicating strong cash flow generation.Total assets and total equity were

QR35.1bn and QR33.7bn respectively at the end of September 2019.Petrochemical revenue shrank 26% on softening demand for petrochemical products in key markets, combined with declining market prices for petrochemical products, which are closely linked to crude oil prices, contributed to the overall decrease in the revenues.Fertiliser prices have remained relatively stable, as a result, the sales volume remained relatively stable with

a marginal decline of 1% in first nine months of 2019.The price stability of fertilisers was primarily driven by supply-demand dynamics in the global markets, where the stricter regulations imposed on large producing countries, together with stringent export restrictions, has “negatively” impacted the supply curve, whereas the demand side has remained soft due to its cyclical nature.The group’s sales volumes in the steel segment saw a moderate decline of 8%,

owing to softer domestic demand since a majority of the large infrastructure projects are at near completion stage, even as the near to medium prospects remain encouraging.Furthermore, demand for steel in international markets remained subdued due to increased competition from relatively lower cost producers from emerging markets that compete on low-cost metrics compared to the high-quality and price metrics that the group adopts.

India orders wireless carriers to pay $13bn in past duesBloombergNew Delhi/Mumbai

India’s top court ordered several telecom carriers, includ-ing Bharti Airtel Ltd, Vodafone Idea Ltd and many defunct ones, to pay the government as much as 920bn rupees

($13bn) in past dues, dealing a blow to the businesses already struggling to make profi ts and pare debt.

The Supreme Court, in a ruling read out by a two-judge bench headed by Justice Arun Mishra, said it will decide on the timeline for payments. Yesterday’s decision possibly puts an end to the two-decades-old legal dispute over airwaves fees owed to the government.

The operators have disputed for years over how authorities calculate their annual adjusted gross revenue, a share of which is paid as licence and spectrum fees. With the ruling, the court upheld the government’s method, while rejecting the compa-nies’ plea to exclude revenue from non-telecommunications businesses.

The judgment throws up “two important facets,” according to Alok Shende, a Mumbai-based principal analyst for telecom at Ascentius Insights. “First, the problem can fester for years in the long drawn legal process, ballooning the fi nal impact,” he said. “The second implication is that the policies often have an element of ambiguity that allows for diff erent interpretations.”

The court order is the latest shock to an industry that has piled on billions of dollars in debt to roll out 3G and 4G net-works in the past decade, even as intense competition for users led to a brutal tariff war, weighing on earnings. Bharti, control-led by tycoon Sunil Mittal, and billionaire Kumar Mangalam Birla’s venture with Vodafone Group Plc have a combined net debt of almost $28bn.

The worst hit are the operators who have been in the busi-ness for more than 10 years, while it is far less consequential for Mukesh Ambani’s Reliance Jio Infocomm Ltd, which entered in 2016 and owes the least among all – 130mn rupees.

“We’re disappointed with the verdict,” Airtel said in a state-ment. “This decision has come at a time when the sector is facing severe fi nancial stress and may further weaken the vi-ability of the sector as a whole. The government must review the impact of this decision and fi nd suitable ways to mitigate the fi nancial burden on the already stressed industry.” Page 6

ECB president Mario Draghi addresses the media during a press conference following the meeting of the Governing Council in Frankfurt am Main, western Germany yesterday. In what the ECB chief termed a unanimous decision, policy makers kept monetary stimulus unchanged yesterday, six weeks after cutting interest rates and restarting bond purchases.

Germany’s factory recession sends employment plungingGermany’s manufacturing slump is taking a harsher toll on the jobs market, adding to pressure on the government to respond with fiscal stimulus, Bloomberg reported.IHS Markit’s measure of manufacturing and services rose marginally in October, but still signals the slump has extended into the fourth quarter. Factories remain the weak spot, with employment in industry falling the most in almost 10 years.The report also showed a decline in confidence and a “further softening of inflationary pressures,” as selling prices rose the least in three years. There were also some positive elements in the Purchasing Managers’ Index: declines in export orders and manufacturing output eased.

Nilsson and the accompanying Swedish delegates in Qatar to explore business opportunities.

BUSINESS

Gulf Times Friday, October 25, 20192

Qatar shares snap 5-day losing streak on foreign institutional buyingBy Santhosh V PerumalBusiness Reporter

Foreign institutions’ increased buying interests yesterday lifted the Qatar Stock Exchange more than 23 points, after five consecutive days of bearish spell.The consumer goods, insurance and transport counters witnessed higher than average demand as the 20-stock Qatar Index settled 0.22% higher at 10,377.89 points.Domestic institutions continued to be net sellers but with higher intensity in the market, whose key benchmark is however up 0.77% year-to-date.Market capitalisation saw more than QR1bn, or 0.22%, jump to QR575.36bn mainly owing to microcap segments.

Islamic equities were seen gaining faster than the main index in the market, where the Gulf individuals were seen increasingly booking profits.Trade turnover grew amidst lower volumes in the bourse, where the banking and industrials sectors together accounted for about 57% of the total volume.The Total Return Index rose 0.22% to 19,096.2 points, the All Share Index by 0.25% to 3,067.19 points and the Al Rayan Islamic Index (Price) by 0.23% to 2,319.29 points.The consumer goods sector gained 1.21%, insurance (0.33%), transport (0.31%), industrials (0.23%) and banks and financial services (0.18%); while realty declined 0.54%. Telecom saw its index tread a flat course.Major gainers included Medicare Group, Woqod, Widam Food, Gulf

International Services, Al Khaleej Takaful, Qatar Islamic Insurance, QNB and Nakilat; even as QIIB, Qatar Islamic Bank, Alijarah Holding, Qatari German Company for Medical Devices, Qatar Industrial Manufacturing, Qatar National Cement, Qatari Investors Group, Ezdan and Mazaya Qatar were among the losers.Non-Qatari institutions’ net buying increased substantially to QR36.38mn compared to QR20.38mn on October 23.However, domestic institutions’ net profit booking grew marginally to QR14.96mn against QR14.74mn on Wednesday.Gulf individuals’ net selling expanded noticeably to QR14.84mn compared to QR13.02mn the previous day.Local retail investors’ net selling

increased perceptibly to QR7.05mn against QR6.57mn on October 23.Non-Qatari individuals were net sellers to the tune of QR3.09mn compared with net buyers of QR8.67mn on Wednesday.Gulf institutions’ net buying weakened significantly to QR3.56mn against QR5.28mn the previous day.Total trade volume fell 12% to 60.64mn shares, while value grew 27% to QR232.61mn despite 8% lower transactions at 4,098.The consumer goods sector’s trade volume plummeted 67% to 5.97mn equities, while value grew 10% to QR38.09mn despite 25% lower deals at 531.There was a 31% plunge in the industrials sector’s trade volume to 11.32mn stocks, 11% in value to QR28.58mn and 16% in transactions to 912.

The telecom sector’s trade volume was down 9% to 2.22mn shares, whereas value grew 6% to QR9.96mn despite 30% lower deals at 247.However, the transport sector’s trade volume almost tripled to 3.08mn equities and value more than doubled to QR9.31mn on a 27% increase in transactions to 144.The banks and financial services sector saw a 31% surge in trade volume to 22.74mn stocks, 50% in value to QR122.55mn and 1% in deals to 1,443.The real estate sector’s trade volume shot up 26% to 9.96mn shares and value by 5% to QR8.76mn, while transactions were down 8% to 437.The insurance sector reported a 2% jump in trade volume to 4.95mn equities, 20% in value to QR15.36mn and 32% in deals to 384.

Turkish central bank slashes interest rates amid dip in infl ationReutersIstanbul

Turkey’s central bank slashed rates by a more than expected 250 points to 14% yesterday,

taking advantage of an infl ation dip and a steadier lira after Washington cancelled just-announced sanctions over a military action in Syria.

The bank lowered its benchmark one-week repo rate from 16.5%. It has cut interest rates aggressively from 24% since July to help revive Turkey’s economy after last year’s currency crisis.

Some economists were surprised by the sharp easing move after two weeks of lira volatility related to Tur-key’s military action on Kurdish-led forces in northeastern Syria.

A Reuters poll predicted a cut of only 100 points.

But the central bank said infl a-tion would likely decline more than it expected by year end after a “sig-nifi cant fall” in September, and it repeated guidance that the policy stance was “to a large part” consist-ent with that path.

Expectations for monetary eas-ing were initially curtailed after troops crossed the Syrian border on October 9, hitting the currency and prompting US sanctions over Turkey’s attacks on Kurdish forces that were once US allies.

But the lira, which plunged 30% last year, regained some losses after Washington opted last week for a light set of sanctions, re-opening the door to the rate cut.

It rallied again on Wednesday when US President Donald Trump cancelled them and said a ceasefi re had been reached.

“They were defi nitely encour-aged by the lifting of sanctions,” Piotr Matys, EM FX strategist at Rabobank, said of Turkish central bankers. “It was a positive move and it increased the room for manoeuvre, but not enough to justify a cut of 250 basis points.”

The Turkish lira slipped 0.7% against the dollar, to 5.7750, after the bank’s third rate cut in as many pol-

icy meetings, totalling 1,000 basis-points of easing.

Last year’s currency crisis tipped the Middle East’s largest economy into recession, sent infl ation soaring above 25%, and prompted Turkey’s central bank to hike rates. Infl ation has since eased, reaching 9.26% in September.

In its latest forecast, the central bank expected it to accelerate to

13.9% by year-end once the so-called base eff ects have worn off .

But yesterday the bank said “re-cent forecast revisions suggest that infl ation is likely to materialise no-tably below the projections” by year end.

The monetary boost comes as Turkey takes other steps to strength-en its economy including preparing a 2020 budget that an offi cial said was

“fl exible” and could be expanded for the military.

Reuters reported the Treasury is also crafting legislation to transfer into the budget $17bn from a central bank fund.

To limit the lira’s fall this month, Turkish state banks have sold billions of dollars and trimmed funding in an off shore swap market, according to traders.

Lebanon debt plan: Credible reforms, or fiscal engineering?BloombergBeirut

Lebanon wants to send a message that it is serious about handling its finances with a plan to slash the budget deficit to almost zero in 2020 from a target level of 7.6% of economic output this year in a bid to contain unrest.The plan has been met with scepticism. After all, this is a country saddled by one of the world’s highest debt burdens and a political system that has stymied any serious attempt to curb corruption and steady public finances. So why would it be diff erent this time?Supporters of Prime Minister Saad Hariri say mass protests against authorities, himself included, will trigger enough momentum to enact long-delayed reforms. Critics say this year’s deficit target was unrealistic to begin with, casting more doubt on future plans.Here are the plan’s key features and main challenges:

Where will the money come from?

The proposals rely on an agreement with the central bank

to waive interest payments on the government’s local-currency debt next year, saving the equivalent of $2.9bn. A one-time 2% tax on banks’ revenue will bring in about $400mn.The government will also cut about $660mn from its annual $2bn transfer to the loss-making state electricity company. Allocations to three state funds will be reduced by 70%, saving further $600mn. Other measures include cutting the salaries of ministers, current and former lawmakers by 50%.

How is that diff erent from the 2020 draft budget?

The protests broke out just as the cabinet was discussing its draft budget for next year. Under that scenario, the deficit was projected at 7.4% of GDP. Revenue was estimated at $12.6bn (around 19tn Lebanese pounds.)It now expects this figure to be slightly lower. Spending was projected at $14.3bn, of which $832mn were earmarked for capital expenditure.

Does the proposal include plans to asset sales?

Yes. The government has approved privatising some of its assets,

including the nation’s two telecom companies, Middle East Airlines, Beirut port and Casino Du Liban.

Will the economy come to a standstill?

Under the plan, the government expects economic growth to be zero next year. But the blow may be softened by capital spending through soft loans, according to Nadim Munla, an adviser to Hariri.Even before the unrest, the government had secured $3bn funding from the World Bank, the European Investment Bank as well as Arab funds for water, waste and transportation projects, Munla said. The World Bank has also agreed to lend Lebanon $100mn at 1% to support an anti-poverty programme.That spending is expected to compensate for a reduction in capital expenditure out of the state budget, which is financed through much costlier public borrowing.

Is it sustainable?

The government is going for short-term fixes in the hope that the measures will convince donors to unlock more than $11bn in aid and project financing, helping Lebanon lower its debt and

borrowing costs beyond 2020, while also creating jobs and improving infrastructure.

What are the risks?

Ziad Daoud, chief Middle East economist at Bloomberg Economics says transferring funds from the central bank to the government is “accounting gymnastics not genuine fiscal consolidation.” Sharp spending cuts will “likely hit economic growth and therefore the tax intake - the largest component of the government’s revenue. This will undermine any attempt to reduce the deficit.”The reliance on the central bank could risk undermining “confidence in government debt service capacity, compounding pressures on the currency peg and debt sustainability over the medium term,” Moody’s vice president Elisa Parisi-Capone said.

Anyone think the plan may work?

Morgan Stanley says the sweeping measures should be positive for Lebanon’s credit. “But usually after a mass protest it takes over a month for the bonds to recoup losses,” it said.

Turkish lira weakens after large rate cutReutersIstanbul

Turkey’s lira weakened yesterday after the central bank cut its policy rate more than expected, reversing course after

fi rming a day earlier to a two-week high when Washington lifted sanctions on Ankara.

The currency, which had been under pres-sure recently due to potential repercussions from Western allies over Ankara’s operation against the Kurdish YPG militants in north-eastern Syria, returned on Wednesday to lev-els before the military action.

However, the lira declined again after the central bank cut its policy rate by 250 basis points to 14% yesterday, compared to a me-dian estimate in a Reuters poll of a 100 basis point cut.

The lira stood at 5.7630 against the dollar at 1500 GMT, some 0.5% weaker than Wednes-day’s close of 5.7350. Earlier, it weakened as far as 5.7795.

The central bank has now cut its policy rate by 1,000 basis points since July.

Infl ation fell to 9.26% in September, which leaves a real interest rate of around 4% after yesterday’s cut.

The lira could come under renewed pres-sure if that margin narrows in November and December, when infl ation is expected to bounce back once the so-called base eff ects wear off .

“The central bank’s decision put pressure on the lira. However, the pressure was limited compared to the cut” due to lower interest rates globally and a recent reduction in geo-political risks, said the forex desk manager of a Turkish bank.

Meanwhile, data from the central bank showed that forex holdings, including pre-cious metals of local corporates and individu-als, rose to a record high of $194.26bn as Oc-tober 18.

The main share index was up 0.5%, while the banking index rose 0.32%.

Separately, Turkey plans to raise tax rev-enues with a series of measures including higher rates for high earners and high-value properties, hotel accommodation, and digital services such as advertising, according to an outline obtained by Reuters.

The changes would “aim to take more tax from high earning groups,” according to an AK Party offi cial.

Turkey’s budget defi cit has widened in the past year and the government increased its defi cit forecast to 125bn lira for 2019 from 80.6bn previously.

The consumer goods, insurance and transport counters witnessed higher than average demand as the 20-stock Qatar Index settled 0.22% higher at 10,377.89 points yesterday.

Riot police interfere to stop demonstrators scuff ling with each other during ongoing anti-government protests in downtown Beirut yesterday. Supporters of Prime Minister Saad Hariri say mass protests against authorities, himself included, will trigger enough momentum to enact long-delayed reforms. Critics say this year’s deficit target was unrealistic to begin with, casting more doubt on future plans.

A merchant counts Turkish lira banknotes at the Grand Bazaar in Istanbul. Turkey’s central bank slashed rates by a more than expected 250 points to 14% yesterday, taking advantage of an inflation dip and a steadier lira after Washington cancelled just-announced sanctions over a military action in Syria.

BUSINESS3Gulf Times

Friday, October 25, 2019

How to halt global warming for $300bnBloombergSingapore/New Delhi

$300bn. That’s the money needed to stop the rise in greenhouse gases and buy up to 20 years of time to fix global warming, according to UN climate scientists. It’s the gross domestic product of Chile, or the world’s military spending every 60 days.The sum is not to fund green technologies or finance a moonshot solution to emissions, but to use simple, age-old practices to lock millions of tonnes of carbon back into an overlooked and over-exploited resource: the soil.“We have lost the biological function of soils. We have got to reverse that,” said Barron J Orr, lead scientist for the UN Convention to Combat Desertification. “If we do it, we are turning the land into the big part of the solution for climate change.”Rene Castro Salazar, an assistant director general at the UN Food and Agriculture Organization, said that of the 2bn hectares of land around the world that has been degraded by misuse, overgrazing, deforestation and other largely human factors, 900mn hectares (almost 5bn acres) could be restored.Returning that land to pasture, food crops or trees would convert enough carbon into biomass to stabilise emissions of CO2, the biggest greenhouse gas, for 15-20 years, giving the world time to adopt carbon-neutral technologies.“With political will and investment of about $300bn, it is doable,” Castro Salazar said. We would be “using the least-cost options we have, while waiting for the technologies in energy and transportation to mature and be fully available in the market. It will stabilise the atmospheric changes, the fight against climate change, for 15-20 years. We very much need that.”The heart of the idea is to tackle the growing problem of desertification – the degradation of dry land to the point where it can support little life. At least a third of the world’s land has been degraded to some extent, directly aff ecting the lives of 2bn people, said Eduardo Mansur, director of the land and water division at the FAO.Marginal lands are being stressed around the globe by the twin phenomena of accelerated climate change and a rate of population growth that could lift the global tally to almost 10bn people by 2050, he said. Much of that growth is in areas such as Sub-Saharan Africa and South Asia where land is already highly stressed.“The idea is to put more carbon into the soil,” said Orr. “That’s not going to be a simple thing because of the natural conditions. But keeping the carbon in the soil and getting that natural vegetation, grazing land etc. thriving

again – that’s the key.” Last month, at a UN conference on desertification in New Delhi, 196 countries plus the European Union agreed to a declaration that each country would adopt measures needed to restore unproductive land by 2030. The UN team has used satellite imaging and other data to identify the 900mn hectares of degraded land that could be realistically restored. In many cases, the revitalised areas could benefit the local community and host country through increased food supply, tourism and other commercial uses.Key to returning dry lands to vegetation is the use of fertiliser, said Mansur. “Fertilisers are essential for increasing productivity. Good fertiliser in the right quantity is very good for the soil.”

