Wednesday, August 16, 2017Dhul-Qa’da 24, 1438 AH

BUSINESSGULF TIMES

US retail sales at biggest rise in 7 months

0.06% JUMP | Page 15

RBS to cut 880 IT jobs by 2020

COST CUTTING | Page 16

Islamic fi nance industry hampered by global economic conditions

IFSB INDUSTRY STABILITY REPORT 2017: Page 3

Air Berlin fi les for insolvencyas Etihad pulls funding plugBloombergFrankfurt

Air Berlin fi led for insolvency af-ter leading shareholder Etihad Airways withdrew its fi nancial

support, marking the second failure of a major European airline in four months after the Gulf carrier pulled the plug on funding Italy’s Alitalia in May.

While Air Berlin, which has 8,600 staff , will continue fl ying with the help of a government loan likely to last it until mid-November, yester-day’s fi ling puts German jobs at risk weeks before German Chancellor Angela Merkel stands for re-election. Deutsche Lufthansa said it may buy parts of its biggest national rival.

Air Berlin has racked up more than €2.7bn ($3.2bn) of losses in a lit-tle over six years and has net debt of €1.2bn. Etihad bought a 29% stake in 2012 as part of a plan to feed more passengers through its Abu Dhabi hub by building a network of minor-ity investments, a strategy that it is now unravelling after itself suff ering losses of $1.87bn in 2016.

“Etihad has notifi ed Air Berlin of the fact that it will not provide any further fi nancial support,” the Berlin-based carrier said in a state-ment, adding that the move has led it to conclude that there is “no longer a positive continuation prognosis.” Eti-had’s two board representatives have resigned.

Air Berlin shares fell as much as 51% and closed 34% lower at 51 cents in Frankfurt, valuing the company at €59.6mn. Its €170mn of bonds due May 2019 fell 33 cents on the euro to a record low of 20 cents, accord-ing to data compiled by Bloomberg. Lufthansa rose 4.7%, the most in fi ve months.

Etihad said that it withdrew fund-ing after Air Berlin’s operations “de-teriorated at an unprecedented pace” in recent months. The UAE carrier’s links to Germany, which include a code-share agreement with Lufthan-sa, remain important and it is ready to assist in fi nding a “commercially vi-

able” solution for Air Berlin, accord-ing to an e-mailed release.

Lufthansa and another unidenti-fi ed airline are “far advanced” with plans for a partial rescue and a deal could be fi nalised in coming weeks, Air Berlin and Germany’s economic ministry said in separate statements. The government is supporting the process by providing a €150mn bridging loan through its Kreditan-stalt fuer Wiederaufbau develop-ment bank.

Lufthansa is keen on acquiring Air Berlin assets including still-solvent Austrian leisure arm Niki, while EasyJet has expressed an interest in other parts of the business, includ-ing German short-haul operations, people familiar with the talks said. Some of Air Berlin’s operations may not fi nd any takers and could be shut,

the people said, adding that talks are evolving and no fi nal decisions have been reached. EasyJet declined to comment.

Air Berlin already has links to Lufthansa, once its arch-rival, fol-lowing an agreement to lease out part of its 144-strong aircraft fl eet to Eu-rope’s third-biggest airline group. Ryanair Holdings said the situation is being “set up” for a takeover by Lufthansa which would breach an-titrust rules while pushing up fares for consumers. The Irish carrier said it has lodged complaints with Ger-

many’s Federal Cartel Offi ce and the European Commission.

Air Berlin submitted the insolvency fi ling in a local Berlin court, though it said it won’t seek bankruptcy protec-tion for Niki and the Leisure Cargo units. Plans to merge Niki with TUI’s German division fell apart in June when Etihad said no agreement had been reached.

After the fi ling Air Berlin credi-tors will have to forgo parts of their investment, German Economy Min-ister Brigitte Zypries said in Berlin, predicting that the carrier will also need to offl oad some landing rights in the city. The government loan should keep it fl ying for about three months, she added.

Air Berlin has “almost no tangible assets” on its balance sheet, with all of its planes now leased rather than

owned, Tony Lebon, a credit analyst at Oddo BHF in Paris, said by phone. “There might still be some value in the slots.” That suggests a “very low” recovery rate for its bonds, he said.

The airline began operations from West Berlin in 1978 with one leased Boeing Co 707. Because only Allied aircraft were allowed there at the time it was founded in Oregon by Kim Lundgren, a US pilot who had previ-ously fl own for Pan American World Airways.

Following German reunifi cation in 1990 Air Berlin embraced the low-cost model being developed by Rya-nair and EasyJet. While the company went public in 2006 it was unable to keep pace with the discount spe-cialists and struggled to win market share from Lufthansa in Germany. It responded by adding long-haul fl ights via the takeover of unprof-itable LTU and adopting a hybrid business model pitched somewhere between full-service and low-cost operations.

In the short term, tour operators TUI and Condor, the German arm of Thomas Cook Group, should benefi t from Air Berlin’s insolvency, as should Lufthansa’s Eurowings discount divi-sion, according to Daniel Roeska, an analyst at Sanford C Bernstein & Co.

“It is very unlikely that any third-party holiday company would be willing to use Air Berlin for packages leaving this winter or next summer,” Roeska wrote in a note. “Similarly, while it is in bankruptcy proceedings, no passengers will likely book on a seat-only basis.”

Rome-based Alitalia began bank-ruptcy proceedings for the second time in a decade on May 2 after work-ers rejected a 2bn-euro refi nancing plan involving 1,600 job losses. Eti-had’s then-chief James Hogan said his company wouldn’t carry on in investing without the support of all stakeholders.

