BUSINESS | 08BUSINESS | 08

G20 ministers

struggle to finalise

oil output cuts

despite US efforts

SoftBank CEO Son

says will supply

300m masks per

month to Japan

st

d

SUNDAY 12 APRIL 2020

BUSINESS

Supporting businesses A digital advertisement for supporting local businesses amidst the spread of the coronavirus disease stands above a nearly empty Las Vegas Strip, in Las Vegas, Nevada, US.

QIB launches Deposit Only Card for corporate, SME customersTHE PENINSULA — DOHA

The Qatar Islamic Bank (QIB) has launched a new Corporate Deposit Only Card as part of its continuous efforts to encourage customers to use digital channels to complete all their banking transactions.

This card allows large cor-porations, as well as small and medium-sized enterprises (SMEs), to deposit cash or cheques in their accounts at any time through QIB’s self-service Cash & Cheque Deposit Machines (CDMs) available across the country at 40 dif-ferent locations.

The new card is a deposit-only card that is linked to the corporate account. The card provides a convenient, risk-free and secure method for businesses which frequently deposit cash or cheques. The cardholder, designated by the company, is only allowed to deposit cash or cheques to ensure full privacy and confi-dentiality of the company’s accounts details. No other transactions or inquires related to the company’s financial information are allowed.

Tarek Fawzi, General Manager, Wholesale Banking Group at QIB, said: “We are always researching and looking for ways to improve the banking experience for eve-ryone that banks with us. Given the current circumstances related to COVID-19, we have prioritised the launch of this new service to further protect our customers and employees, while making depositing cash easier and more secure. With

the Corporate Deposit Only Card, company representatives no longer have to frequently queue at the bank waiting to deposit their earnings, they can now do so instantly through any of our 24/7 Cash & Cheque Deposit Machines. “

Corporate & SMEs cus-tomers can apply by down-loading the application form from the QIB website and sub-mitting it to the Corporate Branch at Grand Hamad Street from Sunday to Thursday from 7:30am to 12:30 noon. A number of cards can be issued under the same corporate main account to designated employees selected by the company.

The cards will be delivered through QPost and the com-pany’s authorised signatory can activate the cards by calling the Bank’s Call Centre or through any of QIB’s ATM.

With the Corporate Deposit Card, representatives can easily and quickly deposit money at any time of the day, on any day, including public holidays, through one of QIB’s 40 CDMs. These are available in con-venient locations across the country and in QIB’s main branches.

Once activated, a unique pin code will be provided for each deposit card. The card can be easily reconciled, and deposits monitored, through QIB’s recently upgraded Cor-porate Internet Banking portal. Once the cash or cheque has been deposited, a receipt will be provided by the machine and a notification SMS will be sent to the registered mobile number.

Barwa Group announces Abdullah Jubara Al Rumaihi as Acting CEOTHE PENINSULA — DOHA

Barwa Real Estate Group has announced the appointment of Abdullah Jubara Al Rumaihi as the Acting Chief Executive Officer of Barwa Real Estate Group, beside his current duties as CEO of Al Waseef Asset Management Company as of April 12, 2020.

Al Rumaihi is one of the distinguished Qatari calibre in the Group since he joined 13 years ago, with extensive experience in the field cov-ering real estate asset man-agement, strategic planning & investment as well as financial affairs for over 25 years of experience.

He has carried out various positions in several national institutions and contributed to the establishment of a number of companies. He is currently the CEO of Al Waseef Asset Management Company which is the operational arm of Barwa Real Estate Company and is wholly owned by it.

Al Waseef Company super-vises the management of all Barwa Real Estate Group projects, in addition to man-aging several major real estate projects in the country. Al Rumaihi is a member of many boards of directors.

Barwa’s Chairman of the Board Salah bin Ghanem Al Ali, and all members of the Board

of Directors welcomed Al Rumaihi in his new position and expressed great confi-dence that the Group attaches to him and its aspiration for his role in implementing the vision of the Board of Directors, which aims to continue the march of the company and enhance its position at the local and global levels, with the Board’s focus at this stage on developing the investment portfolio and achieving sus-tainability for shareholders’ returns.

Al Ali and all board members also thanked Issa bin Muhammad Al Muhannadi for his duties as the Managing Director during the last period.