But decades of poor agricultural practices in both rich and poor nations have resulted in misuse, either from using the wrong products, using too much fertiliser, or in some areas using too little so that the soil loses its nutrients.“The problem unfortunately is big and it is growing,” said Mansur. “The main cause of emissions from agriculture is poor land management. But the solutions are known: Sustainable land management, sustainable water management, sustainable soil management.”Mansur stresses that the problem isn’t about reclaiming desert, but restoring wasteland that was productive before human intervention.“Don’t mix desertification with desert,”

he said. “A desert is an ecosystem. There are deserts on the planet that have to be preserved.”Nor is it merely a matter of planting trees, since each area has to be considered in terms of the people who live there and how they can live on the land sustainably.Kenya, for example plans to plant 2bn trees on 500,000 hectares to restore 10% of its forest cover, but it is also working on ways to adapt to the changes in climate.We have to improve our livestock and crops to be drought resistant or drought tolerant,” said Kennedy Ondimu, director of environmental planning and research at the country’s Environment Ministry. “We have to look at developing our indigenous

vegetables and indigenous livestock gene bank apart from embracing hybrid crop varieties and livestock varieties. We need to prioritise animal breeding.”In Costa Rica, farmers are using deforested land to produce CO2 neutral coff ee, which commands premium prices among consumers. The nation is also replanting rainforest to encourage eco-tourism, which has become the country’s second-biggest earner.Still, the tide of desertification won’t be easy to turn. In India, more than 20% of the country is considered wasteland and scant water resources are making the situation worse. In Chile, home to the world’s driest desert, the Atacama, the government is spending $138mn

improving irrigation as the region’s driest decade on record forces fruit farmers to migrate south to escape the advancing desert. Further north in Brazil, the worst fires in years ravaged the world’s largest rainforest.Yet, Castro Salazar says dozens of countries are fighting back with programs designed to reverse the loss of farmland and at least 20 nations have major eff orts underway to replant lost forests.“All these countries were able to keep producing the food they needed and growing the forest cover,” he said. “The myth was that in order to increase your productivity and your food sovereignty and security you needed to slash or burn the forest. We documented that it’s not true.”

How climate divestment won converts with deep pocketsBy Kelly GilblomLondon

Can you strike a blow against climate change by getting rid of your oil company stocks – and can you do it without losing money? The idea is not just for activists anymore. Norway took a partial step in selling off oil stocks in its massive $1tn wealth fund. And a growing number of investors who control trillions more are using the threat of divestment as a cudgel to force energy companies to adopt greener ways. Together these approaches are producing a notable disruption in the energy field.

1. What’s the climate divestment movement about?

It was started in 2012 by the activist group 350.org, whose name is a reference to what some scientists consider the maximum safe level of atmospheric carbon in parts per million. Its goal is to “keep carbon in the ground,” in part by weakening the oil and coal industries. Adopting a tactic from the fight in the 1970s and 80s to force South Africa to give up apartheid, it urges universities and other investors to divest themselves of stocks from the 100 largest coal companies and the 100 largest oil firms.

2. How has that gone?

The initial movement has had some success. The group says that so far more than 1,100 institutions, from pension funds to family foundations, mostly in North America and Europe, have made some level of commitment to divesting. But the biggest steps

have come from investors acting independently. The Norwegian decided to dump $6bn of oil exploration companies’ stocks as a hedge against a long-term decline in crude prices, and argued that existing producers are investing heavily in the transition to renewable power. And BNP Paribas Asset Management said it would dump almost €1bn ($1.1bn) of coal stocks from its actively managed funds.

3. Is this all about coal?

Coal, the dirtiest fossil fuel, has been the primary focus but that’s starting to change. One of Exxon Mobil Corp’s largest shareholders, Legal & General Investment Management, sold $300mn of the oil giant’s stock when it wasn’t satisfied with the company’s emissions reductions strategy.

4. Have those moves had an impact?

In some ways. The biggest success has been how very large shareholders have been using the idea for their own purposes. A coalition of mega-investors called the Climate Action 100+, which collectively oversees more than $35tn, has been engaging with companies they feel are most at risk as the world transitions away from fossil fuels. The group has extracted pledges from some of the biggest companies, including BP Plc, Royal Dutch Shell Plc and coal giant Glencore Plc, to better align their businesses with the goals of the Paris climate accord. Royal Dutch Shell also agreed to publish a report on its lobbying of governments.

5. Is this a split in the movement?

Not really. Though the largest and

most powerful money managers tend to use the threat of divestment to push companies to succeed, rather than disappear. For example, after freezing out Rio Tinto Group for more than a decade for owning a highly polluting copper mine, the Norwegian sovereign wealth fund re-invested when Rio sold it. It’s now one of Rio’s top 10 shareholders. One of Climate Action 100+’s largest members, Legal & General Investment Management, with about $1tn under management, divested its holdings in some large companies in June, saying they failed to engage over global warming.

6. Who’s taking action on climate change?

Glencore has promised to limit coal production and won’t acquire companies that would add to its coal output.Shell plans to reduce its net carbon footprint by half by 2050. The company bowed to shareholder pressure to set short-term emissions targets after earlier saying it wouldn’t.BP has promised to cut greenhouse gases and link progress toward those targets to staff bonuses. The company will also disclose more information to show how the business is aligned with Paris goals.Rio Tinto Group was the first major mining company to exit coal last year. It’s called climate change a critical issue for the business.

7. Is there an economic argument for divesting?

That depends on who you ask. Oil companies themselves see demand for their products peaking, but not until sometime between 2025 and 2050, and then slowly declining.

Economics drove the thinking at Norway’s sovereign wealth fund, the world’s biggest, about whether it should dump about $37bn of fossil-fuel stocks. It ultimately kept most of them, noting that oil and gas companies have become some of the biggest investors in renewables. The Norwegian finance ministry said that diversification may pay off for the fund in the long-term.

8. What are the fi nancial arguments not to divest?

For most investors, having money in an oil company is almost unavoidable. Behemoths such as Exxon Mobil Corp and Shell are included on every major equity index - core investments, like it or not, for the mutual funds that almost everyone’s pensions or 401Ks are invested in. Then there are the dividends. Oil companies distribute money to shareholders with a fervour matched by few others. If you bought a share of Shell during World War II, you would have received a flat or increasing dividend payment every quarter without exception. Those dividend payments have

endured through price collapses, wars, nationalisation of assets, government sanctions, worries that supplies would run out and more. Few assets besides government bonds off er that kind of stability. And the yield of a Shell share is more than 6%, while a 10-year UK gilt will earn you less than 1%.

9. So does divesting mean taking a fi nancial hit?

It’s a question of the time frame. The absolute return of oil companies hasn’t outperformed the broader index since 2014 because of an oversupply of crude that caused prices to slump. Exiting now could mean passing up those fat dividends and possibly rising share prices, but also curbing exposure to the impact of climate legislation and competition from alternative forms of energy.

10. If everyone divested tomorrow, what would happen?

First of all, the sheer size of oil holdings means it would be hard

for everyone to sell at once – the Norwegian selloff will be done over years. Even if could happen, it probably wouldn’t cut demand for fossil fuels sharply right away. Renewable energy sources like wind and solar are growing rapidly but from a tiny base. In one scenario modelled by Shell, meeting goals set in the Paris climate accord without fossil fuels would require new energy sources to increase fifty-fold and the reforesting of an area the size of Brazil, among other measures.

11. What do energy companies think of the movement?

They don’t like it. BP chief executive off icer Bob Dudley said in October a rising cost of capital for the industry could harm human development, pointing out that cheap energy is essential to economic growth. Executives have also argued that even with a large proliferation of renewables, fossil fuels will remain essential for a wide range of products such as plastics, pharmaceuticals and road surfacing.

Bloomberg QuickTake Q&A

An oil tanker is seen at sunset anchored off the Fos-Lavera oil hub near Marseille, France (file). Oil companies themselves see demand for their products peaking, but not until sometime between 2025 and 2050, and then slowly declining.

A man walks across the bottom of the dried-out Porur Lake in Chennai (file). In India, more than 20% of the country is considered wasteland and scant water resources are making the situation worse.

BUSINESS

Gulf Times Friday, October 25, 20194

ReutersSeoul

A bribery trial involving the heir of South Korea’s Samsung Group will start today after the coun-

try’s top court ruled earlier this year that the case should be reviewed by a lower court, raising the possibility of a tougher sentence.

The Supreme Court overturned in August part of an appeals court bribery conviction against Samsung’s de facto chief Jay Y Lee, who had been given a two-and-a-half-year suspended sen-tence for seeking favour from South Ko-rea’s former president Park Geun-hye.

The court said the interpretation by the Seoul High Court on what consti-tuted bribes by Samsung to Park was too narrow.

“The Seoul High Court is unlikely to make a decision within this year, be-cause prosecutors and his lawyers are fi ghting harder in this round,” said Jun Ji-hyun, a lawyer who is not involved in the case. Lee, 51, is expected to at-tend today’s hearing, which is required by law for defendants in criminal cases, according to legal experts.

The case against Lee centred on whether three horses donated by Sam-sung Group should be considered bribes aimed at winning Park’s favour in the conglomerate’s succession planning.

The horses were given to the daugh-ter of Park’s confi dante, Choi Seo-won, a professional equestrian.

The Supreme Court said the appeals court erred in not recognising the hors-es as bribes given by Samsung to win favours, raising the possibility of Lee returning to jail.

Lee, vice chairman of the group’s crown jewel Samsung Electronics Co, has already served one year of deten-tion but walked free last year after the appellate court halved a lower court’s fi ve-year jail sentence and suspended

it for three years. Samsung declined to comment offi cially.

“We hope to see the end of this un-certainty as soon as possible,” said a company source who requested ano-

nymity, referring to the legal proce-dures. The trial comes as South Korea’s President Moon Jae-in seeks help from big business leaders to resuscitate a fragile economy, which data showed

yesterday slowed more than expected in the third quarter.

Moon thanked Lee for Samsung’s commitment at a ceremony this month unveiling an $11bn investment in dis-

play technologies. The Supreme Court last week closed a separate bribery case involving Lotte Group Chairman Shin Dong-bin, allowing him to stay out of jail with a suspended jail sentence.

South Korea to start Samsung heir Lee’s bribery trial today

Thailand fi rm CP Group signs $7.4bnrail dealAFPBangkok

A consortium led by Thai-land’s largest conglomerate CP Group yesterday signed

a $7.4bn deal to build a high-speed railway connecting three air-ports, the spine of an infrastruc-ture scheme set to transform the southern coast into a tech hub.

A who’s who of the country’s business and political elite took part in the signing, including construction billionaire-turned-health minister Anutin Charn-virakul, Prime Minister Prayut Chan-O-Cha and CP Group’s CEO Suphachai Chearavanont.

His family is Thailand’s richest thanks to its Charoen Pokphand Group – a conglomerate which spans food and telecoms – and its patriarch Dhanin is worth an estimated $17.6bn according to Forbes.

Construction magnate Prem-chai Karnasuta, who was con-victed on poaching charges after he was found with a black leopard pelt, is also part of the consortium building the 220-kilometre (137-mile) line.

It will shuttle passengers from Bangkok’s Suvarnabhumi and Don Muang international airports to a third one near the southeast resort city of Pattaya in under an hour.

The high-speed line will also serve as a link to the Eastern Eco-nomic Corridor (EEC), an ambi-tious $50bn scheme seeking to at-tract investment from industries like auto and tech manufacturing.

“It will make the EEC become the extended part of the capi-tal so it is very important for the people and the investors com-ing in,” Suphachai said, adding it was expected to be completed in fi ve years. Construction will begin in 12 to 24 months and the government is footing 65% of the 224.5bn baht ($7.4bn) deal.

“This (project) is the toughest part because the government is paying money from the budget.... we don’t want to spend it waste-fully,” said EEC secretary general Kanit Sangsubhan.

Offi cials from the Chinese, Ital-ian and Japanese embassies also attended the signing, as China’s Railway Construction Corp and Japan’s Bank for International Co-operation are part of the consorti-um. Chinese embassy offi cials say it will play a key role in Beijing’s massive Belt and Road initiative.

“It will run through the key economic zones in Thailand and the Chinese company is willing to share technology and equipment,” Deng Peipei told AFP.

Indonesia cuts rates to counter tepid global growthAFPJakarta

Indonesia’s central bank cut interest rates for the fourth month in a row yesterday as South-east Asia’s biggest economy looks to counter

slowing global growth.Bank Indonesia (BI) lowered its key lending rate

by 25 basis points to 5%, prompting speculation that more cuts could be in store as central banks around the world adopt softer monetary policies.

“This policy is consistent with low inflation expectations... and is a pre-emptive measure to boost momentum at home amid a global eco-nomic slowdown,” bank governor Perry Warjiyo said.

Yesterday, Indonesia’s main stock index headed for a tenth straight rise in what would be the long-est run of gains since 1995, according to Bloomb-erg, on hopes for business-friendly reforms as President Joko Widodo kicked off a second term.

Widodo this week chose former World Bank

managing director Sri Mulyani Indrawati to serve another term as finance minister, with Indone-sia facing weaker prices for key commodities like coal and palm oil as the global economy falters and demand dries up.

Economic growth eased to 5.05% in April-June – the slowest quarterly expansion in two years – as exports and investment slipped.

That has thrown up a challenge for Widodo, who was re-elected this year largely on his prom-ise to energise the economy with a roads-to-air-ports infrastructure blitz and a pledge to cut red tape.

“The slowing economy and subdued inflation mean BI would certainly like to cut rates again in the coming months,” research house Capital Eco-nomics said after the rate cut.

“However, the timing of further rate cuts will be determined by the performance of the rupiah.”

Indonesia’s currency was at risk of weakening against the US dollar as investors remain cautious because of a stumbling world economy and the US-China trade war, it added.

Bank Indonesia’s logo is seen at its headquarters in Jakarta. Indonesia’s central bank lowered its key lending rate by 25 basis points to 5%, prompting speculation that more cuts could be in store as central banks around the world adopt softer monetary policies.

China’s car sales slump as top urban markets saturateBy John KempLondon

China’s car sales have slumped over the last year, reflect-

ing tougher economic conditions and tax changes, as

well as the saturation of some segments of the domestic

market.

Car sales slowed to 21.7mn in the 12 months to Septem-

ber 2019, down from a peak of 25.3mn in the 12 months to

June 2018, according to the China Association of Automo-

bile Manufacturers.

Slowing sales have coincided with a loss of momentum

across the economy, with the purchasing managers’ index

for manufacturing trending lower since May 2018, data

from the National Bureau of Statistics shows.

Slowing sales have been both a symptom and a con-

tributory factor to the wider economic slowdown as con-

sumers become more cautious about buying expensive

items and automakers respond by cutting output.

Sales have also been distorted by changes in tax policy.

Value-added tax on vehicles with smaller engines was

cut by up to 50% in 2016/17 to stimulate purchases.

The impending rise in tax rates at the start of 2018

drove vehicle sales to a near-record 2.7mn in December

2017 as consumers rushed to beat the deadline.

By pulling so many sales forward, however, tax chang-

es probably contributed to the slump in sales in 2018/19

when rates returned to normal.

The government has implemented another round of

tax cuts, but much smaller this time, to boost sales again

in 2019.

Market saturation

The distorting eff ects of tax changes may be masking

the saturation of at least some sections of the domestic

market for passenger cars.

China’s vehicle ownership rate is still low by interna-

tional standards at 37.5 vehicles per 100 urban house-

holds at the end of 2017, the latest data available.

But ownership had grown phenomenally over the

previous decade from just 6.1 vehicles per 100 urban

households in 2007, according to the National Bureau of

Statistics.

Ownership rates in rural areas were lower at 19.3 vehi-

cles per 100 households in 2017, but even there owner-

ship had almost doubled from 9.9 vehicles in 2013.

Most urban middle-class households have bought a car

in recent years, limiting the potential for further sales to

this population segment.

Lower-income urban households and the majority of

households in poorer rural areas may not yet be able to

aff ord their first vehicle.

Uuban middle class

At provincial level, there is a clear correlation between

per capita disposable income and automobile ownership.

Households have tended to buy motorcycles as their

per capita incomes have risen, and then switch to passen-

ger cars as their incomes increase even further.

Provinces and cities with higher incomes have higher

rates of car ownership (and lower rates of motorcycle

ownership).

The principal exceptions are the provincial-level

megacities of Beijing and Shanghai, where motorcycle

ownership has fallen but car ownership is far below what

would be predicted based on income alone.

Both cities have introduced tough restrictions on car

ownership and invested heavily in mass transit to cope

with severe road congestion.

In the rest of the country, car ownership rates correlate

fairly closely with rising incomes and falling rates of

motorcycle ownership.

But much of the urban middle class has already pur-

chased a vehicle.

Household ownership rates were nearing 50% in

the provincial-level cities of Beijing and Tianjin and the

wealthy province of Zhejiang by the end of 2017.

Pushing ownership further down the income scale in

urban areas as well as out into the poorer countryside is

harder without generous tax incentives, plentiful credit

and fast growth in incomes.

Economic slowdown

China’s slowdown is compounding market saturation:

as the economy grows more slowly, so does the number

of households reaching the income threshold needed to

buy their first vehicle.

Expensive consumer durables such as washing ma-

chines or passenger cars tend to diff use through a popu-

lation following an S-curve – slowly at first, then more

rapidly, before tapering off as market saturation nears.

Initially, expensive durables are restricted to a small

group of high-income households, before spreading to

the mass middle class and finally penetrating lower-

income groups.

New products diff use more quickly or more slowly

depending on whether average incomes rise rapidly or

more moderately.

Even in a diff usion process, some groups may be

excluded from new products for decades after the items

have become commonplace for the middle class.

Poorer households, often in rural areas where produc-

tivity and incomes are lower, may not make their first

purchases until decades later, slowing diff usion in its later

stages.

In 2018/19, the economic slowdown and adverse tax

changes have worsened market saturation eff ects in the

short term and contributed to the slump in sales.

Tax cuts and more generous loans will be needed to

help reverse the slump, and the government is taking

steps in this direction.

But the most critical factor will have to be a return to

faster economic growth and increasing incomes, espe-

cially in second- and third-tier cities and the countryside,

where many households are still waiting to aff ord their

first car.

John Kemp is a Reuters market analyst. The views

expressed are his own.

Lee: Already served one year of detention but walked free last year after the appellate court halved a lower court’s five-year jail sentence and suspended it for three years.

India plans personalincome tax relief; scrap exemptionsBloombergNew Delhi

India is considering tax relief for

individuals as it looks at measures

to accelerate consumer demand

and boost economic growth,

people with direct knowledge of

the matter said.