Hogan has since left Etihad, which last month also announced that it was exiting another so-called Equity Alli-ance partner with the sale of a stake in Swiss regional carrier Darwin to Slov-enia’s Adria Airways.

Kuwait plans tender for $1.2bn solar project next yearBloombergKuwait City

Kuwait will issue a tender to build the estimated $1.2bn Dibdibah solar-power plant in the first quarter of 2018 as part of the country’s plans to produce 15% of power from renewable energy by 2030.Opec’s fifth-biggest oil producer set a September 7 deadline for companies to express interest in the 1 gigawatt project, Shukri AbdulAziz al-Mahrous, deputy chief executive off icer of planning and finance at Kuwait National Petroleum Co, said in an interview at the company’s headquarters south of Kuwait City. The cost will be about $1.2bn, he said. Dibdibah will produce half of the country’s planned renewable energy output, he said.Building solar plants is part of government eff orts to help the environment while benefiting from increased production of petrochemicals and refined products.Kuwait pumped 2.7mn barrels of crude a day in July, less than Saudi Arabia, Iraq, Iran and the United Arab Emirates, according to data compiled by Bloomberg.“By freeing up the resources, the crude and fuel oil, you can process them and have a

highly valued product,” al-Mahrous said. “Everything you don’t use has value for the country.”The 32-square-kilometre (12.3-square-mile) plant, which should be completed by the end of 2020 in Kuwait’s northwest, will save burning 5.2mn barrels of oil a year and reduce carbon emissions by 1.3mn tonnes annually, al-Mahrous said.Kuwait consumes at most 14 gigawatts of electricity a day, usually in the summer when temperatures can top 50 degrees Celsius (122 degrees Fahrenheit), according to the Ministry of Electricity & Water.Capacity is 17 gigawatts. The oil industry is the biggest user of power in the country and plans to cover 15% of its energy from renewables by 2020, beating the national target by 10 years, al-Mahrous said.Kuwait is building a 615,000 barrel-a-day refinery, a petrochemical plant and a receiving terminal for liquefied natural gas at al-Zour on the Gulf coast. The refinery will mainly produce low-sulphur fuel oil for use in power plants. Kuwait is also upgrading its two existing refineries, known as the clean fuels project. That will allow for more products to be exported, al-Mahrous said.

An electronic display board is seen inside the Qatar Stock Exchange. The QSE has announced a change in the tick size of all listed stocks to one dirham as of the opening of the trading session on August 27. The decision was taken after obtaining the approval of the Qatar Financial Market Authority (QFMA) thereon. In a circular submitted to the member brokerage firms in the Qatari market, the QSE indicated that the new tick size would replace the currently-implemented three layers of tick sizes.

Change in tick size of stocks on QSE from August 27

Cost of living in Qatar up by 0.2% in JulyQatar’s cost of living, based on consumer

price index (CPI), increased slightly by

0.2% month-on-month in July due to

higher expenses on food and beverages,

recreation and culture, transport, and

health, according to off icial figures.

Similarly, CPI inflation rose 0.2% year-on-

year on increasing prices in transport,

food and beverages, education, and

health, the Ministry of Development Plan-

ning and Statistics said.

The index of Food and Beverages, which

has a 12.58% weight, jumped 4.2%

month-on-month this July and 4.5% on a

yearly basis.

Recreation and Culture, which have 12.68

weightage on the CPI basket, saw its

index grow by 0.9% month-on-month in

July 2017 but fell 2.5% year-on-year.

The index of Transport, which car-

ries a 14.59% weight in the CPI basket,

increased by 0.6 month-on-month in July

2017 and 7.5% on a yearly basis.

Health, with a weight of 1.79%, saw its

index increase by 0.2% month-on-month

and 2.8% year-on-year.

Prices dipped month-on-month in Cloth-

ing and Footwear by 2.7%, Miscellaneous

Goods and Services by 1.4%, Restaurants

and Hotels (1.1%), Furniture and House-

hold Equipment (1.0%), Communication

(1.0%), and Housing, Water, Electricity and

other Fuel (0.6%).

The other two groups, Tobacco and

Education have remained flat at the last

month’s price level.

Prices dropped year-on-year in Clothing

and Footwear by 4.3%; Housing, Water,

Electricity and other Fuel by 3.6%; Miscel-

laneous Goods and Services (2.0%); Com-

munication (1.1%); Restaurants and Hotels

(0.8%); and Furniture and Household

Equipment (0.7%).

No changes were recorded in the To-

bacco group.

The CPI of July 2017, excluding Housing,

Water, Electricity and other Fuel group

increased by 0.4% when compared to

the index of June 2017, and a 1.4% when

compared to the CPI of July 2016.

Prices dropped year-on-year in Clothing and Footwear by 4.3%; Housing, Water, Electricity and other Fuel by 3.6%; Miscellaneous Goods and Services (2.0%); Communication (1.1%); Restaurants and Hotels (0.8%); and Furniture and Household Equipment (0.7%)

A tow tractor is connected to an Air Berlin aircraft on the tarmac at Duesseldorf airport. While Air Berlin, which has 8,600 staff , will continue flying with the help of a government loan likely to last it until mid-November, yesterday’s filing puts German jobs at risk weeks before German Chancellor Angela Merkel stands for re-election.

“Etihad has notifi ed Air Berlin of the fact that it will not provide any further fi nancial support,” the Berlin-based carrier said in a statement

BUSINESS

Gulf Times Wednesday, August 16, 20172

IMF: China’s debt on a ‘dangerous trajectory’ReutersBeijing

China’s short-term growth outlook has strengthened but there is grow-ing risk of a sharp medium-term

adjustment due to reliance on stimulus to meet targets and a credit-expansion path that may be “dangerous”, the International Monetary Fund said yesterday.

