BUSINESS | 03BUSINESS | 02

Barnier says

Brexit

trade talks

‘going well’

BUSI

WEDNESDAY 4 MARCH 2020

BUSINESS

UDC to award contracts worthQR3bn this yearMOHAMMAD SHOEB THE PENINSULA

United Development Company (UDC), one of Qatar’s leading real estate giants, has announced its plans to award capital contracts worth QR3bn for developing various projects of the company in 2020, including the iconic Gewan Island, its latest flagship real estate venture. The company’s

investments in long-term projects (2019-2023) is esti-mated at QR5.5bn.

This was announced during the UDC’s Ordinary General Assembly by Chairman, Turki bin Mohammed Al Khater, who presided over Company’s AGM.

The AGM approved all the items on the agenda of the meeting, including the board’s recommendation for the distri-bution of cash dividends of QR177m, equivalent to 5 percent of share par value.

Al Khater, while addressing the shareholders of the company, said: “In line with the business plan (of UDC), it is intended that capital contracts will be awarded for developing projects with an amount of QR3bn and with cash outflow for those contracts amounting to an estimated QR1.9bn during 2020.”

Commenting on the financial performance of the Company in 2019, he added: “The Company has achieved a net profit of QR458m and total revenues of QR1.76bn. The net profit attributable to share-holders of the parent Company was QR423m with basic earnings per share of QR0.120. These profits are considered good and notable compared to that of major real estate com-panies in the region, which recorded significant losses”.

“These financial results demonstrate the achievability of UDC’s strategy of diversifying its revenues through the sale and leasing of real estate prop-erties, while investing in the

ongoing development of The Pearl-Qatar and long-term ven-tures, such as Gewan Island”, Al Khater added.

He also highlighted that UDC’s development strategy focuses on supporting Qatar real estate sector in line with the government initiatives to encourage and enhance real estate investment opportunities for local and foreign investors by providing all related nec-essary facilities and support.

UDC’s investments in long-term projects, with an estimated amount of QR5.5bn and in accordance to the Company’s five-year business plan 2019-2023, ensure the Company’s sustainable growth and the cre-ation of new opportunities and revenue sources over the long term.

Al Khater highlighted that as part of UDC’s constant endeavor to enhance the effi-ciency employed in managing its financial resources, for example, it has settled in 2019, bank loans installments amounting to approximately QR532m, which led to reducing the Company’s financing cost by 13 percent

compared to the year 2018. He also said: “The proposed

dividends for this year are in line with the volume of the real estate projects that the Company is developing and the cash outflow that will be spent on these projects during the year 2020.”

UDC President, CEO and Board Member, Ibrahim Jassim Al Othman, described 2019 as a year of focus and consolidation of efforts behind UDC’s core business; real estate.

“The stability in occupancy rates at The Pearl-Qatar, enhanced recurring revenue generated from the leasing of residential and retail units, as well as the sale of residential units and plots in 2019,” Al Othman added.

“Retail leasing witnessed an increase of 18 percent in leased retail space compared to 2018 and the opening of 65 new retail brands at The Pearl-Qatar, across the three main retail hubs in Porto Arabia, Medina Centrale and Qanat Quartier. Residential occupancy further thrived with 178 new rental contracts signed for UDC properties, while UDC residential sales achieved a 115 percent increase for completed units and a 35 percent increase

for residential units under con-struction in Al Mutahidah Towers, compared to 2018.”

According to Al Othman, impressive sales of plots in Gia-rdino Village, Floresta Gardens and Qanat Quartier Marina in addition to Gewan Island in 2019, are yet another indication that UDC is considered a trusted developer of premium real estate investment products.

Highlighting the Company’s plans and prospects for 2020, he said: “The fundamental development phases achieved in 2019 will enable UDC to pursue its growth journey, and to capitalise on two decades of excellence in the delivery of sustainable ventures to resi-dents, investors, businesses and shareholders alike. As such, 2020 is going to be all about achieving our goals with Gewan Island being the cornerstone for our future developments”.

UDC, the master developer of The Pearl-Qatar and Gewan Island, is a leading Qatari public shareholding company with a mission to identify and invest in long-term projects contrib-uting to Qatar’s growth and pro-viding good shareholder value.

Turki bin Mohammed Al Khater (centre), Chairman of United Development Company (UDC), with other Board members during the Ordinary General Assembly meeting of UDC at Mondrian Hotel yesterday. PIC: ABDUL BASIT/THE PENINSULA

The fundamental development phases achieved in 2019 will enable UDC to pursue its growth journey, and to capitalise on two decades of excellence in the delivery.” Ibrahim Jassim Al Othman, UDC President, CEO and Board Member

Retail giant LuLu Group to venture into logistics industrySATISH KANADY THE PENINSULA

LULU Group International (LuLu Group), a highly diver-sified conglomerate with successful business entities in strategic locations worldwide, is venturing into logistics industry.

In an interview to The Business Year (TBY), Mohamed Althaf, Director, Lulu Group International revealed that Lulu Group’s biggest priority in the upcoming years is to ‘open the logistic centre in 2020.”

“We will stick to retail, though we will have multiple formats and increase in our channels. The biggest priority now is to open the logistic centre.. the other priority is to open all our pending stores, including in Lusail and The Pearl, by1Q2020. We will also look at the demo-graphics of people coming to the World Cup and make sure they are taken care of”, Althaf told TBY.

The retail giant’s fresh plans in the pipeline include a locally sourced food brand. Althaf said Lulu Group will

start producing its own label of food products. “We have already started his process by commissioning about 15 items from local producers who matched our quality and standards. These will be products such as processed meat, nuts, and canned foods. Our next stage will be to export them to other countries.”

“We are ensuring we have an excellent export

ecosystem here and a favourable tax structure. Qatar also has great trade treaties with other countries. We will look for potential markets in the GCC like Oman and Kuwait, and perhaps Iraq, India and Bangladesh”.

Althaf noted Lulu Group is doing a pioneer farm-to-store program. The Group partners closely with farmers and work with their pro-duction planning and make sure everything they harvest reaches the Lulu’s store in less than two hours. “We also have buyback programs and algorithms that can predict demand, so farmers can plan accordingly. Farms have been increasingly sig-nificant. Local capacities h a v e i m p r o v e d considerably.”

On Lulu Group’s embracing new technologies in order to enhance its effi-ciency, Althaf said the group’s delivery chain is fully under its control. “We do not rely typical third-party deliv-eries. We have specially designed trucks… with tracking devices.”

Mohamed Althaf, Director, LuLu Group International

Qatar’s Sport Accelerator in talks withglobal sports brands Nike and AdidasLANI ROSE R DIZON THE PENINSULA

Qatar’s sports business hub, the Sport Accelerator, is currently in discussions to host global sports brands such as Nike and Adidas in its state-of-the-art sports business district in Qatar’s Aspire Zone, according to a top official.

The Sport Accelerator, which also hosts the Qatar SportsTech (QST), seeks to bring together elite sports businesses under one roof to take part in Qatar’s growing sports industry, which is estimated to reach $20bn by 2022.

Talking to The Peninsula on the sidelines of the 3rd SMEs Conference which concluded in Doha yesterday, Ibrahim Al Mannai, Executive Director of Advisory and Incubation at Qatar Development Bank (QDB), said the Sport Accel-erator is targeting to host the big brands in the global sports industry.

“They’re in the discussion phase with big brands like Nike and Adidas. They still didn’t confirm who’s coming. But they’re targeting big brands to be hosted in that (sports business district). Again, to support startups, addressing

their needs in research and development,” Al Mannai said.

Established to leverage Qatar’s status as a global sports business hub, the Sport Accel-erator seeks to create new business opportunities for the private sector, attract foreign investment, and develop Qatari entrepreneurs. The pioneering sports business hub also aims to increase the share of the sports sector in Qatar’s economy.

With strategic partners including the Aspire Zone

Foundation, Qatar Financial Centre, Qatar Development Bank, the Ministry of Commerce and Industry, and the Supreme Committee for Delivery and Legacy, the sports business hub offers a ‘strictly limited number of ambitious sports businesses’ with several unique opportu-nities such as funding, access to government procurement and World Cup opportunities.