Prime Minister Narendra

Modi’s government is mulling

a proposal to hike the taxable

income limits, especially the 1mn

rupee slab, which attracts a 30%

rate at present, the people said,

asking not to be identified as the

discussions are private. The move

will be accompanied by scrap-

ping some tax breaks, including

the one off ered on house rent

payments and interest earned on

some bank deposits.

The measures may form

part of the federal budget to be

unveiled in February, the people

said. A spokesman for the finance

ministry couldn’t be immediately

reached for a comment.

If the government tinkers with

personal taxes, it will add to the

list of measures taken in recent

months to boost growth that’s

expanding at the slowest pace in

nearly six years. Apart from last

month’s cut in corporate taxes,

the government has also rolled

back a levy on foreign funds,

injected $10bn into banks, relaxed

foreign direct investment rules,

and merged state-run lenders.

A steep reduction in corporate

tax rate to 22% meant companies

pay taxes at a lower rate than

many individuals who are in

the top 30% rate bracket. That’s

raised the clamour for a relief in

personal income tax rates.

As Finance Minister Nirmala

Sitharaman aims to narrow the

fiscal deficit to 3.3% of the gross

domestic product this year, the

government has limited fiscal

space for fresh giveaways after the

$20bn corporate tax stimulus. It’s

now banking on companies and

individuals to boost consumption

and add to revenue collections.

Personal tax kicks off on

income above Rs250,000 a year,

levied at 5%. Top marginal tax

rate in India is 42.74% for income

above Rs50mn. That’s higher

than the Asia average of 29.99%,

according to data compiled by

KPMG. Only about 5% of the

population pays taxes and the

country’s tax-to-GDP ratio of

about 11% ranks lower than the

global average.

BUSINESS5Gulf Times

Friday, October 25, 2019

BloombergSeoul

South Korea’s economy grew at a slower pace in the third quarter, putting it on track for the small-

est expansion since the global fi nancial crisis as trade uncertainties weigh on investment.

Gross domestic product increased 0.4% from the previous quarter, the Bank of Korea said in a statement, compared with an estimate by econo-mists of 0.5%. From a year earlier, the economy expanded 2%, as projected in a Bloomberg survey.

While exports rose in the quarter, improving from the sharp falls seen at the beginning of the year, the extended run of export weakness and doubts about the strength of overall growth are weighing on investment.

Concerns over weakening investment provide another reason for the govern-ment and central bank to continue bol-stering their support for the economy.

Following the BoK’s rate cut last week to support prices and growth, governor Lee Ju-yeol said the eff ects of the trade war would likely trim South Korea’s economic growth by 0.4 percentage point this year.

That leaves the economy needing a sharp acceleration in the last three months of 2019 to stop growth from falling below 2%. An expansion of al-most 1% in the fourth quarter will be needed to achieve that, with annual growth of 1.8% more likely, according to Cho Yong-gu, a fi xed-income strategist at Shinyoung Securities.

The improvement in exports, which grew 4.1% in real terms from the sec-ond quarter, indicates that weakness in the global tech sector may be over the worst.

The BoK noted growth in semicon-ductor and car shipments compared with the previous three months.

“There are some signs of a recovery in exports,” Cho said. “But the trade war has clearly taken a toll on shipments and falling exports have led to a slump in fa-cilities investment.”

Governor Lee acknowledged the like-lihood of growth falling below 2% in parliament after the release of the GDP data. With interest rates already at a

record low Lee said the government’s fi scal policy had a role to play in boost-ing growth in the fourth quarter.

Lee has said there’s no need for non-conventional policy support yet, though the central bank is looking at its options.

President Moon Jae-in said earlier

this week that an expansionary fi scal policy was essential over the coming year, given the economy’s “grave situ-ation” amid the spread of trade protec-tionism.

Still, some economists said the cen-tral bank would have to keep playing its part as the government ramps up

spending to prop up growth and prices, which recently began to fall.

“South Korea is where the world con-fi rms the impact of the US-China trade war on economic growth,” said Lee Sang-jae, chief economist for Eugene Investment & Securities.

The problem for Korea is that because

its small economy is so open to global trends, the power of fi scal policy is more limited than in other less export-reliant economies.

“Defl ationary trends are growing chronic and the BoK faces a choice like other global central banks to pursue an aggressive monetary policy,” he said.

South Korea economy slows astrade war drags on investment

Shoppers walk past a snack store at the Myeongdong shopping district in Seoul. South Korea’s gross domestic product increased 0.4% from the previous quarter, the Bank of Korea said in a statement yesterday.

Gojek’s twin chiefs eye dual listing, bigger regional shareReutersJakarta

Indonesian ride-hailing and payments company Gojek’s new co-chief executives are preparing for a dual listing in the coming years and a bigger regional market share, they said yesterday as they take over operations of the $10bn company.Co-founder and previous CEO Nadiem Makarim announced on

Monday he had resigned to join the second-term cabinet of Indonesian President Joko Widodo, where he has been named education and culture minister.New co-CEO Andre Soelistyo, who was previously Gojek group’s president, told a media briefing that the firm “is likely to do a dual listing as we are an Indonesian company first”.He said the lack of technology public off erings of this size in Indonesia would

mean Gojek needed to “educate the market”, comparing it to the path taken by Indonesian conglomerate and Gojek investor Astra.The new co-CEO said the firm was working on “building better governance” with the IPO in mind though “with no set date”, while expanding its user base to derive half from overseas.According to Gojek, 80% of its client base originates from Indonesia, Southeast Asia’s largest economy,

equivalent to 29.2mn active users.It claims 7.1mn other monthly active users in the rest of the region.The company is set to raise $2bn by the year-end from backers including Alphabet’s Google and Chinese tech giants Tencent and JD, its new CEOs said.Bankers have identified Gojek’s potential IPO as a key float to track in Asia’s ride-hailing and mobile payments market, catching the attention of global investors.

Having evolved from a ride-hailing service founded in 2010 to a one-stop app via which users can make online payments and order food and services such as massages, Gojek targets a larger slice of the Southeast Asian market, where Singapore-based Grab dominates ride-sharing.However, analysts say Makarim’s surprise move comes in the heat of an expensive battle with SoftBank-funded Grab and raises questions about the firm’s international expansion.

Joint CEOs Soelistyo and Kevin Aluwi told reporters it would be business as usual for the firm and that Makarim, who is keeping his stake in Gojek, would have no advisory or executive role. “Nadiem is definitely the mercurial, charimastic type,” Aluwi said.“The diff erent approach that we’re going to bring to the table is going to be a lot more measured, a lot more process-driven to really focus the company on the right things versus too much experimentation.”

Japaneseauthorities to team up on bank stress testsBloombergTokyo

Japan’s central bank and fi -nancial regulator are teaming up to test major banks’ resil-

ience to mounting risks at home and abroad, people with knowl-edge of the matter said.

The fi rst-ever joint stress tests by the Bank of Japan and Finan-cial Services Agency will require fi ve lenders to measure their ability to withstand shocks such as a sharp economic slowdown, falling stock prices and changes in interest rates, among other things, the people said, asking not to be identifi ed.

The banks are Mitsubishi UFJ Financial Group Inc, Sumitomo Mitsui Financial Group Inc, Mi-zuho Financial Group Inc, Sumi-tomo Mitsui Trust Holdings Inc and Norinchukin Bank, the peo-ple said.

The regulators’ plan is similar to annual tests conducted by the US Federal Reserve, which uses a hypothetical set of stressful eco-nomic conditions to examine the fi nancial strength of large banks.

While Japanese authorities have yet to determine specifi c scenarios, banks will probably undertake the exercise before the FSA’s administrative year ends in June, one of the people said.

It’s likely to take place on an annual basis thereafter, another person said.

Slowing global growth and shrinking interest rates are erod-ing the profi tability of lenders worldwide.

Through the tests, Japanese regulators want to guide the na-tion’s most systemically impor-tant banks to properly deal with challenges such as protracted low rates and the US-China trade war, one of the people said.

The tests will give a better understanding of the relative strengths and weaknesses of Japan’s biggest banks, allow-ing regulators to identify areas needing improvement, accord-ing to the people.

While the lenders have ad-equate capital, they are required to manage themselves in a for-ward-looking manner to avoid undermining the stability of the fi nancial system in the future, one of the people said.

Reuters reported on the plans earlier.

The BoJ and FSA already conduct stress tests separately, though they diff er in nature.

The central bank does “macro stress testing” mainly to deter-mine the resilience of the entire fi nancial system rather than in-dividual banks, while the FSA generally oversees examinations based on lenders’ own models.

Results of the BoJ’s latest macro stress testing are sched-uled to be published later yester-day in its semiannual Financial System Report.

Japan’s central bank and fi -nancial regulator have been working more closely together of late.

The BoJ and FSA are survey-ing banks and other institutions on their readiness for the phase-out of Libor, and recently polled fi nancial fi rms on their exposure to risky foreign assets such as collateralised loan obligations, Bloomberg has reported.

COSCO sanctions have impact but oil and gas output unaffected: CNOOC

ReutersBeijing

CNOOC, China’s largest off shore oil and

gas producer, yesterday said it would be

aff ected by US sanctions on its COSCO

shipping firm but there would be no im-

pact on its oil and gas production.

“(The sanctions) will have some impact

on our business when shipping oil and gas

from overseas oilfields back to China...But

I am sure the company will come up with

solutions,” said Xie Weizhi, chief financial

off icer at CNOOC Ltd, the listed arm of

CNOOC, at a media briefing yesterday.

“COSCO is just a transportation com-

pany...And the sanctions will not aff ect our

oil and gas production,” he added.

Reuters reported two weeks ago that

CNOOC was looking to charter liquefied

natural gas tankers to replace ships it

had hired from COSCO Shipping Tanker

(Dalian), which has been sanctioned by the

United States for allegedly transporting

Iranian oil.

Earlier yesterday CNOOC Ltd reported

a 27.9% jump in capital spending in the

third quarter to 19.53bn yuan ($2.76bn),

according to a company statement filed to

the Hong Kong Stock Exchange, as Beijing

pushes to boost oil and gas exploration

and production.

“We are not planning to adjust our 2019

capital expenditure target of 70bn-80bn

yuan and are confident of meeting it,”

said Xie at the briefing, adding that the

company also expected to reach the upper

limit of, or exceed, its annual output target

of 480mn barrels of oil equivalent.

CNOOC’s global crude oil production

in the July-September period reached

100.3mn barrels, while natural gas produc-

tion was 142.5bn cubic feet, compared

with last year’s 91.1mn barrels and 131.7bn

cubic feet, respectively.

Oil and gas sales, however, only man-

aged to tick up 0.8% to 48.34bn yuan as

higher production was off set by a drop in

energy prices.

CNOOC said it had drilled 19 appraisal

wells, among which, Kenli 6-1 in the Bohai

Bay area was expected to be a mid-sized

oil and gas structure.

Meanwhile, production at three of six

new projects that are scheduled to be

launched this year is underway.

The remaining oilfields – Bozhong 34-9,

Caofeidian 11-1/11-6 and Wenchang 13-2 –

are undergoing off shore commissioning.

In September, CNOOC said it expected

its major deepwater gas field Lingshui 17-2

in the South China Sea to start its first gas

production at the end of 2021, and planned

to expand development at existing fields

such as Dongfang, Yuedong and Yacheng.

The company’s average-realised oil

prices were $60.89 per barrel in the third

quarter, down 14.9% from last year.

Natural gas sales prices fell 8.8% to $5.7

per thousand cubic feet.

At the press briefing, Xie also confirmed

that parent company, CNOOC Group, had

announced Wang Dongjin will be its new

chairman, following Yang Hua’s move to

Sinochem Group in September.

Wang is currently general manager at

CNOOC Group.

A China Ocean Shipping Company container ship is seen at the San Antonio port in Chile. Reuters reported two weeks ago that China’s largest off shore oil and gas producer CNOOC was looking to charter liquefied natural gas tankers to replace ships it had hired from COSCO Shipping Tanker (Dalian), which has been sanctioned by the US for allegedly transporting Iranian oil.

Through the tests, Japanese regulators want to guide the nation’s most systemically important banks to properly deal with challenges such as protracted low rates and the US-China trade war

BUSINESS

Gulf Times Friday, October 25, 20196

AFPHong Kong

Most Asian markets rose yester-day following a positive lead from Wall Street, while the

pound was marginally higher as trad-ers await the next Brexit move with the EU expected to extend Britain’s divorce deadline yet again.

While US earnings on Wednesday were a mixed bag, investors remain broadly upbeat after better-than-fore-cast results so far have soothed worries about the impact of slowing economic growth on companies.

“People were bracing for the worst” for businesses, Yana Barton at Eaton Vance Management said. “So far we’re coming in a little bit better,” she told Bloomberg TV.

Hong Kong fi nished 0.9% higher at 26,797.95 while Tokyo closed with gains of 0.6% at 22,750.60.

Seoul added 0.2% as dealers brushed off data showing the South Korean economy grew in the third quarter at a slower pace than expected, putting it on course for the worst annual perform-ance since the global fi nancial crisis.

Sydney, Singapore, Mumbai, Taipei and Jakarta were also well up.

Shanghai was marginally lower while Wellington and Bangkok were also in the red.

The positive mood comes as China and the US look on track to sign a mini trade deal next month and set up talks for the next phase of a wider agreement to end their long-running tariff s war.

Hopes that Britain will leave the Eu-ropean Union with a divorce pact have also improved sentiment.

While Boris Johnson failed to push his agreement with the bloc in time to meet the October 31 cut-off date, he did manage to get MPs to agree to it.

EU leaders are expected to grant a three-month extension, in which time the prime minister could hold a general election he hopes will give him enough lawmakers to easily break the Brexit deadlock.

Sterling, which has seen strong volatil-

ity for most of the week, fl uctuated in a tight range against the dollar yesterday as dealers await their next cue.

“Brexit remains of great concern, and though few developments materialised (Wednesday) the market is maintaining confi dence a deal will be coming,” said AxiTrader analyst Stephen Innes.

“Traders are still awaiting the EU deci-

sion on whether it will grant a delay until January 31, and under what conditions.”

Oil prices edged down after run-ning up strong gains of more than 2.5% Wednesday in response to data show-ing a slide on US stockpiles as well as a bigger-than-expected fall in gasoline inventories.

However, the selling in Asian trade

came as investors remain concerned about the fact that Opec and other ma-jor producers led by Russia had not yet put forward any plans for changes to their output cuts that have helped sup-port prices for years.

On currency markets, the largely positive mood provided a lift to higher-yielding, riskier units such as the South

Korean won and Indonesian rupiah.The Turkish lira ticked up after Don-

ald Trump ended sanctions on the country that were recently imposed over its operations against Kurdish forces in northern Syria.

He said he was lifting the sanctions because a ceasefi re was holding in the area, calling it a “major breakthrough”.

Asian stock markets rise after positive lead from Wall Street

Apple gets new Street-high target at Morgan Stanley on TV+ boostBloombergNew York

Apple Inc, which this week saw its shares touch a record high, just

earned a new Street-high price target.

Morgan Stanley raised its tar-get to $289 a share from $247 a share, the highest among analysts tracked by Bloomberg and imply-ing 20% upside from Tuesday’s closing price. The bank cited Ap-ple’s upcoming TV+ release next month, contrasting with other brokers who have been less posi-tive about the service.

“The market view is that with the launch of TV+, Apple is entering a new, more capi-tal intensive market with a low probability of generating a pos-itive return,” analysts including Katy Huberty wrote in a note to clients. “We disagree, and see Apple TV+ boosting services revenue growth by two points in FY20, adding one point, on average, to Apple EPS in FY21 and beyond,” they wrote.

Morgan Stanley’s com-ments come after a report from Goldman Sachs last month, in which analyst Rod Hall cut his price target on concern that an aggressive pricing strategy for TV+ could trim earnings. Ap-ple said the service won’t have a material impact.

Apple recruited stars includ-ing Jennifer Aniston, Oprah Winfrey and Samuel L Jack-son for TV+ original produc-tions and may spend as much as $2bn by the end of fiscal 2020 if it rolls out two shows a month after launch, according to Morgan Stanley estimates. The service can become a $9bn-a-year revenue business with 136mn paid subscribers by 2025, the bank said.

Morgan Stanley’s price target hike was also driven by a fore-cast for better iPhone growth as replacement cycles peak and 5G drives device upgrades. Bullish expectations for the iPhone 11 from other analysts helped the stock touch a record of $240.99 on Monday. The average PT among 48 analysts surveyed by Bloomberg is $228.

India stocks fall after court asks telecom fi rms to pay duesBloombergMumbai

Indian stocks fell after the nation’s top court ordered telecom carri-ers to pay the government dues of

Rs920bn ($13bn). The S&P BSE Sensex slipped 0.1% at the close in Mumbai, after fl uctuating a dozen times between

gains and losses through the session.The NSE Nifty 50 Index declined

0.2%. A three-judge Supreme Court panel yesterday accepted the govern-ment’s appeal on licence fee claims and ordered eight wireless carriers, includ-ing Bharti Airtel Ltd and Vodafone Idea Ltd, to pay the government past dues.

The S&P BSE Telecom Index fell 0.7% to its lowest level in over two weeks

while Vodafone Idea Ltd plunged 23%. A gauge of banking stocks declined 1.2% to a one-week low.

The news wiped away all gains spurred by better-than-expected earn-ings reports.

Of the 21 Nifty companies that have announced results so far, 14 have ei-ther met or exceeded analyst estimates, while one didn’t have any estimates.

“Earnings have been good but we are closely watching if the festival demand sustains beyond the short term,” said Vineeta Sharma, head of research for Narnolia Financial Advisors Ltd. “We expect corporate banks and consump-tion stocks to do well going forward.”

Thirteen of 19 sector sub-indexes compiled by BSE Ltd declined, led by a gauge of power companies Infosys con-

tributed most to the Sensex decline, decreasing 2.3% while Yes Bank had the largest drop, falling 5.7%.

PI Industries Ltd climbed 6.9% af-ter reporting higher-than-expected second quarter net income Grasim In-dustries Ltd, a shareholder in Vodafone Idea, dropped 5.1% on the top court or-der.

