BUSINESSBUSINESSThursday 28 September 2017

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UK warns Boeing over Bombardier

trade row

GOIC releases annual ‘Gulf statistical profile’

Dow & Brent before going to press

Omani firms to set up production units in Qatar

Mohammad Shoeb The Peninsula

Large number of Omani companies, including several small and mid-sized enterprises (SMEs), are negotiating

with local businesses and inves-tors to establish partnerships aiming to set up factories and production units in Qatar, said a senior official of Oman’s Public Authority for SMEs Development (riyada), an initiative of the Gov-ernment of the Sultanate of Oman. Qatar, given its climatic conditions and lack of natural water and geographical factors, largely depends on food imports.

The local food production meets nearly 15 percent of the total demand in the country, and the reset were traditionally sourced from neighbouring states. But with the blockade in place, Qatar has now identified new destinations, which include Oman, Kuwait, Turkey, Iran and other South Asian countries.

Qatar and Oman have signed a number of agreements and MoUs to expand and enhance bilateral cooperation.

The volume of trade exchange between Qatar and Oman in 2016 was about QR2bn, which is expected to grow exponentially in the coming years. Oman is the 25th trading partner of Qatar. The Qatari market has 350 joint Omani-Qatari companies engaged in contracting, engineer-ing, services and industry. Omani product were traded in Doha pre-viously, but over the last three months trade relations between the two sides are witnessing sharp growth.

“Out of the 100 participants

in this edition of the Omani Prod-ucts Exhibition (OPEX) in Doha, there are some 27 SMEs, working under ‘riyada’, who are showcas-ing their products in the expo. Like many other big Omani com-panies, these SMEs are looking to establish partnerships with local businesses to set up factories in Qatar,” Abdullah Ali Khamis Al Senaidi, Acting Director of Eval-uation & Follow-up Department

at ‘riyada’ told The Peninsula.Abdullah added: “These firms

are producing a wide range of high quality products which include different types of plastic products, marbles, steel, paper products such as cups, plates, tis-sue papers, and firms that are dealing in incense, perfumes and other items.”

He said that many of these companies are participating in

Qatar for the second time. These SMEs are owned and run by self-employed Omanis who are fully dedicated to these firms, and do not work any other government or private organisations.

“Many of these firms are more than 10 years old producing qual-ity products, which are not only meeting the domestic demands but also export their products to many countries in the Middle East and North Africa region,” said Abdullah.

He noted that the government of Oman, like many other states in the region, is extending all the possible support to SMEs to help them establish, grow and expand their footprints outside the country.

“We believe that forums like OPEX will be of great help to enhance bilateral cooperation with Qatar and Oman. And soon more Omani companies will start producing their products in Qatar,” said Abdullah.

The second edition of the OPEX, which is schedule to

conclude today at DECC, was organised by the joint efforts of Qatar Chamber, Oman’s Ministry of Commerce and Industry, Oman Chamber of Commerce and Industry (OCCI), Oman’s Public Establishment for Industrial Estates (PEIE) and Oman’s Pub-lic Authority for Investment Promotion and Export Develop-ment (Ithraa). “The 2013 OPEX-Doha show was extremely well received. We knew there was a need for a large international Omani products initiative in Qatar but the show’s success exceeded all expectations.

It was clear from the amount of business conducted and the number enquiries received that Oman-made products are valued by Qatari businesses, retailers and consumers.

In fact, we see Qatar as a key growth market for Omani man-ufactures that is why we are back,” said Ayman Abdullah Al Hasani, Chairman of OPEX – Organising Committee, and Vice-Chairman of OCCI.

Ayman Abdullah Al Hasani (left), Chairman of OPEX and Abdullah Ali Khamis Al Senaidi, Acting Director of Evaluation & Follow-up Department for ‘riyada’.

Trade volume

The volume of trade exchange between Qatar and Oman in 2016 was QR2bn, and is expected to grow in the coming years.

French Minister of State, attached to the Minister of Economy and Finance, Benjamin Griveaux (centre) arrives to attend a hearing by the committee on finance, economy and budgetary control at the Palais Bourbon, the seat of the French National Assembly in Paris, yesterday.

QINVEST bullish on Turkey, bets on EM equitiesSatish Kanady The Peninsula

QINVEST, Qatar’s leading investment group, is set to reinforce its presence in

Turkey. Amidst a raft of global market challenges, the promi-nent Qatar-based Islamic financing investment bank, is betting on Emerging Market equities, Europe and other developed markets.

As the general mood across all markets remains uncertain, QINVEST is cautious about the impact of the current macroeco-nomic environment on its existing portfolio. “Our approach can be summarised as being cautiously optimistic”, Dr Ataf Ahmed (pictured), Head of Asset Management, QINVEST told The Peninsula in an extensive interview.

“QINVEST is seeing huge opportunities in various asset classes in Turkey. In Turkey, for instance, we see Islamic finance outperforming conventional finance and have therefore spent a significant amount of effort and investment making and marketing our products to the local market there.

In 2016, we acquired ERGO Portfoy, one of the largest and fastest growing asset manage-ment companies in the country. The acquisition of ERGO Port-foy gave us a unique platform to quickly grow in a market that boasts significant growth and potential. Rebranded QInvest-Portfoy, the company is one of

the leading asset management groups in Turkey with over 1.0billion Turkish Liras in assets under management, providing pension and mutual fund and discretionary portfolio manage-ment services.”, Dr Ataf said.

QInvestPortfoy is expected to play a major role in attracting new investments into Turkey, delivering high value services to a larger client base. It will also benefit from the world-class capability that QInvest currently provides.

QINVEST is also seeing opportunities within Emerging Markets equities, despite the inherent volatility of the asset class, as it thinks that the broad economic backdrop within EM has improved. “Inflation is com-ing in under control and there are a number of positive sur-prises in economic growth. Valuations within the EM equity space are attractive, especially when considering valuations rel-ative to developed markets. Therefore, our positive outlook is driven by both an attractive long term economic outlook and favourable valuations”, he said.

“Within Developed Markets, we see the main opportunity in niche markets and in the alter-native space. Quantitative Easing out of Europe and the US have driven traditional asset prices to record highs, and we think as we see central banks shrink their balance sheet that we may see heightened volatility and a fall in certain asset prices, especially if we see a slowdown in growth.” Explaining on QINVEST’s expo-sure to EMs Dr Ataf said: “Our primary exposure to Emerging Markets comes through in-house managed portfolios which focus on this region. These portfolios have exposure to both equities and sukuk. We also have expo-sure through QInvestPortfoy, which manages Turkish Equi-ties and Sukuk for a number of institutional investors. There is also exposure to broader EM within some of our global funds and mandates, however this is minimal and represents approx-imately 10 percent of total assets across all funds.”

On the potential impact of liquidity crunch on GCC’s deal making, he said ‘liquidity crunch is something that comes and goes’. Across the region there is now an acceptance that low oil prices are the new normal and businesses have adjusted and are basing their forecasts on “low for long”. “We are seeing GCC nations reinforcing their plans to diversify the economies – mov-ing into sectors like finance, trade and tourism.”

Germany’s EON inks sale of fossil fuels stakeFrankfurt

AFP

Germany energy giant EON said it has agreed to sell its remaining stake in fos-

sil fuels spinoff Uniper to Finland’s Fortum Oyi in early 2018. Fortum will offer all Uni-per shareholders ¤22 ($25.90) per share, valuing EON’s 46.65 percent holdings at ¤3.76bn ($4.4bn), the German group said

in a statement late Tuesday. The two groups had announced last week that they were seeking a deal.

Under the terms of the agreement, if EON decides not to sell its stake after all, it will buy up all the shares Fortum acquires during the offer and also pay compensation to the Finnish firm. But EON has made clear that it wants to dispose of i t s remaining s tock

in Uniper—which owns all its traditional gas- and coal-fired power stations—early next year. EON booked charges of ¤11bn in its accounts for last year as it wrote down the value of the fos-sil fuel assets.

The group’s move came as German energy utilities face tough choices during the gov-ernment-spurred “energy transition” from nuclear gener-ation to renewables. → See also page 27

8,421.20+148.06 PTS

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QE

$52.16 $52.16 +0.28+0.28

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0.38%DOW FTSE100

Griveaux at finance committee hearing

22 THURSDAY 28 SEPTEMBER 2017BUSINESS

Abdullah bin Hamad Al Attiyah (left), Chairman of the Board of Foundation of Abdullah Bin Hamad Al Attiyah for Sustainable Development speaking at the 17th Italian Energy Summit tiltled: ‘New Innovation Strategy’, which was held in the Italian city of Milan from September 25-26, 2017.

Italian energy forumQSTP launches ‘Cycle 5’ of its accelerator programme The Peninsula

Qatar Science & Tech-nology Park (QSTP), Qatar’s primary incu-bator for technology innovation and tech-

based entrepreneurship, recently launched Cycle 5 of its intensive accelerator pro-gramme, XLR8.

The three-month XLR8 pro-gramme provides aspiring entrepreneurs with training, guidance, and mentorship, help-ing them bridge gaps between ideation and commercialisation, and transform their ideas into products that address market demands.

A total of 20 teams were selected for Cycle 5, represent-ing a broad range of tech applications and innovations. One team, Royability, is creat-ing a speech-generation app to help autistic children speak, while Muhami is establishing an online service for legal advice. Other innovations include drone delivery systems, a web plat-form for hiring and managing remote workers, and an auto-mated cybersecurity solution.

Three teams have emerged as part of Challenge 22, a com-petition run by the Supreme Committee for Delivery and Legacy for innovative ideas relating to the 2022 FIFA World Cup. Their ideas include a wear-able dehydration detection system for workers, a central smart queuing system, and

smart football shirts that can predict cardiac events such as heart attacks or angina.

“Through programmes such as XLR8, QSTP aims to foster a dynamic and sustainable tech-nology startup ecosystem in Qatar and the wider region. We are delighted to welcome aspir-ing young entrepreneurs who will contribute to Qatar’s jour-ney towards a sustainable, diversified economy in line with the broader vision of Qatar Foundation’s research and development strategy,” said Dr Maher Hakim, Executive Direc-tor of QSTP.