IMF grants

$745m to

Tunisia for

virus response

AFP — WASHINGTON

The International Monetary Fund has approved a $745m emergency loan for Tunisia as it continues to roll out an unprecedented number of aid packages to countries battling the coro-navirus.

“These resources will help address urgent fiscal and balance of payments needs stemming from the outbreak of the COVID-19 pandemic” in Tunisia, the IMF said in a statement.

The nation has been hit hard by the virus, and the economy is expected to con-tract by 4.3 percent this year, the fund said, which would be the deepest recession since Tunisia’s inde-pendence in 1956.

The funding will be used to finance health measures, strengthen social safety nets and help businesses weather the crisis.

Tunisia has officially declared more 600 cases of COVID-19, including 25 deaths, since reporting its first case at the beginning of March.

The IMF has been moving swiftly to reply to an unheard-of 90 simultaneous requests for crisis funding. On Friday alone, the fund approved loans for Albania, Kosovo, Malta and North Macedonia.

IMF Managing Director Kristalina Georgieva said the fund has $1 trillion in lender ammunition available, and the IMF board this week doubled its fast-deploying emergency facilities to $100bn.

Treasury briefing US airlines on $32bn grant programREUTERS — WASHINGTON

US Treasury Secretary Steven Mnuchin is holding calls with airline CEOs throughout the day and could announce some details of a $32bn payroll grant package later this afternoon, people briefed on the matter said.

A United Airlines Holdings Inc spokesman said the company had heard back from the Treasury Department on its application for government support and is currently reviewing the details of Treas-ury’s proposal.

US President Donald Trump

had said airlines would receive details this weekend about the terms of the package meant to offset the impact of the coro-navirus outbreak.

“We have a great plan for the airlines. We’ve got to keep the airlines going. You know it’s never been a great business but

it’s a very vital business for the country,” Trump said on Friday.

Under the $2.3 trillion CARES Act, passenger airlines are eligible for $25bn in cash grants for payroll while cargo carriers can get $4 billion and airport contractors like caterers and airplane cleaners $3bn.

COVID-19 crisis underscores need to create effective BCM plansMOHAMMAD SHOEB THE PENINSULA

The Supreme Committee for Crisis Management in Qatar’s ‘combating COVID-19’ strategies helped mitigate the inherent risks of the pandemic in a big way. Most organisations and businesses with fully developed B u s i n e s s C o n t i n u i t y Management (BCM) plans could make greater progress in re-organising the pandemic response. Unfortunately, certain sectors, which do not have a BCM plan in place, will have to pay an extra price,before they are back to their business, according to an expert.

For instance, the SMEs, especially those which under-estimated the importance of BCM plan, are the most

impacted sector due to poor business planning, inop-portune business priority setting by not having BCM in place. Many of them have suf-fered moderate to significant financial losses which might cause even business closure, Ali Al Yafei (pictured), Chair-person, Business Continuity Institute-Qatar Forum (BCIQF), a non-profit organi-zation working under the umbrella of the UK-based-BCI, told The Peninsula in an interview.

Commenting on the impor-tance of BCM, Al Yafei said: “Considering the latest COVID-19 developments, it has quickly become apparent that we are embarking on uncharted territory. I believe that the Pandemic Response

plans within the BCM plans were insufficient to handle this COVID-19 crisis which has pre-sented itself on a global scale. However, organisations with fully developed BCM plans could make greater progress in re-organizing the Pandemic

response as the critical nature of the organization would have been determined, the critical activities and the critical staff identified and recovery measures tested. Pandemic response plans are very intrinsic to the Business Con-tinuity planning which help minimise the impacts, be it financial, reputational, regu-latory or legal.” He added: “A pandemic response plan will guide the organization to min-imize risk of infections at office premises by social distancing, sanitization, deep cleaning, temperature scanning at entrances etc. and also in man-aging the work from home protocols, reduced staffing in office premises, mobility of staff during lockdown sce-narios, and so on.”

On companies which see BCM as additional burden he said its like “by the time you hear the thunder, it’s too late to build the ark”, situaiton. Regrettably, SMEs underes-timate the importance of the BCM system and its testing.

Organizations of all domains are encouraged to strategise and implement business continuity plans to minimise disruption to their operations and ensure that business remains viable during any contingencies such a virus outbreak or other dis-ruptive events.