EM stocks edge higher; lira weakensReutersLondon

Emerging-market shares rose yesterday as tensions related to the US-China trade spat and Brexit eased, while the Turkish lira retreated from previous session’s rally as investors kept a cautious stance ahead of the central bank rate decision.MSCI’s index of emerging market currencies traded marginally higher against a steady dollar with firm currencies in Russia and South Africa, while those in Asia largely weakened.The emerging markets stocks index rose 0.3%, on course to log its ninth session of gains in 11.Mainland China stocks ended flat, while those in Hong Kong, Taiwan, Russia, Turkey and South Africa rallied between 0.4% and 1.1%.On the trade front, Washington and Beijing are back to discussions over prospects of some wider agreement next month, while another likely Brexit extension takes “no deal” fears off the table for now.“The troubling part now is the waiting gaming process to gauge if the Global PMI’s turn and consumer confidence bounces,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.With no new headlines from either front, markets now look to a batch of major central bank meetings and PMI’s.Japanese PMI came in weak,

while French business activity was firmer than expected, with all eyes now on US key data.The European Central Bank monetary policy decision is due later in the day, followed by the US Federal Reserve and Bank of Japan next week.Within the EM space, interest rate decisions from Russia, Turkey and Brazil will be watched for.The Turkish central bank is expected to deliver a 100 point rate cut at its meeting later yesterday to take the benchmark rate to 15.5%, a Reuters poll showed.The lira dipped 0.2%, but hovered near two-week high hit on Wednesday after US President Trump lifted sanctions on Turkey as he claimed that a US-brokered ceasefire between Turkish and Kurdish forces in Northern Syria was holding.Analysts expect the Turkish central bank to cut rates at this meeting, but they diff er on the need and magnitude.While Credit Suisse says the pricing in the cross-currency rates market allows a larger cut, Rabobank strategists consider it a prudent move if the central bank stands pat until the dust over the Syria crisis settles.“Over the past few months the (central bank) slashed rates by a total of 750bp... easing the burden on the economy.Why take the risk of cutting rates further and making the lira less attractive for carry trade players?,” Rabobank’s EM strategist Piotr Matys says.

Sculptures of water buff aloes stand outside the Exchange Square Complex, which houses the Hong Kong Stock Exchange. The Hong Kong bourse finished 0.9% higher at 26,797.95 points yesterday.

China bond investorwho predicted sell-offnow sees recovery

BloombergHong Kong

All the action in China’s markets is now in government bonds, where a sudden sell-off this month contrasts with subdued moves elsewhere. One contrarian says it won’t last.The yield on benchmark 10-year sovereign debt is up 20 basis points since a three-year low on September 6, ranking it among the worst performers in Asia. Meanwhile, stocks have turned the least volatile since early 2018, while the previously wild yuan has traded around 7.08 per dollar for almost two weeks.While many analysts and investors were blindsided by China’s bond rout, BNP Paribas Asset Management’s Jean-Charles Sambor had cautioned against buying onshore notes in August. He’s now more positive on yuan-denominated debt, saying the price is attractive, and predicts the 10-year yield will revert to 3.1% by the end of the year. Worsening economic data is strengthening the bull case for bonds, he says, as Beijing may adopt easier monetary policy.“A turning point should be here pretty soon,” said Sambor, BNP Asset’s deputy head of emerging market debt in London. “We see value in policy banks and will continue to buy in the adjustment.”Rising yields are a natural consequence of returning risk appetite globally this month after trade tensions eased between Washington and Beijing. But in China, the rout was made worse

by faster-than-expected inflation and whispers that authorities may limit the sale of bond funds. Concerns over liquidity and a prudent central bank have also added to the pessimism.While China funnelled 200bn yuan ($28bn) of one-year cash into the banking system last week, they’ve stayed clear of more aggressive measures this year. The central bank has injected a net 560bn yuan through open market operations in the past four days ahead of a deadline yesterday for corporate tax payments.The risk is that accelerating inflation may undermine a recovery for bonds – Beijing won’t want to inflate prices further by injecting more liquidity. China’s consumer price index will hit 3.5% by December as a deadly swine fever sends pork prices soaring, according to Bloomberg Economics. Inflation was at 3% last month, the fastest increase in prices since 2013.Still, others echo Sambor’s bullish call on Chinese bonds – Wilfred Wee, a money manager at Investec Asset Management, considers the notes “a core holding.” Sun Lu, a strategist at Citigroup Inc, reiterated her “overweight” recommendation and says a likely lower supply of sovereign notes this quarter will support the debt.China bonds will become more mainstream as some enter JPMorgan Chase & Co’s flagship indexes next year, Singapore-based Wee said. That’s going to help support the asset class as more foreigners buy Chinese debt, he said.The yield on China’s 10-year government bonds climbed one basis point to 3.22% as of 4:10pm in Shanghai.

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

13.85

6.51

1.23

1.38

0.41

0.52

6.44

5.81

19.80

7.00

3.50

9.25

1.62

15.40

2.50

3.29

0.66

21.97

0.30

16.00

10.19

2.21

2.30

3.17

0.84

7.28

0.68

0.71

2.67

15.80

8.28

3.20

3.80

1.17

10.99

1.86

0.52

4.99

1.68

0.61

1.01

2.53

0.67

4.51

3.40

2.13

0.71

0.73

1.72

0.00

0.00

0.00

0.00

-0.31

-1.36

0.61

4.48

-4.89

-2.01

-1.82

-0.39

0.81

-4.36

-4.09

1.20

0.68

0.63

0.00

0.00

-1.12

0.96

1.69

0.00

-1.02

-1.67

0.75

-0.25

4.15

0.00

0.53

0.00

0.09

-1.06

0.00

0.20

1.20

-2.09

0.00

0.40

0.30

0.00

-0.58

4.41

-0.42

2,369

361,570

1,013,927

500,844

280,418

-

312,833

27,856

2,468,082

612,289

4,864

3,369,643

377,385

323,896

2,589,221

75,462

1,591,363

247,006

2,371,394

399,373

431

-

836

1,773,230

4,844,293

1,203,274

505,030

1,495,763

2,051,144

86,005

3,346,603

50,704

3,688,656

5,504,472

877,404

348,333

1,324,577

182,167

330,934

7,189,800

-

1,398,054

77,020

2,681,733

773,152

2,489,365

1,486,630

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

Oman PackagingOman Oil Marketing Company

Oman National Engineering AnOman Investment & Finance

Oman Intl MarketingOman Flour Mills

Oman Fisheries CoOman Europe Foods Industries

Oman Education & Training InOman Chromite

Oman ChlorineOman Ceramic Company

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

0.27

0.99

0.13

0.12

0.52

0.68

0.08

1.00

0.24

3.64

0.36

0.42

0.21

0.81

0.07

0.17

5.00

0.09

0.32

0.21

0.14

0.70

3.92

0.19

0.08

0.78

0.17

0.06

0.11

0.18

0.17

0.13

1.25

0.12

0.31

0.07

0.11

0.14

6.80

0.07

0.08

0.39

0.06

0.10

0.49

0.18

0.30

0.17

0.19

1.28

0.18

0.26

0.04

0.26

0.44

0.10

0.12

0.10

0.53

0.09

0.02

0.75

0.10

0.07

0.09

0.79

0.17

0.08

0.02

0.38

0.55

0.19

0.13

0.07

0.88

0.07

1.13

0.07

0.09

0.36

0.13

0.66

0.05

0.60

0.25

0.00

0.00

0.00

0.00

0.00

-1.69

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-0.47

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-1.64

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-1.41

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-0.58

0.00

0.00

0.00

0.00

0.00

0.00

-0.45

0.00

0.00

0.00

0.00

-1.06

0.00

0.00

0.00

-5.33

-2.30

0.00

-0.59

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-5.33

0.00

0.00

-1.16

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-

-

-

4,001,580

-

-

367,134

-

-

-

-

-

-

-

3,900

-

-

-

-

119,010

-

-

-

-

-

-

-

299,952

43,700

-

-

-

-

-

-

916,098

-

-

-

-

520,900

-

2,000

-

-

-

-

20,000

11,500

-

-

-

-

-

588,354

620,192

9,065

-

-

139,000

-

-

142,575

2,677,546

30,000

-

20,730

36,060

-

-

-

-

82,078

-

-

2,313,823

-

-

66,802

-

-

-

-

-

-

-

-

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

Wethaq Takaful Insurance CoSalbookh Trading Co Kscp

Aqar Real Estate InvestmentsHayat Communications

Soor Fuel Marketing Co KscTamkeen Holding Co

Alargan International RealBurgan Co For Well Drilling

Kuwait Resorts Co KsccOula Fuel Marketing Co

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

Fujairah Cement IndustriesLivestock Transport & Tradng

International Resorts CoNational Industries Grp Hold

Warba Insurance CoFirst Dubai Real Estate Deve

Al Arabi Group Holding CoKuwait Hotels Sak

Mobile Telecommunications CoEff ect Real Estate Co

Tamdeen Real Estate Co KscAl Mudon Intl Real Estate Co

Kuwait Cement Co KscSharjah Cement & Indus Devel

Kuwait Portland Cement CoEducational Holding Group

Bahrain Kuwait InsuranceAsiya Capital Investments Co

Kuwait Investment CoBurgan Bank

Kuwait Projects Co HoldingsAl Madina For Finance And In

Kuwait Insurance CoAl Masaken Intl Real Estate

Intl Financial AdvisorsFirst Investment Co Kscc

Al Mal Investment CompanyBayan Investment Co Kscc

Egypt Kuwait Holding Co SaeCoast Investment Development

Privatization Holding CompanInjazzat Real State Company

Kuwait Cable Vision SakSanam Real Estate Co Kscc

Ithmaar Holding BscAviation Lease And Finance C

Arzan Financial Group For FiAjwan Gulf Real Estate Co

Kuwait Business Town Real EsFuture Kid Entertainment And

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

123.00

18.50

771.00

60.20

12.00

38.60

40.50

444.00

20.00

43.00

20.50

80.50

70.50

19.00

210.00

1,220.00

10.20

424.00

30.00

40.70

78.50

88.90

117.00

5.20

135.00

97.90

54.40

116.00

59.00

60.00

165.00

16.30

40.00

34.80

61.40

62.10

777.00

67.40

48.60

178.00

12.80

226.00

62.50

31.80

204.00

100.00

575.00

20.50

280.00

25.70

250.00

60.00

1,110.00

320.00

200.00

37.00

141.00

312.00

222.00

14.40

310.00

74.00

54.40

29.20

9.50

40.80

494.00

35.00

50.90

83.00

12.50

42.80

22.30

261.00

27.30

14.00

42.30

90.00

76.50

12.70

128.00

36.30

236.00

43.70

63.50

57.50

565.00

272.00

105.00

1.65

-5.61

0.13

0.00

-3.23

-0.26

0.00

0.00

0.00

0.00

10.81

-3.01

0.71

6.74

0.00

0.00

3.03

0.00

0.00

2.52

0.00

0.00

0.00

0.00

9.76

0.00

0.37

-0.85

0.00

-1.64

0.00

0.00

2.56

0.87

-0.16

0.00

0.52

3.22

-1.22

-6.32

0.00

-0.44

0.48

-6.47

10.27

0.00

-0.17

0.00

-4.76

6.64

-1.57

0.00

-0.45

0.00

0.00

2.78

2.92

1.63

-0.45

-0.69

-5.49

0.00

-0.73

0.00

-1.04

0.00

0.00

1.74

-1.17

0.00

-47.92

0.00

0.00

0.00

-0.36

-3.45

3.68

0.00

-0.26

0.79

-20.99

0.00

0.00

0.00

0.00

1.77

0.00

0.37

0.00

2,715,590

1,144,100

765,536

-

5,000

410,010

-

-

332,114

-

562,900

100

726,480

109,009

-

-

116,503

-

-

180,022

-

-

16,442

-

1,000

-

7,000

14,377

-

75,345

-

320,610

19,380

1

136,620

837

1,366,291

582,230

220,000

200

-

774,191

234

378,012

8,144,009

-

992,374

-

30,020

953,621

11,780

-

49,019

-

-

416,648

470,578

9,564,962

643,308

464,017

25,070

-

916,266

3,090,292

327,520

-

-

2,456,789

61,309

40,100

8

-

-

30,064

2,989,499

2,613,735

306,330

-

1,336,490

2,240,220

114,760

214,847

734,480

-

-

1,208,113

111,206

2,988,900

-

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

57.00

307.00

900.00

14.60

21.50

122.00

99.00

1,150.00

129.00

64.50

158.00

68.00

3,100.00

71.50

52.00

55.00

50.10

760.00

0.00

44.50

26.90

57.00

70.60

30.10

37.70

1,000.00

92.00

64.40

28.80

54.00

403.00

83.40

19.90

781.00

18.70

462.00

95.50

330.00

466.00

692.00

57.70

90.00

74.00

621.00

59.80

55.80

40.50

127.00

203.00

66.50

350.00

95.40

5.56

-0.65

0.00

9.77

-2.27

0.00

10.00

0.00

0.78

-5.15

0.00

0.00

0.32

10.00

0.00

0.00

4.38

3.54

0.00

3.49

1.51

-3.39

0.00

-5.94

3.86

0.00

0.00

-0.16

8.27

-1.82

0.50

-1.88

-2.93

0.13

1.63

2.67

-1.44

-0.30

-0.64

-0.14

-0.69

0.00

4.23

0.00

-11.80

0.18

5.19

-0.78

0.00

0.00

0.00

0.00

94,902

1,017,813

-

407,054

53,349

51,000

1

-

4,127,897

6,600

-

155,228

11,723

501

-

-

9,232,270

119,565

-

1,113,151

400,489

11,917

302,400

423,900

163,311

111,519

234

40,600

11,448,519

3,150

265,904

5,034,642

290,862

4,604

1,111,239

1,590

453,924

61,000

312,770

1,600,250

118,200

-

2,600

-

200,113

11,722,151

7,855

115,000

301,250

-

-

-

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

0.11

0.55

0.08

0.11

0.07

1.05

1.19

0.29

0.12

0.60

0.50

1.38

3.15

0.28

0.34

0.08

2.21

0.52

0.34

0.28

0.59

1.33

0.09

0.00

6.80

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-6.67

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

2.59

0.00

-4.88

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-

100,000

-

-

-

-

-

-

-

530

502,799

157,761

-

-

-

-

-

-

-

-

487,346

66,460

137,917

-

10,000

-

2,000

283,647

-

-

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

-0.77

-0.24

1.58

1.67

1.52

0.00

4.96

-1.15

0.13

-1.35

0.00

-0.21

1.00

0.00

0.36

0.00

-1.08

-0.77

0.00

0.00

1.25

0.52

278,987

2,000

149,853

699,753

1,430,385

-

68,932

101,261

108,076

3,464,000

458,305

1,584,331

25,000

462,077

1,010,090

-

385,909

32,260

-

377,400

1,172,855

1,707,112

38.60

408.00

96.50

183.00

46.70

161.00

27.50

43.00

756.00

293.00

315.00

944.00

505.00

272.00

278.00

40.00

27.40

25.90

850.00

66.00

8.10

58.30

Lt Price

LATEST MARKET CLOSING FIGURES

BUSINESS7Gulf Times

Friday, October 25, 2019

Best European stock funds beat market despite Brexit dramaBloombergLondon

This year may have been a tumultuous one for Britain, but some equity fund man-

agers are making a killing despite the volatility.

Among this year’s 10 best-per-forming European stock funds with assets exceeding $1bn, four are fo-cused on small and mid-sized UK companies, according to data com-piled by Bloomberg.

JPMorgan Asset Management and Aberdeen Standard are some of the firms reaping market-beating returns of at least 23%. The result can seem counter-intuitive be-cause smaller companies are seen as more exposed to the domestic economy and thus the most likely be hurt by the uncertainty sur-rounding the UK’s departure from the European Union.

Franklin Templeton’s Paul Spen-cer, whose £1.1bn($1.4bn) Frank-lin UK Mid Cap Fund has beaten 95% of peers this year, has been navigating the Brexit turmoil by focusing on individual company fundamentals instead of ephemeral political headlines.

“In the absence of my crystal ball, the outlook is pretty uncer-tain and my expectations for the fund’s performance have been greatly exceeded this year,” Spen-cer said in a phone interview. “UK is very under-owned. So what we’re seeing right now is a slow

return of investors to UK mid-caps.”

Indeed, investors have been avoiding UK equities for years and the country’s stock market is the least popular in the world, ac-cording to a Bank of America fund manager survey this month. But that sentiment may start to change after Parliament on Tuesday voted in favour of Boris Johnson’s Brexit deal, making Britain’s EU depar-ture a more realistic prospect, even if it’s again delayed.

Johnson yesterday cancelled a cross-examination session by senior lawmakers as speculation mounted the prime minister will try again to force a general election to break the Brexit deadlock.

In a sign that investors are em-bracing improved political clarity and hopes for an economic recovery, a Vanguard exchange-traded fund that tracks the mid-cap FTSE 250 Index had a record infl ow of £91.2mn this week. The FTSE 250 has gained 15% this year, almost double the re-sult for the FTSE 100 Index of the largest British companies.

However, Spencer warns that it’s too early to become optimistic about the British economy. That’s one of the reasons that 55% of op-erating earnings for the companies in the fund come from overseas.

“We’re not out of the woods yet. We’re carefully watching the latest data releases to gauge the state of the economy,” he said. “If we get a positive resolution to the political tensions and/or a US-China trade

deal, investors will return to UK mid-caps.”

Among the stocks that fuelled the outperformance of the Franklin Templeton fund is Entertainment One Ltd, which is up more than 50% this year mainly as a result of Hasbro Inc’s decision to buy the studio that makes the Peppa Pig children’s TV show. Other gainers include Spirent Communications Plc, which has risen 70%, and In-termediate Capital Group Plc, a private equity firm that’s up 57%.

Intermediate Capital is also one of the top holdings at JPMorgan’s Mercantile Investment Trust, which has handed investors a re-turn of 34% this year. The portfo-lio manager Guy Anderson says the fund focuses on businesses with long-term growth opportunities that delivered results in spite of “political and economic bumps.”

Other top-performing Europe-an stock funds include Aberdeen Standard’s ASI UK Smaller Com-panies Fund, up more than 25% in 2019, and Aberforth Smaller Companies Trust Plc, up 23%. The manager behind Aberdeen’s fund, Harry Nimmo, is similar to Frank-lin Templeton’s Spencer in that he also doesn’t base his investment decisions on politics.

“We consider it futile to make any sort of political, currency, eco-nomic predictions,” Nimmo said by phone. “It’s the best, high-quality companies that are best able to thrive in difficult economic and political circumstances.”

A broker looks at financial information on computer screens on the IG Index trading floor in London (file). Indeed, investors have been avoiding UK equities for years and the country’s stock market is the least popular in the world, according to a Bank of America fund manager survey this month. But that sentiment may start to change after Parliament on Tuesday voted in favour of Boris Johnson’s Brexit deal, making Britain’s EU departure a more realistic prospect, even if it’s again delayed.