The IMF raised its forecast for China’s average annual growth from 2018-2020 to 6.4% from 6% and said there is now a greater chance that authorities will meet their target of doubling 2010 real GDP by 2020.

But it warned of the consequences to long-term economic health.

The main cost of stronger growth “is further large increases in public and pri-vate debt”, the IMF said in its annual re-view of China’s economy.

“International experience suggests that China’s current credit trajectory is dan-gerous with increasing risks of a disruptive adjustment and/or a marked growth slow-down”, the report said.

The IMF estimates that China’s econo-my would have grown about 5.5% annually from 2012-2016 if credit was expanded at a “sustainable” pace, compared to the aver-age 7.25% that it recorded.

“The key policy imperative is to replace precise numerical growth targets with a commitment to reforms that achieve the fastest sustainable growth path.”

The IMF did not see China making much progress on reducing debt, with the report forecasting that its total non-fi nancial sector debt will increase from about 235% of gross domestic product (GDP) in 2016 to more than 290% by 2022.

The Fund projected that China’s non-fi nancial debt through 2022 will rise “even more strongly” than it forecast a year ear-lier.

For this year, the IMF expects China’s economy to grow 6.7%, unchanged from a forecast in July, above the government’s target of about 6.5%, though growth likely peaked in the fi rst quarter.

China’s economy expanded 6.9% in the fi rst half of the year.

The report also included views from Chinese government offi cials, who agreed

that this year’s growth would likely “ex-ceed marginally” the 6.5% target, though they disagreed with the IMF on China’s debt, saying that it was manageable and that its growth was likely to slow further.

The IMF said some of the steps Chi-na should take to move to a sustainable growth model include reforming fi scal policy to support greater consumption, accelerate reform of state-owned enter-prises (SOEs) and intensify deleveraging eff orts. Over the past year, the IMF said, China has made little headway on SOE re-form but “substantial progress” in super-vising “shadow” fi nancing.

The IMF supported China’s recent pol-icy tightening and increased oversight of fi nancial risks, and said these should con-tinue.

The report said China’s monetary policy has become more market-based as con-trols on credit as well as lending and de-posit rates have been mostly removed, but that the People’s Bank of China should be given “operational independence” in set-ting interest rates.

But that independence would mean its role should be narrowed to focus only on

monetary policy with much greater trans-parency of policy moves, while macropru-dential policy should be separate, the IMF said.

The IMF said China’s control over the yuan exchange rate and capital fl ows in-creased in the past year, and recommend-ed that progress should resume on moving toward a market-oriented rate.

China has tightened its grip on capital outfl ows this year as it looks to preserve foreign currency reserves after signifi cant depreciation pressure on the yuan in 2016.

Reserves have increased this year and the yuan has strengthened in the face of a weak US dollar, though there has been no sign of any loosening of capital controls.

The IMF said that while China should move towards capital account liberali-zation, only carefully targeted reforms should be considered in the near-term.

The report also said that inequality in China – including disparities in income and opportunity – is forecast to increase, but that higher public spending on social services, a progressive personal income tax system and a recurring property tax would help to reduce it.

A group of cleaners prepare to cross a street in the central business district in Beijing. The International Monetary Fund expects China’s economy to grow 6.7% this year, above the government’s target of about 6.5%.

Oil traders expect Asia to import more Venezuela crude if US sanctions kick inReutersSingapore/Houston

Asia would be the biggest benefi ciary of any potential sanctions by the United States on Venezuela’s oil sector, said

traders and analysts, as exports from the South American Opec member could be re-directed to the region, fi lling a vacuum left by producer supply cuts.

Washington is considering sanctions on Venezuela’s oil industry in response to the ruling Socialist Party’s crackdown on offi cials and parties opposed to the government.

An embargo against Venezuelan crude could block imports of about 740,000 barrels per day to the US.

Asian refi ners would welcome the so-called heavy, or higher density, crude since produc-tion cuts by the Organisation of Petroleum Exporting Countries (Opec) have mainly cur-tailed this type of oil.

At the same time, the start-up of new refi n-ing capacity is boosting demand.

China and India, the two biggest buyers of Venezuelan crude after the United States, have room to increase imports while other north Asian refi ners, with equipment sophis-ticated enough to handle heavy Venezuelan oil, are seeking opportunities to tap this sup-ply, analysts and traders said.

“Whatever oil that the United States doesn’t want will fi nd its way into the global market,” a trader with a north Asian refi ner said, adding that Venezuelan oil could be a good fi t for the company’s plant.

A trader with another north Asian refi ner said he is also looking for opportunities to import Venezuelan crude if the US imposes sanctions.

The sources spoke on the condition of ano-

nymity because they were not authorised to speak to media.

Venezuela’s main creditors China and Rus-sia will have fi rst priority to its oil if sanctions are imposed, the sources and analysts said, and the countries would likely make the sur-plus cargoes available in the spot market.

In the fi rst quarter of 2017, Venezuela de-livered to Chinese companies about 485,000 barrels per day (bpd) of crude and oil products to repay loans extended since 2007, accord-

ing to internal documents from state-run oil company PDVSA reviewed by Reuters.

Russian oil fi rms Rosneft and Lukoil are also receiving about 250,000 bpd to repay loans, according to the PDVSA reports.

PDVSA has cut sales to US refi ning unit Cit-go Petroleum since May to increase its supply to Rosneft in order to catch up on overdue Russian deliveries.

Rosneft may ship Venezuelan crude to its newly acquired Essar Oil refi nery in India,

said one trader based in Asia who deals with Venezuelan crude, adding any surplus could be re-sold by Russian companies to other Asian buyers.