Speaking about Qatar’s thriving sports industry, Al Mannai added: “Currently, what is communicated by the Supreme Committee for Delivery and Legacy, is they have many opportunities and by next year there will be more, once they start awarding those opportunities to SMEs here in Qatar and other (global) startups”.

According to data published by the Sport Accelerator in its website, by 2025, the estimated local market size of Qatar’s facilities management will reach QR25bn; industries catering to sports education will be valued at QR530m, sports medicine at QR403m, sports tourism will grow to QR48m, sports data and analytics is esti-mated to reach QR21m, while sports merchandising is expected to reach QR17m.

Ibrahim Al Mannai, Executive Director of Advisory and Incubation at QDB. PIC: SALIM MATRAMKOT/THE PENINSULA

Capital contracts will be awarded for developing projects with an amount of QR3bn and with cash outflow for those contracts amounting to an estimated QR1.9bn during 2020.”

Turki bin Mohammed Al Khater, Chairman, UDC

QSE holds

workshop on

deepening capital

market in Qatar

02 WEDNESDAY 4 MARCH 2020BUSINESS

QSE holds workshop on deepening capital market in QatarTHE PENINSULA — DOHA

The Listing Department of Qatar Stock Exchange (QSE) organized a workshop at the St. Regis Doha Hotel entitled “Equity Capital Markets in Qatar - Challenges and Opportunities” which looked at listing challenges and oppor-tunities as well as dual listings, liquidity issues, regulatory requirements and IPOs envi-ronment in the State of Qatar. The workshop was organized in cooperation with the Addleshaw Goddard (GCC) LLP.

Equity capital markets experts participating in the workshop discussed challenges facing new issuers, ways to manoeuvre them, and opportu-nities presented by current market conditions and ways to capitalise on them. They also dis-cussed the IPO process in Qatar, the valuation issues and the introduction of book building; managing liquidity of shares;

governance issues and new global trends; mergers & acqui-sitions and corporate debts.

Rashid bin Ali Al Mansoori, CEO of Qatar Stock Exchange, stressed the importance of listing as a way to achieve sustainability and called on private companies to become public shareholding companies by listing on QSE

market with the aim of facing current and future development challenges. He added: “One of our priorities at QSE is to contribute to the development of a diver-sified, competitive and sus-tainable national economy.”

Al Mansoori pointed out that the QSE represents a fertile envi-ronment for investments as it is one of the most important plat-forms for economic diversification and privatization in Qatar as well as a platform for capital allocation and capital formation ensuring liquidity provision to existing and potential companies listed on the main and SME’s market.

Abdulaziz Al Emadi, Director of Listing on the Qatar Stock Exchange, highlighted the ben-efits of being a listed company in light of the remarkable devel-opment achieved by QSE during the past few years since its inception. He pointed out that the process of listing private com-panies in the stock market would

help to increase organizational since IPO can reduce the risks of relying on the founding share-holders and expand the investors base supporting the company’s growth and investments. Al Emadi stressed the readiness of

the Qatar Stock Exchange to provide all possible assistance for companies to overcome the obstacles hindering them from being publicly listed on QSE.

The workshop was opened by Ahmad Anani, Head of

Addleshaw Goddard’s Qatar office, delivered the opening address. He noted the impor-tance of cooperation with the Qatar Stock Exchange in raising the issues concerning com-panies and investors.

FROM LEFT: Ahmad Anani, Partner and Head of Qatar Office, Addleshaw Goddard; Haithem Al Katerji, CEO, Al Rayan Investment; Venkatesh Krishnaswamy, Senior Advisory Partner, KPMG; and Dr Kamal Abdallah, Managing Partner, Vita F & B Capital; during the panel discussion at the Equity Market Workshop held at the St Regis Hotel in Doha yesterday. PICS: SALIM MATRAMKOT/THE PENINSULA

Abdul Aziz Al Emadi, Listing Director, Qatar Exchange, addressing the Equity Market Workshop.

QC discusses ways to boost business cooperation in agriculture with Azeri delegationTHE PENINSULA — DOHA

Qatar Chamber First Vice Chairman Mohamed bin Ahmed bin Towar Al Kuwari held a meeting yesterday with the visiting members of Azerbaijani delegation headed by Chairperson of “Agro Procurement and Supply” OJSC under the Ministry of Agri-culture, Leyla Mammadova.

During the meeting, the two parties reviewed ways to support the cooperation between Qatari and Azeri business owners and work to strengthen areas of cooper-ation in many sectors espe-cially in food security and agriculture.

It also reviewed the possi-bility to import Azeri products to the Qatari market and informing the Chamber on all needed information about the

Azeri agricultural sector.On his part, Mohamed bin

Towar Al Kuwari said that Qatar and Azerbaijan enjoy dis-tinguished relations in many fields, noting that there is a scope for cooperation between the private sector in both coun-tries in food security.

He affirmed that Qatar attaches a great interest to the food security sector and there are numerous mega projects being held in this sector such as the mega warehousing projects adjacent to the Hamad Port.

He pointed out that there is a great interest on the part of Qatari investors in exploring the investment opportunities available in Azerbaijan.

He explained that the time is appropriate for more part-nerships between both sides, and take advantage of

advanced infrastructure in Qatar, in addition to the incen-tives and legislation that encourage investment, as well as the existence of economic zones and free zones that attract domestic and foreign investment.

For her part, the head of the Azeri delegation Leyla Mam-madova said that the objective of the visit is to inform the Qatari private sector on the investment opportunities available in Azerbaijan and urging Qatari investors to invest in her country.

She also said that “Agro Procurement and Supply” OJSC under the Ministry of Agri-culture seeks to encourage Azeri farmers and food pro-ducers to export, as well as to promote agricultural and food products abroad and explore their export opportunities.

Qatar Chamber First Vice-Chairman, Mohamed bin Ahmed bin Towar Al Kuwari, with Azerbaijan’s delegation.

$1trillion of investments at stake in megaprojects, GCCcountries must get the institutional setup right: ReportTHE PENINSULA — DOHA

Gulf Cooperation Council (GCC) countries are engaged in almost one trillion US dollars of investment in real estate megaprojects as of early 2020, part of an audacious bid to transform socially and econom-ically, according to a new report by Strategy& Middle East, part of the PwC network. These megaprojects are changing the face of the GCC, adding to these countries’ appeal as tourist desti-nations, making them more livable for their residents, and promising more environmen-tally sustainable communities.

Projects running into the tens of billions of dollars always involve risk and the GCC’s real estate megaprojects are no exception. Adopting a wrong institutional setup is one of the key risks.

Understanding existing insti-tutional setup is key for any suc-cessful megaproject, the report noted Commenting on the

report, Ramy Sfeir, partner with Strategy& Middle East said: “The starting point for any meg-aproject is a solid institutional setup that will guide project development. Frequently, the project sponsors make the car-dinal errors of either delaying decisions about the institutional setup until a later stage, or they choose models that are incom-patible with the overall purpose

of the development. Instead, they should think of the institu-tional setup close to the beginning of the megaproject, along with the fundamental concept behind the development”.

As such and as a first step, understanding what the stake-holders do is vital to shaping the proper role of the megaproject sponsor and to designing the right institutional setup in a real estate megaproject according to the Strategy& report.

Selecting the right institu-tional setup depends on a number of factors. Different institutional setups can be deployed, depending on the eco-system in which the project operates, and they vary in the level of involvement and responsibility of the megaproject sponsor and the sponsor’s posi-tioning vis-à-vis the other players in the ecosystem. The megaproject sponsor does not need to be limited to one role in the ecosystem; the sponsor can

play multiple roles at once.Overall, five models can be

typically adopted with varying roles for the project sponsor. From the most basic model in which the project sponsor takes upon only the master developer role to a model in which the sponsor takes over most roles i.e. Master developer + property developer + regulator + city, infrastructure, and social

services providers.There are several design

factors that can help determine the optimal models and sponsor roles. These factors revolve mainly around project own-ership, project size/ time line, current and desired ecosystem quality/ availability, project purpose, and funding/ partnerships.

