Monday, September 30, 2019Safar 1, 1441 AH

BUSINESSGULF TIMES

Lagarde faces ECB tinged by bitterness

Rating affi rmed by S&P despite the oil attacks

DRAGHI PLAN | Page 9SAUDI OUTLOOK | Page 2

LOCALISATION FOCUS : Page 12

Petrotec, Flowserve set up dry gas seal facility in Qatar

Huge potential for Qatar Inc in Turkey to bring in ‘more Alternatif Bank opportunities’ The huge potential for Qatar Inc in Turkey is all set

to bring in more opportunities for Alternatif Bank, which is wholly owned by Qatar’s Commercial

Bank.Qatar’s investments in Turkey are on the increase, es-

pecially in strategic sectors such as fi nance, retail, energy, agriculture and construction, Commercial Bank manag-ing director and Alternatifbank chairman Omar Hussain Alfardan told Ekonomist magazine in an interview.

Qatar has directly invested about $23bn to date in Tur-key and is ranked the 19th country in direct investments, he said, highlighting that investments are predominantly in the banking industry.

Finding that these investments are predominantly in the banking industry and are mostly in the form of share acquisitions; he said, “In this respect, we witness the fact that the Qatari companies see a great investment potential in Turkey and invest in various industries, in-cluding banking, as part of their medium to long term plans.”

The strength of the strategic relations with Turkey was emphasised during the interview by pointing out that Commercial Bank holds a key position as an investor that believes in the long-term potential and power of the Turkish economy, and supports the development of ever-increasing business relations between Turkey and Qatar.

“It is one of the bank’s highest priorities to provide fi nancial and trade support for the increasingly strong strategic collaboration between these two allied and friendly nations, which have stood side by side in chal-lenging times and Turkey lies at the centre of our inter-national strategy,” according to him.

Commercial Bank’s investment in Alternatif Bank will continue to grow and add value to the economies of both countries; simply because Turkey is closely known and embraced by the Qatari people since the recent develop-ments have also brought the two countries closer.

Commercial Bank owns 100% of Alternatif Bank’s shares. It became the majority shareholder in 2013 hold-ing an initial 74.24% stake and purchased the remaining stake from the Anadolu group in December 2016.

‘Bedaya Friends’ programme holds series of workshops to develop local startups

The Bedaya Centre for Entrepreneur-ship and Career Development (Be-daya Centre), a joint initiative of

Qatar Development Bank and Silatech, has concluded a series of workshops for startup projects to help them evaluate and develop their businesses.

The month-long series, held under the ‘Bedaya Friends’ programme, featured certifi ed and accredited coaches who highlighted various topics that helped en-trepreneurs develop their businesses and transform them into larger projects, as well as ensure their success and sustainability.

The fi rst workshop began by evaluating each participant’s projects and recommen-dation for future development. Another workshop was held to illustrate the best techniques for photographing products us-ing mobile phones.

Similarly, two other workshops tackled the procedures for establishing a business, while another focused on the country’s la-bour laws and rules governing the relation between owners and employees.

Furthermore, the workshops had special-ised session on topics, such as social media usage for startups marketing, business model canvas legal aspects, accounting and fi nancials for small businesses.

After the workshop series, all partici-pants received a Bedaya membership card, which will provide them the necessary sup-port later by giving them priority to par-ticipate in bazaars and events organised by Bedaya Centre. In addition, the member-ship will grant them discounts when they

will participate in all paid programmes and workshops organised by the centre.

Bedaya Centre general manager Reem al-Suwaidi said, “Through the Bedaya Friends programme, we have been successful in seeking the expertise of certifi ed, accred-ited, and professional coaches and trainers to enrich and enhance the capabilities of the centre’s members from startups and entre-preneurs.

“The training workshop series was aimed at providing the educational tools to help

the startups and entrepreneurs to come up with a clear vision about the needed re-quirements to ensure the success of their diverse projects.”

She added, “During the workshops, we assessed the participants’ projects and pre-sented a recommendation for their devel-opment, which will cement the presence of SMEs in the local market due to its positive and pivotal role in strengthening the eco-nomic wheel of the state and supplying the national market’s needs.”

China vows ‘two-way’ financial opening as trade talks near

BloombergBeijing/Shanghai

China said it would continue to open up its financial mar-

kets and encourage foreign investment amid reports the

Trump administration is considering restrictions on fund

flows to China.

“We will take further steps to promote high quality

two-way financial opening, encourage foreign financial

institutions and funds to invest in the domestic financial

market, to boost the competitiveness and dynamism of the

domestic financial system,” according to a summary from

the eighth meeting of the Financial Stability and Develop-

ment Committee.

The world’s two largest economies are heading into

another round of high-level trade talks following China’s

week-long national holidays starting October 1. A US crack-

down on capital flows would present a new pressure point

in the economic dispute, and could cause disruptions well

beyond the hundreds of billions of dollars in tariff s the two

sides have levied against each other.

“Chinese eff orts to enhance reform and opening will

be slowed down in the short term, but it will never be

stopped,” said Liao Qun, Hong Kong-based chief econo-

mist with China Citic Bank International Ltd. “China could

explore European, Southeast Asian and the Belt and Road

markets in lieu of the US.”

Bloomberg News reported on Friday the Trump administra-

tion is considering measures including delisting Chinese

companies from US stock exchanges, limiting Americans’

exposure to the Chinese market through government

pension funds, and putting caps on the Chinese companies

included in stock indexes managed by US firms.

The US Treasury said in a statement on Saturday that the

administration “is not contemplating blocking Chinese

companies from listing shares on US stock exchanges at

this time.”

The statement did not address or rule out other possibili-

ties.

While various Chinese media republished the Bloomberg

story and Treasury Department’s statement, they were not

immediately seen responding to the deliberations by the

Trump administration. The Foreign Ministry didn’t reply to

a fax on Saturday seeking comments, while the Commerce

Ministry didn’t address the issue at a press conference

yesterday. Today, traders in China’s markets will have to de-

cide how to price the risk of the potential US move, which

Citigroup Inc has termed the most extreme threat against

China in the escalating rivalry between the two economies

so far. Page: 4

Qatar Chamber, Thailand examine co-operation ties in labour affairsOff icials from Qatar Chamber held a meeting yesterday with a trade delegation from Thailand headed by deputy permanent secretary at the Ministry of Labour, Major Romayong Surakitbunharn.Surakitbunharn, as well as Thai ambassador to Qatar Nathapol Khantahiran, was received by Qatar Chamber first vice chairman Mohamed bin Towar al-Kuwari at the chamber’s Doha headquarters.During the meeting, both parties discussed ways to enhance co-operation relations between Qatar and Thailand in the field labour. The meeting also presented diff erent sectors in the Qatari market where Thai labourers could showcase their skills.Al-Kuwari said Qatar and Thailand “are linked with

distinct co-operation relations in many fields.” He noted that qualified and trained Thai labourers “are highly-welcomed” to work in projects being implemented by the country and in the tourism, services, healthcare industry, and food security sectors.Surakitbunharn stressed that Thailand supports the development of its co-operation ties with Qatar and the country’s 2030 national vision. She also expressed her country’s preparedness to provide Qatar with qualified labourers in various sectors.“Qatar has managed to achieve a significant development at all aspects. It is growing fast. There are many Thai companies operating in the Qatari market,” Surakitbunharn added.

Al-Kuwari receiving Surakitbunharn and Khantahiran during a meeting in Doha yesterday.

Participants of the workshop series under the ‘Bedaya Friends’ programme listening to one of the subject experts.

Commercial Bank holds a key position as an investor that believes in the long-term potential and power of the Turkish economy, and supports the development of ever-increasing business relations between Turkey and Qatar, says Commercial Bank managing director and Alternatifbank chairman Omar Hussain Alfardan.

BUSINESS

Gulf Times Monday, September 30, 20192

Kuwait’s stock market hasn’t reached its full potential, says ministerBloombergKuwait

The Kuwaiti stock market has yet to live up to its full potential with many public-private projects still to be completed and a number of potential

IPOs in the pipeline, Minister of Commerce and Indus-try Khaled al-Roudhan said.

“We think we have the muscles, the know-how, and all the opportunity to become a commercial hub,” al-Roudhan said in an interview. “We’re trying to improve our business environment not only for foreigners but Kuwaitis too.”

Kuwait has taken some market-liberalisation meas-ures that bring it closer to developed markets, al-Roud-han said. He cited the Capital Markets Authority’s “very ambitious development programme” focused on acces-sibility for foreign investors as well as the lack of foreign ownership limits.

The Capital Markets Authority will start a public of-fering of its 50% stake in Boursa Kuwait next month, making it the second publicly traded exchange in the Gulf after Dubai. “This will enhance its profi le further and increase its competitiveness,” according to al-Roudhan.

MSCI Inc will add Kuwait to its main index tracking stocks in emerging markets in June 2020, once some trading mechanisms are improved, in an upgrade that has been priced in by investors anticipating billions of dollars of infl ows.

More high-profi le listings can be gained by encourag-ing family businesses to list on the exchange as well as “speeding up the privatisation programme and PPP im-plementation, as many assets within those programs are candidates for listing,” al-Roudhan said.

Foreign investments of $1.5bn entered the bourse as a result of the capital market upgrading to the EM catego-ry in the FTSE index, the minister said. Approximately $2.5bn is expected after the offi cial upgrade of MSCI.

Saudi credit rating affi rmed by S&P despite oil attacksBloombergDubai

Saudi Arabia’s credit ranking has been affi rmed by S&P Global Ratings as the king-

dom recovers faster than expected from the biggest attack ever on its oil industry.

S&P kept the sovereign assess-ment at A-, four levels above junk and on par with Malaysia and Mal-ta. The outlook remains stable, ac-cording to a statement on Friday.

“We expect Saudi Arabia to re-double its eff orts to secure key oil production and processing facilities, increase storage capacity, and en-hance attempts to develop Red Sea export routes that would help avoid the volatile Arabian Gulf,” S&P said.

Shaken by the worst disruption of crude output in history, the king-dom is quickly reviving production, with top offi cials suggesting the strikes had “zero” impact on the economy and revenue.

Since then, Aramco has been working fl at out to restore capacity, while maintaining normal supplies to customers by tapping invento-ries and ramping up other fi elds.

Saud Arabia’s real GDP will con-tract by about 0.4% this year, driv-en mainly by a fall in oil production tied to the Opec deal and the at-tacks, S&P said. The rating com-pany expects real GDP to rebound to 2.3% on average over 2020-2022.

Despite the turnaround, Saudi Arabia’s public fi nances remain under pressure as it’s relied on spending to stimulate a sluggish economy. The International Mone-tary Fund warned that the kingdom needs a tighter fi scal policy to safe-

guard its budget in case of a decline in oil prices.

Most forecasts project this year’s defi cit far above Saudi Arabia’s tar-get of 4.2% of gross domestic prod-uct.

“There will likely be a wait for

clarity on the speed of restoration of the kingdom’s oil capacity and output before any rating action,” Bilal Khan, senior economist for Middle East, North Africa and Pa-kistan in Dubai, said before S&P’s announcement.

Last-minutes sell pressure drives QSE below 10,400By Santhosh V PerumalBusiness Reporter

Substantial selling pressure especially in the last few minutes of trading drove

the Qatar Stock Exchange below 10,400 levels yesterday.

The industrials and consumer goods counters witnessed higher than average selling pressure as the 20-stock Qatar Index settled 0.23% lower at 10,395.78 points, although it touched an intraday high of near 10,440 points.

The weakened buying inter-ests of foreign and domestic in-stitutions rather depressed the

sentiments in the market, whose key benchmark is up 0.94% year-to-date.

Market capitalisation saw QR76mn, or 0.13%, decline to QR575.86bn mainly owing to microcap segments.

Islamic equities saw faster de-clines than the other indices in the market, where the Gulf and non-Qatari individuals turned bullish.

Trade turnover declined amidst higher volumes in the bourse, where the industrials and realty sectors together ac-counted for more than 55% of the total volume.

The Total Return Index fell

0.23% to 19,129.12 points, the All Share Index by 0.04% to 3,062.7 points and the Al Rayan Islamic Index (Price) by 0.34% to 2,347.06 points.

The industrials index de-clined 0.92%, consumer goods and services (0.83%) and banks and fi nancial services (0.08%); whereas real estate gained 2.19%, telecom (0.46%) and in-surance (0.14%). The transport index treaded a fl at path.

Major losers included Qatari Investors Group, Industries Qa-tar, Commercial Bank, QNB, Al Khaliji, Qatar Industrial Manu-facturing, Gulf International Services, Mesaieed Petrochemi-

cal Holding and Mazaya Qatar; even as QIIB, Qatari German Company for Medical Devices, Ezdan, Dlala, Doha Bank, Al Khaleej Takaful, Qatar Gen-eral Insurance and Reinsurance, Ooredoo and Untied Develop-ment Company were among the gainers.

Non-Qatari institutions’ net buying declined substan-tially to QR2.35mn compared to QR12.33mn the previous trading day.

Domestic funds’ net buying also weakened considerably to QR9.84mn against QR14.94mn on September 26.

However, the Gulf individuals

turned net buyers to the tune of QR0.83mn compared with net sellers of QR0.54mn last Thurs-day.

Non-Qatari individuals were also net buyers to the extent of QR0.35mn against net sellers of QR2mn the previous trading day.