“The realignment of trade fl ows to push Venezuelan crude to Asia...would entail sub-stantial logistical challenges that would on the margin be bullish (for) sour crude mar-kets, but not necessarily sustainably bullish (for) crude prices,” RBC Capital analyst Mike Tran wrote in a note last month.

South Korea’s July Iran crude oilimports jump 27%ReutersSeoul

South Korea’s crude oil imports from Iran rose 26.5% in July from a year ago, driven by Seoul’s strong appetite for competitively priced Iranian light oil as Tehran looks to boost market share.Korea, one of Iran’s major Asian customers, shipped in 1.40mn tonnes of crude from Tehran in July, or 330,151 barrels per day (bpd), up from 1.10mn tonnes last year, customs data showed yesterday.The worlds’ fifth-biggest crude importer brought in 10.67mn tonnes of Iranian crude in the first seven months of this year, or 368,952 bpd, up 47.7% from 7.22mn tonnes over the same period last year, the data showed.South Korea mainly imports Iranian condensate, an ultra-light oil used to produce more expensive fuels like naphtha. No breakdown of imports was available.Iran, a member of the Organisation of the Petroleum Exporting Countries (Opec) is exempt from the Opec’s deal to limit production to drain a global supply glut.The country is seeking to regain market share lost during the years it was under western sanctions over its nuclear programme.In July, the Middle Eastern country exported 2.2mn bpd of oil to Asian and European markets, with its exports to Asia up by 100,000 bpd.South Korea’s intake of crude oil from top exporter Saudi Arabia fell 9.3% to 3.69mn tonnes, or 873,656 bpd, a year ago.Opec’s July oil production rose further by 173,000 bpd to 32.87mn bpd, in the latest sign the oil producer club’s joint eff orts to cap output are weak.Overall, South Korea’s total July crude imports increased 3.2% to 12.44mn tonnes, or 2.94mn bpd, from a year ago, the data showed.In the January-July of 2017, South Korea imported 84.68mn tonnes of crude, or 2.93mn bpd, up 2% from 83.04mn tonnes in the same period last year.South Korea’s final data for July crude oil imports by state-run Korea National Oil Corp (KNOC) is due later this month.

China’s new loansfall to 8-month low as curbs biteReutersBeijing

China’s new loans in July fell to their lowest in 8 months due to property curbs that have cooled mortgage lending and seasonal effects, reinforcing views economic activity will slow in the second half.Chinese banks extended 825.5bn yuan ($123.7bn) in net new yuan loans last month – the lowest since November 2016 – down from 1.54tn yuan in June, but the figure was still above the 800bn yuan expected by analysts surveyed in a Reuters poll.Analysts say July loans indicate that banks moved some of their riskier shadow credit back onto their books in response to tighter regulations.Beijing is trying to reduce financial risks by containing rising debt and defusing property bubbles amid fears they could derail the world’s second-largest economy if not handled well, but policymakers will be treading warily ahead of a key party meeting later this year. “This shows that banks are giving more support to the real economy as loans go back to the normal channel — in line with the direction of financial regulations”, said Wen Bin, senior analyst at Minsheng Bank in Beijing.July lending is traditionally weak but last month’s level was still 49bn yuan higher than the average of July figures between 2014 and 2016, according to Reuters calculations based on central bank data.Broad M2 money supply (M2) in July grew 9.2% from a year earlier – the slowest since records began in 1996, central bank data showed, missing forecasts for an expansion of 9.4% and compared with June’s 9.4%.China’s central bank has said that the slowing M2 growth could be a “new normal” due to the stepped-up crackdown on risky shadow lending activities. Household loans, mostly mortgages, fell to 561.6bn yuan in July from 738.4bn yuan in June, according to Reuters calculations based on the central bank’s data.Household loans accounted for 68% of total new loans last month, up from 48% in June.Economists believe Beijing

will handily meet its 2017 growth target of around 6.5% after a surprisingly strong expansion of 6.9% in the first half of the year.But most China watchers expect activity will slow slightly in coming months as signalled by a raft of data for July, mainly as higher financing costs and government measures to cool the heated property market dent economic output.Total social financing (TSF), a broad measure of credit and liquidity in the economy, fell around a third in July to 1.22tn yuan from 1.78tn yuan in June.Combined trust loans, entrusted loans and undiscounted banker’s acceptances, which are common forms of shadow banking activity, fell by 64.4bn yuan in July, according to Reuters calculations.The People’s Bank of China switched to a modest tightening stance at the start of this year to help cool explosive growth in debt, but it injected substantial liquidity in June to avoid a quarter-end cash crunch, market participants said.The central bank will strike a balance between deleveraging and maintaining stable liquidity, it said in the latest quarterly policy report that underscored policymakers’ efforts to keep the economy on an even keel.“While we think the PBoC is now done tightening monetary policy, we expect market rates to remain elevated enough to keep credit growth slowing,” said Julian Evans-Pritchard at Capital Economics.The PBoC is unlikely to tighten policy further in the second half of this year, which could cap rises in market interest rates, a central bank adviser was quoted as saying by the state-run China News Service yesterday.In spite of the ongoing process of deleveraging in the economy, ANZ Research said in a report: “Loan growths are likely to stay high over the next few months, given a strong infrastructure pipeline and improving corporate profits.” Outstanding yuan loans at the end of July grew 13.2% from a year earlier, faster than economists’ expectations of 13% and above June’s 12.9%.

PDVSA has cut crude sales to US refining unit Citgo Petroleum since May to increase its supply to Rosneft in order to catch up on overdue Russian deliveries.

3ISLAMIC FINANCEGULF TIMESWednesday, August 16, 2017

Islamic fi nance industry hampered by global economic conditionsBy Arno MaierbruggerGulf Times CorrespondentBangkok

Global economic volatilities, consistently low oil prices and reduced demand for credit

are among the factors that currently weigh on the Islamic fi nancial service industry, the recently released IFSB Industry Stability 2017 Report by Kuala Lumpur-based Islamic Finan-cial Services Board (IFSB) suggests.