Karim Abdallah, partner with Strategy& Middle East added: “Once the institutional setup is created, the mandate and roles of the project sponsor can be clearly defined and delin-eated from those of the other stakeholders in the ecosystem. It is important to note that the structure one begins with is not necessarily permanent. As the mandate grows, and the number of entities increases, the optimal structure often changes.” “Deciding on the institutional setup and structure of the delivery entity is critical in real estate megaprojects. Moreover, the design of the institutional

setup and delivery entity structure are tightly connected to the project master plan, devel-opment approach, and funding approach,” Charly Nakhoul, Principal with Strategy& Middle East.

Karim Abdallah, partner with Strategy& Middle East

Ramy Sfeir, partner with Strategy& Middle East

Peugeot maker

says UK factory

plans dependent

on Brexit talks

REUTERS — PARIS

Peugeot maker PSA does not expect to make a call before the end of 2020 on whether to keep its British factory at Ellesmere Port running, depending on how Brexit talks evolve, Chief Exec-utive Carlos Tavares said yesterday.

The French carmaker man-ufactures models for its Vauxhall and Opel brands at the plant in northwest England and had earmarked it as one of the possible sites to make new Astras.

It has previously warned, however, that Britain’s with-drawal from the European Union could pose a threat for the factory if that process affected its profitability, and Tavares said on Tuesday that negotiations with Brussels over an exit deal would be key.

“The decision will not be taken until we have a clear understanding of the outcome of discussions between the British government and the European Union,” Tavares told journalists on a conference call, which replaced an event planned for this week’s Geneva auto show.

The event was cancelled due to the coronavirus epi-demic. “We won’t have an answer on that until at least midway through this year and most probably not until the end of 2020,” he said.

Tavares said the most important factor for the company would be the preser-vation of “a free trade market on finished cars and car parts, which will tell us whether the viability of these factories is guaranteed or not.” The group also has another production site in Luton, near London, where it makes commercial vehicles.

Jet fuel woes set to linger as coronavirus sickens global aviationREUTERS — SINGAPORE

Already-battered jet fuel refining margins in Asia may come under further pressure in coming months as global airlines suspend more flights and more passengers cancel travel plans due to the widening spread of the coro-navirus.

The Asian jet fuel market has already suffered unprece-dented losses this year due to the virus, which has caused dozens of airlines to suspend scores of flights, affecting the travel plans of millions of people.

The resulting drop in fuel demand had knocked Sin-gapore jet fuel prices more than 30 percent lower by the end of February from the start of 2020, and caused Asian refining profits or cracks to col-lapse by over 50 percent, Ref-initiv Eikon showed.

“The coronavirus outbreak has hampered jet fuel demand in Asia and the impact is expected to linger for a few more months,” said Sri Para-vaikkarasu, director for Asia oil at consultancy FGE.

“It’s indeed an unprece-dented fall since the global financial crisis... Jet fuel cracks have fallen to about $8 per barrel and we think it will sta-bilise around these levels in the next few months before seeing a recovery in the third quarter.” With the virus now prevalent in more than 60 countries and all continents outside Ant-arctica, additional flight cur-tailments are anticipated as authorities, corporations and families reduce travel in an attempt to curb further outbreaks.

The impact on jet fuel demand is expected to be more prolonged than for other fuels given the extended flight sus-pensions already in place and expectations that many tourists will refrain from making travel bookings while the virus con-tinues to flare up, trade sources and analysts said.

Asia’s jet fuel demand plummeted by 740,000 barrels per day (bpd) year-on-year in February, and would remain around 620,000 bpd lower in March, according to FGE estimates.

“We do see the virus eroding jet fuel demand to some extent in the Western Hemisphere. If the demand erosion develops faster, East-West flows will come under pressure,” FGE’s Para-vaikkarasu said.

Cracks for the aviation fuel, which fell to their lowest since 2009 at $6.04 a barrel over Dubal crude last week, are cur-rently at their lowest seasonal March levels in at least a decade, Refinitiv Eikon data showed. “People plan their travels in advance. So April is pretty much gone. Hopefully, May is going to be a turnaround from a crack perspective,” said Sukrit Vijayakar, director of Indian energy consultancy Trifecta.

The resulting drop in fuel demand had knocked Singapore jet fuel prices more than 30% lower by the end of February from the start of 2020.

The starting point for any megaproject is a solid institutional setup that will guide project development. Frequently, the project sponsors make the cardinal errors of either delaying decisions about the institutional setup until a later stage, or they choose models that are incompatible with the overall purpose of the development.''

Uruguay's new Minister

03WEDNESDAY 4 MARCH 2020 BUSINESS

Solid deals in Doha and Al Rayyan lift real estateprice index: Ezdan ReportTHE PENINSULA — DOHA

Real estate price index has grown last week on significant weighty property sale deals that exceeded QR50m, which raised the total sale deals values, according to a recent report by Ezdan Real Estate Company. Some municipalities have seen hefty transactions with a value worth of QR30m, signaling recovery impacts on real estate market performance during the week from 23-27 February, the report added.

Commenting on property sale deals clinched during the period from February 23 to 27, 2020, the Real Estate Regis-tration Department has regis-tered 84 real estate sales with a total value exceeding approx-imately QR359.7 m, and the

operations were distributed over 7 municipalities: Umm Salal, Al Khor, Al Thakhira, Doha, Al Rayyan, Al Shamal, Al Daayen and Al Wakrah, which included vacant land lots, housing, multi-use buildings, multi-use space, and residential buildings Al Rayyan Munici-pality ranked first by highest deal in terms of value through the sale of a residential complex

in the Al Gharaffa spreading over a huge area of 10319 square meters, at a price of QR 450 per square, totaling up to QR 50m.

Doha Municipality ranked second highest deal in terms of value by selling a residential building in Old Airport Area, with a value exceeding QR35.1m, and an area of 4,031 square meters at a price of QR810, which contributed to the increase of the total value of sales throughout the week in the municipality, while Al Shamal municipality has wit-nessed the lowest property sale deal in terms of value for a vacant land lot in the Ruwais spanning over an area of 419 square meters at a price no more than QR 137 per square foot, totaling QR 620,000.

Coronavirus impact: Three scenariosMarkets are demanding a policy response from central bankers and after the carnage in markets last week, one has been rapidly priced into the forward curve and is likely on the way. But tradi-tional central bank medicine does little good for an economy in the throes of a basic shutdown in real activity. Here we consider three scenarios on how things can unfold from here in the wake of the corona-virus outbreak.

The markets are trying to stabilize after a week of almost unprecedented carnage for US equities in particular, where market his-torians were pulling up data from nearly a century ago to find a point at which the market corrected so violently from a fresh all-time high. The chief culprit here was that this coronavirus out-break struck as the market was pushing into extremely complacent territory in credit risk and volatility terms. Commodities did a far better jobs of immediately pointing to the fallout.

Below we present three cases for how this situation could develop from here, from best case to worst case scenarios. It could well be that none of the three sce-narios obtains in the way described, so please note that this is our back-of-the-envelope sketch of potential outcomes that is designed to spark thought and debate on how this could shape up from here, not a forecast!

Scenario 1: The best case – a delayed V-shape

The best case scenario s t i l l i n v o l v e s a

global technical recession and a significant further dis-ruption in Q2 and Q3, but it becomes clear during this period that quarantine efforts are sufficiently slowing the progress of the outbreak that it will eventually turn the corner. Meanwhile, massive rate cuts and tremendous fiscal stimulus (and most importantly, vast credit for-bearance programs) begin to work through the system and generate expectations of a massive V-shaped rebound later this year. One key development that could bring forward a V-shaped scenario is the announcement of a successful vaccine that could ramp up to full production inside of a few months – though we have no ability to assess the odds of this development.