Cycle 5 of XLR8 focuses on three core themes: problem-solution fit; customer validation and market validation; and i n v e s t m e n t , g o - t o

market strategy, and pitching. Participating entrepreneurs will learn how to identify potential customers, design a rough pro-totype, and solicit feedback from potential clients to revise the prototype accordingly. After verifying that their idea is com-mercially viable, participants will learn how to pitch their idea to potential investors.

A network of mentors and coaches, who specialise in the commercialisation of tech-based innovations, will guide entrepreneurs, enabling them to create commercially viable products and services that trans-form their ideas into reality. This cycle’s mentors come from some of Qatar’s leading public and private institutions, including ADGS Computer Systems, iHo-rizons, and Sidra Medical and Research Center.

Since the programme’s inception in 2015, 50 teams and 124 individuals have graduated from XLR8. Emad Al Khaja, CEO of INJAZ Qatar and a Cycle 4 graduate, said: “I went to XLR8 with an idea and they helped me develop it, and learn more about the business aspect, which was very useful because I was focused on the R&D aspect at the same time.”

Through the initiative, QSTP, a member of Qatar Foundation for Education, Science and Com-m u n i t y D e v e l o p m e n t , endeavours to foster an inno-vation ecosystem in Qatar and the region.

Weibo to reward citizen censorswith iPhones & tablets

Empowering ideas

Three-month intensive accelerator programme empowers entrepreneurs to transform their business ideas into reality.

A total of 20 teams were selected for Cycle 5, representing a broad range of tech applications and innovations.

IATA calls on EU to address monopolies of major European airportsThe Peninsula

The International Air Transport Association (IATA), which represents

some 275 airlines comprising 83 percent of global air traffic, has called on the European Union (EU) to significantly strengthen economic regula-tion of major European airport monopolies by focusing on the interests of passengers.

Enforcing greater cost-effi-ciency at Europe’s airports will feed through into cheaper air fares, stimulate travel and enhance European competi-tiveness. In turn, this will support jobs and grow the economy.The case for stronger airport charges regulation is seen in how European passen-gers have been denied the full benefits of cheaper air travel, as illustrated over the period 2006-2016 in a latest IATA study.

According to the findings of the study, the average cost of an air ticket remained virtually the same, including all ancil-lary charges such as hold bags, during the period, while the revenue portion of the ticket price for airlines fell from 90 percent to 79 percent. The report also shows that the por-tion of the ticket price taken by

the airport doubled, and the passenger taxes also doubled during 2006-2016.

The report noted that had airport charges remained con-stant over the 2006-2016 period consumers could have benefitted, on average, 17 Euros per one-way trip. That price stimulus of nearly 10 percent of average tickets costs would have improved Europe’s com-petitiveness, and potentially generated an additional 50 mil-lion passengers. In turn that would have unlocked €50bn in European GDP and created 238,000 jobs.

“Airlines, like all competi-tive businesses, are in a constant struggle to improve efficiency. Europe’s airports however are largely insulated from competitive forces. Europe’s light-handed Airport Charges Directive has failed Europe’s travelers and its own competitiveness by letting air-port charges rise. Tighter EU regulation is needed to stop air-port monopolies from taking money from the pockets of travelers to reward investors,” said Alexandre de Juniac, IATA’s Director General and CEO.

The trend of increasing pri-vate ownership of European airports adds urgency to the situation.

China’s factoryprofits riseCHINA’S major industrial firms posted faster profit growth in the first eight months of this year, the Chinese National Bureau of Statistics (NBS) said yesterday.

Companies with annual revenue of more than 20 mil-lion yuan reported profits of 4.92 trillion yuan in the first eight months, a 21.6 percent increase from one year earlier, the NBS said. The strong growth marks a pick-up from the 21.2 percent in the January-July period.

GOIC releases annual ‘Gulf statistical profile’The Peninsula

The “Gulf Organization for Industrial Consulting” (GOIC) has released the

new annual issue of the “Gulf statistical profile 2016”. It is con-sidered as one of the most important source of information in the region and is available in Arabic and English. This profile is gaining more importance among public and private offi-cials, experts and researchers in the field of industrial and eco-nomic development in the GCC.

Abdulaziz bin Hamad Al Aqeel, Secretary General of the Gulf Organization for Industrial Consulting, said that “GOIC has released numerous specialised files and reports” and that the

“Gulf statistical profile 2016” is considered as a reference for current and documented social and economic data and indica-tors in the GCC countries. In fact, this profile selected Economic and Social Indicators for 2015.”

It also includes Foreign Trade Statistics, which contain total exports and imports clas-sified by SITC code, country, and country groups. In addition to that, it contains Energy and Industry Statistics, including tables about oil and gas reserves, production, exports and con-sumption and well as electricity consumption. It also has a sec-tion on Industry and includes data extracted from the GID database in addition to the water consumption in GCC countries.

Gulf statistical profile 2016 also comprises important data about Population and Labor Force in each country, in addition to var-ious social data including transportation, health and edu-cation in the gulf.

GOIC relies on a number of its specialised databases to pro-vide data such as the socio-economic database and the Gulf industries database. These databases are constantly updated based on data received from direct industrial establish-ments, national statistical divisions and statistical publica-tions of the United Nations and other regional and international organisations.

The electronic version is available on the gulf industrial

knowledge center website (GIKC), where you can read a summary of it and buy the full version. GIKC website is availa-ble in Arabic and English. It has been designed as a portal to all industrial information in the Gulf region. The website provides a unique set of GOIC’s outputs from various industrial studies and industrial investment opportunities, to new reports about several industrial sectors.

GOIC is a Doha-based regional organisation that brings together the Qatar, United Arab Emirates, the Kingdom of Bah-rain, the Kingdom of Saudi Arabia, the Sultanate of Oman, the State of Kuwait and the Republic of Yemen.

Beijing

Reuters

Chinese social media firm Weibo Corp is looking to recruit citizen censors to

help weed out sensitive con-tent on its platform, rewarding those who report the highest numbers of offending posts with iPhones and tablets.

The platform posted a statement on yesterday saying it was looking for an initial 1,000 “Weibo supervisors” as part of a programme overseen by the Beijing arm of the Cyber-space Administration of China (CAC), the country’s top Inter-net watchdog.

The CAC on Monday fined Weibo along with rival tech giants Tencent Holdings Ltd and Baidu Inc for failing to properly censor illegal content on its site, including political articles and social commentary as well as violence and fake news.

Chinese authorities and tech firms are stepping up cen-sorship controls before the 19th

National Congress next month, a major leadership event held once every five years where President Xi Jinping is expected to consolidate power.

Successful applicants to Weibo’s new programme must flag over 200 posts each month to receive a stipend of 200 yuan ($30.13).

The 10 supervisors who report the most posts per month will receive prizes such as Apple Inc iPhones it added.

Weibo, a microblogging service similar to Twitter, is China’s second most popular social media platform after Tencent’s messaging app WeChat, and has been singled out by authorities over illegal content several times this year.

The firm’s US-listed stock dropped sharply in June when its video service was ordered by the CAC to briefly suspend services for “failing to promote core socialist values”.

The company said at the time it would work to promote more mainstream ideas as part of a comprehensive overhaul.

BoC cautious amid uncertain data: PolozOttawa

Bloomberg

Bank of Canada (BoC) Gov-ernor Stephen Poloz (pictured), in his first

speech since his second rate increase, cautioned there is no “predetermined path for inter-est rates” and said the central bank will proceed “cautiously” as it assesses the performance of the economy.

While Canada has made “significant progress” in adjusting to the oil shock, Poloz highlighted the height-ened level of uncertainty about “how the economy is evolv-ing” toward full capacity, particularly around the out-look for inflation, which has been sluggish.

That means the central bank is uncertain about “how far there is left to go” before it reaches a state of full capacity with inflation at 2 percent—what Poloz defines as “home.”

It’s a situation preventing the bank from being “mechan-ical in our approach” to monetary policy, he said

yesterday in St. John’s, Newfoundland.

“The appropriate path for interest rates in this situation is very difficult to know, because there are a number of unknowns around the infla-tion outlook,” Poloz said, according to the prepared text of his speech. “We will not be mechanical in our approach to monetary policy.”

Poloz is seeking to balance bringing interest rates back to more normal levels amid the strongest growth spurt in more than a decade, while at the same time not harming the fledgling recovery. yesterday’s speech—like one given by

Deputy Governor Tim Lane last week—may be interpreted as a further attempt by policy makers to pare expectations that the central bank is mov-ing headlong into more rate increases, after hiking borrow-ing costs twice since July.

Swaps trading suggests investors are still pricing in as many as three more rate increases by the end of next year.

Poloz said that “at a mini-mum,” it’s become clear that the two rate cuts he made in 2015, which are now fully reversed, are no longer needed.

The Canadian dollar—which has appreciated about 10 percent since early May—fell as much as 0.7 percent on the comments to C$1.2434 per US dollar. The currency is down 2 percent since Septem-ber 13.

“The majority of the speech confirms our assumptions that tightening from the Bank of Canada will be a gradual affair from here,” Nick Exarhos, an economist at Canadian

Imperial Bank of Commerce, said in a note to investors.

While Lane placed an emphasis on the dollar, Poloz’s speech underscored the chal-lenges the central bank has been having in forecasting inflation, which has been con-sistently below the central bank’s 2 percent target. Other puzzles in the data include: full capacity being a moving tar-get; the impacts of technology on inflation;wage growth that is slower than what would be expected at this stage of the cycle; and how elevated household debt affects the impact of rate increases on the economy and inflation

Poloz did have things to say about recent market movements, highlighting that policy makers “watch closely” movements of long-term interest rates and the Canadian dollar. He said currency changes could have an impact on the inflation outlook.

He also said interest rates in Canada would have had to have been even lower without fiscal stimulus.

23THURSDAY 28 SEPTEMBER 2017 BUSINESS

UK warns Boeing over Bombardier trade rowLondon

AFP

Britain warned US air-craft giant Boeing yesterday that it risked government defence contracts worth bil-

lions with its challenge to Canadian rival Bombardier, which threatens thousands of jobs in Northern Ireland.

The US Commerce Depart-ment on Tuesday said it would impose anti-dumping duties of 220 percent on Bombardier’s CSeries jets, following an inves-tigation into state subsidies sparked by a Boeing complaint.

Bombardier employs 4,200 people in aeronautics in North-ern Ireland, centred around a Belfast factory that builds the CSeries wings and fuselage.