The study says that 2016 marked another year of slower growth amid adverse macro-economic conditions in some core markets for Islamic fi -nance, including adjustments in the value of global Islamic banking as-sets in US dollar terms on the back of exchange rate depreciations in coun-tries such as Malaysia, Turkey and In-donesia, as well as the persistent lack of global standardisation of the in-

dustry, and lower liquidity and profi t-ability compared to the conventional banking sector.

According to the IFSB, the global size of the Islamic fi nancial serv-ice industry has not changed much over the last year, with total Islamic fi nance assets just slightly increas-ing to $1.89tn from $1.88tn, whereby the volume of sukuk outstanding and takaful contributions grew marginal-ly to $318.5bn and $25bn, but assets of Islamic funds decreased to $56bn as a result of an economic backdrop that reduced demand for investment fa-cilities particularly in Gulf Coopera-tion Council (GCC) markets. Another factor that aff ected asset growth was the currency depreciation in Iran, the world’s largest Islamic fi nance juris-diction in terms of assets.

While the largest Islamic fi nan-cial service industry sector, Islamic banking, was somewhat stagnant as a whole in terms of asset growth, some dynamic could be seen in a re-composition of global assets, the IFSB report says. While assets of

Iran dropped signifi cantly in US dol-lar terms, this was compensated by banking asset growth in the GCC and Asia despite the latter’s currency de-preciations. The share in total Islamic fi nancial assets of Middle East and North Africa, including Iran, but ex-cluding GCC, decreased to 30%, but the GCC’s share increased to 42%, while Asia remained at 22%.

With regards to sukuk, the volume of annual sukuk issuances reached $75bn in 2016, bringing the total vol-ume of outstanding sukuk close to $320bn, with 79% of the issuances originating from sovereign issuers and multilateral organisations, and only 21% being corporate issuances. Malaysia, Indonesia, the UAE, Saudi Arabia and Turkey were the fi ve larg-est issuers of sukuk last year.

Overall, the IFSB says that owing to subdued global economic growth

conditions and unexpected develop-ments on the world political stage, another year of slowdown in the glo-bal Islamic fi nancial service industry should be factored in after a period of double-digit growth until 2015. Since, Islamic fi nance assets have failed to register a notable expansion over 2016 and in the course of 2017.

However, there are some positive developments in terms of a market re-mix between conventional and Islamic banking in certain countries. Islamic banking market share has in-creased in 18 countries while remain-ing constant in eight others, includ-ing Iran and Sudan, which both have a fully Shariah-compliant banking industry which translates in a mar-ket share of 100%. Furthermore, Is-lamic banking is now labelled to be of “domestic systemic importance” in 12 countries, the IFSB report

notes, while only fi ve jurisdictions experienced marginal declines. In turn, four newly added jurisdictions in ISFB’s Islamic banking market-share tracker are Afghanistan with a Shariah-compliant banking mar-ket share of 5.9%, the Maldives with 4.3%, Iraq with 1.5% and Kazakhstan with 0.1%.

In a similar assessment, London-based market analysis fi rm BMI Re-search comes to the conclusion that growth will continue to be slow in key Islamic banking markets over the coming years, although BMI expects that large sovereign sukuk issuances will drive the sector to some extent, as well as future expansion into un-tapped markets that would off er some opportunities, particularly because a number of countries are now adopting new regulations and frameworks supporting the develop-

ment of Islamic fi nance innovation. This includes a focus on Islamic fi -nancial engineering and fi nancial technology to create incentives for Shariah-compliant venture capital and create new products such as on-line crowdfunding platforms, cryp-to-currency based transactions, on-line takaful services or robo advisory as a response to new market realities in Islamic fi nance.

Those services should be seen as a response to changing client demo-graphics and preferences for modern and digitised distribution methods, including through mobile devices, as well as younger clients’ preference for low-cost, passive investment strate-gies, the analysts say, adding that a failure to adapt to these structural dy-namics would put the Islamic fi nance industry at a substantial competitive disadvantage.

Jordan govt‘approaches’ banks for dollar bond or sukuk issue

ReutersDubai

The government of Jordan has asked banks to submit proposals to ar-range a US dollar conventional or

Islamic bond issue, sources familiar with the matter said.

The bond would be of benchmark size, said one of the sources, declining to be named because the information is pri-vate.

Benchmark-sized bonds are generally upwards of $500mn.

Jordan issued its fi rst domestic sukuk last year, but should it opt for an Islamic bond, the planned debt sale would be the fi rst international sukuk ever issued by the country.

Jordan’s ministry of fi nance did not immediately respond to a request for comment on Sunday.

Jordan raised $500mn in April through a tap of its existing $500mn bond issued in November 2015 and ma-turing in 2026.

Under a bond tap, an existing transac-tion is reopened for subscription, using the same documentation as before.

It also issued last October a $1bn bond maturing in January 2027, with Citi and JPMorgan leading the transaction.

Jordan’s economy has been severely hit by the fl ow of refugees arriving from Syria since 2011. “Providing for the needs of the Syrian refugees in Jordan has materially impacted Jordan’s public fi nances and will continue to do so,” said Jordan’s latest bond prospectus, dated April 2017.

“If the Kingdom does not receive ad-ditional and suffi cient assistance from the international community (...) the presence of large numbers of Syrian refugees in Jor-dan will continue to materially strain the general resources of the Government and negatively aff ect the Kingdom’s economy.”