Gulf institutions’ net sell-ing declined infl uentially to QR0.56mn compared to QR11.33mn on September 26.

Local retail investors’ net profi t booking eased perceptibly to QR12.8mn against QR14.14mn last Thursday.

Total trade volume rose 6% to 105.83mn shares, while value fell 21% to QR193.02mn and trans-

actions by 35% to 4,767. The consumer goods sector’s trade volume almost tripled to 17.41mn equities and value soared 28% to QR26.89mn, whereas deals shrank 37% to 529.

The transport sector reported a 71% surge in trade volume to 4.93mn stocks and 19% in value to QR16.03mn but on a 16% fall in transactions to 194.

The insurance sector’s trade volume expanded 24% to 3.14mn shares and value by 2% to QR7.01mn, while deals were down 3% to 229.

The real estate sector saw a 21% expansion in trade volume to 27.7mn equities and 28% in

value to QR26.31mn but on a 34% contraction in transactions to 568.

However, the telecom sector’s trade volume plummeted 45% to 2.45mn stocks, value by 56% to QR10.37mn and deals by 56% to 380.

There was a 24% plunge in the industrials sector’s trade volume to 30.96mn shares, 36% in value to QR48.16mn and 24% in trans-actions to 1,847.

The banks and fi nancial serv-ices sector’s trade volume was down less than 1% to 19.24mn equities, value by 31% to QR58.24mn and deals by 46% to 1,020.

Qatar’s PPI falls 16.5% year-on-year in August this year

By Santhosh V PerumalBusiness Reporter

Weakened earnings in the hydrocarbons and some manu-

factured products led Qatar’s PPI (producers’ price index)

to drag 16.5% year-on-year in August 2019, according to

the official statistics.

Qatar’s PPI – a measure of the average selling prices

received by the domestic producers for their output – saw

a 1.5% month-on-month dip, said the figures released by

the Planning and Statistics Authority (PSA).

The PSA had released a new PPI series in late 2015. With

a base of 2013, it draws on an updated sampling frame

and new weights. The previous sampling frame dates

from 2006, when the Qatari economy was much smaller

than today and the range of products made domestically

much narrower.

The mining PPI, which carries the maximum weight of

72.7%, fell 1.4% on a monthly basis as crude petroleum

and natural gas prices fell in a similar proportion, while

that of stone, sand and clay was unchanged in the review

period

The PPI for mining saw a 17.7% plunge year-on-year in

August 2019 on the back of a 17.7% decrease in the price

of crude petroleum and natural gas; even as there was a

marginal 0.2% rise in that of stone, sand and clay.

The manufacturing sector, which has a weight of 26.8% in

the PPI basket, witnessed a 14% yearly plunge this August

on a 16.4% contraction in the price of refined petroleum

products, 11.3% in basic chemicals, 9.9% in basic metals

and 4.5% in cement and other non-metallic mineral

products.

Nevertheless, there was a 5.9% jump in the price of

rubber and plastics products, 3.8% in other chemical

products and fibres, 3.5% in dairy products, 2.2% in juices,

2.1% in paper and paper products, 1.2% in beverages and

9.2% in grain mill and other products.

The manufacturing sector PPI saw a monthly 1.8% fall in

August 2019 as the price of basic chemicals was down

2.3%, refined petroleum products and rubber and plastics

products (2% each), beverages (0.2%) and dairy products

and grain mill and other products (0.1% each); even as

paper and paper products’ price rose 3.2% and cement

and other non-metallic mineral products by 0.1%.

The utilities group, which has a 0.5% weightage in the PPI

basket, saw its index tank 5.1% on yearly basis in August

this year as electricity and water prices had fallen 5.9%

and 4.4% respectively.

The index however saw a 0.6% increase month-on-month

this August with the price of electricity gaining 1.3%;

whereas that of water witnessed a marginal 0.1% dip.

Kuwaiti traders follow the market at the Kuwait Stock Exchange in Kuwait City (file). MSCI will add Kuwait to its main index tracking stocks in emerging markets in June 2020, once some trading mechanisms are improved, in an upgrade that has been priced in by investors anticipating billions of dollars of inflows.

Saudi and foreign investors stand in front of the logo of state oil giant Aramco at a business event in the capital Riyadh (file). The kingdom is quickly reviving production, with top off icials suggesting the strikes had “zero” impact on the economy and revenue.

BUSINESS3Gulf Times

Monday, September 30, 2019

‘They don’t need us anymore’: Auto workers fear electric unrestBloombergSouthfield, Michigan

The milkman went missing thanks to the rise of refrigerators. Switchboard operators were done in by the dawn of direct dialling. And in the car industry, auto workers are deathly afraid the engine assembler will give way to battery builders.Dread over the prospect that plug-in cars – which have fewer parts and require less labour to build – will doom auto jobs helped spark the first United Auto Workers strike against General Motors Co in over a decade. Ford Motor Co and Fiat Chrysler Automobiles NV, which are rolling their own battery-powered models to market in the coming years, could face a similar fate if they’re unable to quell the UAW’s concerns that widespread adoption of EVs endangers the employment of 35,000 union members.“There’s a potential for our jobs to be gone – they don’t need us anymore,” said Tim Walbolt, president of the UAW local representing workers at a Fiat Chrysler transmission components plant near Toledo, Ohio. “It scares us.”For all the buzz generated by Tesla Inc, the EV era is still in its infancy, with zero-emission autos having reached just 2% of global production. GM has extended the UAW an off er to get in on the ground floor, pitching a new battery plant staff ed by dues-paying union members in an Ohio town jarred by job loss. But the overture came with a catch: GM wants to pay the workers less, and the facility is unlikely to need as many staff as an engine or transmission factory would.A recent study of electric-vehicle production in Europe by consultant AlixPartners found that it took 40% fewer hours to assemble an electric motor and battery than a traditional internal-combustion engine and transmission.“It’s a bad news story from a labour perspective,” said Mark Wakefield, the head of AlixPartners’s automotive practice. “You would just fundamentally need less people.”Perversely, GM also arguably has uncertainty on its side at the bargaining table. It’s going to want concessions to cushion itself against the risk that consumer adoption of electric autos remains slow. The carmaker isn’t fully utilizing the factory that builds the Chevrolet Bolt EV north of Detroit, and tepid demand for the plug-in hybrid Chevy Volt put the future of the factory that assembles it in nearby Hamtramck in doubt.The collision with carmakers over electrification is one the UAW saw coming.“Electric, to me, is where the real risk is to our membership,” Jennifer Kelly, the union’s research director, said during a collective-bargaining conference in Detroit earlier this year.

It’s almost certain to carry over from the UAW’s talks with GM to negotiations with Detroit’s other automakers. Ford has estimated electric cars will require 30% fewer hours of labour per vehicle and 50% less factory floor space.“Rationalisation of the powertrain portfolio is certainly a huge opportunity for all of us as we start this transition,” Joe Hinrichs, Ford’s automotive president, told investors on an earnings call in April.Even Fiat Chrysler, a laggard with regard to electrification, has stoked fear at union halls linked to internal-combustion components plants, where rumours are flying that the company plans to outsource work to lower-paying suppliers.“We cannot help but feel like the left behind stepchildren of the UAW,” Mike Booth, the president of the union’s local in Marysville, Michigan, wrote in a letter to the labour group’s Chrysler council last month. He and other UAW leaders fear that German mega-supplier ZF Friedrichshafen AG, which took over operation of a Chrysler axle plant in 2008, will take work away from the

automaker’s machining facility near Toledo and a transmission and castings complex in Kokomo, Indiana.A Fiat Chrysler spokeswoman categorically denied that another company is seeking to take work from the Toledo or Kokomo operations and called them critical to the automaker’s business. ZF will continue to work with the UAW in Marysville, and an arrangement in which Fiat Chrysler licenses technology from the supplier in Kokomo may be creating some confusion, a spokesman said. He declined to comment on Toledo.In August, GM shut down a transmission plant outside Detroit, aff ecting more than 260 workers as part of a larger restructuring. That may foreshadow other closures as EV production ramps up. The supply chain is where the job risk is greatest, especially for workers employed making engines, transmissions and sub-components that aren’t needed in EVs.Consultant IHS Markit predicts the introduction of new gas-powered engine families will drop to zero

in 2022, from nearly 70 in 2011, as automakers shift spending to electric propulsion. The market for a whole range of parts used in internal combustion vehicles – such as axles, muff lers, fuel tanks and transmissions – will shrink in a range from 6% to 20% by 2025, according to a study by Deloitte Consulting.“The value chain is shifting and companies and their unions are going to have to figure out how to change themselves or risk becoming part of a shrinking bubble,” said Neal Ganguli, head of the auto supply base group at Deloitte’s US automotive practice.That’s a problem because engines and transmissions currently account for just under half of automaker manufacturing capacity, Credit Suisse auto analyst Dan Levy estimated in a September 23 note to investors. As a result, automakers may face labour, social and political challenges as they transition to EVs, he wrote.GM’s EV factory in Lake Orion, Michigan, off ers a window into what the UAW is worried about.While the plant is unionised, the

automaker staff s it in part with lower-wage employees under a special contract. What’s more, 64% of the fully electric Bolt model’s content is made in Korea, including the battery.One of the biggest suppliers is Seoul-based LG Chem Ltd, which makes cells in South Korea and assembles packs for GM and Fiat Chrysler at a non-union plant in western Michigan with a starting wage for technicians of $16 an hour.That’s close to what Ford pays its entry-level temporary workers, but far below the $28 to $30 an hour for legacy UAW employees. Temp workers at Ford’s engine and transmission plants also can move up into legacy wage brackets, which isn’t the case at LG’s facility.“The move to electric could weaken the union further,” Joshua Murray, a labour expert and assistant professor of sociology at Vanderbilt University. “Certainly, the UAW is going to have to try to organise the battery plants, but I think they’ll have a rough time.”No major automaker entirely outsources engines, in no small

part thanks to displacement and horsepower being the source of marketing buzz and bragging rights for decades. EVs are a diff erent story – even Tesla relies heavily on Japan’s Panasonic Corp in the making of its battery packs.Batteries – the single most expensive part of an electric vehicle – are almost exclusively manufactured overseas and mostly by companies relatively new to the automotive powertrain, such as China’s Contemporary Amperex Technology Co Ltd and South Korea’s SK Innovation Co.SK Innovation broke ground earlier this year on a new battery factory outside of Atlanta, which will employ some 2,000 non-union workers. And CEO Jun Kim thinks carmakers will have a tough time replicating what his company does.“There is a diff erence between the DNA of automakers and battery makers such as us,” Kim said in a March interview. “There are only a handful of battery suppliers that are capable of delivering high-quality products while guaranteeing cost competitiveness.”

Why electric-powered airplanes are headed for takeoffBy Benedikt Kammel, Oliver Sachgau and Tara PatelBerlin/Munich/Paris

In Sweden they call it flygskam, or flying shame – that guilty sense when you zip off to Spain for the weekend that you’re helping destroy the planet. Airlines and aircraft makers are acutely aware that they face tougher emissions regulations and potential backlash from climate-conscious customers. That’s one reason they’re seeking ways to cut pollution and reduce their carbon footprint, including new electric and hybrid planes that could do for the skies what the Toyota Prius did for the roads.

1. Is that even possible?

Theoretically yes, but it’s not a simple engineering challenge. Adopting unproven technologies such as hybrid propulsion is tough for any manufacturer, but at the 2019 Paris Air Show “electrification” of aircraft leaped into the spotlight after Airbus SE floated the possibility of introducing a hybrid version of its best-selling single-aisle passenger jet as soon as 2035. Smaller electric and hybrid aircraft are set to arrive sooner.

2. How would they work?

The big problem for electric motors is the size and weight of the batteries needed to power them. Current

lithium-ion batteries have only about 2% the energy density of liquid jet fuel, and for an airplane, huge batteries are a non-starter. Hybrid technology mitigates that by using conventional fuels and turbines to charge smaller cells. In an airplane such as the potential Airbus model, electric engines could power the short but energy-intensive takeoff s and landings, saving vast amounts of jet fuel. Then, when the plane reaches cruising altitude, it would switch to conventional jet engines that are more eff icient during that part of a flight.

3. How does that compare to a Prius?

The Prius uses what’s known as “parallel” hybrid technology, where both an electric motor powered by batteries and a conventional engine powered by gasoline are connected to the power train. They can be used interchangeably, and switched dynamically, depending on demand. There are some prototypes of parallel hybrid airplanes, but many projects use an alternative approach called “serial” hybrid, where wing-mounted engines are connected to batteries that are in turn connected to a turbine in the back of the plane run by kerosene, diesel or even hydrogen. During takeoff and landing, the battery powers the plane on its own, while at cruising altitude the turbine kicks in and recharges the batteries.

4. How soon might electric planes be in the air?

It’s a matter of size. Small robotaxis are poised to take off first, with the first commercial models of autonomous or semi-autonomous electric aircraft scheduled to hit the market in 2020. Small hybrid-electric planes ferrying 10 to 20 passengers could arrive by the middle of the next decade and bigger regional-sized aircraft carrying many as 40 passengers around 2030, according to Stephane Cueille, chief technology off icer at Safran SA, a top jet engine maker.