Prime Minister Theresa May’s office earlier said it was “bitterly disappointed” by the preliminary ruling, but would

keep working with the Canadian government and Bombardier to find a solution.

During a meeting last week at the United Nations in New York, May had personally lob-bied US President Donald Trump to drop the case.

But Ross Murdoch, of the GMB union, accused her of being “asleep at the wheel when she could and should have been fighting to protect these work-ers”. Critics warned the ruling raised doubts about Britain’s hopes of securing a quick trade deal with the United States when it leaves the European Union.

“We can’t rely on a good

trade deal with the US being agreed after Brexit,” added pro-European opposition Labour lawmaker Conor McGinn.

This sentiment was echoed in London, where the govern-ment’s business department said it was “only the first step in the process”.

“Boeing’s position in this case is unjustified and frankly not what we would expect of a long-term partner to the UK—as well as damaging the wider global aerospace industry.”

Fallon said Boeing was a “major defence partner”, and stood to “gain a lot of British defence spending”. “We have contracts in place with Boeing for new maritime patrol aircraft and for Apache attack helicop-ters and they will also be bidding for other defence work,” he said.

“And this kind of behaviour clearly could jeopardise our future relationship with Boeing.” The Bombardier headquarters and factory are pictured in Belfast, yesterday.

US core capital goods data underscores economy’s strengthWashington

Reuters

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

August and shipments main-tained their upward trend, pointing to underlying strength in the economy despite an antic-ipated drag on growth from Hurricanes Harvey and Irma. The Commerce Department said yesterday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.9 percent last month after an upwardly revised 1.1 percent gain in July.

Economists polled by Reu-ters had forecast orders of these so-called core capital goods increasing 0.3 percent last month following a previously reported 1.0 percent jump in July. Core capital goods orders surged 3.3 percent year-on-year. Shipments of core capital goods rose 0.7 percent after advancing 1.1 percent in July. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.

The Commerce Department said it was unable to isolate the effects of Hurricanes Harvey and Irma on the data as the sur-vey is “designed to estimate the month-to-month change in manufacturing activity at the national level and not at specific geographic areas.”

Harvey has hurt August retail sales, industrial produc-tion, homebuilding and home sales. Irma is expected to fur-ther hold down housing activity.

As a result, the storms are expected to cut into third-quar-ter economic growth.

Third-quarter GDP growth estimates are below a 2.5 per-cent annualized rate. The economy grew at a 3.0 percent pace in the second quarter.

The dollar jumped to a more than one-month high against a basket of currencies on the data, while prices for US Treasuries fell. US stock index futures were trading higher.

Business investment has been buoyed by the energy sec-tor, where oil and gas drilling has rebounded after declining in the wake of a collapse in crude oil prices. Spending could get a further boost from an anticipated tax cut next year.

Business spending on equip-ment added a lmost half-a-percentage point to GDP in the third quarter, the most in nearly two years. Strong busi-ness investment is helping to support manufacturing, which accounts for about 12 percent of the US economy.

Last month, orders for machinery rose 0.3 percent after being unchanged in July. There were also increases in orders for primary metals, computers and electronic products, and trans-portation equipment. Overall orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, surged 1.7 percent last month as bookings for transpor-tation equipment jumped 4.9 percent.

Durable goods orders fell 6.8 percent in July. Boeing reported on its website that it received 33 aircraft orders in August, sharply up from 22 in the prior month.

France cuts taxes on bankers Paris

AFP

The French government confirmed yesterday it plans to cut taxes on

high-earning finance sector jobs as part of efforts to make Paris more attractive for firms shifting operations out of London due to Brexit.

The 2018 budget will eliminate the marginal tax rate on salaries of employees in firms not subject to the Value Added Tax (VAT), such as banks and insurance com-panies, that exceed ¤152,279 ($178,761).

From January 1 the higher 20 percent rate on wages above that level will disap-pear and the 13 percent rate applied until 2013 will be used.

The government esti-mates that banks, insurance companies and other finan-cial firms stand to save ¤140m in 2018, thanks to the change.

London-based financial firms could potentially lose their so-called passporting rights that allow them to operate across Europe depending on the outcome of the talks on Britain’s exit from the European Union, set to take place in 2019.

The budget, unveiled yes-terday, contained another measure to improve France’s attractiveness for financial firms that were going to seek relocating to the eurozone, the dropping of a plan to impose a tax on intra-day financial transactions that was set to enter force on Jan-uary 1.

Mideast fund attracts Dubai billionaire as investorDubai

Reuters

A venture capital firm focused on tech start-ups in the Middle East has

signed up Dubai billionaire Mohamed Alabbar as an anchor investor in a new fund that aims to raise $250m, the company said yesterday.

Alabbar, who is chairman of Emaar Properties, took a signif-icant stake this year in the firm, Middle East Venture Partners (MEVP). The size of the invest-ments was not disclosed.

MEVP said the new fund would invest in early and growth-stage technology com-panies in the Middle East, North Africa (MENA) and Turkey.

“If you look at this region, it is completely underserved. Star-tups in this part of the world are hungry for equity, hungry for capital,” said MEVP Chief Exec-utive Walid Hanna.

Venture capital investment in MENA was less than 0.03 per-cent of gross domestic product in 2016, compared with 0.2 per-cent in India and 0.4 percent in the United States, the company

said in its release, citing research reports.

Alabbar has been expanding into e-commerce through his various businesses such as Emaar Malls, which bought a 51 percent stake in fashion website Namshi from Global Fashion Group (GFG), a Rocket Internet startup.

He is also close to launching Noon, an e-commerce venture backed by Saudi Arabia’s sover-eign Public Investment Fund (PIF).

Alabbar declined to com-ment on the launch date

yesterday. Thomson Reuters publication Zawya reported that Noon is expected to go live next week.

In a sign of growing interest in technology firms in the region, Amazon.com bought Middle Eastern online retailer Souq.com in a deal described by Goldman Sachs as the biggest technology M&A deal in the Arab world.

MEVP is one of the largest venture capital firms in the region, with $120m in assets, $100m in co-investments and stakes in more than 40 compa-nies in MENA and Turkey.

Brazil carefully ‘analysing’ Ireland tax haven statusLondon

Reuters

Brazil is carefully analys-ing Ireland’s request that it review last year’s deci-

sion to declare it a tax haven and is holding bilateral talks with Dublin on the issue, finance minister Henrique Meirelles said on Tuesday.

Brazil last year added Ire-land, Austria, Curacao and Saint Martin to its list of tax havens, automatically subjecting trans-actions by companies resident

in the country to stricter Brazil-ian tax rules. The change, which came into effect last October, was a blow to investment funds listed in Ireland. Their Brazil-related transactions now incur a 25 percent withholding tax instead of the 15 percent they would otherwise pay on inter-est, royalties and capital gains.

The move also impacted other sectors. Brazilian airlines have estimated the move implied an additional 1 billion reais ($316m) in new taxes on aircraft leasing.

Anti-dumping

The US Commerce Department said it would impose anti-dumping duties of 220%.

24 THURSDAY 28 SEPTEMBER 2017BUSINESS

London

Bloomberg

Ryanair Holdings Plc will extend flight can-cellations into next year while dropping plans to bid for bank-

rupt Alitalia SpA as Europe’s biggest budget carrier seeks to come to grips with the crisis sur-rounding a pilot shortage.

After shocking customers by abruptly scrapping flights earlier this month, Ryanair said it will operate 25 fewer planes than planned during its winter sched-ule starting in November, and then 10 fewer from April. That will mean canceling 18,000 flights on which about 400,000 passengers were booked, bring-ing the total number affected to about 715,000.

In additional fallout from the crisis, Ryanair has informed administrators managing the bankruptcy of Alitalia that it is withdrawing from the bidding to “eliminate all management dis-tractions,” the Dublin-based company said in a statement yes-terday. Avoiding the risk and cost associated with the Italian car-rier helped buoy Ryanair shares, which rose the most since November.

By scrapping more services, the airline aims to comply with changes to Irish labor laws requiring it to squeeze a year’s worth of vacation into nine months in 2017 and ensure that there’s no hangover into next year. The groundings will also create spare aircraft and crews, so that no further cancellations should be necessary, the

company said. All passengers affected by cancellations have been offered “re-accommoda-tion or full refunds,” Chief Executive Officer Michael O’Leary said. The cost of free ticket vouch-ers issued to passengers affected in the new round of cancellations will be about €25m ($29m), bringing the tally since the start of the crisis to almost €50m.

Ryanair cautioned that it expects to see a softening in yields or fares over the next two months as it offers a range of seat sales to win back unhappy passengers. Discount carriers operate a reduced schedule in the slower winter season, and the company will suspend 11 routes as part of the usual adjustment, it said. The carrier is still forecasting a profit after tax of €1.4bn to €1.45bn in the year ending March 31.

All told, Ryanair expects to fly 129 million passengers in 2017, 2 million fewer than it had previ-ously planned, according to the

statement. The 2018 total will drop to 138 million from 142 mil-lion, it said.

The airline, which has 4,200 pilots, hit back against the likes of Norwegian Air Shuttle ASA over what it said were “false claims” about losing crew to rivals, saying just 100 captains and 160 first officers have left, mainly due to retirement and moves to long-haul operators. Still, the changes are an acknowl-edgment that Ryanair was stretching its operations, which are built on cheap seats and punctuality.

To ease the strain, O’Leary said Ryanair has hired 650 more cockpit personnel who will join

over the next eight months to help staff another 50 Boeing Co 737 jets still due to join the fleet by next May. The number of pilots employed per aircraft should increase to 11 from 10.4 over the next 12 months, he added.

A raise of €10,000 for cap-tains and €5,000 for first officers has also been agreed for pilots stationed in Dublin, London Stan-sted, Berlin and Frankfurt. The hikes, which will come into effect from October 1, were agreed with staff representatives over the past week, and management will schedule further meetings at other bases over coming months. Ryanair also disputed claims of an industry-wide pilot shortage,

saying it has seen a surge in appli-cations from former Gulf airline crews, as well as from Germany and Italy in the wake of the Ali-talia and Air Berlin Plc insolvencies.

The stock rose 3.9 percent, the biggest jump since Novem-ber 7, boosting gains this year to 18 percent and valuing the com-pany at €20.2bn.