European stock markets close higher as ECB leaves rates unchangedAFPLondon

European stock markets were mostly higher yesterday after the European Central Bank left its

key borrowing rates unchanged — as expected — at its regular policy meet-ing.

Stock prices in London, Frankfurt and Paris all held on to their gains even after the ECB warned about the “downside risks” to the eurozone economy.

“Though not as positive as their UK peer, the DAX and CAC waved off (ECB chief) Mario Draghi,” said Spreadex analyst Connor Campbell.

London’s blue-chip FTSE100 in-dex closed around 0.9% higher at 7,328.25 points as the pound weak-ened due to traders’ nervousness about Brexit.

Frankfurt’s DAX 30 closed 0.6% up at 12,872.10 points and Paris’ CAC 40 ended 0.6% higher at 5,684.33 points, while the EURO STOXX 50 fi nished 0.4% up at 3,621.37 points.

In Frankfurt, at his final meeting after eight years in office as ECB president, Draghi warned about the “prolonged presence of uncertain-ties” weighing on economic activ-ity.

Nevertheless, the ECB chose to hold its fi re for now and not to lower borrow-ing rates any further, even if Draghi said that “an ample degree of monetary poli-cy accommodation is still necessary.”

“As expected, Mario Draghi’s last meeting as ECB president did not bring any meaningful news in terms of mon-

etary policy,” said UniCredit analyst Marco Valli.

“Draghi confi rmed a downbeat eco-nomic assessment” and his successor Christine Lagarde “will inherit a mon-etary policy that is likely to be on auto-pilot for some time,” he said.

Among the other European markets, Helsinki was in the red as shares in No-kia plunged more than 20% after the Finnish telecommunications equip-ment maker posted a profi t warning.

“Draghi is in a situation where bond yields are higher and the collapse we saw over the summer is reversing, the euro has steadied itself and everything is fi ne, except for the PMIs of course,” said Societe Generale’s Kit Juckes. “And he’s handing over an empty monetary policy toolkit.”

Germany’s export-dependent manufacturing sector also remained in contraction, suggesting a third-quarter slowdown in Europe’s largest economy could stretch into the closing months of the year.

“Things are really not getting any better yet.

A slight improvement in October PMIs can’t mask the fact that growth has almost stalled.

The overall picture is one of a feeble economy,” said Bert Colijn at ING.

The data had also knocked the wind out of the euro after it had started the day brightly, but bond yields were broadly steady and there were plenty of other things going on too.

The Swedish crown rose 0.7% after its central bank stuck with plans to raise its interest rates in December.

Its gains pulled the Norwegian crown higher as well, despite a rela-

tively dovish message from the Norges Bank which left its rates unchanged.

On the other side of the Atlantic, Wall Street was mixed amid optimism over US-China trade talks and as Tesla surged on positive earnings, while Twitter plunged on disappointing re-sults.

The euro meanwhile dipped against the dollar following poorly-received eurozone manufacturing data.

The pound dropped versus the dol-lar and euro as traders waited to see by how long the European Union would decide to extend Brexit beyond the current October 31 deadline.

With traders’ attention fi rmly on the current earnings season, shares in Air-bus jumped in Paris after the European plane maker said Spirit Airlines in-tended to buy up to 100 of its A320neo family aircraft.

With the euro treading water, The Japanese yen was 0.1% higher at 108.6 per dollar and the Australian dollar was weaker at $0.6842.

The dollar index was lower at 97.452 against a basket of six major curren-cies, heading for its worst month since January 2018.

In commodity markets, oil steadied above $61 a barrel on as concern over the demand outlook off set a surprise drop in US crude inventories and the prospect of further action by Opec and its allies to support the market.

Brent crude was unchanged at $61.17 a barrel, having jumped 2.5% on Wednesday.

US West Texas Intermediate (WTI) crude was down 10 cents at $55.87 and gold barely budged at $1,491.50 an ounce.

Apple IncAmerican Express Co

Boeing Co/TheCaterpillar Inc

Cisco Systems IncChevron Corp

Walt Disney Co/TheDow Inc

Goldman Sachs Group IncHome Depot Inc

Intl Business Machines CorpIntel Corp

Johnson & JohnsonJpmorgan Chase & Co

Coca-Cola Co/TheMcdonald’s Corp

3M CoMerck & Co. Inc.

Microsoft CorpNike Inc -Cl B

Pfizer IncProcter & Gamble Co/The

Travelers Cos Inc/TheUnitedhealth Group Inc

United Technologies CorpVisa Inc-Class A Shares

Verizon Communications IncWalgreens Boots Alliance Inc

Walmart IncExxon Mobil Corp

243.14

116.65

342.13

133.10

46.58

117.70

130.26

48.19

210.76

234.27

134.02

52.26

129.06

124.42

54.69

197.63

161.39

82.43

140.18

91.51

36.36

125.27

131.65

245.02

141.68

175.82

60.80

54.14

119.23

69.21

-0.02

0.14

0.48

-1.66

-1.00

-0.24

-0.66

2.02

-0.27

-0.17

-0.27

1.04

-0.65

-0.56

0.08

-0.79

-4.37

-0.53

2.14

-0.88

-1.12

1.85

-0.39

-1.12

1.27

2.63

-0.13

-0.77

-0.10

-0.77

1,945,135

163,978

436,076

297,375

1,680,473

334,100

412,500

600,900

92,377

150,628

210,542

2,178,166

689,427

664,654

599,555

294,009

585,886

608,850

5,162,617

728,412

1,103,760

765,644

132,143

362,430

193,751

607,247

719,185

412,583

205,987

725,739

DJIA

Company Name Lt Price % Chg Volume

Anglo American PlcAssociated British Foods Plc

Admiral Group PlcAshtead Group Plc

Antofagasta PlcAuto Trader Group Plc

Aviva PlcAstrazeneca PlcBae Systems Plc

Barclays PlcBritish American Tobacco Plc

Barratt Developments PlcBhp Group Plc

Berkeley Group Holdings/TheBritish Land Co Plc

Bunzl PlcBp Plc

Burberry Group PlcBt Group Plc

Coca-Cola Hbc Ag-DiCarnival PlcCentrica Plc

Compass Group PlcCroda International Plc

Crh PlcDcc Plc

Diageo PlcDirect Line Insurance Group

Evraz PlcExperian Plc

Easyjet PlcFerguson Plc

Fresnillo PlcGlencore Plc

Glaxosmithkline PlcGvc Holdings Plc

Hikma Pharmaceuticals PlcHargreaves Lansdown Plc

Halma PlcHsbc Holdings Plc

Hiscox LtdIntl Consolidated Airline-Di

Intercontinental Hotels Grou3I Group Plc

Imperial Brands PlcInforma Plc

Intertek Group PlcItv Plc

Johnson Matthey PlcKingfisher Plc

Land Securities Group PlcLegal & General Group PlcLloyds Banking Group Plc

London Stock Exchange GroupMicro Focus International

Marks & Spencer Group PlcMondi Plc

Melrose Industries PlcWm Morrison Supermarkets

National Grid PlcNmc Health Plc

Next PlcOcado Group Plc

Paddy Power Betfair PlcPrudential Plc

Persimmon PlcPearson Plc

Reckitt Benckiser Group PlcRoyal Bank Of Scotland Group

Royal Dutch Shell Plc-A ShsRoyal Dutch Shell Plc-B Shs

Relx PlcRio Tinto Plc

Rightmove PlcRolls-Royce Holdings PlcRsa Insurance Group Plc

Rentokil Initial PlcSainsbury (J) Plc

Schroders PlcSage Group Plc/The

Segro PlcSmurfit Kappa Group Plc

Standard Life Aberdeen PlcDs Smith Plc

Smiths Group PlcScottish Mortgage Inv Tr Plc

Smith & Nephew PlcSpirax-Sarco Engineering Plc

Sse PlcStandard Chartered Plc

St James’s Place PlcSevern Trent Plc

Tesco PlcTui Ag-Di

Taylor Wimpey PlcUnilever Plc

United Utilities Group PlcVodafone Group Plc

John Wood Group PlcWpp Plc

Whitbread Plc

1,983.60

2,189.00

2,035.00

2,225.00

859.80

561.00

424.30

7,303.00

554.40

166.40

2,760.50

646.20

1,645.00

4,430.00

624.80

1,999.50

510.00

1,980.50

206.30

2,405.00

3,158.00

73.92

1,985.00

4,810.00

2,813.00

7,094.00

3,142.00

285.20

380.40

2,389.00

1,211.00

6,498.00

655.80

232.35

1,719.40

885.80

1,991.00

1,791.50

1,858.50

617.40

1,504.00

518.00

4,610.00

1,106.50

1,861.80

771.00

5,066.00

134.65

3,070.00

214.10

941.00

272.70

59.85

6,990.00

1,033.20

183.75

1,565.50

216.20

204.70

925.80

2,513.00

6,766.00

1,317.50

0.00

1,425.00

2,344.00

675.20

5,850.00

225.90

2,321.50

2,313.00

1,840.00

4,069.00

587.60

702.00

526.20

444.00

216.60

3,135.00

705.40

825.00

2,552.00

299.10

355.60

1,594.00

495.00

1,698.00

7,575.00

1,316.00

702.00

1,035.00

2,310.00

241.20

1,023.50

166.15

4,631.50

883.20

161.20

348.80

918.40

4,107.00

0.19

-0.36

-0.10

1.18

-0.62

0.11

0.66

5.55

3.32

0.37

1.62

-0.98

0.33

-0.16

-0.89

1.09

0.71

1.96

-0.67

-0.21

1.28

-0.38

0.97

1.05

1.11

1.05

0.59

-0.66

-3.21

2.01

-1.78

-0.09

2.60

-0.71

2.19

1.42

1.58

2.72

2.45

1.10

1.62

1.21

1.32

2.60

0.44

1.13

1.91

-2.21

0.79

-1.65

-1.36

0.70

-0.71

0.78

2.09

-3.80

0.32

-0.18

0.34

0.39

-4.81

1.05

2.61

0.00

-0.84

-0.47

-0.50

-1.20

-3.34

0.80

0.37

3.98

0.27

1.94

-3.39

-0.08

1.37

1.21

1.79

1.58

-0.17

1.67

-0.17

1.22

0.16

4.87

1.46

1.34

-0.49

1.92

0.98

-0.22

-0.37

1.99

-0.81

1.45

-0.43

-0.95

-1.52

-0.26

-1.75

5,754,340

739,043

558,867

1,006,032

1,784,176

4,301,835

10,213,837

2,451,494

5,863,448

40,487,434

3,309,312

2,745,317

3,503,137

373,518

2,694,772

900,267

28,227,265

1,283,993

18,323,063

545,006

603,922

21,431,426

2,387,946

288,912

1,625,749

115,072

3,660,180

5,871,598

2,015,405

1,419,459

1,423,381

550,602

1,763,773

27,600,409

7,282,005

1,233,774

310,248

905,602

719,214

23,016,390

2,961,422

7,207,248

468,501

1,972,044

2,188,447

2,602,755

238,188

13,677,015

591,061

5,243,485

2,719,846

14,012,858

147,269,511

778,953

933,452

9,147,867

1,836,600

11,530,438

9,198,964

4,854,754

604,088

407,151

943,440

-

12,401,510

816,290

2,365,234

1,229,711

30,427,181

4,740,553

4,406,412

6,594,350

1,314,304

2,416,952

6,265,841

1,655,467

2,714,915

7,147,800

407,279

2,109,085

1,958,289

220,261

11,016,397

4,135,430

667,403

5,775,608

2,105,484

226,451

2,538,092

7,298,517

1,516,349

629,520

14,851,995

1,360,759

12,930,683

2,302,326

1,373,712

50,424,920

2,462,659

2,675,139

490,592

-

FTSE 100

Company Name Lt Price % Chg Volume

Japan Airlines Co LtdRecruit Holdings Co Ltd

Softbank CorpKyocera Corp

Nissan Motor Co LtdT&D Holdings Inc

Toyota Motor CorpKddi Corp

Nitto Denko CorpHitachi Ltd

Takeda Pharmaceutical Co LtdJfe Holdings IncSumitomo Corp

Canon IncEisai Co Ltd

Nintendo Co LtdShin-Etsu Chemical Co Ltd

Mitsubishi CorpSmc Corp

3,347.00

3,525.00

1,490.00

7,048.00

678.50

1,223.00

7,486.00

2,986.00

5,773.00

4,200.00

3,832.00

1,366.50

1,722.50

2,971.00

7,534.00

37,870.00

12,090.00

2,724.00

46,550.00

-0.09

-0.25

-0.27

1.13

1.12

0.04

0.89

0.98

2.05

0.74

0.55

0.85

-0.03

0.81

15.30

-0.63

0.50

0.63

-0.06

779,200

3,421,900

5,626,900

874,200

15,851,100

2,263,400

5,170,900

4,455,300

1,510,000

2,123,000

3,439,100

2,286,900

2,904,000

2,930,100

366,400

943,700

793,800

3,974,100

137,900

TOKYO

Company Name Lt Price % Chg Volume

Nidec CorpIsuzu Motors Ltd

Unicharm CorpNomura Holdings Inc

Daiichi Sankyo Co LtdSubaru Corp

Sumitomo Realty & DevelopmenNtt Docomo Inc

Sumitomo Metal Mining Co LtdOrix Corp

Asahi Group Holdings LtdKeyence Corp

Mizuho Financial Group IncSumitomo Mitsui Trust Holdin

Japan Tobacco IncSumitomo Electric Industries

Daiwa Securities Group IncSoftbank Group Corp

Panasonic CorpFujitsu Ltd

Central Japan Railway CoNitori Holdings Co Ltd

Ajinomoto Co IncDaikin Industries Ltd

Mitsui Fudosan Co LtdOno Pharmaceutical Co Ltd

Toray Industries IncBridgestone Corp

Sony CorpAstellas Pharma Inc

Hoya CorpNippon Steel Corp

Suzuki Motor CorpNippon Telegraph & Telephone

Jxtg Holdings IncMurata Manufacturing Co Ltd

Kansai Electric Power Co IncDenso Corp

Sompo Holdings IncDaiwa House Industry Co Ltd

Dai-Ichi Life Holdings IncMazda Motor Corp

Komatsu LtdWest Japan Railway Co

Kao CorpMitsui & Co Ltd

Daito Trust Construct Co LtdOtsuka Holdings Co Ltd

Oriental Land Co LtdSekisui House Ltd

Secom Co LtdTokio Marine Holdings Inc

Aeon Co LtdAsahi Kasei Corp

Kirin Holdings Co LtdMarubeni Corp

Mitsubishi Ufj Financial GroMitsubishi Chemical Holdings

Fanuc CorpFast Retailing Co Ltd

Ms&Ad Insurance Group HoldinKubota Corp

Seven & I Holdings Co LtdInpex Corp

Resona Holdings IncFujifilm Holdings Corp

Yamato Holdings Co LtdChubu Electric Power Co Inc

Mitsubishi Estate Co LtdMitsubishi Heavy Industries

Sysmex CorpShiseido Co Ltd

Shionogi & Co LtdTerumo Corp

Tokyo Gas Co LtdTokyo Electron Ltd

East Japan Railway CoItochu Corp

Ana Holdings IncMitsubishi Electric Corp

Sumitomo Mitsui Financial Gr

15,480.00

1,272.50

3,553.00

503.40

6,743.00

3,078.00

4,007.00

2,875.00

3,500.00

1,659.50

5,416.00

66,280.00

166.40

3,941.00

2,466.50

1,458.00

502.00

4,067.00

909.10

8,974.00

22,805.00

15,790.00

2,044.50

14,970.00

2,720.00

1,988.50

801.90

4,468.00

6,340.00

1,769.00

8,851.00

1,558.00

4,983.00

5,355.00

509.30

5,940.00

1,264.50

4,969.00

4,274.00

3,705.00

1,793.50

998.00

2,568.50

9,375.00

8,259.00

1,816.00

13,995.00

4,501.00

16,575.00

2,315.00

9,905.00

5,764.00

2,198.50

1,194.00

2,302.50

752.50

564.20

828.90

21,200.00

68,440.00

3,459.00

1,768.50

4,239.00

1,001.00

472.80

4,775.00

1,859.50

1,643.50

2,096.00

4,409.00

6,873.00

8,561.00

6,126.00

3,462.00

2,764.50

21,335.00

10,175.00

2,284.50

3,704.00

1,529.50

3,836.00

0.85

1.35

0.85

0.70

-0.85

0.79

-0.64

-0.09

0.92

-1.48

-0.55

-1.66

-0.12

0.69

0.49

1.21

0.00

-2.94

0.68

1.72

-0.11

-2.44

0.81

-0.13

-0.48

0.23

-4.35

1.66

-0.24

2.34

-0.45

0.61

0.97

0.75

0.83

0.32

0.40

2.22

0.28

0.03

0.62

0.82

1.94

-0.53

-0.34

0.50

0.29

0.90

-0.93

-1.89

-0.25

0.24

0.87

-0.38

0.22

0.52

0.82

0.61

1.19

-0.84

0.23

1.93

-2.17

1.85

1.46

0.99

4.06

0.34

-0.57

0.34

0.00

-0.12

0.72

-0.06

0.14

2.18

-0.25

0.00

-0.51

0.66

1.45

TOKYO

Company Name Lt Price % Chg

Ck Hutchison Holdings LtdHang Lung Properties Ltd

Ck Infrastructure Holdings LHengan Intl Group Co Ltd

China Shenhua Energy Co-HCspc Pharmaceutical Group Lt

Hang Seng Bank LtdChina Resources Land Ltd

Ck Asset Holdings LtdSino Biopharmaceutical

Henderson Land DevelopmentAia Group Ltd

Ind & Comm Bk Of China-HWant Want China Holdings Ltd

Sun Hung Kai PropertiesNew World Development

Geely Automobile Holdings LtSwire Pacific Ltd - Cl A

Sands China LtdWharf Real Estate Investment

Clp Holdings LtdCountry Garden Holdings Co

Aac Technologies Holdings InShenzhou International GroupPing An Insurance Group Co-H