5. What about big passenger planes?

Full-size commercial airliners will need much longer: the Airbus project mooted in Paris will take at least 15 years to reach fruition. The European aerospace giant is working with Rolls-Royce Holdings Plc and Siemens AG on developing a hybrid engine, though that power plant, due to be tested in the next two years, would produce just 2 megawatts of power, far less than what’s needed to propel even a small narrow-body model. (Siemens said on June 18 that it’s selling its share of the venture to Rolls-Royce.) Purely electrical propulsion is much further out, given that batteries are too heavy to achieve the same eff iciency as fuel. Safran estimates that full-size battery-

powered commercial aircraft are not feasible before 2050 at the earliest.

6. How much would they cut emissions?

That depends. As with cars, the carbon footprint of a hybrid plane depends on the source of its electricity. A serial hybrid plane that powers its battery by burning jet fuel isn’t going to save much in emissions. Using hydrogen, or making sure the batteries are originally charged using renewable energy sources, could make a diff erence. Even an all-electric

plane would only do so much to cut emissions. In a study published in Nature in 2018, researchers estimated that if all aircraft on routes shorter than 690 miles (1,110 kilometres) flew purely electrically, it would cut jet fuel use by 15%.

7. Who else is working on this?

EHang Air Mobility Group of China says it will start selling a $300,000 aircraft next year and anticipates strong demand from emergency responders, air taxi services and

operators of tourist flights. Germany’s Volocopter GmbH, which is backed by Daimler AG, this year will open a “Voloport” in Singapore for public test flights and expects commercial service as early as 2021. Israel’s Eviation Aircraft Ltd is planning a first flight later this year in the US of its Alice model, followed by the assembly of more planes in Arizona and Washington state and certification around 2021. Other startups chasing the opportunity include US-based Zunum Aero, MagniX Technologies Pty Ltd and the UK’s Faradair.

Bloomberg QuickTake Q&A

An Airbus E-Fan electric aircraft performs a flying display at the 51st International Paris Air Show in Paris (file). Airlines and aircraft makers are acutely aware that they face tougher emissions regulations and potential backlash from climate-conscious customers. That’s one reason they’re seeking ways to cut pollution and reduce their carbon footprint, including new electric and hybrid planes that could do for the skies what the Toyota Prius did for the roads.

A demonstrator holds a sign reading “UAW on Strike” during a United Auto Workers strike outside the General Motors Co Hamtramck assembly plant in Detroit, Michigan on September 15. Dread over the prospect that plug-in cars – which have fewer parts and require less labour to build – will doom auto jobs helped spark the first UAW strike in over a decade. Ford Motor Co and Fiat Chrysler Automobiles, which are rolling their own battery-powered models to market in the coming years, could face a similar fate if they’re unable to quell the UAW’s concerns that widespread adoption of EVs endangers the employment of 35,000 union members.

BUSINESS

Gulf Times Monday, September 30, 20194

Treasury says no US plan to block China listings for nowBloombergWashington

A US Treasury offi cial said there are no current plans to stop Chinese companies from list-

ing on US exchanges, a day after a re-port that the Trump administration is discussing ways to limit US investors’ portfolio fl ows into China.

“The administration is not con-templating blocking Chinese compa-nies from listing shares on US stock exchanges at this time,” Treasury spokeswoman Monica Crowley said in an e-mailed statement on Saturday.

Crowley was responding to Friday’s Bloomberg News report on various measures under consideration by the US, including delisting Chinese com-panies from US exchanges. The report unnerved markets, with the S&P 500 Index closing about 0.5% lower. US-listed shares of China-based compa-nies, such as Alibaba Group Holding and Baidu Inc, tumbled.

Other potential measures include limiting Americans’ exposure to the

Chinese market through government pension funds, and ways to put caps on the Chinese companies included in stock indexes managed by US fi rms, according to people familiar with and involved in the discussions. Crowley’s statement didn’t address or rule out any of those possibilities.

Inter-Agency Meetings Administra-tion offi cials for weeks have been ex-amining their options, and Treasury has been participating in inter-agency meetings chaired by Larry Kudlow, the National Economic Council director, the people said.

Still, the push largely comes from Trump’s more hawkish aides, like White House trade adviser Peter Na-varro, and outside advisers like Steve Bannon. The NEC and Treasury are wary of the market reaction and are working to ensure that any plan would be executed in a way that doesn’t spook investors, the people added.

People close to the administration on Friday expressed annoyance at the dis-cussions being publicised, contending that the White House hasn’t decided on a course of action. They said the dis-

cussions were examining a wide range of options and were therefore not yet ready for public consumption.

Some advocates of a crackdown on fi nancial fl ows within the administra-tion said they saw the fact the discus-sions were being leaked as an eff ort by doves inside the White House to kill the eff ort by stirring up opposition.

While various Chinese media re-published the Bloomberg report and the Treasury Department’s statement, they were not immediately seen re-sponding to the deliberations by the Trump administration. The Commerce Ministry didn’t address the issue at a press conference yesterday.

President Donald Trump has given the green light for the review, a person familiar with the deliberations said, but exact mechanisms or a timeline had not been worked out.

More dovish advisers involved in the discussions frame any action as neces-sary to create a level of reciprocity.

The administration’s hawks argue that any US investment in Chinese companies, whether they’re listed in the US or China, exposes investors to

potential fraud as a result of poor Chi-nese corporate governance standards.

Some even say that the close rela-tionship between the ruling Chinese Communist Party and many listed companies, whether formal or infor-mal, means that any investment in them amounts to support for the party and even the People’s Liberation Army. In their eyes, US investors are eff ec-tively underwriting Washington’s big-gest economic and strategic rival.

Hawks like Navarro have in the past publicly accused Wall Street of seeking to undermine Trump’s eff orts to rein in China’s economy.

A bipartisan group of lawmakers – notably Senator Marco Rubio, a Florida Republican – have pushed for strong-er investment restraints and greater scrutiny for Chinese companies in stock indexes and US pension funds.

The White House has been in touch with Rubio to discuss the matter and could potentially support legislation he’s put forward that would set up a process to delist Chinese companies from US exchanges for continued fail-ure to comply with US laws.

When India’s Modi is seen borrowing more, rate cuts fail to boost bonds

BloombergMumbai

September is shaping up to be a

brutal month for Indian bonds,

and traders are hoping the gov-

ernment’s borrowing plans this

week will off er some relief.

Benchmark 10-year rupee

yields have climbed almost 20

basis points since end-August,

driven by fears that a $20bn

tax cut could boost an already

bloated bond supply. Even an

expected interest-rate cut by

the central bank on Friday – the

fifth for the year – has done little

to aid sentiment.

All eyes are now on the gov-

ernment’s financing plans for

the fiscal second half due today,

with traders concerned that

the authorities could increase

bond sales beyond the Rs2.68tn

($37.8bn) set earlier.

“The worries about the fiscal

overhang are so deep that it has

upset optimism created by the

Reserve Bank of India’s easing,”

said Mahendra Jajoo, head of

fixed income at Mirae Asset Glo-

bal Investments Co in Mumbai.

Tax cuts have reignited worries

about the breach of deficit

targets, he added.

Sentiment towards rupee

debt soured after Prime Minis-

ter Narendra Modi’s adminis-

tration unleashed a surprise

tax break on September 20

to shore up growth. Ten-year

yields jumped the most since

February 2017 amid fears the

authorities would be forced to

sell more bonds to make up for

an estimated Rs1.45tn of lost

revenue.

Benchmark 10-year yields

may rise to 7% in the coming

months from around 6.7% due

to worries about a wider budget

deficit and increased bond sup-

ply, according to Mirae Asset

and IndusInd Bank Ltd. Mirae

warned yields could even vault

past that level if the central

bank doesn’t step in to conduct

open-market bond purchases.

The concerns persist even af-

ter an assurance from a govern-

ment off icial that the borrowing

plan remains unchanged for

the rest of the financial year.

Finance Minister Nirmala Sith-

araman has also said any review

of the fiscal gap target will only

take place nearer to the next

budget in February.

Traders remain sceptical,

especially after Standard

Chartered Plc estimated the

government will need to borrow

as much as Rs800bn more, and

Fitch Ratings flagged the likeli-

hood of a wider fiscal deficit.

“Sentiments have been im-

pacted by the fear of additional

supply,” said Shyamal Karmakar,

head of rates and credit trading

at IndusInd Bank in Mumbai.

Key Asian economic data and

events due this week:

Monday, September 30: BoJ

bond purchases, China manu-

facturing PMI, Japan and South

Korea factory output, Thailand

trade balance and India budget

deficit. Tuesday, October 1: RBA

policy review, Japan unemploy-

ment, CPIs in Indonesia, South

Korea and Thailand, South

Korea trade balance.

China urges ‘calm and rational’ attitude to resolve trade warChinese firms face many diff iculties amid trade war; challenges to trade are “unprecedented”; China will actively expand imports; vice premier going to US for more talks after National Day holiday

ReutersBeijing

China hopes Beijing and Wash-ington will resolve their trade dispute “with a calm and ra-

tional attitude”, Vice Commerce Min-ister Wang Shouwen said yesterday, ahead of talks in two weeks between the two sides.

The United States and China have been locked in an escalating trade war for over a year.

They have levied punitive duties on hundreds of billions of dollars of each other’s goods, roiling fi nancial markets and threatening global growth.

A new round of high-level talks be-tween the world’s two largest econo-mies is expected in Washington on Oc-tober 10-11, led from the Chinese side by President Xi Jinping’s top economic adviser, Vice Premier Liu He.

Wang, who has been part of Chi-na’s negotiating team with the United States, told a news conference that Liu would go to Washington for the talks the week after China’s National Day holiday, which ends on October 7.

He said he hoped both sides would fi nd ways to resolve their diff erences.” We believe this will benefi t both coun-tries’ people and the world,” he added.

The Trump administration is con-sidering radical new fi nancial pressure tactics on Beijing, including the pos-sibility of delisting Chinese companies from US stock exchanges. Sources told Reuters on Friday that the move would

be part of a broader eff ort to limit US investments into Chinese companies, in part because of growing security concerns about their activities.

China has hit back at US criticisms about lack of market access for US

firms, forced technology transfers and poor protection of intellectual property.

Wang reiterated that China will open up more sectors of the economy to for-eign investors, and its policy of pro-

tecting foreign companies’ rights in the country will not change.

Earlier, Commerce Minister Zhong Shan told the news confer-ence in Beijing that Chinese com-panies faced many difficulties due to the trade frictions which he said posed unprecedented trade chal-lenges to the country.

China would expand imports, and measures to stabilise trade would yield positive results, he said without giving details.

The trade war has added to tensions between China and the United States, whose ties are also strained over US criticism of human rights issues in China, including protests in Hong Kong, the disputed South China Sea and US support for Chinese-claimed Taiwan.

The Chinese government’s top diplo-mat said on Friday that tariff s and trade disputes could plunge the world into recession and Beijing was committed to resolving them in a “calm, rational and co-operative manner”.

The dispute has taken its toll on the Chinese economy.

China’s exports unexpectedly fell in August as shipments to the Unit-ed States slowed sharply, pointing to further weakness in the world’s second-largest economy and un-derlining a pressing need for more stimulus.

Beijing is widely expected to an-nounce more support measures in com-ing months to avert the risk of a sharper economic slowdown as the United States ratchets up trade pressure.

Chinese Vice Commerce Minister and Deputy China International Trade Representative Wang Shouwen attends a news conference in Beijing yesterday. He said he hoped both China and the US would find ways to resolve their differences.

Japan hikes consumption tax despite recession fearsAFPTokyo

From October 1, Japan finally implements a

much-delayed consumption tax hike, raising

the rate from 8% to 10%, despite fears the

move could cause a recession. The worries

have receded somewhat in recent months,

and the government insists the increase is

necessary to fund key policy priorities.

Here are some questions and answers

on key aspects of the move:

What does the hike cover?

The increase covers almost all purchas-

es, from electronics and alcohol to books

and cars. The government has however

made a few exceptions.

Magazines and newspapers that publish

more than twice a week will stay at 8%,

along with food items purchased for con-

sumption off -site.

That means groceries will stay at the

old rate, along with food purchased for

takeout. But it puts some food retailers,

including bakeries and the country’s

ubiquitous convenience stores in a bind

because customers can choose to eat their

purchases in store or outside, requiring

two diff erent rates.

Why was the hike delayed?Prime Minister Shinzo Abe’s govern-

ment has twice delayed implementing the

hike over fears it could hit the country’s

fragile economic growth.

Growth in the second quarter was a

revised 0.3%, compared to the previous

quarter’s 0.5%, with exports hit by the

global economic slowdown.

And historically tax hikes have hit

Japan’s economy hard. Both of the most

recent increases — from 3% to 5% in 1997

and then to 8% in 2014 — have been fol-

lowed by recessions.

“Japanese wages haven’t been going up

for 20 years,” said Martin Schulz, an econo-

mist at the Fujitsu Research Institute.

“That means that the consumption

tax hike directly induces a reduction of

purchasing power,” he told AFP.

Japanese consumers already face

sticker shock thanks to various additional

indirect taxes, including tariff s on import-

ed goods. Retailers display prices before

tax, putting the full price only in smaller

print below. “It’s as if to say ‘It’s not us, it’s

the mean government!’” Schulz said.

How will consumers react?