Scenario 2: The base case – a U-shaped recovery

The base case is that offi-cially directed quarantining and self-quarantining in the form of decisions not to take holidays or generally reduce public activity means a sharp recession unlike anything we have seen since the Great Recession. And despite heroic stimulus efforts, real activity on the ground is slow to resume as episodes of rein-fection keep significant dis-ruptions and quarantining policy and behaviors in place. However, once the comeback manifests in this scenario, the swing from deflationary fears to more inflationary out-comes could prove far more profound than in the “best case” because in this case, significant supply destruction occurs in energy and other sectors because of a credit

crunch during Q2 and Q3, such that when a rebound arrives, demand and liquidity spike prices as supply struggles to catch up.

Scenario 3: The worst case - an L-shaped recovery

We really don’t want to go there, but the worst case is one in which global GDP goes into an unprecedented slump not seen since the Great Depression of the 1930’s as the global spread of the coronavirus makes it dif-ficult to lift quarantine efforts as reinfection fears continue from the virus having spread worldwide and meaning that opening up for business as usual generates renewed outbreak fears.

As market pessimism goes into full swing, increase long exposure to sectors and instruments that will benefit from even more extreme stimulus efforts that will eventually trigger a comeback – in prices if less so in real GDP. Atop the list is short the US dollar – versus riskier currencies in DM to begin with but increasingly against hard assets as well. Recall that one of the steepest equity market rallies in history came in 1932-33 as FDR finally shook up the market with devaluation of the USD against gold.

IN-DEPTH

John Hardy, Head of FX Strategy, Saxo Bank

Azucena Arbeleche (centre) sits next to sub secretary of Economy and Finances Alejandro Irastorza and Secretary of the Presidency Alvaro Delgado as she assumes the role of Minister of Economy and Finances, under the new government of Uruguay, in Montevideo, Uruguay.

Barnier says Brexit trade talks ‘going well’AFP — BRUSSELS

The EU’s chief Brexit negotiator Michel Barnier (pictured) yesterday said trade talks had started on the right foot as offi-cials began a three-month sprint to settle future EU-UK relations.

Each side assembled about 100 officials at a Brussels con-ference centre and split into nine groups for intense and detailed negotiations on a wide range of topics, with trade the thorniest issue.

“The negotiations are going well,” Barnier told reporters. “In the first phase we are trying to see clearly, precisely, where our divergences, grey zones, convergences are.” Barnier and his UK counterpart David Frost officially launched the negoti-ations on Monday with the first round set to end tomorrow.

The next series is to take place in London and thereafter alternate between the two cap-itals. The talks began just over a month after Britain officially left the EU on January 31.

A transition period runs until December 31, during which Britain trades like an EU member with no tariffs or other barriers, but must abide by European rules. Tensions have been rife in the weeks running up to the talks as both sides dig in to their positions, stoking fears that the talks could fail.

It is assumed that both sides will determine whether the talks are worth continuing at an EU-UK summit in June.

If there is no broad trade deal, economic pain will be felt on both sides -- but especially in Britain and Ireland, the EU member most dependent on trade with the UK.

Oil-State senators push Trump on refinery biofuel waiversBLOOMBERG — WASHINGTON

The oil industry and its Capitol Hill allies are pressing the Trump administration to defend its decision to exempt oil refin-eries from requirements they blend biofuels into gasoline and diesel.

The administration has until the end of next Monday to request the full 10th Circuit US Court of Appeals rehear a decision that threatens to curtail the use of waivers.

Republican senators from states with large oil-refining interests, including Ted Cruz of Texas, John Barrasso of Wyoming and James Inhofe of Oklahoma have made entreaties to the White House or the Environmental Pro-tection Agency in recent days, warning that if the decision is applied nationwide, it could strain refineries, hike gasoline prices and jeopardize jobs. The senators’ efforts were described

by three people familiar with the matter who asked not to be named detailing private conversations.

At issue are requirements to use renewable fuels, such as corn-based ethanol and soy-based biodiesel. Although federal law authorizes the EPA to exempt small refineries facing an “economic hardship,” a January ruling by a three-judge panel of the 10th Circuit Court of Appeals throws into doubt the agency’s ability to broadly issue those waivers.

If the decision stands, it is believed only two small refin-eries would still be eligible for hardship relief, according to a letter 13 Republican senators, led by Barrasso, sent to Pres-ident Donald Trump on Feb-ruary 27. Since the January 24 ruling, expectations the EPA will dramatically restrict waivers have driven a 152 percent surge in the cost of renewable iden-tification numbers, the credits

refiners use to prove they have complied with biofuel quotas.

The EPA has the legal option to apply the court decision to refineries only in the six states covered by the 10th Circuit, but top agency officials view that as unworkable, according to two people familiar with the matter. Administration officials including White House eco-nomic adviser Larry Kudlow had tentatively decided to apply the ruling nationwide. Oil industry allies are hoping

Trump will personally intervene and order a shift in course.

Barrasso has spoken with EPA Administrator Andrew Wheeler and Kudlow, “urging them to appeal the 10th Circuit decision,” Sarah Durdaller, a spokeswoman for the senator, said by email. Representatives for Inhofe did not immediately respond to a request for comment.

Cruz spokesperson Lauren Blair Aronson said the senator has been “reaching out to all stakeholders, including the administration.”

“Failure to appeal the court’s decision to invalidate hardship exemptions from refineries under RFS and apply that decision nationwide could put tens of thousands of blue-collar refinery jobs in jeopardy,” Aronson said. “Senator Cruz believes the administration has a critical role to play in ensuring this decision is reheard.”

Chevron’s $80bn pledge to investors exceeds $100-crude eraBLOOMBERG — NEW YORK

Chevron Corp. plans to hand investors billions of dollars more than it did during the heyday of $100-a-barrel crude as the US supermajor ramps up oil output in the Permian Basin.

In a surprise move, Chief Executive Officer Mike Wirth pledged Tuesday to lavish as much as $80bn on dividends and share buybacks over the next half decade. The pro-jected returns exceed levels paid out in the years pre-ceding the worst-in-a gener-ation 2014-2016 market collapse.

The key driver of those returns will be crude pro-duction from the Permian Basin of West Texas and New Mexico, which will double

over the next five years and eventually account for a third of the company’s global output.

The targets, unveiled by Chevron at its annual investor meeting in New York, are illustrative of the high-wire balancing act facing Big Oil. The industry’s largest com-panies are being asked to reinvest in future production, reward shareholders, and, at the same time, work through an energy transition that may spell the end of fossil-fuel growth within a decade.

Chevron’s projected investor returns “look well supported by the balance sheet,” RBC analyst Biraj Borkhataria said in a note to clients. The presentation “looks more like evolution than revolution, and

continues the prior mantra around lower for longer capex, and a steady uptick in Permian performance.”

Chevron said it will save $2bn by cost cutting and margin improvements while holding annual capital spending to no more than 10% above current levels. Returns on capital will increase to more than 10 percent by 2024, up a third from current levels.

Returning cash to share-holders is “our number one priority,” Wirth said. “This doesn’t rely on higher oil prices. It relies on self-help to greater cost efficiency, continued capital discipline and effective portfolio management.”

Chevron’s returns have languished in recent years,

far below where they stood a decade earlier. Exxon Mobil Corp. has seen a similar deterioration.

The Permian – a vast, multi layered swath of oil that dominates North American crude production -- will be a key driver of Chevron’s plan to improve performance, offering more than 20% profit for each dollar invested, said Jay Johnson, chief of the com-pany’s upstream business. Production will plateau at 1.2 million barrels a day by the mid-2020s with capital spending of about $4.5 billion a year.

The Permian targets show faith in a basin in which many explorers are struggling to generate cash after taking on debts to fund expansions and drilling.

The administration has until the end of next Monday to request the full 10th Circuit US Court of Appeals rehear a decision that threatens to curtail the use of waivers.

04 WEDNESDAY 4 MARCH 2020BUSINESS

McLaren 765LT launch

UK firms are warned 20% of staff could be off with virusBLOOMBERG — LONDON

British businesses were warned as many as 20 percent of their workers could be forced to take time off during peak periods of infection if the UK is hit by a widespread outbreak of coro-navirus.