The business changes helped reassure investors that “the issues are put to bed,” Mark Simpson, an analyst at Goodbody Stock-brokers, said by phone. “Ryanair put together a clear defined response which critically weak-ens any bargaining position its pilots might have had.”

Lyon

Reuters

Italian shipbuilder Fincantieri will take effective control of STX France under a shared

ownership agreement, the office of French President Emmanuel Macron said yesterday, ending a dispute that had soured bilat-eral ties.

France angered Italy in July by ordering a “temporary” nationalization of STX, cancel-ling a deal in which Fincantieri

and another Italian investor had agreed to buy 55 percent of the firm, based in Saint-Nazaire in western France. On the back of yesterday’s deal, which will see Fincantieri effectively holding a 51 percent stake in STX France, Paris and Rome will explore the creation of a Franco-Italian naval defence group, merging French military shipyards com-pany Naval Group with Fincantieri, Macron’s office said.

The two countries hope out-lines of that deal can be struck

by June 2018, creating a pan-European naval defence champion. France sees the cre-ation of European champions as crucial to warding off the threat posed by industrial powers in China and the United States. The STX deal comes a day after Macron offered an ambitious vision for European renewal, calling on the continent to forge deeper cooperation.

While Macron, who took office barely five months ago, initially appeared determined to

protect French strategic assets at all costs, the deals between Alstom and Siemens and now Fincantieri and STX suggest he is willing to see French control diluted if it opens the way for a bigger European champion.

In order for Fincantieri to take effective control, the French state will lend it a one percent stake. Paris will have the right to demand the holding back if Fincantieri does not honour commitments on jobs, govern-ance or intellectual property.

Frankfurt

AFP

Lending by eurozone bank to households and companies grew faster

in August than the previous month, figures from the Euro-pean Central Bank showed yesterday.

Overall credit to the pri-vate sector grew 2.7 percent year-on-year last month, adjusting for some purely financial transactions — an increase of 0.1 percentage point over July’s pace.

July had already seen a 0.1-percentage point increase in growth from the previous month’s figure. Policymakers watch lending growth closely for signs the ECB’s massive interventions in the single currency area’s economy are working as intended.

The ECB hopes more credit should power the econ-omy and boost inflation towards its target of just below 2 percent, believed to be most favourable rate for growth.

Looking in more detail, lending to households grew at the same 2.7-percent year-on-year rate last month as in July, still in adjusted terms. Expansion in credit for gen-eral consumption held steady at 6.7 percent, while mort-gage lending growth sped up from 3.1 to 3.4 percent.

Meanwhile, loans to non-financial corporations continued accelerating last month, adding 0.1 percent-age point to reach 2.5 percent growth, continuing July’s recovery from a June slump.

With cheap loans to banks, record low interest rates and monthly bond pur-chases of €60bn ($71.5bn), ECB policymakers have sought to pump cash through the financial system and into the real economy.

The ECB has strongly hinted that it will begin wind-ing down bond-buying in October, although inflation in the 19-nation eurozone remains well short of its tar-get. Inflation in the euro area reached 1.5 percent in August.

Ryanair ends Alitalia bid amid crisis

A Ryanair plane takes off from Dublin Airport. The Irish no-frills airline said yesterday that it was dropping its bid to buy Italian carrier Alitalia, as it struggles with a shortage of pilots that has forced it to cancel thousands of flights.

Bank lending in eurozone picks up pace

New York Reuters

New York state’s finan-cial services regulator has issued a subpoena

to Equifax Inc demanding it provide more information about the massive data breach the credit-reporting firm disclosed this month, a person familiar with the mat-ter said yesterday.

New York’s Department of Financial Services (DFS) sent the subpoena to Equifax on September 14, said the person, who declined to be named because the matter has not been made public.

The subpoena seeks doc-uments related to the hack that compromised the personal data of up to 143 million Amer-icans, details on when Equifax learned of the breach and what actions it took after it was dis-covered, as well as other information, the person said.

The DFS put out guidance to financial institutions on Sept. 18 about steps they should take to protect con-sumer information following the breach, but the issuing of the subpoena has not been previously reported.

The state also proposed on September 18 credit reporting agencies be subject to its cybersecurity rule that went into effect on March 1 and requires banks and other financial institutions regu-lated by DFS to establish a program to protect consumer data and alert the regulator to material breaches.

Equifax has lost around $4.5bn in market value since it disclosed the hack on Sep-tember 7, which the Atlanta-based company said it detected on July 29 and occurred between mid-May and July.

Paris

AFP

The French government defended allowing train maker Alstom to be swal-

lowed by its German rival Siemens on Wednesday as it came under attack from oppo-nents for failing to protect a domestic industrial giant.

Alstom and Siemens, which make France’s high-speed TGV and Germany’s ICE trains, announced a tie-up late on Tues-day to create a new European rail champion. Both sides insist it is a “merger of equals”, with the combined entity to be headed by Alstom’s current chief exec-utive Henri Poupart-Lafarge and based in the Paris region.

But Siemens will be the big-gest shareholder with a 50-percent stake in the new company and has the option to increase this to a majority after four years, while the French state has relinquished its stake. “Some people are free to look back at yesterday’s world. We are look-ing forward,” French Economy Minister Bruno Le Maire said yesterday, as he compared the new train maker to European aircraft maker Airbus.

The French government’s spokesman, Christophe Cas-taner, said people should stop playing the “pseudo nationalism”

card. “In a context where there is a large global leader, who is Chinese, ... and where this is another leader called Bombar-dier, boosting a European champion is certainly the best thing to do,” he said.

German government spokes-man Steffen Seibert similarly saw the tie-up as a “project of cooper-ation of European and global significance”. It was decision taken by the two companies which was “especially important against a background of European and international challenges in the sector,” Seibert said.

Takeovers of major indus-trial companies are extremely sensitive in France, where suc-cessive governments have generally sought to protect the country’s manufacturing capac-ity and avoid major job losses.

The TGV — “Train a grande vitesse” — is a source of national pride and France’s widely admired locomotives have fre-quently smashed world speed records, making the country a pioneer in the sector.

Laurent Wauquiez, who is seeking the leadership of the right-wing Republicans party, accused Macron of “selling us down the river... as it’s Germany which is buying France”. Another leading member of the party, Xavier Ber-trand, dubbed the combined group a “fake rail Airbus.”

Investors and French trade unions are watching the Alstom-Siemens deal with interest as they seek to decipher the indus-trial policy of Macron, a 39-year-old pro-business cen-trist who rose to power in May. Macron favours greater Euro-pean integration, but he nationalised strategic French shipyard STX in western France in July to block a takeover by Italian firm Fincantieri.

A compromise is set to be announced during a meeting between the French and Italian governments in the eastern French city of Lyon, with reports suggesting Fincantieri could ulti-mately end up with a majority stake. “We still don’t really know about his (Macron’s) industrial policy,” the head of France’s Industrial Federation Group (GFI), Philippe Darmayan, said.

Mathieu Plane, an economist at the OFCE economic think-tank at Sciences Po university in Paris, said that Macron had “quite a liberal view of the econ-omy... but on industrial policy he is more interventionist.”

The bosses of Siemens and Alstom insist the deal was nec-essary to help them compete with state-run Chinese rival CRRC Corp, the world’s biggest train maker which was formed via a merger of two Chinese firms in 2014.

France defends new Franco-German rail giant

Henri Poupart-Lafarge, Chairman and Chief Executive Officer of Alstom, shakes hands with Siemens President and CEO Joe Kaeser (left) at a news conference to announce their deal to merge their rail operations, creating a European champion, in Paris, yesterday.

Italy’s Fincantieri to take control of France’s STXNY regulator subpoenas Equifax over massive breach

Ryanair said it will operate 25 fewer planes than planned during its winter schedule starting in November, and then 10 fewer from April. That will mean canceling 18,000 flights on which about 400,000 passengers were booked, bringing the total number affected to about 715,000.

25THURSDAY 28 SEPTEMBER 2017 BUSINESS

London

AFP

European and US equi-ties rose yesterday as investors waited for US President Donald Trump to reveal his tax

reform plans.“Global stock markets have

taken a major step out of their recent malaise today, with trad-ers spending much of the day waiting with baited breath to see exactly what the Trump tax plan is going to look like,” said mar-ket analyst Joshua Mahony at online trading firm IG.

In London, the FTSE 100 closed up 0.4 percent at 7,313.51 points; in Frankfurt, the DAX 30 ended up 0.4 percent at 12,657.41 points; in Paris the CAC 40 closed up 0.3 percent at 5,281.96 points while the EURO STOXX 50 was up 0.6 percent at 3,557.52 points. In New York, the Dow was up UP 0.03 per-cent at 22,290.85 points in afternoon trade.

Investors have been salivat-ing for months over the prospects of lower corporate taxes, which would boost prof-its of blue-chip companies and other businesses considerably. Wall Street is also a fan of a cut in personal taxes, another Trump priority expected to fea-ture in the plan. “While the prospect of lower taxes prom-ises a bounty for stocks, it is worth noting that Trump has yet to deliver on any major policies given the constant rebuttals from the Republican-dominated Con-

gress,” noted Mahony.“There is a good chance that

these tax reforms are going to be as difficult to pass as the health reforms, with issues such as the controversial bor-der adjustment tax likely to provide significant hurdles along the way,” he added.

Trump campaigned on unrav-elling the health care reforms put in place by his predecessor Barack Obama, but some Republican law-makers in the Senate have refused to endorse changes that would lead to reduced coverage, with a last gasp chance at a new law fail-ing this week.

In European trading, shares in Alstom were among the strongest performers with a gain of 4.3 percent to close at €35.07 on news of the merger of its rail activities with German industrial giant Siemens. Siemens’ stock meanwhile won 1.2 percent to 117.95 euros.

Shares in Ryanair gained

more than 3.4 percent in Dublin to €16.99 after the low-cost air-line announced more flight cancellations and the abandon-ment of its bid for Italy’s Alitalia as it sought to overcome its pilot shortage.

Earlier in Asia, major stock markets were mixed as US-North Korea tensions continue to jan-gle nerves and keep investors from buying with any conviction. The yen — which had surged in safe-haven buying on Tuesday after Pyongyang accused Trump

of declaring war and said it may shoot down US bombers — gave up some of those gains before climbing anew.