These plans come handy in further developing appro-priate response plans for unprecedented situations like COVID-19 within a short span avoiding major impact and

sustaining critical business activities.

Asked if he expect any change in response and attitude of companies, espe-cially the SMEs, towards BCM in the post-COVID-19 era, he said: “In late December 2019, the entire globe embarked on an unexplored modern pan-demic which demonstrates how quickly corporate risk turns to a crisis with emergent challenges and consequences. Unfortunately, SMEs are the most impacted sector due to unfortunate preparedness, poor business planning, inop-portune business priority setting by not having BCM in place and suffered moderate to significant financial loss which might cause business closure.” �P9

Boeing, the biggest US exporter, had sought $60bn in federal support for itself and the 17,000 suppliers and contractors in its supply chain. The sector employs around 2.5 million people in the US, according to the aerospace giant.

Emergency cash

09SUNDAY 12 APRIL 2020 BUSINESS

We started the year with a constructive view for emerging markets (EM) in 2020. Bullish investor sentiment triggered a powerful risk-on market envi-ronment in late 2019, driven by a favourable combination of moderate global growth, high employment and low inflation. China, in particular, was expected to be a key driver of an upcoming economic accel-eration, with policy support spilling over to commodities and other open economies.

But bad news spreads fast and far. A “black swan” event materialized in the form of a global pandemic of pneumonia-like virus Covid-19. In the most affected countries in Asia, Europe and North America, the fallout produced unprece-dented negative shocks on both the supply side and demand side of the economy. As a result, the outlook changed dramati-cally. The global economy is now expected to head into the sharpest and deepest slowdown since the post-World War II demobilization of the late 1940s.

Markets have already started to discount the new sce-nario with a significant tight-ening of global financial condi-tions. Vulnerable EM are being hit hard. According to data from the Institute of International Finance, the Covid-19 shock produced the greatest reversal of capital flows ever, far out-pacing other major episodes of EM stress. From late January to early April 2020, non-resident portfolio outflows from EM nearly reached $100bn. The sell-off was mostly concen-trated on Asian countries and large EM, including Taiwan,

South Korea, Thailand, Brazil, Mexico and South Africa.

Importantly, the demand shock quickly spilled over to commodity prices, in a move that was amplified by diplo-matic events such as the sudden end of the Opec+ agreement. This increased the pressure on commodity producing EM through a deterioration of fiscal, terms-of-trade and current account dynamics. The Bloomberg Commodity Index is down more than 20 percent while the price of Brent crude is down almost 50 percent from the beginning of the crisis to the time of writing.

The FTSE All Emerging All-Cap, which is a market-capital-ization weighted index repre-senting the USD performance of large, mid and small cap EM stocks, collapsed more than 25 percent since late January.

The J.P. Morgan EM Bond Index (EMBI) Global, the most comprehensive EM debt benchmark covering USD denominated Brady bonds, Eurobonds, traded loans and local market debt instruments issued by sovereign and quasi-sovereign entities, declined by more than 10 percent during the same period. Volatility spiked sharply.

The rout was so acute that the US Federal Reserve (Fed) had to act. In mid-March, the Fed established temporary dollar liquidity-swap lines of $60bn each with the central banks of Brazil, South Korea, Mexico and Singapore. Not long thereafter, as the demand for USD cash continued, the Fed launched a new repurchase agreement (repo) facility aimed at supplying foreign central banks with USD liquidity through swaps backed by US Treasuries. The measures intend to help ease the strain in

global USD funding markets while supporting the smooth functioning of the US Treasury market.

Liquidity support measures and additional policy stimulus are contributing to an incipient stabilization of markets. However, three reasons suggest that EM countries are not out of the woods yet. First, the global economic situation is expected to get worse before it gets better. Covid-19 mitigation strategies should continue to limit activity in the coming months.

Second, disruptions in global trade and supply chains as well as demand destruction in China are particularly threat-ening to Asian and commodity exporters. Lower export rev-enues are likely to increase external financing needs in USD.

Third, the deflationary shock from a collapse in global demand is already prompting EM central banks to cut policy rates. In contrast to the US, Europe or Japan, monetary authorities in most EM coun-tries still have some policy space. Lower yields in EM are likely to encourage further capital flight towards safer assets.