The UK government pub-lished its plan for dealing with the disease yesterday, including an estimate that in a worst-case scenario a fifth of the workforce – more than 6 million people – could be absent. This would have knock-on effects, as others would be forced to take time off to care for those who are ill, or to look after children if schools are closed. Such a peak period of infection would be likely to last around three weeks, the government said.

Prime Minister Boris Johnson (pictured) unveiled a package of emergency measures to tackle coronavirus yesterday after he was criticized

for not doing enough to prepare for the spread of the disease. He said he is ready to close schools and cancel public events, though health officials are uncertain whether either would be necessary.

“I fully understand public concern, your concern about the global spread of the virus and it is highly likely we will see a growing number of UK cases,” Johnson said in London. The government is preparing for “all

eventualities,” he said. “Keeping the country safe is our over-riding priority.”

He appeared alongside Chief Medical Officer Chris Whitty and lead science adviser Patrick Vallance at a news con-ference to announce steps the government is taking.

The plan, which has been drawn up with devolved gov-ernments in Scotland, Wales and Northern Ireland, sets out measures to slow transmission of the disease, which Health Secretary Matt Hancock said has so far been confirmed in 51 UK patients.

“This is a national effort. We need everyone to listen to and act on the official medical advice, we need employers to prioritize the welfare of their staff,” Hancock told the House of Commons later on Tuesday. “It’s becoming more likely that we’ll see widespread trans-mission here in this country.”

The current focus is on

trying to contain the disease in the UK and delay the moment of peak infection until the summer, when the National Health Service is usually less busy than in colder months.

Measures include plans to bring health-care professionals out of retirement to treat the sickRelaxing rules on class sizes to allow schools to stay open if teachers become ill, allowing truckers to work longer hours so vital drugs can move around the countryAirlines have to declare their passengers are all healthy before they landing in the UK.

Emergency laws will be introduced to the House of Commons later this month to give the government powers it says it needs to tackle an out-break. Ministers plan to fast track the legislation through Parliament so it will be in place before the number of cases peaks.

The army is on standby to

backfill roles normally carried out by police, such as guarding sensitive sites and power plants, if officers are needed to maintain public order and make up for shortages in regular policing, Johnson’s office said.

The government is talking to businesses to “ensure they understand what the reasonable worst-case scenario is” so they can make preparations for dis-ruption caused by a widespread outbreak of illness among their employees, the prime minister said.

The Treasury will allow companies more time to settle their tax bills if they have cashflow issues caused by the virus, and Chancellor of the Exchequer Rishi Sunak will include financial support for public health efforts in his budget next week. His office is working with the Bank of England to respond to the threat to the UK economy from the continued spread of the virus.

CEO of McLaren Automotive Limited, Mike Flewitt, poses for a photograph with the McLaren 765LT at its launch at the McLaren headquarters in Woking, Britain, yesterday.

Ryanair CEO

expects 10%

hit to bookings,

Q1 earnings

impact

REUTERS — BRUSSELS

Ryanair expects April and May bookings to fall 10 percent due to the coronavirus outbreak, dealing a “meaningful impact” to quarterly earnings, but its Chief Executive Michael O’Leary said yesterday the situ-ation will stabilise by early summer.

The Irish airline, Europe’s largest low-cost carrier, said on Monday it would cut 25 percent of its Italian capacity for three weeks but it was far too early to speculate about earnings from the next financial year, which begins April 1.

Asked about the prospects for earnings in the three months to June 30, the first quarter of Ryanair’s financial year, O’Leary yesterday said “there will be a meaningful impact.” “At the moment we’re expecting a 10 percent decline in bookings through the months of April and maybe May. We could be down about 2 million passengers over that period,” O’Leary told Reuters on the sidelines of an annual industry conference.

“But that I think would be about the extent of it,” he added, saying that once temperatures begin to rise in Europe in May and June “the hysteria about the spread of the COVID virus will have calmed down again.” Ryanair has followed rivals like British Airways, easyJet and Wizz in warning about cancel-lations and reduced profits due to the outbreak, which emerged in China in late December and has spread to more than 50 countries.

O’Leary said his airline has not yet responded with cheaper pricing but it would stimulate the market if necessary closer to the summer.

He hinted that the crisis would have some upsides for Ryanair, reducing pressure from the delayed delivery of Boeing 737 MAX jets, grounded due to two fatal crashes, and possibly putting weaker rivals out of business.

He said he expects to receive the first 20 of the MAX jets in September and October and was “pretty confident” it would get 50 in time for summer 2021, but added there was a risk it would be fewer.

“There’s always a risk that when they restart the pro-duction line it won’t be as effi-cient as it was prior to the grounding and we might run into risk that we’re only able to take less than 50 aircraft, 40 aircraft for summer of 2021,” he said. “But at the moment it looks good.” Airbus, O’Leary said, had contacted Ryanair last week offering it pre-2025 pro-duction slots that had not pre-viously been available. O’Leary said the answer was: “Yes we would, as long as the price is right.” While Ryanair has his-torically operated a Boeing 737-only fleet, its Austrian sub-sidiary Laudamotion operates two dozen Airbus A320s.

India restricts export ofsome pharmaceuticalingredients, drugsREUTERS — BENGALURU/ NEW DELHI

India, the world’s main supplier of generic drugs, yesterday restricted the export of 26 pharmaceutical ingredients and drugs made from them, including paracetamol, as concern mounted the corona-virus outbreak could turn into a pandemic.

Indian pharma companies get almost 70 percent of the active pharmaceutical ingre-dients (APIs) for their medi-cines from China.

Already, the coronavirus outbreak has disrupted busi-nesses dependent on Chinese supplies and industry profes-sionals say Indian generic drugmakers are likely to face supply shortages from China if the epidemic drags on.

“Export of specified APIs and formulations made from these APIs... is hereby ‘restricted’ with immediate effect and till further orders,” the Director General of Foreign Trade said in a statement, without explaining the extent of the restrictions.

The list given by the gov-ernment included 26 APIs and

formulations, which amount to 10 percent of all exports.

“Irrespective of the ban (restrictions), some of these molecules may face shortages for the next couple of months,” Dinesh Dua, chairman, Phar-maceuticals Export Promotion Council of India (pharmexcil), told Reuters.

The council falls under the federal commerce ministry.

“If coronavirus is not con-tained, then in that case there could be acute shortages,” Dua said. Separately, the gov-ernment said yesterday it had detected “high viral load” in six people who had been in contact with a patient who contracted the coronavirus in the capital New Delhi.

The people have been kept in isolation and their samples are being sent to India’s National Institute of Virology for confirmation, the gov-ernment said in a statement.

On Monday, India reported three new cases of coronavirus, including an Italian national in the western Indian state of Rajasthan. The patient in New Delhi was being closely moni-tored but stable, the gov-ernment said.

Medical staff with protective clothing are seen inside a ward specialised in receiving any person who may have been infected with coronavirus, at the Rajiv Ghandhi Government General Hospital in Chennai, India, in this January 2020 file picture.

Qualcomm says outbreak threatensmobile phone industry disruptionREUTERS — NEW YORK

Chip maker Qualcomm Inc has said that the coronavirus outbreak in China poses a potential threat to the mobile phone industry, with a possible impact on manufacturing and sales.

The comments by Qualcomm, the world’s biggest supplier of “modem” chips that connect mobile phones and other devices to wireless data networks, dragged down chip stock shares despite signs that an industry downturn was ending.

Qualcomm’s chief financial officer, Akash Palkhiwala, on a conference call with investors following the release of quar-terly results, said the company expects “significant uncertainty around the impact from the coronavirus on handset demand and supply chain.” Qualcomm shares fell as much as 3.75 percent in after-hours trade.

The San Diego-based chip

supplier forecast revenue for its fiscal second quarter largely above Wall Street estimates, in the latest sign that the protracted slowdown in the global chip industry is easing.

The forecast was wider than usual because of the outbreak in China, which has killed hun-dreds and sparked fears around the world. The company lowered the bottom end of its earnings-per-share guidance by 5 cents to account for possible disruptions, Palkhiwala said.

On the conference call, Qualcomm officials tried to calm analyst concerns over the virus, saying that the biggest 5G markets this year are expected to be in the United States, Korea and Japan, and that the company could weather disruptions.