China Mengniu Dairy CoSunny Optical Tech

Boc Hong Kong Holdings LtdChina Life Insurance Co-H

Citic LtdGalaxy Entertainment Group L

Wh Group Ltd

72.80

17.00

54.75

51.55

15.50

17.30

167.60

33.40

53.35

10.92

38.00

75.30

5.60

6.28

115.00

11.12

14.20

74.20

38.40

45.45

80.90

10.76

48.80

106.20

94.55

31.00

116.30

27.10

19.62

10.32

51.95

7.58

0.83

0.59

0.00

0.49

1.84

1.53

1.27

1.98

0.95

1.11

1.06

0.80

1.82

1.29

0.09

1.65

0.28

1.78

2.54

2.71

1.44

0.75

3.94

0.00

0.69

1.64

1.93

0.56

0.72

1.78

2.26

1.61

4,834,951

4,798,682

3,316,669

1,191,343

21,760,034

15,567,685

1,961,605

20,647,176

4,149,027

20,067,395

2,617,409

11,606,251

224,162,196

8,907,335

4,489,790

12,722,338

25,419,055

1,459,321

12,257,209

2,586,962

2,980,790

23,271,075

10,083,530

2,632,756

18,154,073

6,329,215

3,044,059

8,708,787

25,228,947

11,321,746

14,787,262

28,246,583

HONG KONG

Company Name Lt Price % Chg Volume

Hong Kong & China GasBank Of Communications Co-HChina Petroleum & Chemical-HHong Kong Exchanges & Clear

Bank Of China Ltd-HHsbc Holdings Plc

Power Assets Holdings LtdMtr Corp

China Overseas Land & InvestTencent Holdings Ltd

China Unicom Hong Kong LtdLink Reit

Sino Land CoChina Resources Power Holdin

Petrochina Co Ltd-HCnooc Ltd

China Construction Bank-HChina Mobile Ltd

15.42

5.39

4.62

240.80

3.22

61.85

54.35

44.75

25.15

319.00

8.10

85.35

12.38

9.72

4.06

12.06

6.35

65.30

1.31

1.13

0.65

-0.17

1.26

1.06

0.37

0.90

-2.33

-0.31

1.12

1.73

1.81

1.04

1.00

1.34

0.95

0.54

9,740,121

15,956,170

62,621,003

2,065,159

292,010,928

15,903,442

2,346,299

3,396,349

31,690,208

18,472,498

20,681,518

4,353,750

3,689,968

3,551,666

50,499,292

62,278,340

330,381,665

9,392,118

HONG KONG

Company Name Lt Price % Chg Volume

Adani Ports And Special EconAsian Paints Ltd

Axis Bank LtdBajaj Finance Ltd

Bharti Airtel LtdBharti Infratel Ltd

Bajaj Auto LtdBajaj Finserv Ltd

Bharat Petroleum Corp LtdCipla Ltd

Coal India LtdDr. Reddy’s Laboratories

Eicher Motors LtdGail India Ltd

Grasim Industries LtdHcl Technologies Ltd

Housing Development FinanceHdfc Bank Limited

Hero Motocorp LtdHindalco Industries Ltd

Hindustan Petroleum CorpHindustan Unilever Ltd

Icici Bank LtdIndiabulls Housing Finance L

Indusind Bank LtdInfosys Ltd

Indian Oil Corp LtdItc Ltd

Jsw Steel LtdKotak Mahindra Bank Ltd

Larsen & Toubro LtdMahindra & Mahindra Ltd

Maruti Suzuki India LtdNtpc Ltd

Oil & Natural Gas Corp LtdPower Grid Corp Of India Ltd

Reliance Industries LtdState Bank Of India

Sun Pharmaceutical IndusTata Steel Ltd

Tata Consultancy Svcs LtdTech Mahindra Ltd

Titan Co LtdTata Motors Ltd

Upl LtdUltratech Cement Ltd

Vedanta LtdWipro Ltd

Yes Bank LtdZee Entertainment Enterprise

399.15

1,790.50

707.70

4,026.15

372.35

237.55

3,167.85

8,091.00

513.05

446.85

205.20

2,825.30

21,032.35

123.85

705.60

1,119.05

2,144.95

1,236.10

2,696.00

181.35

299.10

2,133.35

454.75

200.30

1,283.00

635.35

141.30

249.05

222.85

1,613.20

1,432.25

581.05

7,391.40

120.20

140.70

204.10

1,436.45

262.50

405.95

359.90

2,082.00

726.35

1,374.55

133.50

597.70

4,311.55

145.70

249.60

48.30

237.70

0.77

1.31

-1.00

-0.30

3.33

-8.41

0.16

0.25

-2.67

-1.63

-1.72

-0.05

2.49

-3.73

-5.05

2.18

0.09

-0.44

-0.62

-2.03

-3.11

0.00

-0.08

-2.84

-3.72

-2.34

-2.21

-0.80

0.07

-0.03

0.03

-1.82

-0.66

-0.70

-0.85

-1.04

3.16

-4.70

0.19

1.04

0.57

-0.03

1.92

0.64

0.12

1.42

-0.38

-1.87

-5.66

-1.82

SENSEX

Company Name Lt Price % Chg

WORLD INDICESIndices Lt Price Change

GCC INDICESIndices Lt Price Change

Dow Jones Indus. AvgS&P 500 Index

Nasdaq Composite IndexS&P/Tsx Composite Index

Mexico Bolsa IndexBrazil Bovespa Stock Idx

Ftse 100 IndexCac 40 Index

Dax IndexIbex 35 Tr

Nikkei 225Japan Topix

Hang Seng IndexAll Ordinaries Indx

Nzx All IndexBse Sensex 30 Index

Nse S&P Cnx Nifty IndexStraits Times Index

Karachi All Share IndexJakarta Composite Index

26,779.59

3,010.19

8,170.56

16,375.82

43,642.17

107,228.00

7,328.25

5,684.33

12,872.10

9,391.80

22,750.60

1,643.74

26,797.95

6,796.69

1,815.76

39,020.39

11,582.60

3,168.87

24,537.83

6,339.65

-54.36

+5.67

+50.77

+39.89

+95.69

-315.60

+67.51

+30.89

+73.91

+6.80

+125.22

+5.60

+231.22

+18.47

-4.18

-38.44

-21.50

+24.59

+233.71

+81.84

Doha Securities Market

Kuwait Stocks Exchange

Oman Stock Market

10,377.89

4,760.60

3,989.61

+23.27

+3.35

-6.84

“Information contained herein is believed to be reliable and had been obtained from sources believed to be reliable. The accuracy and completeness cannot be guaranteed. This publication is for providing information only and is not intended as an off er or solicitation for a purchase or sale of any of the financial instruments mentioned. Gulf Times and Doha Bank or any of their employees shall not be held accountable and will not accept any losses or liabilities for actions based on this data.”

1,746,500

1,951,400

1,026,200

18,911,700

1,259,700

1,352,700

1,027,200

4,448,900

1,177,500

5,051,800

701,800

317,100

81,887,000

815,900

4,097,600

2,006,700

7,245,700

19,881,200

6,759,800

1,151,600

246,800

361,400

813,200

780,000

1,861,200

1,173,900

14,904,500

1,908,900

3,352,100

7,168,200

1,332,300

1,802,200

1,484,700

2,106,000

9,416,100

3,156,200

2,497,200

1,928,200

756,000

1,094,900

4,292,200

3,383,700

5,226,900

352,400

1,212,900

3,334,100

211,600

910,700

530,000

3,313,300

383,200

1,352,800

2,143,500

3,358,200

1,704,400

4,672,100

39,776,800

6,284,500

751,000

492,200

1,233,900

2,267,200

2,310,800

4,285,800

6,780,400

1,167,500

3,902,100

738,500

3,463,500

917,700

413,200

1,120,500

843,100

1,351,500

775,100

1,504,000

563,400

2,479,100

756,300

3,315,300

6,420,400

6,433,637

1,497,854

8,986,203

1,267,557

72,697,775

14,258,378

656,713

336,515

14,079,076

1,733,751

8,470,734

602,632

224,848

14,228,647

7,394,585

6,751,080

4,061,508

6,553,747

1,427,292

6,890,297

5,773,873

973,453

23,542,540

42,804,690

6,833,303

25,666,433

7,913,928

16,791,340

15,890,442

1,600,001

3,646,005

2,212,393

1,658,859

8,009,018

6,919,238

3,053,353

10,351,384

63,943,183

3,017,220

10,973,402

2,798,671

2,888,332

1,791,699

41,951,668

2,250,928

884,456

11,714,667

3,917,098

230,787,323

9,431,942

Volume

Volume

BUSINESS

Gulf Times Friday, October 25, 20198

The European Central Bank in Frankfurt. The ECB yesterday chose to hold its fire for now and not to lower borrowing rates any further, even though its president Mario Draghi said that “an ample degree of monetary policy accommodation is still necessary.”

BUSINESS

Gulf Times Friday, October 25, 201910

Riksbank seeks end to negative rates in pivot away from herdBloombergStockholm

Sweden’s Riksbank made clear it wants to put an end to half a decade of negative

interest rates, as it breaks away from the monetary orthodoxy of the day despite continued signs of weakness in the largest Nordic economy.

Yesterday, Swedish policy-makers surprised most econo-mists and traders by explicitly pointing to a hike in December that would bring the Riksbank’s benchmark repo rate to 0%. From there on, there are unlikely to be any increases into 2022, it said.

The Riksbank is trying to turn its back on negative rates as the world’s most infl uential central banks cling to stimulus. Later yesterday, the European Cen-tral Bank was to announce its latest rate decision after earlier this year delivering yet another stimulus package to support the eurozone economy. Going far-ther below zero has opened up a rift at the Frankfurt-based bank, with some members advocating for a return to positive rates.

Riksbank Governor Stefan In-gves yesterday defended nega-tive rates as the best way to help the economy deal with the af-termath of the global fi nancial crisis and Europe’s debt crisis. But he also warned that there are risks if the policy becomes en-trenched.

By raising rates to zero “then that’s something we don’t have to worry about,” he said at a press conference. Negative rates have worked well, but we “are aware that many people think they are strange,” he said.

The verdict on the eff ective-ness of negative rates has been called into the question on the lending side, including in a study co-written by former US Treasury Secretary Lawrence Summers which argued that they hurt bank profi ts and failed to translate into lower rates for consumers. The paper was dis-

puted by the Riksbank. Petr Krpata, a currency strategist at ING Bank, said he fi nds it “really strange that the Riksbank sticks to such a hawkish tilt given the domestic and external slow-down.” But he also noted that “it appears that the board does want to leave the negative inter-est rate territory at almost any cost and once back to zero, they can rest.”

The Riksbank is one of a number of central banks that announced rate decisions yes-terday. In neighbouring Nor-way, Norges Bank kept its main rate at 1.5% and reiterated its view that it won’t need to make any changes to its policy in the “coming period.” But it also said an historically weak krone posed an infl ation risk.

“In a way it is a sensible deci-sion. Raising rates from below 0 will likely get rid of some of the negative publicity around the

Riksbank and its mandate. And this will allow them to stand pat during 2020 when we expect the global slowdown will likely continue. The problem is that today’s forecast revisions do not warrant raising rates in Decem-ber. That makes it look like leav-ing negative interest rates was a goal in itself — something which has not been communicated by the Riksbank,” said Johanna Jeansson, Nordic economist.

Robert Bergqvist, chief econ-omist at SEB AB, said the Riks-bank “is bucking the global monetary easing trend with to-day’s pretty hawkish announce-ment.” The Riksbank appears to be “happy with the infl a-tion levels, but maybe unhappy with SEK weakness. I welcome today’s decision — we should move away from negative rates.”

The head of trading strategy at Svenska Handelsbanken AB, Claes Mahlen, said this looks to

be a case of “one and done.”It’s a “remarkable shift,” sug-

gesting unchanged rates until the end of 2022, he said. “There needs to be a clear repricing at the front of the SEK curve, but less further out.”

The Riksbank acknowledged that the rocky economic outlook is forcing it to lower its rate out-look, once it returns its policy rate to 0%.

“As before, the forecast in-dicates that the interest rate will most probably be raised in December to zero%. Uncer-tainty over the development of economic activity and infl ation abroad and in Sweden is consid-erable, however. The forecast for the repo rate has therefore been revised downwards and indi-cates that the interest rate will be unchanged for a prolonged period after the expected rise in December,” the Riksbank said.

Ingves has repeatedly sought

to downplay signs of economic weakness in the lead-up to this week’s rate meeting. That’s proving increasingly diffi cult as the world’s major central banks respond to the threat of reces-sion by clinging on to stimulus.

Meanwhile, Sweden’s labour market is showing clear signs of weakness as the manufacturing sector struggles. And Sweden’s reliance on exports, which make up about half the economy, has also left it particularly vulner-able to global trade tensions.

“After several years of strong economic activity and infl a-tion close to the target of 2%, the Swedish economy is slowing down and the economic condi-tions are becoming more nor-mal. In recent months, infl ation has indeed fallen back, but this was expected and overall, the infl ation prospects for the next year are unchanged,” a Riksbank statement said.

Swiss bankers group calls on SNB to scrap negative interest rate

Boeing CEO to testify in Senate on 737 MAX

BloombergZurich

The Swiss Bankers Association upped the ante in its campaign

against the central bank’s negative rates, saying the policy probably

isn’t eff ective anymore and should be scrapped.

“Negative interest rates no longer fulfil their economic purpose: the

Swiss franc is not overvalued, prices are stable, and the economy

has adjusted to the current realities,” the group said in a report

published yesterday, adding that the franc was now close to its

equilibrium versus the euro. “From an overall economic perspective,

it is necessary to pave the way for an exit from crisis mode.”

The financial sector blames the Swiss National Bank’s deposit rate

of —0.75%, implemented to maintain the yield spread with the euro

area and stem pressure on the haven franc, for compressing profit

margins and making it hard to generate suff icient returns.

It’s not the first time that the SNB has come under fire for the policy,

enacted in early 2015, when the European Central Bank had already

taken its deposit rate negative and was about to embark on quanti-

tative easing.

In September, the SNB gave banks more room to breathe by amend-

ing its exemption threshold for the punitive charge. The change

takes eff ect next month. With the global economy in the throes of a

slowdown, SNB off icials have said the policy of negative rates remains

essential and that low interest rates are a global phenomenon.

While the SNB hasn’t released a detailed assessment of negative

rate policy, ECB President Mario Draghi said his institutions’ asset

purchases and subzero borrowing costs had added 2.7 percentage

points to real output growth in the region between 2015 and 2018.

An SNB spokeswoman declined to comment on the SBA’s report.

BloombergWashington

Boeing Co’s chief executive off icer will testify before a Senate

committee next week to answer questions about the plane maker’s

design and certification of a jet involved in two deadly crashes.

Dennis Muilenburg will appear at a Senate Commerce Committee

hearing on Tuesday, a day before his expected appearance before the

House’s Transportation committee, according to two people familiar

with the hearing who spoke on the condition they not be named.

Committee chairman Roger Wicker, a Mississippi Republican,

confirmed there would be a hearing related to Boeing, but not who

would appear.

A second panel with witnesses from the National Transportation

Safety Boardand an international review panel known as the Joint

Authorities Technical Review, which examined the 737 MAX’s certi-

fication, will also appear on Tuesday, said a person familiar with the

hearing. Both the NTSB and the JATRhave in recent weeks issued

findings related to the plane.

The appearance by Muilenburg comes as the Chicago-based com-

pany is under fire over its design of the 737 MAX jet and its candor

with regulators during the jet’s certification. The company’s board

recently stripped Muilenburg of the chairman title and made other

changes among top executives.

Muilenburg’s appearance before the Senate will be on the one-year

anniversary of the first of two crashes involving the 737 MAX, Boe-

ing’s best selling jet.

The company says it is making progress in winning approval from

regulators to get the MAX flying again after redesigning a flight con-

trol feature that malfunctioned, causing a Lion Air jet to crash off the

coast of Indonesia last October and an Ethiopian Airlines plane to go

down in March, leading to a worldwide grounding of the model. A

total of 346 people were killed.

Dirty money trail leads to elite schools, crocodile handbagsBloombergLondon

Dirty money worms its way into banks, law

firms, and accounting agencies. It seeps

into properties, companies, and even

schools. And despite a crackdown by Brit-

ish lawmakers and police, the $418bn flood

shows no signs of receding as criminals

from around the world continue to make

the UK a hub for corrupt wealth.

That is the key finding of a report released

yesterday by Transparency International

UK, the London-based arm of the global

anti-corruption group. When it comes to

money-laundering, one of the toughest

challenges is tracing where the proceeds

of crimes wind up. By analysing 400 cases

with a British link over the last 30 years,

researchers found that illicit funds had

moved through 86 banks and financial

institutions, 81 law firms, 62 accountants,

and more than 2,200 companies in Britain

and its overseas territories.

Researchers traced suspect money to

the usual baubles of the super-rich, with

£407mn ($524mn) spent on yachts and

jets. They tracked ill-gotten funds to

the purchase of a Chanel crocodile-skin

handbag and a Tom Ford jacket at Harrods

worth £50,690, as well as a corporate box

at Stamford Bridge, the home stadium of

the Chelsea soccer team. The suite was

bought by a shell company at full market

value of £126,000 for the 2012-13 season.

Transparency International said none of

the companies is accused of wrongdo-

ing. A Chelsea spokesman declined to

comment.

They also found £8.3mn paid to more than

three dozen architectural and interior

design firms, and other payments to car

dealerships, jewellery stores, art galleries

and fashion boutiques.

“We’ve known for a long time that the

UK’s world-class services have attracted a

range of clients, including those who have

money and pasts to hide,” Duncan Hames,

the director of policy at Transparency

International UK, said in a statement.

“Now, for the first time, we have shed light

on who these companies are and how they

have become entangled in some of the big-

gest corruption scandals of our time.”

The report comes at a time when law-en-

forcement off icials in the UK are cracking

down on money-laundering by using new

legal tools such as “unexplained wealth

orders,” to force suspects to disclose their

assets. Off icials are also focusing on law-

yers and family off ices who help criminals

conceal their ill-gotten gains in invest-

ments such as mansions in the English

countryside.

Transparency International urged off icials

to redouble their eff orts as suspicious

wealth from the East permeates all man-

ner of enterprises in Britain. Many of the

transactions it analysed were traced to

so-called laundromats — industrial-scale

schemes that have been accused of wash-

ing dirty money in Moldova, Azerbaijan

and other former Soviet countries.

The report said Citigroup Inc and the Royal

Bank of Scotland Group Plctopped a list of 10

lenders that were responsible for sending or

receiving funds linked to the laundromats.

And 177 educational institutions, includ-

ing the prestigious British schools Harrow

School and Charterhouse, received £4.1mn

in tuition payments also stemming from the

reputed money-laundering schemes.