The economic conse-quences of the Covid-19 pan-demic will have a deep effect on vulnerable EM. Existing support from the US Fed is nec-essary but not sufficient to provide a backstop to a broader range of EM. Appropriate global policy responses would include actions to strengthen interna-tional financial institutions mandated to support countries with balance of payment problems.

COVID-19 crisis underscores need to create effective BCM plans

FROM BUSINESS PAGE 10

Al Yafei added: “I believe that post COVID-19, not only SMEs but all organisations, will begin to adopt the BCM concepts and start to incorporate it as part of their inherent culture. The government and the regulators will mandate the inclusion of business continuity plans to sustain any short term or long term interruptions to strengthen the overall nationwide response plan to such crises situations. This is clearly evident even in the current nationwide response plan in handling this crisis from shutting down all sectors except the essential ones with minimum impact to the citizens and residents of the country, which is very commendable.” Business Continuity planning helps enterprises to respond to the uncharted circumstances like the COVID-19. This may cover key business operational

risks pertaining to Business Processes and Functions, Com-munications, both internal and external and Supplier & Cus-tomer Management, employee morale, Cybersecurity Threat, work from home plans and adoption of digitalization, arti-ficial intelligence, robotic process automation technol-ogies etc. Companies equipped with BCM provisions have antic-ipated the risks well in advance and expected to perform signif-icantly better to cope-up with emerging dramatic challenges by rigorous series of strategies, business priority setting, by early detection of possible financial impact, safeguard employees, remote working capabilities, IT infrastructure, management of cyber security threats, tech-nology bandwidth, etc.

He noted that government’s efforts led by the Supreme Com-mittee for Crisis Management

provided demonstrative and robust strategies that contributed positively to mitigate the inherent risks at a breakneck speed containing the situation which is commended at a global platform. Moreover, persistence and leadership of BC equipped companies have contributed expressively in advance planning to anticipate and mitigate potential financial impact; thus, put in place rigorous strategies to tackle and preserve enter-prises’ value and reputation and most importantly human lives.

“Unprecedented crisis indeed requires exceptional preparation, planning and in my view, by doing so, companies would indeed begin to immediately respond and begin recovery as the incident occurs, and busi-nesses without BC management are left with a dramatic potential lucky escape or unfortunate outcome,” Al Yafei pointed out.

Boeing enlists banks to advise on possible US supportAFP — NEW YORK Boeing has enlisted investment banks Lazard and Evercore to advise it on talks with Wash-ington on potential federal aid in the wake of the coronavirus pandemic, sources said.

The talks with the US Treasury Department, which is managing a $2.2 trillion US emergency aid package, could begin towards the end of April, said a source on condition of anonymity.

Boeing, the biggest US exporter, had sought $60bn in federal support for itself and the 17,000 suppliers and con-tractors in its supply chain. The sector employs around 2.5 million people in the US, according to the aerospace giant.

Around $17bn aimed at Boeing was included in the giant federal relief bill approved in March. Boeing had $27.3bn in debt at the end of December as it works to complete the pur-chase of Brazilian company Embraer’s commercial plane operation.

President Donald Trump again offered strong support for the company Friday.

“We can’t let anything happen to Boeing,” Trump said at a White House briefing. “It’s got so much potential.” Later in the briefing, Trump said that he thought Boeing “probably” will seek federal support.

“This isn’t a great time to sell airplanes, let’s not kid our-selves,” Trump said. “We’ll do whatever’s necessary to do.” A stumbling block has been the question of what Washington will get in return for the support.

Boeing chief executive David Calhoun has balked at the idea that taxpayers would receive shares in Boeing, a pro-posal floated by some congres-sional Democrats.

In talks with major airlines, Treasury officials have demanded that carriers

maintain their staff until at least September 30.

But Boeing is targeting a reduction of 10 percent of its workforce in the commercial plane business, the Wall Street Journal reported. The company’s factories have been shuttered due to COVID-19.

In anticipation of complex negotiations with the Treasury, Boeing has also asked Lazard and Evercore to explore private sources of funds, said a dif-ferent source, confirming a report in the Wall Street Journal.

Boeing declined to comment.

Boeing also continues to be embroiled in a complex process with the Federal Avi-ation Administration over efforts to win approval to resume flights on the 737 MAX, which has been grounded since March 2019 following two deadly crashes.