“If we have an issue, a supply chain issue or demand issue in China, we tend to have the ability to have other regions to back it up,” Chief Executive Steve Mollenkopf said. “So we tend to look at the business in

terms of our planning. We want to make sure that we maintain that strength across different markets.” But investors’ virus worries overshadowed results that otherwise beat expectations.

While it is dominant in mobile modems and processors, Qualcomm has been pushing to win over customers with the kind of chip called a radio-fre-quency front end that is more complex in phones that use 5G. Even though it forecast fewer modem sales than Wall Street expected, it generated more revenue per modem shipped than in the past.

In an interview, Mollenkopf said the company’s forecast reflected strong demand for radiofrequency chips from phone makers, especially in China, where brands are putting 5G capabilities into cheaper devices that will sell in greater quantities sooner than Qualcomm had originally anticipated.

Too early for US dollar sell-off despite Fed rate cutsREUTERS — BENGALURU

The US dollar’s strength will remain in place and for longer than expected just a month ago, despite Federal Reserve interest rate cuts intended to limit the economic damage from the spreading corona-virus, a Reuters poll showed.

The survey was conducted before the Fed cut interest rates by a half percentage point in an emergency move yesterday, after G7 finance officials said they were ready to use all policy tools to safeguard against risks to growth.

Many analysts had expected this reduction in the federal funds rate by 50 basis points to 1.00-1.25 percent to take place, only later this month at the Fed’s policy meeting.

Currency analysts in the February 28-March 3 poll

expect the dollar to sail through the current market crisis without shedding much of its strength. The dollar is up more than 1 percent so far this year, even though Wall Street is down over 4 percent.

A little more than half the analysts who answered an additional question, 25 of 45, echoed those views and said market expectations for Fed rate cuts were unlikely to halt the dollar’s strength.

A significant majority of analysts also forecast the cur-rency would continue to dom-inate trading in the foreign exchange markets for at least another six months, a view held since the middle of last year.

“I think it might be a little early to assume that the dollar will sell off on Fed easing. It’s likely that other central banks will react, too, and that takes us back to where we were a

year ago,” said Jane Foley (pic-tured), head of FX strategy at Rabobank.

“At the start of last year, when markets switched from anticipating Fed hikes in 2019 to expecting Fed cuts, markets also thought that the dollar would fall. But the dollar didn’t fall, and one of the reasons for that is we saw certain other

central banks getting in there more aggressively than the Fed.” If anything, the impact from the coronavirus outbreak would be felt more by emerging-market currencies.

The consensus from the latest poll echoed the long-held view the dollar will eventually lose its shine over the coming year, a majority prediction that has proved incorrect over the past two years.

The euro has mostly been used as a funding instrument by traders over the past few years, but analysts have noted some recent strength against the dollar.

“Its not just about what central banks do, there is also an element of positioning adjustment as well... we’ve seen over the last week that there’s still scope for the euro and the yen short positions to be liqui-dated, and that feeds through

to a further move higher for those currencies,” said Lee Hardman, currency economist at MUFG.

Still, despite the latest slightly better performance by the euro against the dollar, there has not been a dramatic shift in analyst expectations. If anything, there was a slight downgrade to median expectations.

The median forecast showed the euro was expected to trade at $1.14 in a year, about 2.5 percnet higher than Tues-day’s $1.11, compared with the $1.15 predicted in the past three polls. But more than half of the respondents in the latest poll expect the euro to trade lower than where it was on Tuesday over the next six months, with that number dropping to about one-quarter of them in a year.

There were considerably more pessimistic euro calls

compared with the previous month.

That is largely driven by expectations the European Central Bank will be prompted to ease policy further to fight off any damage to the economy from the coronavirus outbreak, which is likely to hit the ailing Italian economy hard.

“Markets are going to be thinking: ‘Well, hold on a minute, if the Fed goes, what is the ECB going to do?’ In the near term, euro/dollar may be a little bit high, but I don’t think that’s going to sustain. I think even by the end of the week, that would have run its course,” said Rabobank’s Foley.

A significant majority of analysts also forecast the currency would continue to dominate trading in the foreign exchange markets for at least another six months, a view held since the middle of last year.

COVID-19 impact

05WEDNESDAY 4 MARCH 2020 BUSINESS

This administration is closely monitoring the coronavi-rus and its effects on public health, markets, the broader economy and supply chains. We have a very resilient US economy as we go into the experience of the coronavirus.

BoE to take ‘all necessarysteps’ to support UKeconomy, says CarneyREUTERS — LONDON

Bank of England Governor Mark Carney (pictured) said policymakers around the world are working on a “powerful and timely” response to the economic hit from coronavirus which has raised fears of a new global recession.

Central bankers and finance ministers from the Group of Seven rich nations were due to hold a conference call and Carney said they would act with the common goal of providing bridging support for the economy.

“The lines of communi-cation globally between central banks are wide open,” Carney told lawmakers yesterday. “It is reasonable to expect a response that reflects a combi-nation of fiscal measures and central bank initiatives.”

“We are confident that col-lectively these measures both within jurisdiction and across jurisdictions will be both pow-erful and timely,” he said.

The spread of coronavirus from China around the world has sent global finance chiefs scrambling to come up with ways to offset the hit to their economies, recalling the darkest days of the 2007-08 global financial crisis.

Carney said the threat from coronavirus, while potentially hurting economic growth for one or two calendar quarters, was not on the same scale.

“The 2007-2008 crisis caused some lasting scarring effects on the economy. The

prospect with this situation is that we will have disruption, not destruction,” he said.

Earlier yesterday, two G7 officials said the policymakers from the group would stop short of directly calling for new government spending or coor-dinated central bank interest rate cuts.

Carney, who is due to be succeeded as governor by Andrew Bailey in the middle of this month, said the shock to Britain’s economy from coro-navirus could be “large but temporary”.

The British central bank’s three top policy-making com-mittees held a rare joint meeting on Monday to plan out what action might be needed.

“The Bank of England’s role is to help UK businesses and households manage through an economic shock that could prove large but will ultimately be temporary,” he said in a statement to lawmakers before addressing their committee in parliament.

Carney declined to

comment when asked if the BoE’s Monetary Policy Com-mittee might cut interest rates before March 26 when it is due to announce the outcome of its next meeting.

“The committee will make a decision at the appropriate time but not before,” he said.

Deputy Governor Dave Ramsden said measures to boost liquidity – which would aim to stop the financial system drying up – were among measures the BoE might take.

“Individual policies work, whether they’re conventional or unconventional, across a range of countries,” Ramsden said. “But when you put them together in packages with the correct communications you can get more bang for your buck.”

Carney said he was holding discussions with British finance minister Rishi Sunak -- who is expected to announce higher public spending in a budget statement next week -- and he was in regular contact with Britain’s FCA financial regu-lator, the BoE’s international peers and the International Monetary Fund.

Carney said the BoE’s monetary and financial policy committees and bank super-visory committee met jointly on Monday “to review a range of macroeconomic and financial system scenarios and their implications, and they will continue to meet as needed and will act as appropriate.”

Euro zone bond yields rise as ECB ready to act against virus falloutREUTERS — LONDON

Euro zone government bond yields rose yesterday after the European Central Bank joined its US and Japanese peers in indi-cating that it stands ready to protect the economy from the coronavirus outbreak.

With the virus spreading around the globe, governments and central banks are under pressure to support growth, which is suffering from travel restrictions, weakening demand, supply chain disruptions and a sharp market sell-off.

The ECB said on Monday it was ready to take “appropriate and targeted measures” to fight the impact of coronavirus. G7 finance ministers were expected to hold a conference call to discuss measures to deal with the economic impact, sources told Reuters.

The central bank is also pre-paring possible measures to provide liquidity to businesses hit by the economic fallout of the coronavirus outbreak, according to three sources familiar with the discussion.

Australia cut its benchmark interest rate to a record low yes-terday, putting its central bank among the first in the world to ease policy to fight the economic fallout from the coronavirus.