The hike has caused anxiety, with some

consumers deciding to make big-ticket

purchases before the increase comes into

eff ect. “The tax increase worries me be-

cause I’m going to retire at the end of the

month and my pension isn’t very large,”

Mayumi Susami, 65, told AFP at a large

electronics store in Tokyo.

But experts say there are signs that

many consumers have simply resigned

themselves to the increase and are un-

likely to adjust their spending.

“Contrary to expectations, there are

minimal signs of a significant increase in

consumer spending ahead of the tax hike

next month,” Shahana Mukherjee, an econ-

omist at Moody’s Analytics told AFP.

Why is the hike needed?VAT in Japan is among the lowest in the

Organisation for Economic Co-operation

and Development, where the average rate

in 2018 was 19.3%. But the country has the

world’s highest national debt among de-

veloped nations, a whopping 226% of GDP,

and is struggling with the ballooning costs

associated with its ageing population.

New front in trade war means no reprieve for emerging marketsBloombergSingapore

Emerging markets are heading into the fourth quarter in the shadow of one of the most perilous phas-

es in the US-China trade dispute.Bloomberg’s report last week that

the Trump administration is said to be considering choking off portfolio fl ows to China has posed a fresh rid-dle for traders at the start of a week that includes the release of Chinese manufacturing data, an Indian inter-est-rate decision and a key Turkish infl ation reading. And US payrolls numbers come on Friday.

“It is not yet clear how serious the proposal is, but if it happens it would open up a brand new front in the war with China,” James McCormick, global head of strategy at NatWest Markets Plc in London, wrote in a report. “Having already signifi cantly disrupted the global trading system, doing the same to global capital mar-kets would be a huge risk.” Develop-ing-nation currencies are headed for their weakest quarter since the three months ended June 2018 as the US-China trade skirmish threatens to de-rail already fragile global growth.

The yuan, poised for its worst September since 2012, will probably continue to set the tone for traders as its correlation with other emerging-market currencies remains near the record high reached in July.

BNP Paribas Asset Management

expects “a lot of volatility” in devel-oping-nation currencies as it remains focused on Argentina ahead of the country’s October 27 election, trade tensions and central bank policy deci-sions, said Jean-Charles Sambor, the fi rm’s London-based deputy head of emerging-market fi xed income.

Investors will be on the lookout for hints of change in policy direction by President Xi Jinping on Tuesday as he marks the 70th anniversary of the People’s Republic of China with a speech outlining his vision for the future. Onshore Chinese markets will be closed for the annual Golden Week holidays, to reopen on October 8. President Donald Trump earlier de-layed the increase of tariff s on $250bn of Chinese imports from October 1 to October 15, citing the anniversary cel-ebrations, but is also probably holding out ahead of the high-level US-China trade negotiations that begin in the second week of October.

While the markets will be closed for the entire week, China will be releasing a slew of manufacturing data as early indicators signal slowing growth in the world’s second-largest economy.

The nation’s offi cial manufactur-ing PMI for September, to be released today, is expected to have inched up, while staying below 50, signifying continued contractionary expecta-tions, according to economists sur-veyed by Bloomberg. On the fl ip side, another measure of the manufac-turing outlook, the Caixin PMI, will probably remain above 50, pointing

towards expansionary expectations, though the data are expected to ease from August, a separate survey shows.

Manufacturing PMIs from Taiwan, South Korea, India, Indonesia and other South East Asian countries are also due on Tuesday.

The majority of economists sur-veyed are expecting the Reserve Bank of India to trim repo rates by 25 basis points to 5.15% on Friday, following the 110 basis points of cuts enacted so far this year.

The nation’s economy is running below its potential, with the respon-sibility of closing the negative out-put gap largely falling on the central bank, according to Abhishek Gupta, Bloomberg’s Mumbai-based econo-mist for India.

The rupee is the Asia’s best-per-forming currency this month. Inves-tors will be eyeing the release of the Bank of Thailand’s minutes from the September review on Wednesday.

Policy makers voted unanimously to leave rates unchanged rates then, following the surprise cut in August. In Colombia, offi cial minutes today are expected to support expectations that the central bank will maintain in-terest rates for now.

Unemployment numbers com-ing earlier that day are forecast to show the urban unemployment rate rising in August on a year-on-year basis. Policy makers in Poland and Romania set to keep rates un-changed on Wednesday and Thurs-day, respectively.

Zad Holding CoWidam Food CoVodafone Qatar

United Development CoSalam International Investme

Qatar & Oman Investment CoQatar Navigation

Qatar National Cement CoQatar National Bank

Qatar Islamic InsuranceQatar Industrial Manufactur

Qatar International IslamicQatari Investors Group

Qatar Islamic BankQatar Gas Transport(Nakilat)Qatar General Insurance & ReQatar German Co For Medical

Qatar Fuel QscQatar First Bank

Qatar Electricity & Water CoQatar Exchange Index Etf

Qatar Cinema & Film DistribAl Rayan Qatar Etf

Qatar Insurance CoQatar Aluminum Manufacturing

Ooredoo QpscNational Leasing

Mazaya Qatar Real Estate DevMesaieed Petrochemical Holdi

Al Meera Consumer Goods CoMedicare Group

Mannai Corporation QscMasraf Al Rayan

Al Khalij Commercial BankIndustries Qatar

Islamic Holding GroupInvestment Holding Group

Gulf Warehousing CompanyGulf International Services

Ezdan Holding GroupDoha Insurance Co

Doha Bank QpscDlala Holding

Commercial Bank PsqcBarwa Real Estate Co

Al Khaleej Takaful GroupAl Ahli Bank

13.62

6.03

1.24

1.34

0.41

0.51

6.50

6.04

19.20

6.07

3.58

8.90

1.94

15.93

2.38

3.60

0.73

23.27

0.32

15.36

10.28

2.20

2.34

3.36

0.92

7.43

0.68

0.74

2.98

15.31

7.37

3.28

3.54

1.18

10.94

2.01

0.52

5.05

1.80

0.69

1.04

2.57

0.69

4.46

3.34

1.92

0.71

-1.30

-0.82

0.00

1.52

0.74

0.99

0.00

-0.66

-0.05

1.17

-2.98

2.42

-3.00

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0.00

1.12

6.88

-1.15

0.64

0.07

0.00

0.00

0.00

0.00

1.55

0.68

-0.87

-1.21

-1.97

0.39

0.00

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-1.67

-0.55

-1.47

0.39

0.00

-1.10

4.38

0.00

0.39

1.47

-0.89

-0.30

1.59

-0.97

17,180

210,029

1,262,173

1,752,552

810,463

14,520

889,782

105,000

505,222

98,068

64,430

1,240,093

1,974,159

497,601

3,794,509

21,855

15,320,459

340,227

8,163,579

113,839

-

13,920

-

419,824

8,000,742

1,191,866

142,090

314,356

2,269,703

221,771

262,775

209,314

1,227,165

58,210

1,269,490

2,781,130

677,027

244,778

1,176,785

23,267,945

55,000

871,234

588,284

3,077,828

2,364,127

2,541,606

15,312,311

QATAR

Company Name Lt Price % Chg Volume

KUWAIT

Company Name Lt Price % Chg Volume

OMAN

Company Name Lt Price % Chg Volume

KUWAIT

Company Name Lt Price % Chg Volume

KUWAIT

Company Name Lt Price % Chg Volume

LATEST MARKET CLOSING FIGURES

Oman PackagingOman Oil Marketing Company

Oman National Engineering AnOman Investment & Finance

Oman Intl MarketingOman Flour Mills

Oman Fisheries CoOman Europe Foods Industries

Oman Education & Training InOman Chromite

Oman ChlorineOman Ceramic Company

Oman Cement CoOman Cables Industry

Oman & Emirates Inv(Om)50%Natl Aluminium Products

National Real Estate DevelopNational Mineral Water

National Life & General InsuNational Gas Co

National Finance CoNational Detergent Co Saog

National Biscuit IndustriesNational Bank Of Oman Saog

Muscat Thread Mills CoMuscat Insurance Co Saog

Muscat Gases Company SaogMuscat Finance

Muscat City Desalination CoMajan Glass Company

Majan CollegeHsbc Bank Oman

Hotels Management Co InternaGulf Stone

Gulf Mushroom CompanyGulf Investments Services

Gulf Invest. Serv. Pref-SharGulf International Chemicals

Gulf Hotels (Oman) Co LtdGlobal Fin Investment

Galfar Engineering&ContractGalfar Engineering -Prefer

Financial Services Co.Financial Corp/The

Dhofar TourismDhofar Poultry

Dhofar Intl DevelopmentDhofar Insurance

Dhofar Generating Co SaocDhofar Fisheries & Food Indu

Dhofar CattlefeedDhofar Beverages Co

Construction Materials IndComputer Stationery Inds

Bankmuscat SaogBank Nizwa

Bank Dhofar SaogArabia Falcon Insurance Co

Aloula CoAl-Omaniya Financial Service

Al-Hassan Engineering CoAl-Fajar Al-Alamia Co

Al-Anwar Ceramic Tiles CoAl Suwadi Power

Al Sharqiya Invest HoldingAl Maha Petroleum Products M

Al Maha Ceramics Co SaocAl Madina Takaful Co Saoc

Al Madina Investment CoAl Kamil Power Co

Al Jazerah Services -PfdAl Jazeera Steel Products Co

Al Jazeera ServicesAl Izz Islamic Bank

Al Buraimi HotelAl Batinah PowerAl Batinah Hotels

Al Batinah Dev & InvAl Anwar Holdings Saog

Al Ahlia Insurance Co SaocAhli Bank

Acwa Power Barka SaogAbrasives Manufacturing Co S

A’saff a Foods Saog0Man Oil Marketing Co-Pref

#N/A Invalid Security#N/A Invalid Security

0.27

1.07

0.14

0.12

0.52

0.68

0.08

1.00

0.24

3.64

0.36

0.42

0.22

0.81

0.07

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5.00

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0.32

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0.70

3.92

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0.78

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1.25

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9.50

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0.39

0.06

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0.49

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0.17

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1.28

0.13

0.26

0.04

0.26

0.44

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0.53

0.10

0.02

0.75

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0.17

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0.02

0.38

0.55

0.21

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0.07

0.88

0.07

1.13

0.07

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0.32

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0.66

0.05

0.60

0.25

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0.00

0.00

0.00

0.00

0.87

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0.00

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0.00

0.45

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0.00

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0.00

0.00

0.00

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0.54

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0.00

0.00

0.00

0.91

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0.00

0.00

0.00

0.00

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1.39

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0.00

0.00

0.00

0.00

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0.00

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1.08

0.74

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2.13

0.00

0.00

3.96

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0.00

0.00

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378,722

-

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25,000

-

-

-

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-

7,119

-

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30,405

-

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56,250

-

-

-

-

7,000

-

-

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20,059

24,583

-

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8,000

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-

153,200

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1,073,672

-

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16,722

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38,000

38,500

300,000

-

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859,226

22,500

-

4,509,002

17,980

-

-

-

35,580

-

-

-

-

144,856

5,000

-

38,576

-

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15,000

-

-

-

-

-

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Al-Madar Finance & Invt CoGulf Petroleum Investment

Mabanee Co SakcInovest Co Bsc

Al-Deera Holding CoMena Real Estate Co

Amar Finance & Leasing CoUnited Projects For Aviation

National Consumer Holding CoAmwal International InvestmeEquipment Holding Co K.S.C.C

Arkan Al Kuwait Real EstateGfh Financial Group Bsc

Energy House Holding Co KscpKuwait Co For Process PlantAl Maidan Dental Clinic Co KNational Shooting CompanyAl-Ahleia Insurance Co Sakp

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Alargan International RealBurgan Co For Well Drilling

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Shuaiba Industrial CoAan Digital Services Co

First Takaful Insurance CoKuwaiti Syrian Holding Co

National Cleaning CompanyUnited Real Estate Company

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Combined Group ContractingJiyad Holding Co Ksc

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Boubyan Bank K.S.CAhli United Bank B.S.C