Citigroup and RBS off icials declined to

comment on the report, while representa-

tives for Harrow School and Charterhouse

didn’t immediately respond to requests for

comment. Transparency International UK

said it wasn’t making allegations of wrong-

doing against the banks or the schools.

While Transparency International called

for an overhaul of the UK’s anti-money

laundering supervisory regime, experts

in illicit finance say it’s going to be diff icult

to curb the inflow. The problem is that

London, still the world’s top international

financial centre, excels at managing the

fortunes of global players.

“London is the final destination for illicit

wealth,” said Anastasia Nesvetailova,

a professor of international political

economy at City, University of London.

The Golf once saved Volkswagen... now VW wants to save the GolfBloombergFrankfurt

Two cars supported Volkswagen AG’s

decades-long ascent to the top: The

rotund Beetle, which laid the foundation

for the company as a people carrier; and

the Golf, a boxy hatchback that pulled VW

from economic doom in the 1970s.

The Golf went on a record-breaking run

of more than 35mn units sold to date. But

in the 45 years since the first one rolled

off the line, the ground has shifted under

Volkswagen, particularly in recent times.

The diesel crisis that erupted four years

ago cost the company €30bn ($33bn) and

counting. That forced VW into a radi-

cal rethink of its strategy and portfolio,

giving birth to an unprecedented push

into electric cars that will sit alongside

heritage models like the Passat, Jetta and

the Golf. And the insatiable thirst for SUVs

has dented the Golf’s internal standing as

the undisputed sales king: for the first time

last year, the compact Tiguan crossover

eclipsed the Golf as VW’s bestseller.

VW Golf models from its 45 year history.

“The Golf is still one of the most impor-

tant products for VW and still has high

symbolic value, but it doesn’t have the

critical significance of the past any more,”

said Bankhaus Metzler analyst Juergen

Pieper. These days, the car contributes

about 6% to 8% to group profit at best,

compared with at least 20% two decades

ago, Frankfurt-based Pieper estimates.

Those challenges notwithstanding, VW

still sees a future for the Golf, now entering

its eighth iteration. VW was set to unveil

the latest version later yesterday, promis-

ing a car that is “more digital and more

connected than ever before.”

Sales start in December, and VW has

pooled production of the vehicle at

the hulking factory sitting next to its

Wolfsburg headquarters, a bold statement

that the Golf remains a cornerstone of its

portfolio. Success is pivotal to keeping a

site covering an area the size of Monaco

humming along.

In-house competition doesn’t stem from

SUVs alone. In two weeks, a VW outpost

in Zwickau, three hours away from Wolfs-

burg, will begin churning out the ID.3, a

fully-electric hatchback that sits in a simi-

lar bracket to the Golf in terms of size and

pricing. VW off icials insist the ID. 3 attracts

a younger, more tech-savvy clientele than

Golf buyers.

But the ID.3’s arrival might still limit the

allure of the new Golf, which comes in a

hybrid version but is still principally built

around a traditional combustion engine.

The Golf is emblematic of the dilemma

facing the wider car industry: how to chart

a path into an electric future without chok-

ing off combustion cars that finance the

undertaking. In VW’s case, that’s a $50bn

outlay to develop at least 70 electric cars

across the group in coming years, marking

the most aggressive and costly endeavour

of its kind.

The new Golf hits showrooms at a time

when global demand for new cars is

on the wane. Global vehicle production

is forecast to fall by about 2% in 2020,

according to JPMorgan estimates, amid

persistent uncertainty over Brexit, swirling

trade woes and geopolitical tensions.

To keep the Golf fresh even after its almost

half-century production run, VW has

upgraded the car with technical gadgetry.

There are larger touch screens and sophis-

ticated drive-assistance off erings. Then

there’s interior ambient lighting, and a

cloud-based customisation option for the

infotainment system.

The VW has trimmed costs on the golf —

previously a showcase for the company’s

engineering excesses — by slashing

slow-selling variants and reusing 80%

of already existing assembly tools from

the current version. The company was

able to cut the time it takes to make a

single Golf by about 1 hour, using more

standardized machinery and processes,

trimming country-specific model variants

and improved logistics. Gone are the days

when buyers could choose from dozens

of steering wheels or fabric designs that

promised a high degree of customisation,

but at the expense of complexity and cost

for the manufacturer.

VW advertises its latest ID.3 models in

Wolfsburg, Germany.

“We have never viewed it as a key profit

driver for VW group given its production

complexity and an exhaustive array of

options,” Bloomberg Intelligence analyst

Michael Dean said.

“The new Golf’s earnings potential has

improved, but its importance is reduced

by the continual shift into SUVs and first

deliveries of the ID.3 and further electric

vehicle launches.”

A VW Golf vehicle sits in the final inspection area of the production line at the Volkswagen automobile manufacturing plant in Zwickau, Germany. VW sees a future for the Golf, now entering its eighth iteration.

The headquarters of the Riskbank, Sweden’s central bank, stands in Stockholm. Yesterday, Swedish policy makers surprised most economists and traders by explicitly pointing to a hike in December that would bring the Riksbank’s benchmark repo rate to 0%. From there on, there are unlikely to be any increases into 2022, it said.

BUSINESS11Gulf Times

Friday, October 25, 2019

Daimler posts 3% rise in Q3 profits to $2bnCORPORATE RESULTS

German carmaker Daimler reported yesterday a

return to quarterly profits in July-September after

its first three-month loss in 10 years, but said more

work was ahead as it confronts a slowing global

market.

“Strong sales” at the Mercedes-Benz maker helped

lift net profits 3% year-on-year, to €1.8bn ($2.0bn),

chief executive Ola Kallenius said.

But the recently-installed boss reiterated that the

Stuttgart-based firm must continue cutting costs to

be fit for the future.

Revenues were up 8%, at €43.3bn, with operating

or underlying profit growing at the same pace, to

2.7bn.

“Daimler beat market expectations for sales,

operating profit and net profit,” noted analyst Frank

Schwope of LBBW bank.

“The car division stabilised significantly and the

final quarter this year should be better than in

2018,” he forecast.

Over the full year, Daimler confirmed that it expects

revenue “slightly above” 2018’s level, while operat-

ing profit will be “signficantly below” last year’s

€11.1bn.

It has already lowered expectations twice, hit by re-

calls over alleged diesel cheating and faulty Takata

airbags as well as weaker-than-expected growth in

the global car market.

Volvo Cars

Volvo Cars reported a sharp rise in third-quarter

revenue and profits yesterday helped by cost sav-

ings, but also sees market conditions continuing to

pressure margins this year.

Volvo, part of China’s Geely group, said its quar-

terly operating profit rose 90% to 3.49bn crowns

($362mn), with revenues improving by 14% to

64.8bn crowns.

Its results were also boosted by strong demand for

its SUV models.

It said its sales growth had outpaced the industry

in Europe, China and the United States, as it sold

166,878 cars globally in the quarter.

“The growth in unit sales, revenue and profit was

driven by a strong demand for our SUV range as

well as cost eff iciency,” Chief executive Hakan

Samuelsson said in a statement.

Volvo — which said in July it would cut fixed costs

by 2bn crowns with measures to be completed by

the first half of 2020 — aims to produce premium

cars to rival BMW and Daimler’s Mercedes-Benz.

It repeated yesterday that market conditions would

continue pressuring margins this year, but that

volume growth and cost measures would boost

profits in the second half compared with the same

period last year.

Volvo said it expected a slightly lower level of capi-

tal expenditure, after an intense period of invest-

ments in its global footprint and new technologies.

Group 1 Automotive

Group 1 Automotive Inc posted a far better-than-

expected quarterly profit yesterday as strong US

demand off set weakness in other markets, sending

shares of the No 3 US auto dealership soaring as

much as 16% to an all-time high.

J.P. Morgan analysts said in a research note the

results were well above expectations, calling out

“solid execution” in the US market despite struggles

in its British and Brazilian markets.

They said the British market was weak for the com-

pany but better than expected.

Group 1 still expects the US auto industry to finish

this year at 17mn in new-vehicle sales and finish

somewhere in the 16.5mn to 17mn range next

year, chief financial off icer John Rickel said in a

telephone interview.

“If you look where the consumer is in the US,

they’re still pretty upbeat,” he said.

Group 1’s net income in the second quarter rose

more than 9% to $38mn, or $2.04 a share, from

$34.8mn, or $1.74 a share, in the year earlier quarter.

Excluding one-time items, Group 1 earned $3.02 a

share.

Analysts were expecting $2.72 a share, according to

IBES data from Refinitiv.

Revenue rose 7.9% to $3.12bn, above the $2.95bn

analysts had expected.

The Houston-based company, with dealerships in

the United States, Britain and Brazil, reported a 7%

increase in gross profit as revenue from new-vehi-

cle sales rose 7.3%, and retail used-vehicle revenue

increased almost 10%. US operations accounted

for almost 78% of total revenue and about 83% of

gross profit, while British operations accounted

for almost 19% and 14%, respectively. Same-store

revenue rose 9.7% in the United States, while it fell

2.3% in Britain.

Comcast

Comcast Corp beat Wall Street profit and revenue

estimates yesterday, as the company added high-

speed internet customers and lost more video

subscribers than expected.

Comcast’s third quarter showed that its focus on

the higher-margin broadband business — neces-

sary to stream content — is helping to off set a

decline in cable subscribers.

Revenue from the company’s high-speed internet

business grew 9.3% to $4.72bn with the gain of

379,000 subscribers in the quarter, beating ana-

lysts’ average estimate of 344,000 net additions,

according to research firm FactSet.

Comcast’s results also reflected the widespread

“cord-cutting” across the cable business.

The company lost 238,000 video customers in the

three months ended September 30, higher than the

224,000 it lost in the previous quarter, above the

203,000 loss estimated by research firm FactSet.

In September Comcast announced it will off er Xfini-

ty Flex, its streaming media set top box, and a voice

remote for free to its US internet-only customers.

It had previously charged those customers $5 per

month for the service and remote.

The product is meant to make it easier for subscrib-

ers of multiple streaming services to find shows.

The company’s NBCUniversal business, which

includes NBC Entertainment and Universal Pictures,

reported revenue of $8.30bn, down 3.5% from a

year earlier.

In April NBCUniversal is launching a streaming

service called “Peacock,” which will be available

as a subscription or with ads, stocked with 15,000

hours of content from the company’s library.

British pay-TV group Sky, which Comcast acquired

after outbidding Twenty-First Century Fox last year,

generated revenue of $4.55bn, missing estimates

of $4.75bn.

Comcast attributed that miss to tough macroeco-

nomic conditions in the UK, Germany and Italy.

The Philadelphia company said revenue rose 21.2%

to $26.83bn, beating analysts’ average estimate of

$26.77bn, according to IBES data from Refinitiv.

Net income attributable to Comcast rose to

$3.22bn, or 70 cents per share, from $2.89bn, or 62

cents per share, a year earlier.

Excluding items, the company earned 79 cents per

share, ahead of estimates of 75 cents.

Twitter

Twitter shares plunged yesterday after reporting

glitches that impacted its ad-targeting ability, pull-

ing down revenue growth in the past quarter.

Profit for the third quarter was $37mn, a sharp drop

from last year when the online messaging platform

was helped by a large tax benefit.

Revenue rose 9% from a year earlier to $824mn,

well below analyst forecasts, impacted by what the

company called “revenue product issues.”

Twitter said revenue was hit by “bugs” which made

it harder to deliver targeted advertising, as well as

some seasonal factors.

“Unfortunately we had some missteps and bugs,”

chief executive Jack Dorsey told a conference call.

“These are issues we identified quickly and are

working quick to fix.”

Chief financial off icer Ned Segal said Twitter is

working on a fix but that the glitch is expected to

have a negative impact in the fourth quarter.

The bugs mainly aff ected Twitter operations

outside the United States, where ad revenue was up

just 5% compared with 11% for the US.

Overall, advertising revenue totalled $702mn, up

8% from last year.

Equinor

Equinor’s third-quarter profit fell by more than

expected yesterday after a significant decline in

the volume and price of natural gas sold to Europe,

although the Norwegian firm reiterated its forecast

for flat 2019 production.

Equinor’s Sverdrup oil field, which only started

in early October, has already achieved a daily

production above 200,000 barrels, and will have a

capacity of well above 300,000 barrels by the end

of November.

Equinor’s adjusted earnings before interest and

tax (EBIT) fell to $2.59bn in the third quarter from

$4.84bn during the same period in 2018.

A poll of 23 analysts compiled by Equinor forecast

adjusted EBIT of $2.69bn. “We maintain strong cost

and capital discipline, but our results are aff ected

by lower commodity prices in the quarter. In addi-

tion, we have decided to use our flexibility to defer

gas production to periods with higher expected

prices,” Equinor’s chief executive Eldar Saetre said.

Equinor’s total equity oil and gas production was

1.9mn barrels of oil equivalent per day in the third

quarter, down 8% from the same period in 2018.

Gas production off Norway alone fell by 17%, while

average invoiced European gas prices were down

26%.

Equinor had made impairment charges of $2.79bn,

with $2.24bn related to its onshore shale oil and gas

assets in North America on “more cautious price

assumptions”.

Nordea

Nordea, one of the Nordic region’s biggest lenders,

swung into the red in the third quarter, surprising

analysts and adding pressure on new CEO Frank

Vang-Jensen as he seeks to revive profitability.

It was the first loss since Nordea was created as the

result of a bank merger in 1998.

The bank, which also set out Vang-Jensen’s finan-

cial strategy yesterday, had already been seeing

profits decline due to low interest rates and tough

competition in mortgages and loans.

In the third quarter Nordea said it faced one-off

charges totalling €1.3bn ($1.5bn), resulting in an

overall operating loss of €421mn for July-Septem-

ber.

That compared with analysts’ expectations for a

€905mn profit, according to a Refinitiv poll of six

analysts.

Since Vang-Jensen took over as CEO last month, the

bank has announced the departure of three senior

executives including its finance chief and its chief

operating off icer as the bank looked to revise its

leadership.

Yesterday, it set a target to achieve a return-on-eq-

uity target of above 10% in 2022, a cost-to-income

ratio of 50%, a management buff er of 150-200

bps above the regulatory CET1 requirement and a

dividend payout ratio of 60-70%, both starting from

2020.

Coca-Cola European Partners

Coca-Cola European Partners Plc said yesterday it

had a slower-than-expected start to its fourth quar-

ter due to weakening demand in France and Britain,

as well as cold weather in October in most markets.

The world’s largest independent bottler of Coca-

Cola drinks expects to report full-year diluted

earnings per share growth of about 10%, compared

with its prior forecast of between 10% and 11%. The

company forecast full-year revenue to grow about

3%, excluding the impact of soft drinks taxes of

about 1%. It had previously expected the growth to

be in a low single-digit range.

Coke European Partners, which sells and distributes

drinks in 13 European countries, reported €3.28bn

($3.65bn) in revenue for the third quarter ended

September 27, compared to €3.29bn a year earlier.

Separately, it also said it will take a 25% stake in Kol,

an on-demand delivery service in Paris, and a 15%

stake in self-driving technology company TeleRetail

through its investment fund.

Norwegian Air

Norwegian Air said yesterday it has struck a deal

with China’s CCB Leasing to take joint ownership of

27 Airbus aircraft on order and reported earnings

for the peak summer holiday season above expec-

tations, boosting its finances.

The cash-strapped carrier has for months said it

aimed to find a partner to help take ownership of

the Airbus fleet, allowing Norwegian to cut its debt

and increase its equity.

CCB Leasing Corp DAC (CCBLI), a wholly owned

subsidiary of China Construction Bank Corp, will

own 70% of the joint venture, while Norwegian Air’s

Arctic Aviation unit will own the remaining 30%.

Under the terms of the agreement, the joint venture

will purchase an initial 27 Airbus A320 NEO aircraft

from Arctic to be delivered from 2020 to 2023.

Net profit for the third-quarter came in at 1.67bn

crowns ($183mn), beating the average analyst fore-

cast in a Refinitiv poll for a profit of 1.47bn crowns

and up from a profit of 1.30bn crowns a year ago.

The firm cut its 2019 capital expenditure guidance

by $200mn this year to $1.0bn, while raising it by

$100mn to $1.4bn for next year.

It also narrowed its 2019 guidance for earnings be-

fore interest, taxes, depreciation, amortisation, and

restructuring (EBITDAR), excluding other losses or

gains, to about 6.1-6.5bn crowns, from earlier guid-

ance for 6-7bn.

Schneider Electric

Schneider Electric yesterday posted an organic

revenue growth of 3.1% in its third quarter, un-

derpinned by strong performances in its energy

management segment.

The company, which markets products ranging

from electrical car chargers and lighting control to

transformers and software, said its third-quarter

revenue came in at €6.64bn ($7.39bn), above a

company-compiled consensus of €6.61bn.

The group, active in the production and distribution

of electrical components and automation systems,

said it expects China to remain a growing market

although construction end-markets could soften,

aff ected by trade tensions with the United States.

DNB

Norway’s DNB said yesterday it will begin a new

share buy-back program as it reported third-quar-

ter results above expectations.

Norway’s biggest bank earned a net profit of

6.06bn Norwegian crowns ($664.2mn) for the July-

September period, up from 5.67bn last year, beating

the average forecast of 5.46bn in a Refinitiv poll of

analysts.

DNB had warned in September that it’s third-quar-

ter result would be hit by a 1bn crowns loan loss

provision related to one of the bank’s customers.

Norwegian business daily Finansavisen reported at

the time that the loss stemmed from the collapse of

tour operator Thomas Cook, although DNB has de-

clined to comment on the origins of the provision.

Microsoft

Microsoft Corp on Wednesday forecast sales for

its cloud computing services that topped analysts’

estimates, even as quarterly growth slows for its

Azure business.

Microsoft said it expected “intelligent cloud”

revenue of $11.25bn to $11.45bn for its fiscal second

quarter, above analysts’ consensus of $11.2bn, IBES

data from Refinitiv showed.

Revenue from Azure grew 59% in the fiscal first

quarter ended September 30, well below the 76% in

the year-ago period and slightly short of analysts’

estimates.

Worldwide spending on cloud infrastructure serv-

ices grew nearly 38% year-on-year in the calendar

second quarter to $26.3bn, according to data from

research firm Canalys.

Microsoft beat Wall Street expectations for its over-

all revenue and its intelligent cloud segment, which

contains Azure, marking $33.1bn in overall sales and

cloud unit sales of $10.8bn.

The technology company’s personal computing

division accounted for the largest share of its first-

quarter revenue posted on Wednesday, rising 4%

to $11.13bn.