A key test flight of the Boeing 737 MAX has been pushed back by a month to May due to the upheaval of the coro-navirus crisis, sources said earlier this week.

Canada’s Leader of the Government in the House of Commons, Pablo Rodriguez, speaks in the House of Commons as legislators convene to give the government power to inject billions of dollars in emergency cash to help individuals and businesses through the economic crunch caused by COVID-19 outbreak, on Parliament Hill in Ottawa, Ontario, Canada.

Sudden reversal of capital flows a problem for vulnerable EM

QNB ECONOMIC COMMENTARY

Accumulated non-resident capital outflows from EM

(USD Bn, t = initial date, daily)

The final G20 communique appeared to gloss over simmering divisions over energy policy, making no mention of output cuts and pledging simply to ensure oil “market stability” amid the coronavirus pandemic.

08 SUNDAY 12 APRIL 2020BUSINESS

G20 ministers struggle to finalise oil output cuts despite US effortsAFP — RIYADH

Top oil producers struggled to finalise production cuts during a virtual summit held by G20 energy ministers on Friday, despite US President Donald Trump’s mediation efforts to end a standoff with Mexico.

The final G20 communique appeared to gloss over sim-mering divisions over energy policy, making no mention of output cuts and pledging simply to ensure oil “market stability” amid the coronavirus pandemic.

Mexico was the lone holdout in a record Opec-led agreement reached a day earlier that would see output slashed by 10 million barrels per day in May and June followed by a gradual reduction in cuts until April 2022.

The standoff had cast doubt on efforts to bolster oil prices, pushed to near two-decade lows by the demand-sapping pandemic and a Saudi-Russia price war that rattled global markets.

The subsequent G20 meeting — hosted by Riyadh —was expected to seal the deal more widely with non-OPEC countries in the group including Mexico, the United States and Canada.

But there was no sign of an agreement in the group’s final statement.

“We commit to ensure that the energy sector continues to make a full, effective

contribution to overcoming COVID-19 and powering the subsequent global recovery,” said the statement released early Saturday.

“We commit to take all the necessary and immediate measures to ensure energy market stability.” There was no sign that countries such as Canada — the world’s fourth largest producer — had com-mitted to specific cuts, with Natural Resources Minister Seamus O’Regan saying the G20 summit “didn’t discuss numbers”.

Under the Opec deal, Mexico was expected to cut production by 400,000 barrels per day but it resisted the suggestion. Mex-ico’s President Andres Manuel Lopez Obrador said he had reached an agreement with Trump to cut production by only 100,000 bpd.

He added that Trump had

agreed to cut US production by 250,000 bpd “as compen-sation” for Mexico.

Trump later confirmed the deal, saying the United States will “make up the difference” by cutting “some US production”.

The G20 statement was silent on the Mexico-US deal.

The tentative production cut deal, which hinges on Mexico’s consent for it to take effect, marked a possible end of the price war between Russia and Saudi Arabia. Both oil producers took on the lion’s share of the cuts as they agreed to slash output to around 8.5m bpd, according to Bloomberg News.

Russian Energy Minister Alex-ander Novak also urged the G20 ministers to act in a spirit of “part-nership and solidarity”, according to a local television station.

Opec Secretary-General Mohammad Barkindo (pic-tured) warned the global crude storage capacity would be

exhausted before the end of May because of a supply glut and a “jaw-dropping” drop in demand.

“There is a ghostly spectre encircling the oil industry,” Bar-kindo told the ministers.

“We need to act now, so we can come out of (the) other side of this pandemic with the strength of our industry intact.” The impact of the tentative deal on prices was not immediately clear as the global oil markets were shut on Friday for the Easter weekend.

But Stephen Innes, an analyst at AxiCorp, said the supply cuts were “less than the market hoped for” given the hit to demand from coronavirus lockdowns throughout the world.

“The deal currently tabled will only partially offset oil price distress,” he said.

“The storm clouds for oil prices will only completely dis-sipate when lockdowns are lifted.” Rystad Energy also said the cuts were not enough to restore market equilibrium.

“The proposed 10 million bpd cut for May and June will keep the world from physically testing the limits of storage capacity and save prices from falling into a deep abyss,” the energy research firm said.

“But it will still not restore the desired market balance.” Oil prices have slumped since the beginning of the year due to the COVID-19 pandemic.