In Tokyo, the Nikkei 225 was down 0.3 percent and closed at at 20,267.05 points; in Hong Kong, the Hang Seng ended up 0.5 percent at 27,642.43 points, while in Shanghai, the Compos-ite closed up 0.1 percent at 3,345.27points.

The euro also rebounded in late European trade, after hav-ing touched a low of nearly six

weeks against the dollar follow-ing a rally in the greenback on comments on Tuesday by Fed-eral Reserve boss Janet Yellen that the central bank would press on with its plan to raise borrowing costs, saying the US economy was strong enough to withstand it. Analysts inter-preted her comments as suggesting she did not want to delay raising rates and end up having to introduce sharper increases down the line — which could risk a recession.

European and US equities riseWashington

AFP

Worker pay in rich countries has stag-nated as employers

shift to part-time and tempo-rary labor while unions declined, helping generate per-sistently weak inflation, according to new IMF research released yesterday.

The findings go to the center of the debate in key cen-tral banks over how fast to remove the stimulus put in place amid the Great Reces-sion, since low unemployment rates have not led to higher inflation as in a normal eco-nomic recovery.

“Recent labor market developments in advanced economies point to a possi-ble disconnect between unemployment and wages,” the International Monetary Fund economists found in their report. Crunching data from across 29 advanced economies between 2000 and 2016, the IMF study found median unemployment rates fell steadily since 2013 even as labor force participation rates increased.

But that decline in job-lessness may represent only a kind of “surface healing,” the authors said. The jobs recovery since the 2008 crash appeared to coincide with fundamental changes in com-pany-worker relationships, with employers across the developed world increasingly relying on part-time positions and short-term contracts—while employees’ ability to bargain for higher pay eroded.

As a result of the changes, central banks should re-think “the true degree of slack” in labor markets as they begin to withdraw stimulus and raise interest rates, the IMF said.

US economists have been dumbfounded by the endur-ing weakness of inflation in the current recovery, which has stayed below the Federal Reserve’s target for five years despite unemployment rates falling to near historic lows.

The Fed this year has raised interest rates twice, downplaying the low inflation as the result of transitory fac-tors. But US Federal Reserve Chair Janet Yellen in a speech Tuesday conceded policymak-ers might have “misjudged” the strength of labor markets and the forces driving inflation.

The IMF report showed that starting in 2009, wage growth has slowed steadily and temporary labour contracts have become more common. Because wages are the main cost of production, wage gains are the main driver of inflation. “Core inflation in advanced economies is thus unlikely to recover in a sustained man-ner before labor market tightening spurs higher wage inflation,” the report said.

Singapore

AFP

An electric car-sharing serv-ice will be launched in Singapore in December, in

what the company behind the scheme said yesterday was a first for Southeast Asia.

BlueSG, a subsidiary of France’s Bollore Group, said that 80 cars and 30 stations where vehicles can be picked up and dropped off would be opera-tional by the end of the year. The group plans to roll out 1,000 of its custom-built Bluecars by 2020, as well as numerous sta-tions and charging points.

The affluent city-state—whose generally uncongested roads are a contrast to many traffic-choked cities in the region — has become a testbed for transport innovations. Last year it hosted a limited public trial of the world’s first driver-less taxis.

Marie Bollore, from Blue Solutions, said Singapore was a launchpad for the company to enter the Asian market. “We will start in Singapore, and afterwards we will see if other regions in Asia are interested,”

Bollore said at the launch of BlueSG’s new Asia-Pacific headquarters in Singapore. The service is being rolled out with the help of the authorities.

Land Transport Authority chief technology officer Lam Wee Shann said the initiative would “lay the foundation” for a network of electric vehicle charging stations, and support the growth of electric car use in Singapore.

Blue Solutions is the world’s biggest operator of electric car-sharing services, with 5,000 other electric vehicles in eight cities—including Paris and Lyon in France, Turin in Italy and Indi-anapolis in the United States.

In Singapore, users will be able to book an electric car online or via a mobile app, and charged for the time they rent the vehicle rather than the dis-tance travelled. There will also be an option for a daily or annual membership.

Slightly bigger than a Smart car, the two-door, four-seater Bluecars are designed with Ital-ian coachbuilder Pininfarina.

Nissan in March started a similar service in the city of Yokohama south of Tokyo.

Brussels

AFP

The EU slapped a huge fine of €880m ($1bn) on Euro-pean truckmaker Scania

yesterday, accusing the firm of colluding to fix prices and dodge the costs of stricter pollution rules.

Scania, owned by German auto giant Volkswagen, was the only holdout in the European Union’s massive cartel case in which five other truck builders admitted to the wrongdoing and jointly received a record fine of three billion euros.

“Today’s decision marks the end of our investigation into a

very long lasting cartel -- 14 years,” European Commission competition chief Margrethe Vestager said Daimler, DAF, Iveco, MAN and Volvo/Renault were hit with the fines in July 2016. Along with Scania, they account for nine out of every 10 trucks sold in Europe.

With the latest fine, the total penalty inflicted by Brussels hit €3.8bn ($4bn), said the Euro-pean Commission, the EU’s antitrust regulator. “Instead of colluding on pricing, the truck manufacturers should have been competing against each other — also on environmental improvements,” said Vestager.

Senior managers from Daimler, DAF, Iveco, MAN and Volvo/Renault hatched the plan at a secret meeting in a “cosy” Brussels hotel, the commission said.

Germany’s MAN tipped off the European Commission about the collusion at the highest level, triggering an investigation that began with raids on large truck manufacturers in 2011.

The charge sheet includes accusations of price-fixing, but also alleges the existence of a secret agreement by the com-panies to delay and then pass on the costs of anti-pollution technology to consumers.

London

AFP

Uber appealed before a British employment tri-bunal yesterday against

a ruling that would give its driv-ers official worker status, as the company also battles against a threatened ban in London.

The landmark case brought by two Uber drivers could have far-reaching implications for people employed in Britain’s “gig economy”, many of whom complain about precarious working conditions and low pay. The US ride-hailing app may have to pay its drivers the national minimum wage of £7.50 (8.5 euros, $10) an hour if it loses the case.

Uber drivers are currently paid for each ride and are con-sidered self-employed which means they are not entitled to benefits including paid holidays. A ruling in the case is not expected for weeks.

The Independent Workers of Great Britain (IWGB) trade

union is representing the driv-ers, and staged a demonstration in central London. Yaseen Aslam, one of the claimants, said drivers “face many struggles” and “carry all the risks”.

James Farrar, the other claimant, called Uber’s business plan “brutally exploitative”. He called on London Mayor Sadiq Khan to make workers’ rights a condition for renewing Uber’s licence. Uber responded by say-ing that almost all taxi and private hire drivers “have been self-employed for decades before our app existed.

“With Uber drivers have more control and are totally free to choose if, when and where they drive with no shifts or min-imum hours,” it added in a statement. “The overwhelming majority of drivers say they want to keep the freedom of being their own boss.”

Transport authorities last week said they would not renew Uber’s licence to operate in Lon-don, owing to concerns about public safety for passengers and

the process of registration for drivers. Uber, which has about 40,000 drivers and some 3.5 million customers in the British capital, has 21 days to lodge its appeal and can continue to operate until that process has concluded.

The company is having reg-ulatory issues in several countries, and threatened on Tuesday to stop services in Canada’s Quebec province in mid-October, saying proposed new ride-sharing rules aimed at levelling the field with taxis are too onerous.

Last week, the Quebec gov-ernment imposed conditions that would require Uber drivers to undergo 35 hours of training — the same as taxi drivers — and a criminal background check by police while vehicles would also be required to undergo annual safety inspections.

Adding to its headaches in London, Uber is also facing a sex discrimination case from a 44-year-old female driver also going to an employment tribunal.

Chimin Cao, Co-Founder and Chairman for RYB Education Institution and Yanlai Shi, Co-Founder and CEO for RYB Education Institution, ring the opening bell together to celebrate their company’s IPO at the New York Stock Exchange (NYSE) in New York, yesterday.

Electric car-sharing serviceto roll into Singapore

EU hits Scania with €880m fine

‘Surface healing’ masks stagnant wages and inflation: IMF

People take part in a protest against Uber and in favour of labour rights in London yesterday.

Uber appeals UK courtcase on drivers’ rights

Index movements

In London, the FTSE 100 closed up 0.4 percent at 7,313.51 points; in Frankfurt, the DAX 30 ended up 0.4 percent at 12,657.41 points; in Paris the CAC 40 closed up 0.3 percent at 5,281.96 points while the EURO STOXX 50 was up 0.6 percent at 3,557.52 points.

26 TUESDAY 28 SEPTEMBER 2017BUSINESS

INTERNATIONAL MARKETS - A LIST OF SHARES FROM THE WORLD

A C C-A/D 1592.45 -39.8 30392

Aban Offs-A/D 181.95 -4.75 375040

Ador Welding-B/D 428.2 -12.45 12875

Aegis Logis-A/D 220.8 -6.05 65688

Alembic-B/D 38.05 -0.8 113996

Alkyl Amines-B/D 423.8 -10.75 5746

Alok Indus-B/D 2.71 -0.02 285472

Apollo Tyre-A/D 242 -6 155667

Asahi I Glass-/D 368.9 -7.45 24554

Ashok Leyland-/D 112.15 -1.6 799656

Bajaj Hold-A/D 2734.05 31.2 9569

Ballarpur In-B/D 12.85 -0.24 187199

Banaras Bead-B/D 58.45 -1.05 2078

Bata India-A/D 682.45 -7.6 28814

Beml Ltd-A/D 1643 -43 80264

Bhansali Eng-B/D 81.5 -2.65 369980

Bharat Bijle-B/D 1104 -26.75 5076

Bharat Ele-A/D 177.35 -4.9 1284837

Bharatgears-B/D 142.85 -6.45 3967

Bhartiya Int-B/D 576 -8.75 18202

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Bombay Dyeing-/D 177.3 -9.3 984473