Osos Holding Group Co

109.00

22.00

763.00

63.00

11.50

38.90

45.00

440.00

55.00

45.00

16.30

78.10

72.00

18.50

210.00

1,240.00

10.50

430.00

27.00

41.30

65.00

49.00

116.00

5.20

120.00

98.10

55.30

116.00

59.00

59.00

160.00

16.30

42.50

34.60

58.40

62.20

724.00

80.00

51.00

189.00

13.60

226.00

68.50

31.30

90.40

100.00

538.00

20.50

278.00

17.50

260.00

64.00

1,100.00

315.00

200.00

34.30

138.00

316.00

221.00

16.40

329.00

74.00

54.90

31.80

12.20

40.00

480.00

32.00

51.30

80.00

25.00

36.00

22.30

265.00

26.70

13.20

39.90

88.00

72.50

12.50

162.00

36.00

229.00

43.70

68.90

49.30

554.00

271.00

99.20

0.93

0.00

0.26

4.13

0.88

0.26

0.00

0.00

0.00

-10.00

-2.98

-1.76

0.00

-9.76

0.00

0.00

0.96

2.14

0.00

2.23

0.00

63.33

0.00

0.00

0.00

0.00

-4.66

-0.85

0.00

-1.01

0.00

1.24

0.00

7.12

2.46

0.00

-0.82

-13.98

0.00

0.00

0.00

0.89

9.60

-1.88

6.35

0.00

-0.37

0.00

-6.40

0.57

0.00

0.00

1.85

-0.94

0.00

-2.00

0.00

-0.63

-0.45

0.00

0.00

0.00

-0.18

0.00

-0.81

2.56

0.00

-0.93

0.00

0.00

0.00

0.00

0.00

1.15

2.30

0.76

2.31

0.00

3.57

1.63

0.00

-2.44

0.44

0.00

6.00

-0.40

-0.89

-0.37

0.00

662,952

141,726

89,525

250

92,096

1,387,862

-

-

-

80

80,361

10,000

10,000

500

100,100

-

1

89,080

-

117,270

-

10,600

18,826

-

-

-

102,590

100,867

-

10,206

-

580,564

-

52,003

10,060

-

1,134,960

5,012,515

-

-

-

916,243

25,480

363,960

307,000

-

1,303,886

-

12

2,480,445

36,460

-

189,134

600

-

101,545

-

47,991

108,843

-

-

-

582,790

1,524,355

516,003

224,608

15

635,111

3,975,562

-

4,200

-

-

96,591

9,539,488

2,301,859

303,750

-

56

3,119,667

-

807,300

502,307

-

760

17

269,357

2,235,932

-

Al-Eid Food KscQurain Petrochemical Industr

Advanced Technology CoEkttitab Holding Co Sak

Real Estate Trade Centers CoAcico Industries Co Kscc

Kipco Asset Management CoNational Petroleum Services

Alimtiaz Investment GroupRas Al Khaimah White Cement

Kuwait Reinsurance Co KscKuwait & Gulf Link Transport

Humansoft Holding Co KscAutomated Systems Co Kscc

Metal & Recycling CoGulf Franchising Holding Co

Al-Enma’a Real Estate CoNational Mobile Telecommuni

Sanad Holding Co KsccUnicap Investment And Financ

Al Salam Group Holding CoAl Aman Investment Company

Mashaer Holding Co KscManazel Holding

Tijara And Real Estate InvesJazeera Airways Co Ksc

Commercial Real Estate CoNational International Co

Taameer Real Estate Invest CGulf Cement Co

Heavy Engineering And Ship BNational Real Estate Co

Al Safat Energy Holding CompKuwait National Cinema CoDanah Alsafat Foodstuff Co

Independent Petroleum GroupKuwait Real Estate Co Ksc

Salhia Real Estate Co KscGulf Cable & Electrical Ind

Kuwait Finance HouseGulf North Africa Holding Co

Hilal Cement CoOsoul Investment Kscc

Gulf Insurance Group KscUmm Al Qaiwain General Inves

Aayan Leasing & InvestmentAlrai Media Group Co KscNational Investments CoCommercial Facilities CoYiaco Medical Co. K.S.C.C

Dulaqan Real Estate CoReal Estate Asset Management

56.50

315.00

900.00

16.60

22.90

135.00

98.50

1,030.00

124.00

62.00

158.00

72.70

3,078.00

71.00

30.00

160.00

46.60

714.00

0.00

44.00

30.00

57.10

71.50

28.50

38.00

973.00

92.50

62.00

18.50

56.50

402.00

78.60

19.50

770.00

26.00

438.00

80.20

330.00

491.00

679.00

58.50

90.00

70.40

680.00

71.90

56.20

35.40

125.00

210.00

66.50

350.00

95.40

2.73

0.64

0.00

-0.60

0.00

0.00

0.61

-8.04

0.00

5.08

0.00

3.86

-0.06

0.00

-45.36

0.00

1.30

-0.83

0.00

0.00

0.67

1.78

0.00

0.00

-3.80

-0.10

0.54

-6.06

5.11

0.00

-0.25

-0.51

0.00

0.00

0.00

0.00

-0.12

0.00

3.37

-0.15

0.00

0.00

0.00

0.00

0.00

-0.88

-9.23

-1.57

3.45

0.00

0.00

0.00

41,850

668,252

-

250,005

100

41,234

10

22,526

526,328

10,020

-

25

5,791

-

53,000

-

852,385

21,506

-

30,010

952,167

1,302,238

700,100

27,401

95,001

122,828

338,000

1,000

897,183

-

330,380

816,757

-

-

652,645

-

13,000

-

3,930,481

1,670,193

-

-

-

-

-

1,099,334

5,000

108,760

2,038,010

-

-

-

OMAN

Company Name % Chg Volume

Voltamp Energy SaogVision Insurance Saoc

United Power/Energy Co- PrefUnited Power Co Saog

United Finance CoUbar Hotels & Resorts

Takaful OmanTaageer FinanceSweets Of OmanSohar Power Co

Sohar International BankSmn Power Holding Saog

Shell Oman Marketing - PrefShell Oman Marketing

Sharqiyah Desalination Co SaSembcorp Salalah Power & Wat

Salalah Port ServicesSalalah Mills Co

Salalah Beach Resort SaogSahara Hospitality

Renaissance Services SaogRaysut Cement Co

Phoenix Power Co SaocPackaging Co Ltd

OoredooOminvest

Oman United Insurance CoOman Telecommunications Co

Oman Refreshment CoOman Qatar Insurance Co

0.17

0.11

1.00

2.40

0.08

0.13

0.12

0.10

0.55

0.10

0.11

0.08

1.05

1.11

0.29

0.13

0.60

0.50

1.38

3.15

0.29

0.35

0.09

2.21

0.53

0.36

0.23

0.59

1.38

0.10

0.00

-0.87

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-0.89

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

1.06

0.00

0.00

0.00

0.00

2.89

0.88

1.03

0.00

1.05

-

56,000

-

-

1,000

-

-

-

-

100

371,000

18,000

-

-

-

-

-

-

-

-

115,217

3,500

50,300

-

-

58,433

19,000

8,500

-

9,600

Sultan Center Food ProductsKuwait Foundry Co Sak

Kuwait Financial Centre SakAjial Real Estate Entmt

Kuwait Finance & InvestmentNational Industries Co Ksc

Kuwait Real Estate Holding CSecurities House/The

Boubyan Petrochemicals CoAl Ahli Bank Of Kuwait

Ahli United Bank (Almutahed)National Bank Of Kuwait

Commercial Bank Of KuwaitKuwait International Bank

Gulf BankAl-Massaleh Real Estate Co

Al Arabiya Real Estate CoKuwait Remal Real Estate Co

Alkout Industrial Projects CA’ayan Real Estate Co Sak

Investors Holding Group Co.KAl-Mazaya Holding Co

0.00

-1.00

0.00

0.00

-2.17

0.00

0.00

4.32

0.13

1.67

0.31

-0.52

-0.20

-1.10

-0.71

0.00

-2.01

0.76

0.00

-0.62

-3.33

2.33

10,000

830

6,724

-

2,327,453

-

-

195,573

239,763

101,004

55,252

1,343,221

830,481

3,020,349

9,334,720

-

76,528

637,294

-

356,506

578,750

546,021

44.00

495.00

90.00

137.00

49.50

172.00

27.00

45.90

756.00

305.00

319.00

953.00

500.00

270.00

279.00

38.00

24.40

26.50

840.00

64.00

8.70

57.00

Lt Price

BUSINESS5Gulf Times

Monday, September 30, 2019

Wall St falls in love again with companies loaded up on debtBloombergNew York

The Federal Reserve’s new round of interest-rate reductions just might be working. At least, that’s what one obscure, but key, stock market indicator suggests.For the first time since 2016, companies with fragile balance sheets are outperforming their sturdier peers and the broad market, a pair of Goldman Sachs indexes show. That’s a clear sign that the rate cuts are shoring up investor confidence in heavily indebted companies - the segment of corporate America that’s perhaps most at risk to any downturn that hits the US economy.The outperformance is so stark that a pure measure of leverage is the top equity factor this year among 10 styles tracked by Bloomberg. It’s a big turnaround for traders who had recently pushed relative valuations for financially solid firms to a 16-year high.The change in heart comes as the Fed seeks to stoke growth by reducing borrowing costs, reacting to signals that the US economic expansion is slowing. With long-term Treasury yields reaching a record low last month, investors may be betting that all that inexpensive debt financing will help those companies expand and drive future earnings growth.“Money is a lot cheaper to borrow and close to free in some cases,” said Sylvia Jablonski, the head of capital markets at Direxion, which manages $13bn. “As long as that goes into the investment of the firm and helps the firm grow and increases capex in a positive way, then I think it could be something that’s positive for those firms.”Take the performance of Edison International and Carmax Inc, for example, members of the S&P 500 Index with some of the highest ratios of net debt to earnings, according to data compiled by Bloomberg. Both are up more than 30% this year, trouncing the S&P 500’s 18% return.

That’s not to say there’s hasn’t been a tonne of hand wringing about soaring corporate debt levels and the fallout to come when things go south. Even the Fed’s rate cut, while helpful in the short term, runs the risk of merely delaying the reckoning that will surely arrive for overzealous borrowers.Goldman Sachs pointed out that net leverage – which measures how much companies owe for every dollar of earnings after subtracting cash on hand – for the median company in the S&P 500 spiked to a record in

the second quarter. JPMorgan also flagged growing debt levels this month as a risk, saying leverage metrics are worsening.But rather than fret, equity investors are taking a chance on riskier firms. A Goldman Sachs basket of companies with weak balance sheets has bested a gauge of strong balance sheet firms for four straight months. Up 20% year-to-date, the group of firms with more fragile finances is on track to beat the S&P 500 for the first time since 2016.One reason for the faith? Extremely

low borrowing costs. A divided Fed cut interest rates for the second time in two months on September 18, reducing its federal funds target by a quarter percentage point to a range of 1.75% to 2%.Interest rates in the US aren’t high compared to the pace of economic growth, a dynamic that means companies should be able to easily meet debt payments, according to Joseph LaVorgna, the chief economist for the Americas at Natixis.“If yields remain under nominal

activity, a broad-based pickup in corporate defaults is unlikely,” he wrote to clients this month.Companies have been on a refinancing tear in September, issuing bonds with lower interest rates and buying back more expensive securities. The US investment grade market, with about $155bn priced this month, has already surpassed last September’s total, and more companies are looking to refinance with borrowing costs still low.Of course bond investors are still

being selective. In recent weeks, riskier companies have been forced to either off er higher interest rates or dangle sweeteners to drum up demand. At least four planned sales this month have been yanked from the market entirely.The latest bout of strength in highly levered stocks may also be evidence of a trade gone too far instead of any particular love for finance chiefs who have borrowed a lot.Earlier this year, valuations of firms with healthy finances versus those of their weaker peers had reached some of the highest levels since 1980, and Goldman Sachs said the phenomenon was due for a reversal amid more accommodative monetary policy.And of course not all investors are keen on highly leveraged stocks. Sandy Pomeroy, manager of the Neuberger Berman Equity Income Fund, is sticking to companies with “squeaky clean” balance sheets. Whittier Trust, with $13.5bn of assets under management, has a bias toward high quality growth shares.“Leverage is not a winning stock picking attribute,” Sandip Bhagat, Whittier Trust’s chief investment off icer, said in an interview at Bloomberg’s New York headquarters. “The higher the leverage, the lousier the fundamentals, the lower quality the company is depicting. Don’t get tricked by it.”But Barbara Reinhard, head of asset allocation for multi-asset strategies at Voya Investment Management, and Michael Kelly, global head of multi-asset at PineBridge Investment, both pointed to a thawing of trade tensions between the US and China as supportive for highly indebted companies.“A more predictable trade environment will lead to better business conditions, so you have some deeper pockets of credit and the stock market finding buyers,” said Kelly, whose firm manages $97bn. “It’s a little safer to wander out in the waters.”

A street sign for Wall Street is seen outside the New York Stock Exchange in New York City (file). For the first time since 2016, companies with fragile balance sheets are outperforming their sturdier peers and the broad market, a pair of Goldman Sachs indexes show. That’s a clear sign that the rate cuts are shoring up investor confidence in heavily indebted companies – the segment of corporate America that’s perhaps most at risk to any downturn that hits the US economy.

BUSINESS9Gulf Times

Monday, September 30, 2019

Lagarde inherits ECB tinged by bitterness of Draghi stimulusBloombergFrankfurt/Zurich

When Christine Lagarde takes charge of the European Central Bank, she’ll inherit the policy disputes of her predecessors – now with even deeper scars.The new president will have to confront the aftermath of an unprecedented revolt among off icials over Mario Draghi’s plan to reactivate quantitative easing. In a move probably linked to that, Germany’s Sabine Lautenschlaeger unexpectedly quit the Executive Board.While such discord is reminiscent of when Draghi became president in 2011 after resignations by other German policy makers, the cumulative bruises from years of arguments present a challenge to Lagarde. She’ll need to determine how to lead the Governing Council while broaching inevitable disagreements, and to look at how to accommodate discord when it arises.“The diff erences between the majority group and the hawkish group seems quite stark,” said Nick Kounis, an economist at ABN Amro in Amsterdam. “I don’t think she has a magic wand to make people who fundamentally disagree agree.”Draghi has encountered dissent before, but never to such a degree. Bundesbank president Jens Weidmann and Klaas Knot of the Netherlands immediately criticised the September 12 QE decision. Recently, Bank of France Governor Francois Villeroy de Galhau publicly declared his own disagreement, and Lautenschlaeger resigned.The president was left relying on support mainly from southern Europe and the euro’s smallest economies, at a meeting described by one participant as the most tense he can remember. He spoke on condition of anonymity, because such discussions are private.Lagarde can survey the wreckage first hand when she starts work in November.