Jordan, rated B1 by Moody’s and BB-minus by Standard & Poor’s, is receiving support from the International Monetary Fund through a three-year, $723mn ex-tended fund facility, which was approved in August last year. It also relies on funds from the World Bank and other interna-tional organisations.

Before the issue of $500mn in bonds in November 2015 as a standalone cred-it, Jordan issued bonds fully guaranteed by the US government through the US Agency for International Development (USAID).

Gulf TimesExclusive

EDUCATION/FAQ on Sale/Sukuk

What is the diff erence between ownership and possession?The diff erence may be explained as such: something that is possessed might not be owned (e.g. rental property), while something that is owned might not be physically possessed (e.g. one’s stolen vehicle).

Is an arbitrary sale of a general nature valid?An arbitrary sale of a general nature is invalid, such as selling fish in the water (assuming the seller owns the body of water as in a fish farm), whose quantitative and qualitative value is unknown at the time of the contract.

May I trade in goods that are naturally connected to the site of their origin?

Goods that are still naturally connected to the site of their origin are impermissible to sell until they are first separated, including, for example, fruit on the tree (unless the tree is first sold or the fruit first picked), wool on the sheep (unless the sheep is first sold or the wool first sheared), steel beams in a building (unless the building is first sold or the beam dismantled), milk in the udder (unless the animal is first sold or the udder first milked).

Is the buyer entitled to return an item if the seller claims the sale is at cost but subsequently makes a profit?If the buyer is told by the seller that an item is being sold at ‘cost’ (where cost may include any value additions to the item made by the seller), and the buyer

learns after the sale that the seller had actually made a profit, the buyer is entitled to return the item, but not entitled to compel the seller to sell the item at a lower price, though the seller may opt to do so.

What are the conditions of validity for a buyer and seller?The buyer and seller must both be: ‘Sane’ adult, meaning both buyer and seller should have reached puberty (with some exceptions made based on customary practice, such as a responsible child selling fruit); free from duress, meaning they should not be forced by an outside party to conduct transactions against their will; acting in accordance with the Shariah, meaning that the permissibility of the transaction itself must not be

obviated by the intention of the buyer or the seller. For instance, a Muslim weapons manufacturer must not sell weapons to a buyer at war with Muslims; a Muslim publisher must not off er printing services to an author spreading lies against Muslims; a Muslim computer programmer must not off er services to an aeronautics firm supplying weaponry to bomb Muslims; and so on. The seller must constructively own the item to be sold, or be legally authorised to represent the actual owner.

When is delivery of goods due?The item is the seller’s responsibility until the buyer takes delivery, even if delivery occurs sometime after the sale’s execution; once delivered to the buyer, the item is the buyer’s responsibility.

What are Diminishing Mushrakah Sukuk?These sukuk represent the proportionate share of partners in the joint ownership of an asset. The financial institution or investor leases and gradually transfers its share of ownership of the asset to the client. The lessee uses the investor’s share and by the end of the Musharakah, redeems and assumes ownership of it.

What are Murabaha Sukuk?The Murabaha is a sale in which the cost of acquiring the asset and the profit to be earned from it are disclosed to the client. Murabaha Sukuk are issued for the purpose of financing the purchase of goods through the Murabaha so that the

certificate holder becomes the owner of the Murabaha commodity. Murabaha Sukuk are issued for the purpose of financing the purchase of goods through the Murabaha so that the certificate holder becomes the owner of the Murabaha commodity. Murabaha Sukuk cannot be sold or purchased in the secondary market.

What is the definition of Sukuk?Sukuk is an Arabic term and a plural of the word Sakk which means ‘certificate’. Sukuk are defined as certificates of equal value representing undivided shares in ownership of tangible assets, usufruct and services. Sukuk may be issued for various Islamic banking products such as Ijarah, Musharakah, Murabaha, Salam and Istisna.

Meraas Holding issues $200mn tap of private sukuk due in ’22

ReutersDubai

Dubai’s Meraas Holding, a real estate developer owned by the government, priced on Monday a $200mn tap of the $400mn sukuk which it sold privately at the end of May, a document showed.Under a bond tap, an existing transaction is reopened for subscription, using the same documentation as before.The $200mn of private sukuk, due in May 2022, were priced at a 4.991% yield to maturity and arranged by Dubai Islamic Bank and Emirates NBD Capital, the document showed.

Jordan issued its fi rst domestic sukuk last year, but should it opt for an Islamic bond, the planned debt sale would be the fi rst international sukuk ever issued by the country

Dana sees creditors paying out in legal fray as profi t risesBloombergDubai

Dana Gas PJSC said it expects a “signifi cant liability” for hold-ers of its Islamic bonds in a le-

gal battle over the securities.Sukuk holders will likely repay the

energy producer the “excess on ac-count of profi t payments,” chief ex-ecutive offi cer Patrick Allman-Ward said on a conference call with report-ers, after the company announced that second-quarter profi t rose to $12mn from $7mn a year earlier.

The Sharjah, the United Arab Emir-ates-based company missed a profi t payment last month on $700mn of debt as it seeks to prove in court that its Islamic bonds are no longer Sha-riah compliant.

Dana Gas initially proposed to re-place the bonds, which mature in Oc-tober, with four-year securities pay-ing less than half their current profi t

rate, but it retracted that off er last month in favour of a court settlement.

Dana Gas has reclassifi ed the sukuk from being a borrowing to “capital re-

ceived on issuance of sukuk” to refl ect the company’s legal position, Allman-Ward said.

Investors have questioned the va-lidity of Dana Gas’s legal bid, since neither sukuk regulations nor UAE laws governing the matter have changed since they were issued in 2013.