Camph.& All-Xc/D 740 10 1058

Canfin Homes-A/D 2597.05 -58.45 11642

Caprihans-Xc/D 95.85 -4.85 3187

Castrol India-/D 359.85 -4.5 97086

Century Enka-B/D 308.5 -7.3 6066

Century Text-A/D 1220.55 -36.8 52069

Chambal Fert-B/D 135.4 -4.2 45610

Chola Invest-A/D 1058.85 -17.15 11193

Chowgule St-Xt/D 13.35 -0.7 7273

Cimmco-B/D 85.3 -4.3 9232

Cipla-A/D 568 -10.15 44125

City Union Bk-/D 149.2 -5.45 48294

Colgate-A/D 1061.65 -19 12227

Container Cor-/D 1258 -30.25 9630

Dai-Xc/D 380 -8.95 7408

Dcm Shram Ind-/D 307 -8.35 4138

Dhampur Sugar-/D 254 -4.6 59670

Dr. Reddy-A/D 2307.5 -59.25 76898

E I H-B/D 138.95 2.9 2451

E.I.D Parry-A/D 338.2 -4.05 35687

Eicher Motor-A/D 30481 -342.85 1895

Electrosteel-B/D 24.75 -0.6 53689

Emco-T/D 19.5 -0.5 28027

Escorts-A/D 635.9 -7.9 129904

Eveready Indu-/D 295 -5.15 9796

F D C-B/D 185 1.25 20260

Federal Bank-A/D 110.5 -1.55 325727

Ferro Alloys-X/D 12.07 -0.31 369813

Finolex-A/D 606 -9.25 2380

Forbes-B/D 1820 -65.55 6624

Gail-A/D 398.4 0.8 132405

Gammon India-Z/D 7.06 -0.37 102071

Garden P -B/D 32.95 -0.5 22337

Godfrey Phil-A/D 991.7 -50.35 29880

Goodricke-Xc/D 241.15 -4.6 9250

Goodyear I -B/D 806.25 -11.15 3469

Hcl Infosys-A/D 46.7 -0.6 546466

Him.Fut.Comm-B/D 25.3 -1.3 4963487

Himat Seide-B/D 319.95 -2.5 8490

Hind Motors-B/D 7.89 0.01 211046

Hind Org Chem-/D 19 -0.25 33359

Hind Unilever-/D 1207 -10.55 335350

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Hindalco-A/D 233.4 -1.05 892292

Hous Dev Fin-A/D 1718.95 -20.9 35084

I F C I-A/D 22.9 -0.5 354507

Idbi-A/D 52.25 -1.25 364112

Ifb Ind.Ltd.-B/D 708.75 -14.25 1058

India Cement-A/D 165.6 -5.7 336011

India Glycol-B/D 231.2 -9.8 91050

Indian Card-B/D 174 -2.95 2389

Indian Hotel-A/D 118.6 -0.4 75975

Indo-A/D 96.1 -6.1 284381

Indusind-A/D 1663.5 -25.4 31816

J.B.Chemical-B/D 268 -4.15 6726

Jagatjit Ind-X/D 56 0 1550

Jagson Phar-B/D 31.2 -0.25 11318

Jamnaauto-B/D 250.8 -0.35 18116

Jbf Indu-B/D 152.8 -2.55 3519

Jct Ltd-Xc/D 3.2 -0.08 191486

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Jktyre&Ind-A/D 143 -5.55 239550

Kabra Extr-B/D 132.3 -2.2 1981

Kajaria Cer-A/D 695.7 -22.55 1081701

Kakatiya Cem-B/D 353.65 -2.1 27317

Kalpat Power-B/D 352.3 -14.6 10608

Kalyani Stel-B/D 393 -10.1 31100

Kanoria Chem-B/D 81.9 -3.8 34718

Kg Denim-Xc/D 58.8 0.4 21694

Kilburnengg-Xd/D 77.45 -2.4 35123

Kinetic Eng-Xc/D 65.65 -1.85 10941

Kopran-B/D 66.05 -2.3 42393

Lakshmi Elec-X/D 629.95 -12.2 3519

Lakshmi Mach-A/D 5653.4 -157.25 3921

Lgb Broth-B/D 694.65 -5.25 2752

Lloyd Metal-Xd/D 17.4 -1.6 56800

Lupin-A/D 998.35 -6.8 137854

Lyka Labs-B/D 46.8 -2 14762

Mafatlal Ind-X/D 264.1 -3 2849

Mah.Seamless-B/D 388.7 -11.65 7088

Maha Scooter-B/D 2673.1 -138.4 1943

Mangalam Cem-B/D 327 -17.85 4545

Maral Overs-B/D 36.05 -1.9 13951

Mastek-B/D 273.6 -4.45 74758

Max Financial-/D 587.65 -19.1 46674

Mrpl-A/D 121.25 0.45 267811

Nagreeka Ex-B/D 31.85 -0.75 29514

Nagreeka Ex-B/D 31.85 -0.75 29514

Nahar Spg.-B/D 99.55 -3.45 27070

Nation Alum -A/D 74.65 -2.1 394544

Navneet Edu-B/D 166.1 -0.95 5161

Neuland Lab-B/D 1011.75 -3.6 1938

Nrb Bearings-B/D 117.5 -1.6 7489

O N G C-A/D 170.2 -1.35 565837

Oil Country-B/D 43.6 -1.95 3254

Onward Tech-B/D 113.2 -4.05 53328

Orchid Pharm-B/D 19.65 -0.75 239083

Orient Hotel-B/D 35.65 -1.2 24182

Orient.Carb.-B/D 1212 -34.95 2103

Orient.Carb.-B/D 1212 -34.95 2103

Patspin India-/D 23.2 -0.35 14698

Punjab Chem.-B/D 351.6 -10.95 4938

Radico Khait-B/D 153.55 -4.85 125387

Rallis India-A/D 207.35 -6.3 29224

Rallis India-A/D 207.35 -6.3 29224

Reliance Indus/D 481.25 -21 165737

Ruchi Soya-B/D 22.4 -0.4 127608

Salora Inter-T/D 43.1 0.25 1427

Saur.Cem-Xc/D 70.2 -4.75 145918

Sterling Tool-/D 250.05 -0.95 1794

Tanfac Indu-Xd/D 73.45 -3.65 27155

Tanfac Indu-Xd/D 73.45 -3.65 27155

Thirumalai-B/D 1472.6 -42.25 26938

Til Ltd.-B/D 441.95 -8.4 15936

Tinplate-B/D 226.95 -8.7 794176

Ucal Fuel-B/D 182.9 -2.8 11768

Ucal Fuel-B/D 182.9 -2.8 11768

Ultramarine-Xc/D 224.85 1.25 18454

Unitech P -A/D 6.62 -0.29 2457810

Univcable-B/D 134.25 -6.45 15146

3I Group/D 908.5 -7 503306

Assoc.Br.Foods/D 3169 2 203174

Barclays/D 189.6 1.3 9738858

Bp/D 471.463 -0.1 10762789

Brit Am Tobacc/D 4670.5 20.5 1554841

Bt Group/D 284.4 -1.1 3781786

Centrica/D 188.13 -1.5 4621686

Gkn/D 337.9 -4 3354098

Hsbc Holdings/D 728.8 9.5 8874628

Kingfisher/D 293.9 -2 1429400

Land Secs Grou/D 973.5 -3 601505

Legal & Genera/D 256.772 1.2 4368683

Lloyds Bnk Grp/D 66.253 1.27 60427080

Marks & Sp./D 350.4989 2.9 2166105

Next/D 5204.7626 70 193922

Pearson/D 605 21.5 3093033

Prudential/D 1750 33.5 2584067

Rank Group/D 220.4 3.4 2143

Rentokil Initi/D 293 -2.3 1001569

Rolls Royce Pl/D 868 -5.5 1157989

Rsa Insrance G/D 624.5 -0.5 1277300

Sainsbury(J)/D 239 1.1 2137496

Schroders/D 3279.9704 14 57625

Severn Trent/D 2171 -13 240881

Smith&Nephew/D 1308 -6 728551

Smiths Group/D 1540 3 393073

Standrd Chart /D 739.5 21.1 2382925

Tate & Lyle/D 644.5 19 1570888

Tesco/D 187.2997 2.6 6528040

Unilever/D 4255.5 -18.5 992568

United Util Gr/D 849.5 -4.5 675252

Vodafone Group/D 209 0.5 20180432

Whitbread/D 3701.72 5 115520

COMPANY CLOSE NET VOLUME NAME CHG TRADED

COMPANY CLOSE NET VOLUME NAME CHG TRADED

COMPANY CLOSE NET VOLUME NAME CHG TRADED

COMPANY CLOSE NET VOLUME NAME CHG TRADED

COMPANY CLOSE NET VOLUME NAME CHG TRADED

LONDON

QATAR STOCK EXCHANGE

QE Index 8,421.20 1.73 %

QE Total Return Index 14,121.85 1.73 %

QE Al Rayan Islamic Index 3,420.51 1.24 %

QE All Share Index 2,403.75 1.47 %

QE All Share Banks &

Financial Services 2,642.36 1.14 %

QE All Share Industrials 2,588.54 2.03 %

QE All Share Transportation 1,753.89 1.58 %

QE All Share Real Estate 1,823.05 0.87 %

QE All Share Insurance 3,421.25 4.35 %

QE All Share Telecoms 1,040.09 0.90 %

QE All Share Consumer

Goods & Services 5,016.43 0.79 %

QE INDICES SUMMARY QE MARKET SUMMARY COMPARISON WORLD STOCK INDICES

GOLD AND SILVER

27-09-2017Index 8,421.20

Change 148.06

% 1.73

YTD% 19.31

Volume 13,602,220

Value (QAR) 302,757,335.89

Trades 3,545

Up 06 | Down 37 | Unchanged 0026-09-2017Index 8,569.26

Change 119.79

% 1.42

YTD% 17.89

Volume 12,425,596

Value (QAR) 289,501,338.90

Trades 4,024

EXCHANGE RATE

GOLD QR151.3318 per grammeSILVER QR1.9791 per gramme

Index Day’s Close Pt Chg % Chg Year High Year Low

All Ordinaries 5725.516 -4.093 -0.07 5983.2 5635.1

Cac 40 Index/D 5280.79 12.03 0.23 5442.1 4733.82

Dj Indu Average 22284.32 -11.77 -0.05 22419.51 17883.56

Hang Seng Inde/D 27642.43 129.42 0.47 28248.12 21883.82

Iseq Overall/D 6772.73 73.95 1.1 7157.43 6369.05

Kse 100 Inx/D 42290.15 -376.08 -0.88 53127.24 40686.09

S&P 500 Index/D 2496.84 0.18 0.00721 2508.85 2245.13

Currency Buying SellingUS$ QR 3.6305 QR 3.6500

UK QR 4.8566 QR 4.9248

Euro QR 4.3002 QR 4.3607

CA$ QR 2.9129 QR 2.9706

Swiss Fr QR 3.7132 QR 3.7649

Yen QR 0.03195 QR 0.03257

Aus$ QR 2.8353 QR 2.8921

Ind Re QR 0.0549 QR 0.0560

Pak Re QR 0.0342 QR 0.0349

Peso QR 0.0707 QR 0.0721

SL Re QR 0.0236 QR 0.0240

Taka QR 0.0439 QR 0.0449

Nep Re QR 0.0343 QR 0.0350

SA Rand QR 0.2663 QR 0.2716

American International Group Inc., the insurer and retirement planner that traces its history back to 1919, is find-ing being tech-savvy pays off.