The signals from major central banks bought some calm to rattled world markets, pausing a stunning rally in top-rated bond markets for now. Equity markets surged after their worst plunge since the 2008 financial crisis last week, encouraged by the prospect of government action to stem the economic impact.

“When you have a sharp bear market with all the yields tumbling, it’s not so unusual that

you have a counter-movement, especially when there is news about central banks and govern-ments intervening,” said DZ Bank rates strategist Daniel Lenz.

Ten-year German gov-ernment bond yields were last up 4 basis points to -0.58 percent, off six-month lows of -0.67 percent hit on Monday.

Italian and Greek gov-ernment bonds - which bore the brunt of last week’s sell-off - rallied strongly. Italy’s 10-year yield fell 10 basis points to 1.05 percent, off five-week highs at 1.23 percent hit during the pre-vious session.

Greece’s 10-year yield was down 14 bps to 1.24 percent.

Inflation expectations bounced from record lows below 1.10 percent hit on Monday, to above 1.14 percent.

Euro zone consumer prices grew more slowly in February than in January, as expected, as the spread of the coronavirus around the world depressed oil prices. Excluding the volatile unprocessed food prices, inflation accelerated to 1.4 percent year-on-year from 1.3 percent in January.

However, the release had little lasting impact on bond yields, as data releases have taken the back foot given the focus on immediate news on coronavirus.

European auto industry plans to cut costs and jobsREUTERS — LONDON

Europe’s auto industry is facing a slowdown in demand for new cars, as well as disruption from the coronavirus epidemic and import tariffs between China and the United States. As a result, several companies have announced plans to cut costs and jobs.

Here is a summary of the steps announced so far by leading automakers.

VOLKSWAGEN GROUP Volkswagen said in March

2019 it would cut up to 7,000 positions and aim to deliver €5.9bn ($6.7bn) of annual savings at its core VW brand by 2023.

Volkswagen’s luxury car unit Audi said in November it would cut one in ten jobs by 2025, up a total of 9,500, to fund its shift towards electric vehicle production.

PSA GROUP, FIAT CHRYSLER PSA’s

German unit Opel said in February it was ruling out forced redundancies until July 2025, but would reopen a vol-untary leave programme for older employees.

Unions at Fiat Chrysler, which is planning a merger with PSA, said management promised to avoid redun-dancies and get all group employees off special furlough arrangements and back to work by 2022.

The merger aims to achieve annual savings of €3.7bn.

BMW In November, BMW man-

agement and its German labour representatives reached an agreement on changes to payout schemes and bonuses to reduce costs in Germany while avoiding “drastic measures”. BMW has said it will keep headcount stable, as hiring in software development will offset voluntary staff reductions in other areas.

VOLVO CARS In July 2019, Volvo Cars

announced plans to cut fixed costs by 2 billion Swedish crowns ($214m), adding the savings drive - on which it did not provide details - would come into effect in the second half of 2019 and run into the first half of 2020.

JAGUAR LAND ROVER In February, Britain’s biggest

carmaker Jaguar Land Rover said it would reduce or stop pro-duction on certain days at two of its British factories as it was pursuing cost-cutting measures in response to falling demand.

French Economy and Finance Minister, Bruno Le Maire (right) and French Junior Minister, for Economy and Finance Agnes Pannier-Runacher address a press conference after a meeting about the economic impact of COVID-19 outbreak, at the Economy Ministry in Paris, yesterday.

RBI chief sees room to cut interest rates in India if neededBLOOMBERG — LONDON

India’s central bank governor said he’s ready to act to shield the economy from the coronavirus and reiterated there’s room to cut interest rates if needed.

Speaking in an interview with Bloomberg News in Mumbai just hours before finance ministers and central bank chiefs from the G-7 economies were scheduled to discuss policy options, Shak-tikanta Das said “there is a strong reason for coordinated policy action.” For India, options include a rate cut and supporting the market through liquidity measures, he said.

Inflation, which had kept the central bank from easing since December, is expected to mod-erate, he said in an interview at the RBI’s headquarters. He argued the bank’s flexible

inflation-targeting framework allows the central bank to look through recent price pressures and loosen policy.

“We’re ready for a response should the situation warrant,” Das said in a meeting room dec-orated with framed portraits of his predecessors. “I think the G-7 countries are having a con-ference. And going forward, in the near future, I do expect some discussion through video con-ference or telephone conference among the central banks of the large economies, including India.”

India’s sovereign bonds gained after the governor’s com-ments, with the 10-year yield dropping to 6.35 percent from 6.36 percent. Earlier Tuesday, the RBI said in a statement it’s ready to act to calm market volatility, although so far the spillover to

the nation’s stocks and bonds have been relatively contained.

Das’s counterparts in Aus-tralia and Malaysia lowered interest rates on Tuesday, while Indonesia said its working on a second stimulus package. The Federal Reserve signaled a pos-sible rate cut last week, while monetary authorities in Japan and the UK pledged action to sta-bilize markets -- a throwback to the coordinated action in the aftermath of the global financial crisis more than a decade ago.

“We, G-7 Finance Ministers and Central Bank Governors, are closely monitoring the spread of the coronavirus disease 2019 (COVID-19) and its impact on markets and economic condi-tions,” the G-7’s finance ministers and central bankers said yes-terday in a statement published after Das spoke with Bloomberg

News. “There is definitely a strong reason for coordinated policy action, because corona-virus has now turned out to be a global problem,” Das said. “So when the problem is global, nat-urally the response and the need for coordinated action is so much more.”

Das also addressed lingering concerns about the nation’s shadow banks, saying only about four firms required active mon-itoring now and the sector no longer posed a risk to financial stability.

The RBI cut interest rates five times in 2019 to support an economy headed for its weakest expansion in 11 years, but has been on pause since December following a spike in inflation, which accelerated again to 7.6 percent in January -- well above the central bank’s 2-6 percent

target. Data on Friday showed growth decelerated to 4.7 percent in the three months through December from a year ago, the third straight quarterly slowdown.

Das said the virus’s impact on India will come through two channels: trade with China and weaker global growth. The RBI would be able to quantify the hit to growth at its next policy meeting in April, he said.

With only five confirmed coronavirus cases as of March 2, India has been relatively insu-lated from the outbreak. However, the economy probably won’t be, since India depends on China for more than one-fifth of its total non-oil, non-gold goods imports. Indian businesses aren’t currently facing any problem in securing supplies of raw mate-rials, but there may be issues if

the shutdowns in China continue for longer, Finance Minister Nirmala Sitharaman said last week. The government is ready to respond with measures, she had said separately.

“Everyone likes a rate cut,” Das said when asked if a coordi-nated response from global peers would lead to market pressure on him to also move. “We will do what we think is right.”

Shaktikanta Das, RBI Governor of India

Virus may push weak airlines tomerge: Air France-KLM chiefAFP — BRUSSELS

The spread of the coronavirus could force weak airlines to merge with competitors, the head of Air France-KLM and the A4E association of European airlines said yesterday.

“There are quit a few weak carriers around the world,” Benjamin Smith said at the association’s annual meeting. “I believe this will accelerate consolidation.”

Dozens of airlines scaled back or halted flights to China in January as the coronavirus outbreak that causes COVID-19 gained steam in the country, with people reluctant to travel and gov-ernments erecting travel restrictions.

Last week, airlines moved to reduce flights to Italy where the largest outbreak in Europe is underway.

“It’s clear we have yet to see the full effect of the COVID-19 on the air transport sector,” said Smith.

Last month the Interna-tional Air Transport Association (IATA) said that airlines oper-ating in the Asia-Pacific region stand to lose a combined $27.8 billion of revenue this year owing to the ongoing corona-virus crisis.

Governments have come under mounting pressure to help support businesses as the outbreak disrupts the economy.

“Any taxes which could be limited or temporarly lifted would be appeciated by the industry,” said Smith.

The central bank is preparing possible measures to provide liquidity to businesses hit by the economic fallout of the coronavirus outbreak.

Steven Mnuchin, US Treasury Secretary

06 WEDNESDAY 4 MARCH 2020BUSINESS

South African economy enters second recession in two yearsREUTERS — PRETORIA

South Africa entered its second recession in two years in the final quarter of last year as agri-culture, transport and construction contracted, data showed yesterday, highlighting the impact of power cuts on the economy.