The company is restructuring debt for the second time in fi ve years as overdue payments from Egypt and Iraq’s Kurdish region leave it grappling for funds. Dana Gas, which pumps most of its gas at fi elds in Egypt and Iraq, is seeking to recover payments from both countries for overdue bills.

It was owed $900mn at the end of June, down from $982mn as of the end of 2016.

Dana Gas said profi t was driven by increased revenue from the Kurd-

ish region of northern Iraq and lower expenses, partly off set by a decline in investment and fi nance income. Rev-enue grew 8.3% to $104mn.

Realised prices rose 23% and pro-duction in Egypt increased 3%. Hy-drocarbon output fell 2% to 65,400 barrels of oil equivalent per day on reduced production at its Zora field in the UAE and the Kurdish region. Realised prices averaged $42 a bar-rel for condensate, compared with $34 a barrel a year earlier, and $29 a barrel per oil equivalent for liquefied petroleum gas, up from $27 a year earlier.

Allman-Ward said he expects pro-duction to be “more or less fl at” in the second half of the year and oil prices to average between $45 and $55 a bar-rel. Brent crude rose 0.1% higher as of 1:38pm in Dubai to $50.80 a barrel.

Dana Gas missed a profit payment last month on $700mn of debt as it seeks to prove in court that its Islamic bonds are no longer Shariah-compliant.

BUSINESS

Gulf Times Wednesday, August 16, 20174

‘Petronas targets select markets for expansion’ReutersKuala Lumpur

Malaysian state energy fi rm Petronas will focus on a few select markets for expan-

sion, its CEO told Reuters, as it posi-tions itself as leaner and meaner for a medium-term period of relatively low oil prices.

Hurt by a slump in oil prices, Petro-liam Nasional Berhad has cut its costs and its spending, deferring some projects in an eff ort to help profi tability in a tough energy market.

Rather than having its operations “scattered all over the place,” CEO Wan Zulkifl ee Wan Ariffi n wants the compa-ny’s geographical profi le to be concen-trated, he said in an interview yesterday at the Petronas Towers, the world’s tall-est twin towers.

“We must have geographical concen-tration to be more cost eff ective,” Wan Zulkifl ee said.

For its upstream business, Petronas will focus on South East Asia and Can-ada, where it already has huge reserves, he said, adding that Mexico – where Petronas has recently picked up three blocks – will be another focus.

Petronas last month scrapped a pro-posed $29bn liquefi ed natural gas (LNG) terminal project in western Canada be-cause of weak prices.

Oil prices are expected to trade at around current levels in the short- to medium-term, and Petronas is budget-ing for Brent crude at $45 per barrel for 2017 and a “few dollars” higher for next year, Wan Zulkifl ee said.

Brent crude was trading at about $50 a barrel yesterday.

With oil trading at near 12-year lows early last year, Petronas announced it would cut spending by 50bn ringgit ($11.64bn) over the next four years.

For this year, Petronas is budgeting for capital spending of 60bn ringgit ($13.97bn) – in line with last year, when it actually only spent 50.4bn ringgit.

Much of this year’s spending will be on its Refi nery and Petrochemical Inte-grated Development (RAPID) project in the southern state of Johor, Wan Zulki-fl ee said. Petronas has also cut the divi-dend it pays to the government.

It expects to pay 13bn ringgit this year, half its 2015 payout.

Dividends from Petronas, one of Ma-laysia’s biggest employers and only For-tune 500 company, contributed about

7.5% of the country’s revenue. The cost cutting, including the loss of around 2,300 jobs, helped Petronas post higher profi t last year.

Wan Zulkifl ee said Petronas has its assets under constant review, and he said earlier this year that Petronas was reviewing some assets in Africa, and exited its liquefi ed petroleum gas (LPG) business in the Philippines.

“High grading our portfolio is an on-going process,” he said. “No emotional attachment. If it doesn’t make money, it’s a candidate for us to divest.”

He did not say what other assets Pet-ronas may be looking to sell.

Wan Zulkifl ee said RAPID, which some analysts say will be the company’s biggest source of growth in the medi-um-term, is on track to start in 2019.

The RAPID project, part of the Pengerang Integrated Complex, will contain a 300,000 barrel-per-day oil refi nery and a petrochemical complex with capacity to produce 7.7mn metric tonnes a year.

Malaysia’s Pengerang peninsula sits strategically between the Malacca Strait

and the South China Sea. Nearly all the Middle East oil and gas bound for North Asia’s industrial powerhouses of China, Japan and South Korea passes through those two bodies of water.

Saudi Aramco has agreed to buy a $7bn stake in RAPID.

“Refi nery start-up will be in the (2019) fi rst quarter. For it to go into commercial operation, probably a few months after that,” Wan Zulkifl ee said, adding the project is around 70% com-plete.

Petrochemical operations at the site,

which will feed off the refi nery, will start 6-12 months later, he said.

“Currently our upstream portfolio is huge. RAPID will provide us a bigger downstream portfolio.

So it will be more balanced,” he noted.Wan Zulkifl ee said the cost of devel-

oping the RAPID facilities and the sup-port infrastructure may be lower than the initially estimated $27bn.

After RAPID is completed, Petronas’ capital spending will be split 70:30 be-tween the upstream and downstream businesses, he said.

Cookie counting Indrawati aims to fix Indonesian budget woesBloombergJakarta

Within the austere confines of Indonesia’s

Finance Ministry, even the cookies are

under review as budget strains threaten

to undermine President Joko Widodo’s

ambitious infrastructure plans for South-

east Asia’s largest economy.

Finance Minister Sri Mulyani Indra-

wati urged spending restraint in a recent

speech to off icials as she grapples with

a fiscal shortfall and widening budget

deficit. When a couple of dozen biscuits

at a morning meeting weren’t eaten and

thrown out, she told her charges to tackle

waste of any kind.