Consumers are pumping cash into a unit that oversees $244bn in client assets after it invested in digital platforms to make the proc-ess easier, according to the head of the division, Kevin Hogan.

“We believe our assets are up billions of dol-lars as a result,” Hogan said in an interview last week at AIG’s New York headquarters, refer-ring to digital services created for clients such as teachers and hospitals. The unit, called Valic, has set up a record number of investment plans this year, he said.

The market for digital advice is likely to grow to $1 trillion by 2020, according to a recent study by Aite Group. Under Chief Executive Officer Brian Duperreault, AIG has focused on tech to streamline operations and forged a relationship with hedge fund firm Two Sigma Investments to work on deals with small- to middle-sized businesses.

AIG shares slipped 1 percent to $60.38 at 1.12 pm in New York, extending its decline for the year to 7.6 percent.

Hogan leads the life and retirement busi-ness, a bright spot at the New York-based company that’s struggled with years of surprise costs at its commercial unit.

The unit’s pretax operating income jumped 33 percent in the second quarter. AIG on Mon-day restructured its business operations, including moving the personal insurance unit into a segment overseen by new executive Peter Zaffino. Duperreault said the change would allow for “the greatest competitive advantage and ability to serve our clients.”

Valic has expanded to more than $99.2bn in client assets, up from about $95.2 at the end of last year, while the individual retirement unit had almost $144.8bn as of June 30. Valic has more than 1,000 financial advisers and joined with startup firm RetireUp to use new software in March.

Hogan’s team spent 18 months creating dig-ital services for Valic. He is seeking new ways to use artificial intelligence, data and analytics, and has been working with algorithms behind robo-advising platforms to cater to specific cli-ents in the individual retirement business. Rivals such as century-old TIAA, which is known for catering to teachers, have started online advisers.

Robo advisers began popping up shortly after the financial crisis as startups offered lower fees for digital platforms with trading and portfolio services tied to algorithms.

At first Wall Street ignored them, but then large asset managers like Charles Schwab Corp. and Vanguard Group Inc. joined the industry and launched robo advisers of their own.

As the millennial generation ages, many of these platforms introduced hybrid products requiring interaction between humans and com-puters. Betterment is the largest independent robo with just over $10bn in assets under man-agement, and it recently unveiled a hybrid model. Charles Schwab and Vanguard also have hybrids.

“Robos reaffirm how big the retirement opportunity is in the U.S.,” Hogan said. “An important part of our strategy is to make sure that we’re at the leading edge of how to work with those organizations.”

Satish Kanady The Peninsula

As markets tend to offer investors a mixed bag of outcomes, Qatar’s lead-ing investment group QINVEST is bullish on Turkey, Europe and the US. It’s also betting on Emerging

Market equities.QINVEST is cautious about the impact of the

current macroeconomic environment. The investment group sees potential headwinds aris-ing from the impact of a delayed FOMC monetary tightening policy and believes the ECB’s removal of Quantitative Easing could expose the Euro-zone periphery to a sell-off, reducing liquidity in EM credit markets. It also sees an increase in profit-taking in equities and credit, as the oppor-tunity cost of money-market investments declines post rate hikes.

“There are additional concerns from increas-ing geopolitical risks both within the region here as well as arising from an increasingly confron-tational tone between the US and its allies and North Korea. However, despite the market sen-timent, we continue to identify pockets of investment opportunity within key sectors and geographies. Our approach can be summarised as being cautiously optimistic”, Dr Ataf Ahmed, Head of Asset Management, QINVEST told The Peninsula in an extensive interview.

Explaining on QINVEST’s exposure to EMs Dr Ataf said: “Our primary exposure to Emerg-ing Markets comes through in-house managed portfolios which focus on this region. These port-folios have exposure to both equities and sukuk. We also have exposure through QInvestPort-foy, which manages Turkish Equities and Sukuk for a number of institutional investors. There is also exposure to broader EM within some of our global funds and mandates, however this is min-imal and represents approximately 10 percent of total assets across all funds.”

On the potential impact of liquidity crunch on GCC’s deal making, he said ‘liquidity crunch is something that comes and goes’.

While the current market environment across the globe is challenging, financial insti-tutions in the GCC region are in a very strong financial position to international players. Liquidity in the GCC has been undoubtedly tight-ened as a result of the pressures on the oil price, there is also opportunity as we see the rise of growth industries which require innovative finance solutions and institutions look outside of traditional assets and funds for investment.

“We are seeing GCC nations reinforcing their plans to diversify the economies – moving into sectors like finance, trade and tourism. The big-gest impact in the region has been the tightening of government spending and introduction of initiatives to compensate for lower oil prices such as the removal of subsidies and introduc-tion of VAT.”

In certain sectors, QINVEST is also seeing consolidation to create bigger and stronger organisations, while issuances in both bonds and sukuk have been more prevalent. Qatar for example continues to have a significant surplus from both a fiscal and current account stand-point, and as we see some of the infrastructure projects near completion the spending demands on these projects will also fall, only serving to boost the government surplus.

Given the forecasted increase in the govern-ment’s surplus, QINVEST believes it will see the government focus on the next stage in Qatar’s economic growth. This view has only been solid-ified post-blockade, as the government is likely to follow through with support for the develop-ment of local businesses and a focus on

self-reliance. Commenting on the secular trend and the

potential catalysts of change that QINVEST is seeing in the long-term horizon Dr Ataf noted: “The end of Quantitative Easing in Europe and the US will be a catalyst for change, as we see central bank balance sheets shrink, we will truly find out if recent growth can be sustained by true economic activity rather than by abundant liquidity.”

“We will also see if de-regulation and tax reform in the US can sustain the longest bull run in recent times, however it seems that there are challenges that were unforeseen within the cur-rent US administration, and the realms of what was thought to be possible has changed over the past few months.”

On QINVEST’s positioning in the current con-text of generally high-valued asset prices and the bank’s secular outlook Dr Ataf said : “Within

equities we continue to have exposure to devel-oped markets, although we have used Sharia’a compliant hedging contracts to de-risk our port-folios in the event of a sell off. We think that the US may see a one-off catalyst if the promised corporate tax cut materializes. Within Europe we have some exposure, however we think there are long term structural challenges which have not been resolved, so in terms of exposure we have some opportunistic exposure.”

QINVEST is focusing on niche markets and opportunities which are non-correlated to tra-ditional asset classes. Earlier this year, it launched the oversubscribed QInvest SQN Income Fund, a Sharia’a compliant closed-ended fund provid-ing a unique opportunity for investors to access income generating assets in developed markets. The fund was launched in collaboration with SQN Capital Management, a leader within the global equipment leasing industry.

“We launched our first fund which invests into sharia compliant global leases (Ijarah) and has deployed a significant part of its assets which have started to distribute a yield equivalent to 7 percent per annum on a monthly basis. The fund is on target to generate an 8-9 percent IRR for its investors by the end of its investment term. We think that lack of correlation and the lack of capital within this asset class produces attrac-tive risk adjusted returns. Making such products funds accessible and understood, is a priority for us, and we will continue to create innovative Sharia’a compliant products and services which meet our clients’ needs and risk appetite.”

Sharing his thoughts on ‘whether the ongoing geopolitical tensions are going to shake up the market?’, Dr Ataf said the market has seen height-ened tensions and geopolitical shocks on the global stage over the last 12 months, the effects of which

continue to dominate the macroeconomic envi-ronment. However, investors have remained sanguine, and equity markets, particularly in the US, have been resilient to diplomatic strains dem-onstrating robust performance in recent years.

Asked ‘where does he want Qatari investors to put their money ?’ Dr Ataf commented: “It obvi-ously depends on their risk appetite and liquidity needs. At QInvest, we have increasingly seen grow-ing demand from investors for innovative Islamic products. To meet this, we have expanded our pioneering open architecture, Sharia’a compliant fund platform, QMAP, adding new, highly inno-vative products and widening the investment opportunities which we can present to our clients. The QMAP platform allows us to offer a range of products across different asset classes and mar-kets and there are varying levels of return and yields.

“So far in 2017, our best performing funds are our global equity funds which have had an impres-sive return but we found that low risk, yielding products have been attractive to many investors. We had this yield sentiment in mind while devel-oping our QInvest SQN Income Fund programme this has a 7 percent annual yield with a monthly pay out and as the first fund sold out within a few weeks of launch, we are already working on the next fund. However, as this fund programme has a five-year fixed term, other investors prefer higher liquidity and so we continue to raise assets for our sukuk strategy.”

In 2016, QInvest’s funds performed well despite a challenging and volatile market envi-ronment. “Our Asset Management business has had a similarly strong first half to 2017,delivering impressive performance across both local and glo-bal markets withresults that place QInvestas a leader amongst its peer group. Within Turkey, a key growth market for QInvest, the team contin-ues to deliver top quartile performance and has won a number of significant institutional mandates.”

“We have a strong track record in managing Sharia’a compliant funds via our QInvest Man-aged Account Platform (“QMAP”), the world’s first open architecture Sharia’a compliant managed account platform. It brings best practice from the conventional fund industry to investors through a range of global partnerships with managers around the world. These achievements have been recognized through several awards, including “Qatar - Asset Management Advisory Firm of the Year” and “Best Open-ended Sharia’a Securities Fund” for the “QInvest-GAM Sharia’a Fund”.