The recession is another setback to President Cyril Ram-aphosa’s efforts to revive the economy and stave off a down-grade of the country’s sovereign debt to below investment grade by rating agency Moody’s.

Statistics South Africa said the economy shrank 1.4 percent in the fourth quarter, following a revised 0.8 percent contraction in the third quarter. Agriculture declined 7.6 percent, transport 7.2 percent, construction 5.9 percent, electricity 4 percent and retail 3.8 percent, the data showed.

“You can lay a lot of the blame on (power utility) Eskom and the loadshedding (power cuts). But you must also blame government -- reform is hap-pening way too slowly,” said Wayne McCurrie, an FNB port-folio manager.

Regular power cuts as Eskom fails to meet electricity demand have seen a steady decline in South African business and consumer confidence.

Eskom implemented the

worst power cuts in more than a decade in December. It forced some mines to shut down and disrupted thousands of smaller businesses that couldn’t rely on backup generators.

Spending shrank 1.2 percent in quarter-on-quarter terms after contracting by a revised 0.4 percent in the third quarter, Stats SA said. “Spending of money is different, I feel it in the fluctu-ation of my lifestyle. I’m spending less,” said self-employed Msimeki Mabuza, 34.

South African retailers have struggled to increase earnings as cash-strapped shoppers spend money on food rather than higher-margin discretionary goods such as electronics, hurting the likes of Walmart-controlled Massmart.

Small businesses were also feeling the pain. “It is tough,” said 62-year old Lesley Nkosi, who sells fruits and vegetables on the sidewalk of a street a few blocks from Pretoria’s Union Buildings, which houses Ram-aphosa’s office. “Since last year I have noticed people aren’t buying as much as they used to. They don’t have money.” Banks have also struggled to increase their earnings at home and are increasingly relying on busi-nesses elsewhere in Africa to maintain their performance.

US Fed cuts rates as G7 pledgesall appropriate tools to beat virusREUTERS — TOKYO/WASHINGTON

The US Federal Reserve cut interest rates yesterday in an emergency move designed to shield the world’s largest economy from the impact of the coronavirus as Group of Seven finance officials pledged all appropriate policy moves.

In a statement, the Fed said it was cutting rates by a half per-centage point to a target range of 1.00 percent to 1.25 percent.

“The fundamentals of the US economy remain strong. However, the coronavirus poses evolving risks to economic activity,” it said in a statement.

The coronavirus, which emerged in the central Chinese city of Wuhan late last year, has spread around the world over the past week, with more new cases now appearing outside China than within. It has hit sports events, trade exhibitions, book fairs, prayer meets and other large gatherings worldwide.

There are more than 90,000 cases globally, with more than 80,000 of them in China, and infections appearing in 77 other countries and territories, with Ukraine the latest country to report its first case.

China’s death toll is 2,943, with more than 75 deaths

elsewhere. Finance ministers from the G7 group of rich coun-tries were ready to take action,

including fiscal measures where appropriate, Japanese Finance Minister Taro Aso (pictured) told reporters. Central banks would continue to support price stability and economic growth.

“We reaffirmed our com-mitment to adopt all appropriate policy steps to protect the economy from downside risks posed by the coronavirus, and that we stand ready to cooperate further on timely and effective measures,” Aso said after a G7 call.

He was short on specifics and said the desirable policy response would vary from country to country. Asked if all appropriate policy steps would include both monetary and fiscal policies, Aso said: “Yes, anything will be included, both monetary and fiscal steps.” US Treasury Secretary Steven Mnuchin told the US House Ways and Means Committee that G7 finance min-isters and central bank gov-ernors had agreed to “do every-thing possible” to limit economic harm.

A sharp rebound in world stock markets lost only a little steam on Tuesday despite a lack of any immediately gratifying G7 measures. Europe’s main bourses were almost 2 percent higher. But Wall Street’s main S&P 500 and Dow Jones markets gave up early

gains to slip into the red.“This is a tug of war between

hope and fear. Central banks are giving hopes with their potential stimulus,” said Vasu Menon, senior investment strategist at OCBC Bank Wealth Management. “The question is what they will do? Monetary policy is already very loose and interest rates are very low,” Menon added.

German Finance Minister Olaf Scholz said the G7 had “all means” at its disposal.

“Should the need arise, we have all the means to counter a global downturn,” Scholz said in a statement on Twitter.

Global stocks suffered a rout last week on fears that the dis-ruption to supply chains, factory output and global travel caused by the epidemic could deal a serious blow to a world economy trying to recover from the US-China trade war.

New coronavirus cases in China have been falling sharply, with 125 reported on Tuesday, thanks to aggressive con-tainment measures. After what critics said was an initially hes-itant response, China imposed sweeping restrictions, including suspensions of transport, sealing off communities, and extending a Lunar New Year holiday across the country.

We reaffirmed our commitment to adopt all appropriate policy steps to protect the economy from downside risks posed by the coronavirus, and that we stand ready to cooperate further on timely and effective measures.”

QATAR STOCK EXCHANGE

QE Index 9,258.69 +0.47 %

QE Total Return Index 17,325.84 +0.47 %

QE Al Rayan Islamic

Index - Price 1,998.42 +0.78 %

QE Al Rayan Islamic Index 3,457.72 +0.78 %

QE All Share Index 2,806.78 +0.63 %

QE All Share Banks &

Financial Services 4,014.78 +0.83 %

QE All Share Industrials 2,377.03 -0.06 %

QE All Share Transportation 2,349.53 +0.91 %

QE All Share Real Estate 1,321.23 +1.62 %

QE All Share Insurance 2,364.04 -0.81 %

QE All Share Telecoms 818.49 +1.52 %

QE All Share Consumer

Goods & Services 7,412.58 +0.29 %

QE INDICES SUMMARY QE MARKET SUMMARY COMPARISON WORLD STOCK INDICES

GOLD AND SILVER

03-03-2020Index 9,258.69

Change +42.88

% +0.47 %

YTD% -11.19

Volume 96,187,884

Value (QAR) 287,011,101.46

Trades 7,908

Up 35 | Down 08 | Unchanged 04

02-03-2020Index 9,548.22

Change -155.66

% -0.61 %

YTD% -8.97

Volume 95,848,501

Value (QAR) 366,967,601.82

Trades 9,239

EXCHANGE RATE

GOLD QR188.1805 grammeSILVER QR2.9782 per gramme

Index Day’s Close Pt Chg % Chg Year High Year Low All Ordinaries 4207.354 110.624 2.7 5069.5 3829.4

CAC 40 Index/D 3176.13 -0.06 0 4169.87 2979.87

DAX - Composit/D 531.14 8.71 1.67 667.98 485.74

DJ Indu Average 0 0 0 12876 9936.39

Egypt Cma Gn Idx 675.91 13.3 0.95 1567.23 143.08

Hang Seng Inde/D 19783.67 452.97 2.34 24468.64 18868.11

ISEG Overall/D 2510.71 44.36 1.8 3037.89 2333.35

Karachi 100 In/D 11311.29 276.37 2.5 12768.4 11032.2

Nikkei 225 Index 9038.74 94.26 1.05 10891.6 8227.63

S&P 500 Index/D 0 0 0 1370.58 1039.7

Straits Times/D 2821.09 -62.91 -2.18 3280.77 2847

Currency Buying (QAR) Selling (QAR)

US$ 3.6305 3.6500

Pound Sterlig 4.626 4.6903

Swiss Frnac 3.7803 3.8345

Japanese yen 0.03345 0.0341

Australian Dollar 2.3671 2.4137

Canadian Dollar 2.7003 2.7535

Indian Rupee 0.0492 0.0502

Pakistan Rupee 0.0234 0.0239

Philipine Peso 0.0711 0.0725

Bangala Takka 0.0425 0.0433

Sri lanka Rupee 0.0198 0.0202

Nepalese Rupee 0.0308 0.0314

South African Rand 0.2316 0.2363

Euro 4.0218 4.0785