She has already faced a call from Austrian policy maker Robert Holzmann to allow the views of individuals to be cited in accounts of meetings to acknowledge diff erences. That would be a step toward the openness of the Bank of England and US Federal Reserve, which publish votes.Such moves could go some way toward accommodating dissent while ensuring that, as Draghi has said, disagreements don’t undermine policy decisions.Even a safety valve to vent views might not be enough. Lagarde may also need to find a diff erent way of initiating policy moves from Draghi, who often signalled major measures publicly without formal discussions with his colleagues first.“It would probably be a mistake to try and emulate Draghi’s approach,” said Richard Barwell, an economist at BNP Paribas Asset Management.While Lagarde signalled in an interview last week that she’ll seek “teamwork” from her colleagues, she may also need to embrace more engagement than Draghi did – and maybe share responsibility with her chief economist, Philip Lane.That might help accommodate those who think their experience means they know better. She has never been a central banker, having served as French finance minister and led the International Monetary Fund.Lowering the temperature will surely assist Lagarde if she wants to unveil further timely stimulus. More bond purchases could require the ECB to scrap self-imposed limits intended to safeguard against monetary financing – a key principle for the Germans.However, more discussion could slow down policy making in the already unwieldy group of 25 policy makers, including the six-member Executive Board.“She will try to build a consensus,” said Barwell. “The centre of gravity within the Council should therefore shift back toward the governors, away from the board – dragging the reaction function of the ECB with it.”

When Christine Lagarde takes charge of the European Central Bank, she will have to confront the aftermath of an unprecedented revolt among officials over Mario Draghi’s plan to reactivate quantitative easing

BUSINESS

Gulf Times Monday, September 30, 201910

What’s the price of a Treasury note?It depends on whom you askBloombergNew York

The US government just argued

that Treasuries are suff iciently

transparent when it comes to

prices. So why can’t investors

agree on what those prices are?

The $16tn Treasuries market is the

world’s biggest and most liquid

bond market. But unlike stocks, it

lacks a mechanism for establish-

ing end-of-day prices that every-

one can use. That means money

managers sometimes value identi-

cal securities at diff erent levels.

Tradeweb Markets Inc, one of

the biggest electronic market-

places for buying and selling

Treasuries, wants to help change

that. Through a partnership with

New York Stock Exchange owner

Intercontinental Exchange Inc, it’s

now publishing closing prices for

US debt.

The Tradeweb-ICE partnership

was announced September 10,

two weeks before the Treasury

Department unveiled conclusions

from a multiyear study of the

market. It recommended a weekly

release of volume data based

on monitored transactions, but

not their prices, a point on which

stakeholders had clashed.

“Price transparency largely

exists in the Treasury market,”

Deputy Treasury Secretary Justin

Muzinich said last week at the

Federal Reserve Bank of New

York’s annual US Treasury Market

Conference.

And, yet, consider the Treasury

note issued in May 2017 with a

2% coupon and maturing in 2024.

There’s nearly $77bn worth of

them, making it one of the largest

Treasury issues in existence.

Three large bond mutual funds

that held it valued the debt slightly

diff erently at the end of the

second quarter. The Bond Fund of

America went with 101.1880.

The Federated Total Return

Bond Fund used 101.1820. North-

ern Fixed Income Fund marked

it at 101.1758. The prices were

calculated using market values of

reported holdings.

By contrast, large equity funds

managed by those three compa-

nies all agreed on where Microsoft

Corp’s stock ended the month

of June: $133.96, which was the

industrywide closing price. The

investment companies declined to

comment.

Lack of pricing uniformity is

problematic in an investment

landscape now dominated by pas-

sive money managers, who invest

by simply putting money into

whatever assets are in a particular

index.

“A trusted benchmark price is

useful for all market participants,

but the growth of ETFs and

passive investment has led to

increased demand for objective

closing prices from ETF issuers

and index providers,” Elisabeth

Kirby, head of US rates products

and strategy at New York-based

Tradeweb, said in an interview.

“Elsewhere, risk and compli-

ance teams want a robust market-

wide price for evaluation and

monitoring.” In the US stock mar-

ket, a consortium of exchanges

called the Consolidated Tape

Association ensures closing prices

are uniform to “avoid confusion,”

according to a Securities and

Exchange Commission overview

of how the process works.

And that information is easily

accessed on endless websites,

the Stocks app on iPhones and

so forth. Institutional holders of

stocks use those numbers to value

their holdings and set share prices

for mutual funds.

Trading of Treasuries is de-

centralised and there is no public

record of transactions. So mutual

funds and other institutions typi-

cally turn to pricing services to

mark their holdings. (Bloomberg

LP, the owner of Bloomberg News,

is one of them.) As a result, funds

may assign diff erent values to

the same security, depending on

who ran the calculation and the

millisecond the numbers were

crunched.

Tradeweb went public in

April, more than two decades

after being founded as the first

multi-dealer online platform for US

government bonds. It also off ers

trading of derivatives, exchange-

traded funds and other products.

The company is producing the

closing prices with ICE Benchmark

Administration, which operates

other indexes including Libor.

The Treasury prices “are

designed to represent the daily

mid-price for US Treasury securi-

ties” at 3pm New York time, and

are being calculated for more than

900 issues “using prices available

on Tradeweb’s institutional global

platform,” the company said in a

statement.

That covers a big swath of

the business: Tradeweb handled

about $89bn of Treasuries trades

a day last month. But that’s not the

entire market. Across the industry,

the daily average was roughly

$700bn in August, according to

Muzinich’s presentation Monday.

And BrokerTec, the largest elec-

tronic platform for Treasuries, saw

$211bn a day, according to CME

Group Inc, which acquired the

business last year.

Tradeweb’s proposition is that

working with ICE and auditor

Ernst & Young LLP will ensure

the quality of the prices. ICE

Benchmark Administration, or IBA,

will oversee the process by which

they are calculated and verify

compliance with principles for

financial benchmarks developed

by the International Organisation

of Securities Commissions.

Fed should buy over $250bn inTreasuries: Former officials BloombergWashington

The Federal Reserve should consider increasing its balance sheet by $250bn over the next two quarters through outright purchases of Treasury securities to help diminish the risk of future money market turmoil, two former US central bank officials said.In a blog posting on the Peterson Institute for International Economics’ website, Joseph Gagnon and Brian Sack write that “a case can be made’’ for such a move to build up a buffer of bank reserves at the Fed.After the purchases are completed, “the Fed should continue to grow its balance sheet as needed to expand reserves in line with nominal GDP,’’ or gross domestic product, said Gagnon, now a senior fellow at Peterson, and Sack, currently director of global economics for the DE Shaw Group.Last week’s turmoil in the money markets focused attention on the level of bank reserves and whether the Fed went too far in shrinking its securities holdings. Its balance sheet now totals $3.8tn, down from a high of $4.5tn in January 2015.New York Fed president John Williams said that policy makers will assess the implications of recent market moves “for the appropriate level of reserves and time to resume organic growth of the Federal Reserve’s balance sheet.”The New York Fed has conducted a series of repo auctions to provide liquidity to money markets. Primary dealers oversubscribed its operation for term repurchase agreements, even after the bank doubled the maximum size of the offering to $60bn. In a September 23 note, Wrightson

ICAP LLC chief economist Lou Crandall reckoned that such an organic approach would result in the Fed increasing its purchases of Treasuries by roughly $15bn per month.Last week’s turbulence in the repurchase agreement market indicates that the Fed’s operating framework “is not as resilient as it could be,” according to Gagnon and Sack.“Volatility in this market threatens the functioning of markets more broadly and could ultimately hurt the economy,’’ they said.They urged the Fed to adopt a standing fixed-rate repo facility under which banks and other selected financial institutions could borrow from the central bank, arguing that would provide a “guard rail” against unexpected market developments.Fed policy makers discussed the possibility of establishing such a facility when they met in June, but reached no conclusions, according to the minutes of that gathering.Gagnon and Sack also called on the central bank to abandon its federal funds rate target and adopt the repo rate – as measured by the secured overnight financing rate – as its objective instead.“The Fed should be explicit about its desire to control the repo rate,” they said.Sack was formerly an executive vice president at the Federal Reserve Bank of New York, where he served as the head of the Markets Group and the manager of the System Open Market Account for the Fed from 2009 to 2012.Before joining Peterson in 2009, Gagnon was visiting associate director for the Fed’s Division of Monetary Affairs. He also served in a variety of other posts at the central bank and the Treasury Department in a public sector career that began in 1987.

Fed is girding for repo trouble today even as market calmsBloombergNew York

The repo market has calmed down, but the Federal Reserve is gearing

up its safeguards seemingly to prevent turmoil from resurfac-ing today.

Last week’s craziness was not the fi rst time in recent memory that US money markets have shown signs of stress. It’s tend-ed to happen around quarter-end, most notably in late De-cember.

The third quarter ends today. So, for the past two days, the New York Fed has run $100bn overnight repo operations – bigger than the $75bn daily li-quidity injections that began early last week – plus separate 14-day operations.

Neither of Friday’s actions were fully subscribed and short-term lending rates are well below the peak seen last week, a sign order has been re-stored for now.

But today, that larger $100bn size will be repeated and the overnight operation will run from 7:45am to 8am New York time, earlier than prior morning actions. Both signal the Fed is

getting ready in case rates spike again.

“I wouldn’t be surprised to see some volatility,” said Sub-adra Rajappa, head of US rates strategy at Societe Generale. “The Fed has provided enough liquidity for now, but there are some large Treasury settle-ments so you’ll have large pres-sures.”

She was referring to the fact that two-, fi ve- and seven-year Treasuries that were auctioned this week by the US govern-ment are settling – or being

issued – on Monday. That will push collateral into the market at a time when investors are still clamouring for cash, potentially getting the repo market’s sup-ply and demand out of whack again.

It looks like rates will increase some today. The quarter-end rate for repurchase agreements is being quoted at about 2.87% on Friday afternoon, according to Scott Skyrm, executive vice president at broker-dealer Cur-vature Securities.

While that’s down from

3.25% earlier in the day, it’s above the current general col-lateral repo rate of 1.80%, ac-cording to ICAP data. Skyrm sees it opening today at around 2.50% before moving lower throughout the morning, he wrote in a report.

The overnight repo rate soared to a record high of 10% last week amid a funding crunch that drew scrutiny to the size of the Fed’s balance sheet and fuelled calls for the central bank to start injecting liquidity.

The central bank responded to the funding pressures, which appeared to be building around quarter-end, with three term operations this week and a daily schedule of overnight actions through October 10.

As of now, it appears that the New York Fed “was able to satiate primary dealer demand for term funding at these rate levels,” Jon Hill, a strategist at BMO Capital Markets, wrote in a note. “The question then be-comes how much of the reserve infusion will be able to perme-ate through markets and reach other participants.”

He said that while there may still be upward pressure on short-term rates today, it may be more muted than some fear.

The repo market has calmed down, but the Federal Reserve is gearing up its safeguards seemingly to prevent turmoil from resurfacing today

Data will show damage of tariff s, strong dollar on US goods exportersReutersNew York

It’s no longer a probability, it’s a real-ity: The escalating US-China trade war and the strengthening dollar ap-

pear to be infl icting measurable damage on US goods makers that rely on global markets.

Market participants will get a picture of the extent to which trade tensions and currency have hurt US manufactur-ers when the Institute for Supply Man-agement (ISM) releases its purchasing managers index (PMI) for September on Tuesday.

Its August report showed the manu-facturing sector, which accounts for about 12% of the US economy, contract-ing in for the fi rst time in 3-1/2 years, and more worryingly, its export component hit a more than 10-year low.”The export-ers are at least a half a step or full step closer to the predicted recession,” said Robert Pavlik, chief investment strate-gist, senior portfolio manager at SlateS-tone Wealth LLC in New York.

The August report’s New Export Or-ders plunged to 43.3, its lowest level since April 2009, when the United States was in the throes of the great recession.

A PMI reading below 50 indicates con-traction.

In the August PMI survey, manufac-

turers told ISM “business is starting to show signs of a broad slowdown,” and that “tariff s continue to be a strain on the supply chain and the economy overall.” China already has implemented tariff s on about $110bn in US goods, in return for President Donald Trump’s tariff s on Chinese imports.

Beijing announced additional re-taliatory increases in August. The fi rst tranche took eff ect at the beginning of this month and the second is due to fol-low on December 15.

US goods would already be more expensive on global markets due to a stronger dollar, which has been boosted by simmering geopolitical unease and negative interest rates in Europe.

Market-rattling tit-for-tat tariff hikes from Washington and Beijing have creat-ed a perfect storm.”Geopolitical tensions do two things,” said Peter Tuz, president of Chase Investment Counsel in Char-lottesville, Virginia. “They compel big companies to sit back and not spend as much as they would.” “And as tensions increase and the dollar rises, (US) prod-ucts become more expensive and you see demand fall off .” The dollar index, which measures the greenback against a basket of major world currencies, hit a 29-month high on September 3, the very day ISM released its dismal PMI report.

Indeed, in the fi rst quarter of 2018, during which Trump fi red the opening

salvo in the trade war, the negative cur-rency impact on North American corpo-rate earnings was an estimated $40mn, according to cloud treasury services fi rm Kyriba.