Perry Williams and Ben Sharples Bloomberg

Australia’s energy crisis keeps getting stranger.

The world’s second-biggest seller of liquefied natural gas is already

threatening producers with export curbs as it struggles to find enough supply for its own use. Now the country that ships more thermal coal

overseas than almost any other is scrambling to replenish stockpiles at some power plants after they dwindled following a surge in demand and constrained supply.

It’s the latest twist in the saga of how a global energy powerhouse is struggling to sustain reliable and affordable electricity for its own pop-ulation. Power price spikes and gas shortages have already frustrated businesses and homes across the nation and put pressure on the gov-ernment and generators to prioritize domestic customers over sometimes more lucrative export markets.

Coal inventories at Australia’s three largest electricity providers -- AGL Energy Ltd., Origin Energy Ltd. and CLP Holdings Ltd.’s EnergyAus-tralia -- have shrunk over winter as they use more of the

fuel to compensate for natural gas shortages. The closure of the Hazel-wood coal-fired power plant in Victoria state also put further pres-sure on the nation’s remaining generators to produce more power, eating through their stockpiles at a faster pace. Against this backdrop, the power producers have struggled to get sufficient supplies . Miners in Australia can command higher prices for coal known as high ash in China, South Korea and India.

“The high ash market has devel-oped in North Asia over a number of years and that has caused complica-tions for some power stations,” said Robin Griffin, a research director at Wood Mackenzie Ltd. in Brisbane. “It means that miners can actually sell a much lower quality product into the export market.”

Griffin estimates miners can probably sell coal to international customers at double the price sold to domestic utilities. Australia exported 116.1 million metric tons of thermal coal during the first seven months this year, compared with 114.4 million in the same period last year, according to government data.

“The local power producers have got a set delivery amount and they may be asking for more coal,” he said.

Strong Chinese imports and the price gap Australian producers can achieve by exporting coal rather than selling to local plants was a factor contributing to low stockpiles, according to Gavin Wendt, a senior resource analyst at MineLife Pty.

There’s growing concern power supply disruptions may trigger

blackouts during the peak summer demand period. Three of the biggest LNG producers yesterday guaran-teed to supply more of the fuel to alleviate domestic shortages and lower spiraling prices after Prime Minister Malcolm Turnbull threat-ened to impose export curbs from their projects.

Australia has been scrambling to find additional sources of elec-tricity since the national market operator said in March that gas-fired power shortfalls may be possible next year. The warning spurred Turnbull to propose rules to restrict gas exports in the eastern state of Queensland amid concern outbound shipments had contributed to sup-plies being crimped and a tripling of Australia’s wholesale gas price in the past two years.

AIG assets surge by `billions’ with digital services Sonali Basak and Julie VerhageBloomberg

Liquidity crisis will come and go, says QINVEST

It’s the latest twist in the saga of how a global energy powerhouse is struggling to sustain reliable and affordable electricity for its own population.

US may see a one-off catalyst if the promised corporate tax cut materializes. Within Europe we have some exposure, however we think there are long term structural challenges which have not been resolved, so in terms of exposure we have some opportunistic exposure.

QINVEST is focusing on niche markets and opportunities which are non-correlated to traditional asset classes. Earlier this year, it launched the oversubscribed QInvest SQN Income Fund.

“So far in 2017, our best performing funds are our global equity funds which have had an impressive return but we found that low risk, yielding products have been attractive to many investors.”

Now one of the world’s energy powerhouses has a coal squeeze

BUSINESS VIEWS 27THURSDAY 28 SEPTEMBER 2017

28 THURSDAY 28 SEPTEMBER 2017BUSINESS

BACK TO BUSINESS

Worst bond-market rut in 52 years shows few signs of break out

sight

Bloomberg

The world’s most impor-tant bond market is stuck in its worst rut in

more than half a century.Ten-year US Treasury

yields have been locked between 2.01 percent and 2.63 percent in 2017 -- a measly 62 basis points. That’s the tightest trading range since 1965, when William McChesney Martin ran the Federal Reserve, Lyndon B. Johnson was president and Frank Herbert’s sci-fi classic Dune hit shelves. And it’s less than half the annual average span of 175 basis points, according to data compiled by Bloomberg.

Analysts who less than six months ago predicted that the 10-year yield would end the year at about 3 percent have since brought their median forecast down more than 50 basis points. Inves-tors say yields will continue to be constrained by medio-cre growth, tepid inflation and a Fed that’s revised down its estimate of the ter-minal fed funds rate amid a well-telegraphed tightening cycle.

“There’s a disappoint-ment on growth and there’s a disappointment on infla-tion, which sort of pushes yields lower,” said Lee Fer-ridge, head of macro strategy for North America for State Street Corp. Conversely, bal-ance-sheet tapering from the Fed and expectations for faster economic expansion are keeping a floor under-neath yields, he said.

The Fed earlier unveiled plans to start shrinking its $4.5trillion balance sheet,

which strategists say may put upward pressure on yields. Ditto for the European Cen-tral Bank’s anticipated tapering of its bond-pur-chase programme, which analysts expect an announcement on in the coming months. Still, that may not be enough for the 10-year yield to break above highs made in mid-March.

“There’s not really that much room for yields in gen-eral in the US to meaningfully rise, and at this point it’s going to depend on what happens with removal of accommodation globally and in the US ,” said Subadra Rajappa, head of US rates strategy at Societe Generale. She expects 10-year Treas-ury yields to end the year near 2.5 percent.

Beyond issues related to the bond holdings of the ECB and Fed, US policymakers are still signalling a rate hike at the central bank’s Decem-ber meeting, which could prompt year-end volatility. On the flip side, any escala-tion in geopolitical tensions or other exogenous shocks risk sending investors flee-ing to haven assets and forcing yields lower.

Bank of America Corp. is looking to the possibility of action on the political front to help drive yields higher. Mark Cabana, the firm’s head of US rates strategy, has one of the highest year-end fore-casts for 10-year yields at 2.85 percent. That compares to a median estimate of 2.48 percent, according to the estimate of 62 analysts and strategists surveyed by Bloomberg—well within the year’s range.

Capital Comment

The malware being used (for ATM cyber attack) has evolved significantly and the scope and scale of the attacks have grown proportionately.

Steven WilsonHead of Europol’s EC3 cyber crime centre

Gross Domestic Product

A luxury villa of 450 square metres located on the southeast side of Mykonos, Greece.

Luxury real estate buying to growChicago

Reuters

Middle East has the highest number of individuals inter-ested in purchasing luxury real estate,

according to a recent report. Luxury Portfolio Interna-

tional, the luxury face of Leading Real Estate Companies of the World, released their annual Global Luxury Real Estate Report at their Global Symposium in Vienna, Austria. The report pro-vides an in-depth analysis of the habits of global luxury consum-ers and how their purchases tie directly to how they see them-selves in the world.

Global Luxury Real Estate Report indicates an ongoing sell-er’s market with 25 percent of high-net-worth individuals interested in purchasing luxury real estate but only 17 percent planning to sell.

The Middle East and Asia-Pacific regions are expected to see the highest levels of interest in purchasing and certain

high-demand markets worldwide will face continued pressure.

“The population of wealthy consumers continues to grow and their interest in purchasing real estate also increased,” noted Luxury Portfolio International President, Paul Boomsma.

“Today’s high-net-worth buyer seeks privacy and the lat-est technology, creating a strong opportunity for new home developers.”

The report breaks out the key differences among consum-ers including attitudes toward luxury living, in four different regions: North America, Europe, MENA (Middle East/North Africa) and Asia-Pacific.

The feeling that status equates to luxury is strongest in the Middle East and Asia-Pacific regions.

In the Middle East, 83 per-cent of consumers stated that luxury symbolises status, com-pared to 36 percent expressing the same belief in Europe. A reflection, partially caused by the subdued effect of Brexit in the UK. A unifying factor among

luxury consumers in all four regions is personal achievement, which was noted as one of the main values represented by status.

In the Middle East, status supports internal validation, while in the Asia-Pacific region, status symbolises good fortune.

The Global Luxury Real Estate Report has also found that the Asia-Pacific region has seen 21 percent growth in $10m plus net worth population since 2015. It shows that North America contains the largest number of $10m plus household and has seen growth of 146 percent since 2010.

The top reason given by lux-ury consumers for purchasing a new home was to improve their quality of life, the report showed, while 82 percent of luxury con-sumers stated that their privacy has never been more important.

Meanwhile, 61 percent of potential US high-net-worth buyers stated that security is what they are looking for in a

home purchase.The Global Luxury Real

Estate Report reveals deep insights into the motivations and desires of the world’s wealthi-est citizens.

The ongoing demand for lux-ury real estate requires inventory that incorporates the latest technology, security fea-tures and flexibility for modern multi-generational living.

The Global Luxury Real Estate report includes informa-tion from YouGov, a leader in global consumer market research.

Luxury Portfolio Interna-tional is the largest global network of premier locally branded companies dominated by many of the world’s most powerful independent luxury brokerages.

Luxury Portfolio Interna-tional attracts a global audience of visitors from over 200 coun-tries/territories every month and marketed over 50,000 lux-ury homes to over three million high-net-worth visitors last year.

Schaeuble to leave finance ministry

Berlin

AFP

Germany’s hardline finance minister Wolf-gang Schaeuble

(pictured) is to leave his post to become speaker of the new parliament following water-shed elections at the weekend, party sources said yesterday.

The chief whip of Chan-cellor Angela Merkel’s Christian Democrats (CDU) and his counterpart with their Bavarian sister party CSU, Alexander Dobrindt, are to formally nominate him, the officials said.

The sources said Schaeu-ble, was ready to accept the change to leave the ministry, where he has been a staunch backer of austerity for stricken eurozone member states.

His unbending stance on Greece cast him as a villain in the struggle to save Athens from crashing out of the euro and many debt-mired coun-tries in southern Europe will cheer his departure. Merkel must now try to form a gov-ernment likely to include the Free Democratic Party, which has already staked a claim to the powerful finance minister job.

Merkel personally asked Schaeuble to become parlia-mentary speaker, arguing that the “job will have greater importance than usual given the arrival of the AfD in the Bundestag” lower house.

Schaeuble will replace the highly respected Norbert Lammert, who retired at the end of the last parliamentary term this month.