The unit includes Windows software, Xbox gaming

consoles, online search advertising and Surface

personal computers.

Windows results were boosted by 19% revenue

growth for business computers, which was off set

by a 7% decline for consumer PCs.

Mike Spencer, head of investor relations for Micro-

soft, said Google Chromebooks continued eat into

Windows revenue for entry-level laptops.

But Microsoft forecast current-quarter revenue

of $12.6bn to $13bn for the personal computing

division, below analysts’ consensus estimate of

$13.38bn.

Net income rose 21% to $10.68bn, or $1.38 per share,

while total revenue rose 14% to $33.06bn.

Analysts had expected a profit of $1.25 per share on

revenue of $32.23bn, according to IBES data from

Refinitiv.

Ford Motor

Ford Motor Co on Wednesday cut its forecast for

operating profit for the year after a disappoint-

ing third quarter that chief executive Jim Hackett

blamed on higher warranty costs, bigger discounts

and weaker than expected performance in China.

Investors sold off Ford shares, which fell 2.5% to

$8.98 in after-hours trading while shares in electric

car maker Tesla Inc surged more than 20% on bet-

ter than expected results.

The disappointing financial results are a setback for

Hackett, the former CEO of off ice furniture maker

Steelcase, who took over Ford in May 2017 after the

abrupt ouster of Ford veteran Mark Fields.

For two years, Hackett has been asking investors

to be patient with a methodical restructuring that

has made progress, including a wide-ranging alli-

ance on electric vehicles with Volkswagen AG and

the sale of money-losing operations in India to a

venture controlled by Indian automaker Mahindra

& Mahindra. But by Ford’s own reckoning, most of

the restructuring work has yet to be done.

It has booked only $3.3bn of the projected $11bn

in charges it previously said it would take for the

global restructuring, up from $2.2bn at the end of

the second quarter.

The company also suff ered a bumpy introduction

of the redesigned Ford Explorer and all-new Lincoln

Aviator in the quarter, said Joe Hinrichs, Ford’s

president of automotive.

The third quarter included $1.5bn in costs for the

company’s global restructuring, $800mn of which

was related to the formation of a joint venture in

India with Mahindra.

Ford’s ongoing restructuring includes cutting costs

and overhauling its product lineup in key global

markets like China and Europe.

Ford reported a third-quarter net profit of $425mn,

or 11 cents a share, compared with $991mn, or 25

cents a share, a year earlier.

Excluding one-time charges, Ford earned 34 cents

a share, above the 26 cents analysts had expected

according to IBES data from Refinitiv.

Revenue in the quarter fell 2% to $37bn, above the

$33.98bn expected.

Virtually all of Ford’s third-quarter pretax profit

came from North America — its most lucrative

market — where highly profitable pickup trucks

drive margins for the Dearborn, Michigan-based au-

tomaker and its Detroit rivals, GM and Fiat Chrysler

Automobiles NV.

Ford said Wednesday it now expects a full-year

adjusted operating profit in the range of $6.5bn to

$7bn, compared with $7bn last year.

In July, it had forecast an increase in the range of

$7bn to $7.5bn.

Ford also said it expects adjusted earnings this year

in the range of $1.20 to $1.32 a share. Previously, the

high end of its forecast had been $1.35.

Analysts expect $1.26 a share.

Ford’s third-quarter operating profit in North

America was just over $2bn.

Its US sales in the quarter fell 4.9%, but demand for

lucrative pickups remained strong with an increase

of almost 9%. China revenue in the quarter slid

about $300mn to $900mn and Ford’s share in that

market fell to 2.3% from 2.9% last year.

Ford’s third-quarter sales in China fell 30% as it con-

tinued to lose ground in its second-biggest market.

Ford has been struggling to revive sales in China

since its business began slumping in late 2017.

American Airlines

American Airlines rode strong demand for flying in

the travelling public to higher earnings yesterday

despite mounting costs connected to the pro-

longed grounding of the Boeing 737 MAX.

Fuller flights amid a good consumer environment

enabled American’s profits to soar 14.2% higher in

third-quarter to $425mn.

Revenues increased 3% to $11.9bn.

Chief executive Doug Parker said he was pleased

with the earnings growth, but conceded that “our

results should have been better.”

Parker cited the hit from the MAX grounding — in

the wake of two tragic crashes — as well as ongoing

operational challenges tied to contentious labour

talks with maintenance workers.

American now estimates the MAX grounding will

shave pre-tax profits by $540mn in 2019, up from

the prior estimate of a $400mn hit to the bottom

line.

Earlier this month, American pushed back the

return of the jets until January 2020 based on

slower-than-expected recertification of the plane

by regulators.

BUSINESSFriday, October 25, 2019

GULF TIMES

Global banks hung on $1.5bn of loans as investors cut riskBloombergNew York

Risky corporate loans are gradually piling

up on the books of some of the world’s

largest banks.

Underwriters that agree to provide funds

for buyouts are rarely forced to come

up with the cash themselves, instead of-

floading the exposure to investors before

deals close. Yet lenders including Barclays

Plc and Deutsche Bank AG have been left

holding at least $1.5bn of leveraged loans

that they’ve struggled to sell over the past

several months, according to people with

knowledge of the matter.

The amount of hung debt is small relative

to the almost $170bn of leveraged loans

issued in the US and Europe this year to

finance buyouts. Still, it’s notable given

the broad strength of credit markets at

present, as opposed to the end of last year,

when a sharp selloff left banks holding at

least $3.6bn of unsold debt. Market par-

ticipants say the stalled deals pose little

risk to the wider junk-loan market for now,

though a marked uptick could constrain

potential underwriting in the future.

“The mix of loans coming to market right

now is very diff icult” to absorb, said Steven

Abrahams, head of strategy at Amherst

Pierpont Securities, a broker dealer. “It’s a

very unusual story that leveraged loans

and collateralised loan obligations are

showing stress, even though the rest of

the market is pretty benign, if not bullish.”

Growing concern of an economic slow-

down is prompting investors to steer clear

of the riskiest issuers, those with excessive

debt seen as vulnerable to a turn in the

credit cycle.

Chunks of loans for at least five private

equity deals are currently sitting on

banks’ books. Two of them — for invoice

processing company OSG Billing Services

and kitchen-cabinet maker ACProducts

— were underwritten before last year’s

sell-off and have struggled to find buyers

for many months now. Barclays, the sole

underwriter on both, is still holding around

half of each financing, the people said,

asking not to be named discussing private

transactions.

Others, like the debt sales for Apollo

Global Management’s buyout of photo-

printing company Shutterfly and HGGC’s

take-private of font designer Monotype

Imaging Holdings, were announced more

recently. But they still failed to be fully

syndicated as demand for riskier credits

waned. A group of banks led by Barclays

and Deutsche Bank was also left holding

hundreds of millions of dollars of debt for

Advent International’s buyout of an Evonik

Industries unit in July, the people said.

“The amounts in question are insignifi-

cant in the context of the wider market

and insignificant to Deutsche Bank’s

debt-financing businesses,” a spokesman

for the German lender said in an emailed

statement. A representative for Barclays

declined to comment. Investor concerns

are still brewing.

Banks have struggled to sell an almost

$3bn cross-border debt package for Bain

Capital’s purchase of a majority stake in

market-research firm Kantar. The under-

writers have been forced to add a slew of

concessions on pricing and documenta-

tion to the loan and bond deal to lure

investors, while the deadline for commit-

ments was extended twice.

Off loading the hung loans could prove

challenging for banks over the com-

ing months. Worries over a potential

downturn have reduced demand for

lower-rated loans at risk of downgrades,

especially from collateralised loan obliga-

tions, which face limits on the amount of

debt rated in the weakest CCC tier that

they can own.

“It is extreme bifurcation,” said Jerry Cudz-

il, head of US credit trading at TCW Group,

who noted that sharp declines in the price

of some leveraged loans in recent weeks

have reduced investors’ risk tolerance.

When stuck with unsold loans, banks

often work with private equity sponsors to

restructure the financing, typically with an

injection of additional equity. If no solution

is found, they’re ultimately on the hook to

provide the funds at the original terms.

To limit any member of the syndicate

from off loading the debt at fire-sale prices,

they often sign pacts that prevent one an-

other from selling for a period of months

below a certain threshold. In a best-case

scenario, market sentiment or company

fundamentals improve to an extent that

the underwriters can attract buyers above

the set level.

For some of the currently hung deals,

that’s a tall order for now, according to

Cudzil.

“It is late cycle and there is growing risk of

credit accidents,” Cudzil said. “We kill so

many loans in the early stages that we are

not even going to look at a cabinet maker

right now.”

Business investment in US remains soft; jobless claims fallCore capital goods orders fall 0.5% in September; core shipments slip 0.7%; weekly jobless claims decline 6,000 to 212,000

ReutersWashington

New orders for key US-made capital goods fell more than expected in

September and shipments also declined, a sign that business investment remains weak amid the continuing fallout from the US-China trade war but other data yesterday showed it has yet to have much eff ect on the over-all jobs market.

The Commerce Depart-ment said orders for non-de-fence capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, fell 0.5% last month on less demand for transportation equipment, motor vehicles and parts, and computers and electronic products.

Data for August was also re-vised down to show core capital goods orders falling 0.6% in-stead of declining 0.4% as pre-viously reported.

Economists polled by Reuters had forecast core capital goods orders dipping 0.2% in Septem-ber.

Such goods orders increased 1.0% on a yearly basis.

Shipments of core capital goods dropped 0.7% last month.

Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product meas-urement.

Shipments for August were fl at after being revised from a previously reported 0.3% gain.

“The data are volatile, but through the volatility, trends have slowed signifi cantly,” said Jim O’Sullivan, an economist at High Frequency Economics.

US Treasury prices rose fol-lowing the report while US stocks were little changed.

The US Federal Reserve has cut interest rates twice this year and investors currently see another reduction in borrow-ing costs when policymakers meet next week as the economy grapples with the fallout from a more than year-long US-China trade war and slowing global growth.

The manufacturing sector, which makes up about 11% of the US economy, has been hobbled by the trade dispute, which has hurt business confi dence and investment, and cast a cloud of

uncertainty over the economic outlook.

US manufacturing output fell more than expected in Sep-tember, hampered by a strike at General Motors, Fed data showed last week while busi-ness investment fell at a 1.0% annualised rate last quarter, the biggest drop since the fourth quarter of 2015, the government reported last month.

Earlier this month, US Presi-dent Donald Trump outlined the fi rst phase of a deal to end the trade war with China and sus-pended a threatened tariff hike, but offi cials on both sides said much more work needed to be

done before an accord could be agreed.

Overall orders for durable goods, items ranging from toast-ers to aircraft that are meant to last three years or more, de-clined 1.1% in September after edging up a revised 0.3% in the prior month.

Another report yesterday showed the number of Ameri-cans fi ling applications for un-employment benefi ts unexpect-edly fell last week, pointing to a still-tight jobs market even as hiring and economic growth has slowed.

Initial claims for state un-employment benefi ts declined

6,000 to a seasonally adjusted 212,000 for the week ended Oc-tober 19, the Labour Department said.

Data for the prior week was upwardly revised to 218,000.

Economists polled by Reuters had forecast claims edging high-er to 215,000 in the latest week.

The Labour Department said no states had claims estimated last week.

The overall decrease was de-spite the ongoing General Mo-tors strike.

While striking workers are not eligible for unemployment benefi ts, the work stoppage has aff ected production, impacting non-striking employees at sup-pliers.

The United Auto Work-ers union reached a tentative agreement with the Detroit automaker last week on a new four-year-contract but will re-main on strike until members complete a vote on the proposal by today.

The four-week moving aver-age of initial claims, considered a better gauge of labor market trends as it irons out week-to-week volatility, declined 750 to 215,000 last week.

Elsewhere, the Commerce Department reported yesterday sales of new US single-family homes dipped in September as low inventories continue to weigh on sales even as prices saw the biggest monthly fall in fi ve years.

Sales declined 0.7% to a sea-sonally adjusted annual rate of 701,000 units last month, matching expectations.

August’s sales pace was re-vised down to 706,000 units from the previously reported 713,000 units.

New home sales, which com-prise about 11.5% of housing market sales, are drawn from permits and tend to be volatile on a month-to-month basis.

Sales were up 15.5% from a year ago.

A factory worker installs components for a forklift on the assembly line at the Toyota Industrial Equipment Manufacturing facility in Columbus, Indiana. The Commerce Department said orders for non-defence capital goods excluding aircraft fell 0.5% last month on less demand for transportation equipment, motor vehicles and parts, and computers and electronic products.

SoftBank to seek USnational securityreview of WeWork dealBloombergSan Francisco

Japanese conglomerate Soft-

Bank Group Corp plans to seek

approval of its WeWork bailout

package with a US government

committee that reviews corpo-

rate deals for national security

risks. SoftBank will file in the

coming weeks with the Com-

mittee on Foreign Investment

in the US, or Cfius, according to

a person familiar with the plans

who asked not to be identified

discussing private information.

On Tuesday, the board of WeWork

parent We Co reached an agree-

ment with SoftBank to eff ectively

take over 80% of the company,

in a deal that included an off er to

buy $3bn of existing shareholders’

stock. The move was part of an

eff ort to shore up the finances of

New York-based WeWork, which

was on track to run out of money

as soon as next month.

SoftBank, which is based in

Tokyo but invests globally, has

run into issues with Cfius in the

past and the review could be a

significant hurdle to closing the

deal. Cfius, which is run by the

Treasury Department, reviews

investments by foreign firms in

US companies. The committee

can impose conditions on a deal

or recommend to the president

that a transaction be blocked.

Representatives for SoftBank and

WeWork declined to comment.

SoftBank won approval from the

panel to buy Sprint Corp and UK

chip designer ARM Holdings.

However, the committee put

conditions on its ownership of

Sprint, and restricted its control

of alternative-asset manager

Fortress Investment Group.

More recently, SoftBank was

unable to fill two board seats at

one of its portfolio companies,

Uber Technologies Inc, because

it did not have Cfius approval,

Bloomberg reported earlier this

year. More than a year after Soft-

Bank made a large investment in

Uber, the company went public,

voiding some of its prior commit-

ments with SoftBank. The compa-

ny never got to fill its seats.

Cfius became more powerful last

year after Congress passed legis-

lation giving it broader author-

ity to scrutinise and potentially

halt foreign deals for reasons of

national security.

Rosneft switches contracts to euros from dollars amid US sanctionsReutersVerona/Moscow

Russia’s largest oil company Rosneft has fully switched the currency of its contracts to euros from US dollars in a move to shield its transactions from US sanctions, its chief executive Igor Sechin said yesterday.Rosneft’s switch to the euro is seen as part of Russia’s wider-scale drive to reduce dependence on the dollar, but it is unlikely to quickly boost the euro’s role for Russia given the negative interest rates it carries.“All our export contracts are already being implemented in euros and the potential for working with the European currency is very high,” Sechin told an economic forum in Italy’s Verona.“For now, this is a forced measure in order to limit the company

from the impact of the US sanctions.”Reuters reported earlier this month that state-controlled Rosneft set the euro as the default currency for all its new export contracts.Washington has threatened to impose sanctions on Rosneft over its operations in Venezuela, a move which Rosneft says would be illegal.Moscow has been hit by a raft of other financial and economic sanctions from Washington over its role in the Ukrainian crisis and alleged meddling in the US elections.Russia denies any wrongdoing.Last year, Rosneft exported oil and oil products worth 5.7tn roubles ($89bn), according to its reports.Rosneft’s switch to the euro comes amid attempts by Russian companies to work out ways to carry out international

transactions without the US dollar.Russian President Vladimir Putin has called for de-dollarisation that should help limit exposure to the lasting risk of more US sanctions, while the Russian central bank has lowered the amount of US Treasuries in its reserves in 2018.The switch to the euro has its downside as, under the current policy of the European Central Bank, financial institutions are required to pay interest for parking excess reserves with the bank, known as negative interest rates.“There is no sense in storing money under negative interest rates,” said Alexander Losev, head of Sputnik Asset Management.Given the negative rates, Rosneft’s switch to operations in euros is capable of increasing the amount of euro conversion as Rosneft will seek to ditch the currency for those that are of more use for its operations, market experts say.

The euro’s share in Russia’s exports has been on the rise since 2015 but Rosneft’s adoption of it is unlikely to have an impact on the Russian currency market, said a manager at one of Russia’s state-controlled banks.Other experts agree, saying that Rosneft will still need to convert its euros for tax payments and other needs in Russia.A senior forex dealer at a state-controlled bank also said the impact of Rosneft’s move on the rouble will be negligible.The Moscow Exchange said Rosneft’s move will increase the euro share in its overall trade turnover.Previously, the share of euro trade on the Moscow Exchange has been increasing only marginally.Over the past year, the euro/rouble share in overall FX turnover on Russia’s main bourse stood at 12%, up from 11% in 2017 and 9% in 2016.

The headquarters of Rosneft in Moscow. Rosneft’s switch to the euro is seen as part of Russia’s wider-scale drive to reduce dependence on the dollar, but it is unlikely to quickly boost the euro’s role for Russia given the negative interest rates it carries.

Trump again attacks Fed; says central bank ‘derelict in its duties’

AFPWashington

President Donald Trump once

again attacked the US Federal

Reserve yesterday, calling for

more interest rate cuts to stimu-

late the American economy

just days before the key policy

meeting.

“The Federal Reserve is der-

elict in its duties if it doesn’t

lower the Rate and even, ideally,

stimulate,” he said on Twitter, a

relatively mild epithet after call-

ing policymakers “boneheads”

and “pathetic.”

Trump has long argued that the

Fed was too aggressive about

raising the benchmark borrow-

ing rate, which rose four times

in 2018.

Under Fed Chair Jerome Powell,

the Fed cut the rate twice this

year, and could do so again at

the two-day meeting next week,

although some economists are

calling for a pause.

Trump’s blitz of insults and

criticism directed at the Fed had

slowed in recent weeks, with

the most recent occurring two

weeks ago when he said US

central bankers “don’t have a

clue but I do.”

“Take a look around the World

at our competitors. Germany

and others are actually GETTING

PAID to borrow money.

Fed was way too fast to raise,

and way too slow to cut!” Trump

tweeted, pausing in his focus

on the impeachment inquiry

against him in Congress.

The European Central Bank

left its policy interest rate

unchanged yesterday at -0.5 %,

while the Bank of Japan — also

set to meet next week — has a

-0.1 % rate as sluggish economic

growth persists.