One year later, that number ballooned to $23.4bn.

The arrival of third-quarter earnings season next month will provide a clearer view of the damage the trade war and strong dollar have wrought on compa-nies’ bottom lines.

Over the last year, third-quarter ana-lyst earnings estimates for a basket of 15 top US exporters by dollar value have dropped by an average of 17.3%, accord-ing to Refi nitiv data, and by 12.3% in the last three months.

Fourth-quarter estimates for the same companies have been revised down 15.6% on average since September 2018 by 10.3% since June.

Third-quarter earnings estimates for Apple Inc are 7.4% lower than they were a year ago, and down 16.7% for the essen-tial October-December holiday quarter.

Non-US revenue contributes 63.1% of the iPhone maker’s total.

General Electric Co gets about 61.5% of its revenue from abroad.

Analysts currently see the conglomer-ate’s third-quarter earnings coming in 44.6% below the level seen a year ago, and its fourth-quarter EPS estimates are now 43.5% lower. Chipmakers, particu-

larly vulnerable to trade concerns and technology exchange issues, have seen their earnings estimates slashed most.

Micron Technology Inc relies on non-US business for 88.1% of its revenue.

Third quarter earnings estimates for the company have plunged 83.4% over the last year and 42% from last quarter.

Overseas customers contribute 97.4% of Qualcomm Inc’s revenue.

Analysts have slashed their third quar-ter earnings estimates for the company by 47.7% over the last year.

Nike Inc, which derives 62.5% of its revenues from overseas, reported its fi rst-quarter earnings for fi scal year 2020 on Tuesday.

The sportswear company’s revenue and profi t beat analyst estimates, but it said currency and trade concerns re-mained headwinds and it expects the im-pact of tariff s will be “most pronounced” in the current quarter. “The manufactur-ing side of our economy is in the early stages of a recession and we should be concerned about the possibility of a full recession spreading here and around the world,” said Tim Ghriskey, chief invest-ment strategist at Inverness Counsel in New York.

“If (the ISM PMI) export number re-mains weak that will point to deepening overseas weakness,” Ghriskey added. “But a strong number would surprise me given what’s happening around the world.”

Traders work on the floor of the New York Stock Exchange. US market participants will get a picture of the extent to which trade tensions and currency have hurt US manufacturers when the Institute for Supply Management releases its purchasing managers index for September on Tuesday.

BUSINESS11Gulf Times

Monday, September 30, 2019

Polish banks haunted by Swiss franc mortgages in European courtReutersWarsaw

Europe’s highest court will rule next week whether a bank in Poland broke the law by selling homeowners a Swiss franc mortgage, potentially unleashing lawsuits which could wipe out Polish banking profits for years to come.It is nearly two decades since 700,000 Poles, attracted by interest rates far lower than those available in their zloty currency, took out mortgages denominated in Swiss francs.Such foreign currency loans now total 124bn zloty ($31bn), almost one third of all Polish mortgages, but many homeowners are having to pay far bigger instalments than they expected due to a sharp rise in the value of the Swiss franc.Although similar mortgage deals became a problem in other European countries, including Hungary,

Romania and Croatia, Poland has been slower to resolve the plight of its borrowers.Anna Wojtowicz-Bartlomiejczuk said she was left with huge debts when the franc jumped as she was preparing to move and pay off her previous foreign currency loan on a two-bedroom flat.“It’s like I have thrown the cash out the window,” said the 39-year-old mother of two from Gdansk.Since the collapse of Lehman Brothers in 2008 the Swiss franc has risen 85% from 2.18 zloty to 4.04 zloty, while this year alone it appreciated by 6% against the Polish currency.The most painful year for Poles was 2015, when the franc skyrocketed as the Swiss central bank removed a currency cap.Many borrowers have since turned to the courts, encouraged by a cut in the cost of taking action, in what has become the worst crisis to hit Poland’s banks since the end of communism.

And the European Court of Justice (ECJ) is now due to rule on October 3 whether it was legal for Raiff eisen Bank to grant foreign currency-denominated mortgages, as Polish banks face increasing pressure to compensate thousands of borrowers.The ECJ was asked by a Polish judge whether such contracts broke European law.The number of new cases in Polish courts in the first six months of 2019 rise by 39% to 2,021, justice ministry data shows.“The (ECJ) judgment will cause an avalanche of lawsuits,” Janusz Szewczak, a lawmaker for Poland’s ruling nationalist Law and Justice (PiS) party, said.The ZBP banking lobby estimates that the total cost could hit 60bn zloty ($15bn) if all those with such a loan were to succeed in court, four times more than the 2018 net profit of Poland’s banks.

Legal actions against the banks claim their contracts abused the rights of borrowers, with one estimate of more than 11,000 pending cases in Polish courts.DM BOS brokerage analyst Michal Sobolewski said the ECJ ruling could determine that some of the Polish mortgages should be unwound and treated as if they were originally made in zloty.“This is the biggest challenge for the banking sector at the moment,” chief economist at ING Bank Slaski Rafal Benecki said, predicting it could wipe out profits and require some banks to seek fresh capital.The banks with the biggest foreign exchange-denominated mortgage portfolios include units of Santander, BCP and Commerzbank, as well as Poland’s biggest lender PKO BP and Getin Noble Bank.While many are pursuing the banks, there is also anger with the way

the problem has been treated by successive governments. Jacek Sledzinski, a 45-year-old lawyer, resents the lack of support, even though he has been able to continue repayments on his Swiss franc loan on a 2-bedroom flat in Warsaw.“Neither the previous nor the current governments helped Swiss franc mortgage holders,” he said.With no end to the crisis in sight, there is also potential for legal changes to try to resolve the mortgage mess.Jaroslaw Urbaniak, a lawmaker from Poland’s opposition centrist Civic Platform said his party wants to support homeowners in their tussle with the banks with new legislation. This was the case in Croatia, where legal changes in 2015 meant that most foreign currency denominated loans were converted into euros, at the expense of the banks.A recent ruling by Croatia’s Supreme Court means these borrowers

can individually sue banks for compensation, although the lenders are trying to reverse that ruling in the Croatian Constitutional Court and European Union courts.Foreign currency loans are no longer an issue in Romania as banks there rescheduled/converted most of them and following the financial crisis they represented about 5% of hard currency loans in the country, in contrast with others in the region.In Slovenia, several cases are going through the courts, with some ruling in favour of the banks, while others have backed the borrowers.The majority of cases have not been finalised, however, as most can appeal to a higher court.The outstanding amount of mortgages in Swiss francs in Slovenia in 2017 was €461mn ($504.20mn), although this has since fallen as many borrowers have converted them into euro loans in agreement with their banks.

Citing climate risk, investors bet against mortgage marketReutersNew York

David Burt helped two of the protagonists of Michael Lewis’ book The Big Short bet against

the US mortgage market in the run-up to the 2008 fi nancial crisis.

Now he’s betting against the market again, but this time, the risk is not from underwater subprime mortgages, it’s from homes sinking under water.

As he did then, Burt has given up his full-time job to make that bet.

He left his role as a portfolio manager at the $1tn Wellington Management last year to start an investment fi rm, Delta-Terra Capital, which aims to help clients manage climate risk, and, where possi-ble, take advantage of ways the market has not yet priced in that risk.

His fi rst investment strategy is tar-geting residential mortgage-backed securities, or RMBS, with exposure to climate hot spots like Texas and Florida. In doing so, Burt is joining the ranks of a small number of investors

who have become worried that climate risk is underpriced in these securities, which are pools of home loans sold to investors.

“The market’s failure to integrate climate science with investment anal-ysis has created a mispricing phenom-enon that is possibly larger than the mortgage credit bubble of the mid-2000s,” Burt wrote in a presentation to prospective clients.

Most mainstream investors remain skeptical of the impact of climate change on their portfolios or argue that they are diversifi ed enough not to have to worry about the risks. Burt and at least three other investors said in in-terviews with Reuters that they think the risk is real.

They argue that a growing body of academic research and data shows that hurricanes, fl ooding and other dis-asters pose a far larger threat than is currently being priced into mortgage securities.

“I don’t think you need any new climate eff ects to come to draw these conclusions.

The ones I see happening right now, I just need to get a little unlucky with them and I’m in trouble,” said Thomas Graff , head of fi xed income at Brown Advisory. Graff abandoned a riskier type of RMBS after Hurricane Harvey hit Houston in 2017.

Climate researchers and investors say a key culprit for the mispriced risk in the US mortgage market is outdated flood maps drawn by the federal government.

These maps determine the premi-ums on government-sponsored home insurance policies.

Due to budget cuts, more than three-quarters of the maps have not been updated in at least fi ve years, ac-cording to First Street Foundation, an organisation that is developing a pub-licly accessible database of up-to-date fl ood risk information.

Outdated maps mean far fewer peo-ple are required to have fl ood insurance than are at risk, the investors and re-searchers say.

A University of Bristol estimate put the actual fi gure at around three times

the 13mn Americans currently living in designated fl ood zones.

The gaps are evident: About 70% of all damages to homes that were fl ooded during Harvey were not covered by in-surance, according to CoreLogic.

The federal government provides most fl ood insurance in the United States and the gaps mean the risk is not properly priced.

The cost for an average policy in low-risk Green Bay, Wisconsin, for ex-ample, is three times that in Gulfport, Mississippi, a town devastated by Hur-ricane Katrina, according to Burt.

The Federal Emergency Manage-ment Agency has said it aims to fi x some of these problems with a major risk re-rating on October 1, 2020.

Burt’s bet is that the move will result in signifi cant cost increases.

That in turn will lead to home price declines and mortgage losses, which would increase volatility in RMBS prices.

He expects a correction beginning in the next 6-18 months.

“The bet I’m making is that many

regional markets will experience large price declines in response to increasing costs related to the geography-specifi c risks,” Burt said.

There are many risks to Burt’s the-sis. In the past few years, RMBS prices have recovered after disasters such as Harvey.

The federal government has stepped in with aid when losses were not cov-ered by fl ood insurance.

David Goodson, head of securitised fi xed income and senior portfolio man-ager at Voya Investment Management, said he does not dismiss RMBS deals that have signifi cant concentration in fl ood hot spots like Miami or Houston.

“While there are more vulnerable population centres that are at greater risk, I think it would be imprudent to out-of-hand dismiss deals that have a concentration in a particular” area, he said.

Burt thinks the mainstream view will be proven wrong.

Some of the conditions that allowed prices to recover after Harvey, such as redevelopers bailing out homeowners,

could disappear if there is an economic downturn. Investors also have been taking on more risk.

Some RMBS issued by Freddie Mac and Fannie Mae since 2017, called credit risk transfer (CRT) deals, move the risk of default to the investors.

In traditional agency RMBS, Fannie and Freddie cover those losses.

Between 2% and 4% of the loans in outstanding CRT deals were located in Houston and other areas badly hit by Hurricane Harvey, according to Bank of America.

While prices of these securities re-covered, investors in lower tranches of the capital structure in some deals took losses they did not recover.

This is because the most junior tranches have little or no protection.

The lowest tranche of the most re-cent Freddie Mac CRT will start losing principal if mortgage pool losses ex-ceed 0.1%.

“It has been building up,” Burt said, “and so when the correction comes, it will probably come in a more meaning-ful way than people are expecting.”

Italy’s economy minister hints at 2.2% defi cit target in2020 budgetReutersMilan

Italy’s economy minister suggested yes-terday that the country’s budget defi cit would be set at around 2.2% of domestic

output next year, stressing the need for fl ex-ibility as Rome tries to rekindle stalled growth without reigniting friction with the EU.

Roberto Gualtieri said in an interview with RAI state TV that the 2020 defi cit would be “a wise midway between 2.04% and 2.4%” of gross domestic product.

He made reference to last year, when the previous government originally set a 2019 defi cit target of 2.4%, only to reduce it to 2.04% after an increase in yields on Italian bonds and a tussle with the European Com-mission.

“We need to use all the fl exibility available,” he said. This year’s defi cit is seen at around 2.0% of GDP, Deputy Economy Minister An-tonio Misiani said last week.

The cabinet is due to sign off on the new targets in the Treasury’s Economic and Fi-nancial Document at a meeting today.

On Saturday, a political source said Rome would target its budget defi cit at around 2.2% of GDP next year, falling to 1.8% in 2021 and 1.4% in 2022.

But the source said the targets were still subject to possible marginal revisions ahead of Monday’s meeting.

In particular the 2020 defi cit goal could be lowered to 2.1% depending on ongoing talks with the Commission.

Italy’s economic growth is seen around 0.6% next year, rising to 1.0% in each of the following two years, according to a draft of the targets seen by the source.

Gualtieri said the government was also weighing options for possible adjustments to value-added tax rates.

Rome has promised Brussels that it will increase VAT to raise some €23bn ($25.2bn) from January as a backstop in order to comply with EU fi scal rules if it could not fi nd alter-native resources.

So far Italy has said it wanted to avoid the planned VAT increase in full, but last week Prime Minister Giuseppe Conte did not rule out a decision on limited tweaks to the VAT regime.

Gualtieri said one of the options was to marginally increase one of the VAT rates but to hand money back to people who do not pay in cash for their purchases.

Credit Suisse saga reveals bank surveillance stateBloombergNew York

The scene: a street in Zurich. The mark: a wealthy Swiss banker. His pursuers: hired

goons looking for intel.It sounds like something ripped

from John Le Carre. In fact, it’s real-life - and not all that unusual in the world of high fi nance.