As credit markets rebound, neediest borrowers are left behindBLOOMBERG

The $1.2 trillion US junk-bond market has staged a marked recovery in recent days. But pull back the curtain and it’s clear not all borrowers are reaping the benefits equally.

For many of the riskiest credits, the situation remains as dire as ever, leaving them with little chance to access the financing they desperately need — at least, not anytime soon. Risk premiums on bonds rated CCC remain near the widest since 2009 relative to securities a few notches higher in the B and BB buckets. The F e d e r a l R e s e r v e ’ s

announcement Thursday that it will start buying debt recently downgraded to the highest junk tier could ultimately exac-erbate the divergence, according to analysts, even as the broader market rallies.

The growing disparity between speculative-grade issuers may signal that a wave of restructurings among the most leveraged companies is largely unavoidable, even if the global economy is able to turn the corner in the coming months. Barclays Plc said last week it expects high-yield defaults to reach 9 percent to 10 percent in 2020, while Goldman Sachs Group Inc.’s forecast was even

more bleak, predicting a trailing 12-month average of 13 percent later this year.

“In periods of economic uncertainty or market uncer-tainty, as well as expectations of earnings declines, there is gen-erally going to be a flight to quality overall because that uncertainty is magnified the further you go down the risk spectrum,” said Steven Oh, global head of credit and fixed-income at PineBridge Investments.

Oh said he’s underweight CCC rated debt and is avoiding adding energy-sector risk in particular. Of all the measures used to gauge the strength of US

credit, the gap between investment-grade and high-yield risk premiums is among the most closely followed. US junk bonds on average pay 5.52 percentage points more than investment-grade notes, down from a high of 7.27 percentage points late last month.

But some market watchers now say the metric is con-cealing dangers lurking beneath the surface. Bonds in the CCC tier are trading at an average spread of 16.4 per-centage points relative to Treasuries. Not only that, but the gap relative to B rated notes has ballooned to 8.62 per-centage points, barely off last

month’s highs and near the widest since the depths of the financial crisis.

Just as concerning, the spread between B rated and BB rated securities — at 2.44 per-centage points — remains the widest since 2016.

As a consequence, the primary market has remained virtually shut for all but the highest-rated, most liquid spec-ulative-grade issuers. BB rated Yum! Brands Inc. last week was the first company to raise funds in nearly a month when it sold $600m of debt.

Since then, companies including similarly-rated Res-taurant Brands International

Inc. and Wynn Resorts Ltd. have priced deals, while split-rated Ferrellgas has been the only credit with at least one CCC rating to tap the market.

To make matters worse, investment-grade companies directly impacted by the COVID-19 outbreak such as Carnival Corp. and Nordstrom Inc. are turning to junk-bond buyers for financing. Even when transactions aren’t being conducted off of bank high-yield desks, funds dedicated to the asset class are increasingly buying blue-chip deals amid attractive rates and a record spurt of supply, limiting market access for lower-rated issuers.

SoftBank CEO Son says will supply 300m masks per month to JapanREUTERS — TOKYO

SoftBank Group Corp CEO Masayoshi Son (pictured) said he has secured a monthly supply of 300 million face masks for Japan from May after reaching a deal with Chinese electric vehicle maker BYD Co Ltd, which has also started producing masks.

SoftBank will supply two different kinds of mask, initially for medical staff, in cooperation with the Japanese govern-ment’s “mask team”, set up to tackle shortages due to the coronavirus outbreak, Son said on Twitter.

Addressing the supply crunch is a priority for the Jap-anese government, which will begin delivering two washable masks to households next week -- a move that has been widely criticised on social media as inadequate.

The government is also targeting domestic production of 700 million disposable masks.

Son, who has a long history of partnering with and investing in Chinese firms, said BYD is setting up a new line to produce the masks.

BYD’s production capacity has reached 15 million masks

a day, a company spokes-woman said, confirming the firm will supply masks to SoftBank.

SoftBank’s supply will consist of 100 million N95 masks, which can filter very small particles, and 200 million regular surgical masks.

The coronavirus pandemic has spurred Son’s return to Twitter, where he has com-plained that Japan’s response is being spearheaded by poli-ticians rather than scientists and polled users on their view of the government’s response — adding to pressure to increase social distancing measures.