News that Credit Suisse Group AG had hired private investigators to tail a star banker who’d defected to a rival has captivated the hush-hush world of Swiss banking. The ensuing scandal has reached the very top of the fi rm and, in all likelihood, heads will roll.

Yet no one in fi nance should be under any illusions. Banks spy all the time. The only diff erence? Credit Suisse got caught, and publicly so.

Call it the banker-surveillance state – a phenomenon probably as old as banking itself. From Deutsche Bank AG to Spain’s BBVA and even Barclays Plc, fi rms have long turned to a range of techniques to gather corporate intelligence and protect their talent and client lists. But the line between safeguarding intellec-tual property and carrying out ven-dettas can, at times, be blurry.

“Surveilling employees who are getting ready to leave the company is a dog-eared page in the playbook,” said Mary Inman, a partner with law fi rm Constantine Cannon in London who specialises in employee whistle-blower cases. “What’s remarkable about the current situation is that it got so heated.” Beyond the business-as-usual monitoring of emails and chats, banks often step up scrutiny of records once top employees leave.

Suspicions of wrongdoing can prompt forensic reviews of messag-es, documents and phone logs. Some banks hire external intelligence fi rms to scour public records for indica-tions that the departing person may be gearing up to start a rival business - and possibly breach a non-compete or try to poach former colleagues.

But the situation at Credit Su-isse, which is playing out against the backdrop of a personal rift between

the departed banker and chief exec-utive Offi cer Tidjane Thiam, appears to be a step beyond common proce-dure, prompting questions about in-ternal controls.

But, it’s hardly the fi rst of its kind.A decade ago, German prosecutors

investigated potential data protec-tion violations at Deutsche Bank af-ter bank offi cials on several instances hired private eyes to spy on board members, a shareholder and a pri-vate individual. The lender fi red two executives over the matter.

In 2014, HSBC Holdings Plc was fi ned by a Brazilian court for using private investigators to spy on 152 employees on medical leave. The in-vestigators entered some employees’ houses without permission to fi lm and take pictures, attempting to cor-

roborate suspicions among some at the bank that they were fraudulently collecting medical-leave benefi ts. The court said those actions invaded people’s privacy.

And Spanish bank BBVA is cur-rently investigating reports that bank offi cials hired a detective agen-cy in 2005 to tap the phones of senior managers, regulators, politicians and journalists as part of a high-stakes power struggle in the executive suite.

In other instances, drastic meas-ures are taken to address matters of a more personal nature.

Barclays chief executive Jes Staley almost lost his job after it was re-vealed that he’d ordered the bank’s internal security personnel to un-cover the identity of a whistle-blow-er who was denigrating one of his top

lieutenants. Staley, who ordered the operation despite instructions from the bank’s counsel to stand down, was fi ned by regulators and had to forgo some of his past compensation.

Credit Suisse’s Thiam is now wrapped up in a similarly perilous situation. Tensions between the CEO and Iqbal Khan, a 43-year-old rain-maker who led the bank’s interna-tional wealth management division, escalated in January. The two men argued during a party at Thiam’s house in the upscale neighbourhood of Herrliberg outside Zurich, people familiar with the situation have said.

In February, Khan was passed over for a promotion during a corporate reorganisation and fi ve months lat-er, he left. Within weeks, arch rival UBS Group AG – with headquarters

merely blocks away from Credit Su-isse’s in downtown Zurich – hired him to co-lead wealth management, a role that plots a line for Khan to possibly contend for the top job.

Concerned that Khan might poach some of his former colleagues, Credit Suisse hired private detectives from Investigo GmbH, a local security company, to shadow Khan and iden-tify people he met. This month, as the banker was driving with his wife in downtown Zurich, he noticed he was being followed and tried to take photos.

At that point, the story lines di-verge. According to Khan, the pursu-ers tried to take his phone from him, which led to a physical confronta-tion, people briefed on the matter said. Investigo, in a report sent to Credit Suisse and seen by Bloomb-erg, said the incident involved only one of its employees who was ap-proached by Khan and simply raised his hands to block the phone, before moving on.

Whatever the case, Khan reported the matter to the police, which ar-rested three Investigo employees. Prosecutors launched criminal pro-ceedings and Credit Suisse’s board started a probe.

The event has put Thiam in limbo. Some have called for his ouster if the reports are true, including Oswald Gruebel, who ran both Credit Suisse and UBS.

“Such behaviour is unworthy of a large Swiss bank,” Gruebel told a Swiss publication.

Others say it will all blow over. Credit Suisse investigators are ap-parently homing in on the role of Pierre-Olivier Bouee, the fi rm’s op-erating chief, who was involved in authorising the surveillance of Khan, a person familiar with the matter told Bloomberg.

The board will decide early this week who will be held to account.

“Surveillance should not be un-dertaken if it is done for emotional or vengeful purposes,” said James H Rowe, co-managing partner at corporate investigations fi rm Mintz Group. “There’s got to be a strong concern of misconduct – not a fi sh-ing expedition.”

A branch of Credit Suisse in Geneva. News that Credit Suisse had hired private investigators to tail a star banker who’d defected to a rival has captivated the hush-hush world of Swiss banking.

BUSINESSMonday, September 30, 2019

GULF TIMES

Arab investors pledge $1mn in Philippine agro-industrial projectsBy Peter AlagosBusiness Reporter

Investors who were part of the recently-concluded ‘MSC Arab Business Delegation to the Philippines’ have pledged over $1mn worth of investments to fund various agro-industrial projects in the Southeast Asian nation.The ‘MSC Arab Business Delegation to the Philippines’, an initiative supported by the Philippine Economic Zone Authority (Peza), was organised by Doha-based Management Solutions Consultancy (MSC) and implemented by the Association of Filipino Realtors & Entrepreneur Executives in Qatar (Afreeq). According to Joseph Rivera, one of Peza’s investment promotions partners in the Middle East, the pledges from a

business group in Qatar and another from Pakistan “are now undergoing due diligence and feasibility study

preparations,” which includes the acquisition of an initial 50 hectares of agricultural lands in three towns of

Iloilo province located in the southern part of the Philippines.The land is being eyed for

agro-industrial economic zone development focusing on breeding and raising imported cattle, and for the establishment of a Halal hub. Also, investors from the delegation are planning to fund machinery to upgrade the operations and facilities of a gemstone handicraft industry in Antique province, Rivera told Gulf Times yesterday. Other ventures include the potential export of Philippine mangoes to Qatar, a mineral processing facility in the province of Guimaras, and the establishment of a one-stop-shop skills and manpower development centre for overseas deployment. These projects are expected to be formalised early next year, Rivera said. Earlier, MSC managing partner Abdulrahman Hassan and Police Chief Superintendent Rhodel O

Sermonia of the Philippine National Police (PNP) signed an agreement to forge a partnership with the Association of Chief of Police of the Philippines Incorporated (ACPPI) led by Sermonia, who is also the director of the PNP’s Global Police Community Relations (GPCR) programme. The partnership aims to jointly promote the Philippines as a premier investment and tourist destination by co-hosting promotional and business missions to the Philippines organised by MSC.Aside from the Southern Philippines, the delegation also held trade and tourism tours in Metro Manila and in Bataan province located in the central island of Luzon. The delegation was also hosted by Peza director general Charito Plaza at the Peza headquarters in Manila.

Brent crude futures decline in volatile sessionwww.abhafoundation.org

OilOil prices fell on Friday and posted a weekly loss on a faster-than-expected recovery in Saudi output, while investors also worried about global crude demand amid slowing Chinese economic growth.During a volatile session, Brent crude futures fell 1.3%, to settle at $61.91 a barrel, after dropping to a session low of $60.76 a barrel. US West Texas Intermediate (WTI) crude futures fell 0.9%, to settle at $55.9. Brent fell 3.7% for the week, its biggest weekly loss since early August. WTI lost 3.6%, its steepest loss since mid-July. Brent is just above its level before attacks on Saudi facilities on September 14, which initially halved the kingdom’s production. Sources told Reuters last week that Saudi Arabia had already restored capacity to 11.3mn barrels per day, although Saudi Aramco has yet to confirm it is fully back online.Crude futures fell along with other higher-risk assets after news that the US government is considering the possibility of delisting Chinese companies from US exchanges. The move would be a radical escalation of trade tensions between the US and China. Also weighing on prices, the International Energy Agency (IEA) said it might cut its estimates for global oil demand for 2019 and 2020 should the global economy weaken further, while in China, the world’s second-largest economy and biggest importer of crude oil, industrial companies reported a contraction in profits in August. Emerging details related to the Trump impeachment inquiry also

helped to dent demand sentiment adding uncertainty to the US economy. In an indication of future production, US energy firms reduced the number of oil rigs last week, and for a record 10th month in a row. Drillers cut six oil rigs in the week to September 27, bringing the total count down to 713.

GasAsian spot prices for LNG remained relatively stable this week, having firmed over the previous two weeks on turbulence in the gas and crude oil sectors. The average LNG price for November delivery into northeast Asia is estimated at $5.75 per mmBtu, down from $5.80 mmBtu the previous week. While there were no indications of rising demand, some traders may

have looked to close financial exposure towards the end of the month, which provided some price support on Friday. The market expects some volatility in the coming week as European front-month gas contracts roll from October to November, which could lead to the November price becoming more bearish as Europe is well supplied with LNG and has full gas stocks.Any movement on European gas prices is expected to translate to Asian LNG prices. Activity on the LNG market this week also indicated that market participants may have diff erent expectation for future price direction.Some buyers, such as Indian Oil Corp and India’s Gujarat State Petroleum Corp (GSPC), cancelled their latest tenders, adding that off ers they

received might have been higher than expected. Some other buyers re-issued previously unawarded tenders, in likely expectation that prices could rise even higher. In the US, natural gas futures

fell again last week following the falling oil market and continued demand concerns. Henry Hub spot prices dropped around 5.1% from the previous week to settle at $2.40 MMBtu.

This article was supplied by the Abdullah bin HamadAl-Attiyah International Foundation for Energy and Sustainable Development.

WEEKLY ENERGY MARKET REVIEW

Qatar Chamber joins ‘International Halal Industry Fair’

Qatar Chamber partici-pated in the ‘Interna-tional Halal Industry

Fair’, which was held in Sarajevo, Bosnia and Herzegovina from September 26 to 28, it was an-nounced in a statement.

Qatar Chamber board member Dr Mohamed Jawhar al-Mohamed represented the chamber during the event where he met with Bosniak Member of the Presidency of Bosnia and Herzegovina, Se-fik Dzaferovic, and toured the

fair to learn about the partici-pating companies and their products.

He said the event provided an opportunity for businessmen to meet producers, manufactures, traders, and investors of halal products.

An awareness programme was held on the sidelines of the fair to provide visitors with in-formation about business op-portunities available in the re-gion, as well as halal products and other markets.

Al-Mohamed shakes hands with Bosnian Member of Presidency Shefik Dzaferovic.

Ramon Lacap, investment manager of the Cavite Economic Zone, delivering a presentation to members of the ‘MSC Arab Business Delegation to the Philippines’.

Petrotec, Flowserve set up dry gas seal facilityPetrotec and Flowserve have es-

tablished a dry gas seal repair and testing facility in Qatar as part

of strengthening localisation and sav-ing substantial foreign exchange for the country.

This new facility – which is at Petrotec Service and Technology Centre, Street 39, Salwa Industrial Area – expands Petrotec’s existing wet seal repair and testing facility in Qatar and brings local compressor seal commissioning, inspec-tion and repair capabilities to Qatar.

The inauguration was held in the pres-ence of Misfer al-Bidaiwi, vice president of Pearl GTL at Qatar Shell; Jacques Azi-bert, chief executive of North Oil Com-pany; and Abdulaziz al-Ansari, Head of Tawteen at Qatar Petroleum.

This new facility will give Qatar’s oil and gas companies access to faster seal delivery, local inventory, on-site inspec-tion and testing services, and immediate repair capabilities.

Previously, companies had to send compressor seals outside Qatar for test-ing and servicing, which led to increased downtime and shipping expenses.

“This newly-established dry gas seal facility demonstrates Petrotec’s will-ingness to localise key services in Qa-tar, which previously were sourced from other countries in the Gulf or other parts of the world,” said Salah al-Jaidah, co-founder and co-owner of Petrotec Group.

Established in 1989, Petrotec, a 100% Qatari-owned company and is one of the largest providers of prod-ucts and services to the energy sector in Qatar, has strengthened its posi-tion in the maintenance, repair and overhaul market in Qatar by adding this new dry gas seal repair facility to

its long list of service workshops. The new facility has been built in partnership with Flowserve, an American multina-tional corporation and one of the larg-est suppliers of industrial and environ-mental machinery including pumps, valves, mechanical seals and services to

the oil, gas, power, chemical and other industries.

“Petrotec is a pioneer in the rela-tionship between Flowserve and its distributors because Petrotec had the first wet seals repair and testing fa-cility for a third party company out-

side of Flowserve’s extensive existing network of facilities. This new facil-ity is the first time Flowserve has ever partnered with a distribution channel for a dry gas seal repair facility in the world,” said Tom Diez, vice president (Global Distribution) at Flowserve.

The inauguration of Petrotec’s new dry gas repair and testing facility.