“Because the meeting was at eight in

the morning, no one touched those cook-

ies. Twenty four snacks for one meeting.

Imagine in a day how many meetings we

can have,” Indrawati said in remarks that

were posted on social media last week.

“I’ve heard about this line many times

during my period at the World Bank, that

less is more.”

Indonesia’s economy has been grow-

ing at about 5%, short of the 7% Widodo

targeted when he came to off ice almost

three years ago. The government projects

the 2017 budget deficit will widen to 2.9%

of gross domestic product, just short of a

legal limit of 3%.

In a positive global market environ-

ment, a budget deficit below 3% of GDP

shouldn’t be a problem for the govern-

ment as it raises financing, said Dian

Ayu Yustina, an economist at PT Bank

Danamon in Jakarta. But global monetary

tightening as the US Federal Reserve

prepares to reduce its balance sheet and

geopolitical factors could aff ect capital

flows.

“The risk still lies in the financing,”

Yustina said. “Therefore it’s imperative

for the government to maintain a positive

perception of the economy.”

The rupiah is up 0.9% against the dol-

lar this year, extending a 2.3% advance

in 2016, according to data compiled

by Bloomberg. Foreign investors have

pumped $9.1bn into the nation’s bonds

and stocks since the beginning of this

year.

Widodo, known as Jokowi, will lay out

his 2018 budget plans when he addresses

the parliament today. His two speeches,

on the eve of Indonesia’s Independence

Day, will mark out spending priorities as

well as key assumptions and risks for the

economy.

The strains on the 2017 budget

already have the government eyeing up

additional debt and needing to borrow

461tn rupiah ($34.5bn) to fund the fiscal

shortfall. The current account deficit

has also widened, hitting $5bn or 1.96%

of GDP in the second quarter, on the

back of a decline in exports and a rise

in imports.

“The risk of widening deficits right now

is primarily that a tight budget means the

government has very little room left to

use the budget to drive growth, even if

overall public debt is low,” said Roland Ra-

jah, director of the International Economy

Programme at the Sydney-based Lowy

Institute.

“The presence of a still large current

account deficit meanwhile means that if

growth does pick up, the current account

might quickly enter the danger territory

again of 3% of GDP or higher,” he said.

Cutting low quality spending like

energy subsidies and raising Indonesia’s

low tax take through policy changes and

better compliance and enforcement are

key to creating the fiscal space for more

productive spending on infrastructure,

education and health, he said.

Compounding the budget blues, Indo-

nesia is also facing a decline in oil revenue

and steadily rising fuel imports.

Jokowi, who a year ago vowed to

develop every inch of the Indonesian

archipelago, has ramped up government

spending on infrastructure to more than

60% of the annual budget since taking

over in 2014. His chances of re-election in

2019 are also closely tied to the success of

his $350bn infrastructure agenda.

But with a tax-to-GDP ratio of 10.8%,

fiscal pressures are persisting. Indrawati,

who wants to raise the ratio to 16% by

2019 said last month the rate is “low and

unacceptable” when compared to neigh-

bours such as Malaysia which has a ratio

of 15.6% and Thailand at 16%.

Total government debt has also been

rising, climbing from 2,605tn rupiah at

the end of 2014 to 3,780tn rupiah by the

end of July. At about 30% of GDP, that’s

still significantly lower than many other

countries and far less than the 60% al-

lowed by law.

House of Representatives Deputy

Speaker Fadli Zon, who is also a member

of the main opposition party Gerindra,

said the president should be showing

greater spending restraint at a time

when the Indonesian economy is under-

performing. “The increase in debt is con-

cerning me and my colleagues. It is at a

dangerous level,” Zon said in an interview.

“It’s also become a burden on our

national budget,” Zon said. “He has to

prioritise which infrastructure projects

should be done at this time of crisis.”

The Lowy Institute’s Rajah said the

growing government debt and budget

deterioration present risks for Jokowi’s

infrastructure plans.

“Widodo can try to finance investment

by relying more on SOEs to raise capital

from the market and using PPPs,” he

said. “This is diff icult enough, but even if

successful the risk is either that it leads

to a higher current account deficit or

could crowd out other investment by the

private sector.”

And so Indrawati is plowing on with

her plans to shave the deficit, one snack

at a time.

“If our budget can be saved 15% from

procurement, my deficit for this year can

fall to 2.5%,” she said, according to the

comments posted on her Instagram ac-

count. “It’s not about being stingy, but it’s

about your mindset.”

Petronas CEO Wan Zulkiflee speaks during an interview in Kuala Lumpur. For its upstream business, the company will focus on South East Asia and Canada, where it already has huge reserves, Zulkiflee said yesterday.

PBoC may not tighten policy further:adviserReutersBeijing

China’s central bank is un-likely to tighten policy further in the second half

of this year, which could cap ris-es in market interest rates, a cen-tral bank adviser yesterday was quoted as saying by the state-run China News Service.

Under its “prudent and neutral” stance, the central bank shifted to slight tightening at the start of the year, guiding market interest rates higher during the fi rst quarter. But it later pumped out substan-tial cash in response to a surge in short-term rates caused by a fi -nancial deleveraging drive.

“Financial market rates, in general, will not go up again in the second half, but will stay sta-ble or even fall slightly,” Sheng Songcheng, an adviser to the People’s Bank of China, was quoted as saying.

The weighted average lend-ing rate for non-fi nancial fi rms, a key indicator refl ecting corporate funding costs, rose 14 basis points in the second quarter to 5.67%, following an increase of 26 basis points in the fi rst quarter to 5.53%, the PBoC said on Friday in its sec-ond-quarter policy report. The adviser’s comments come at a time China’s de-risking programme to contain debt continues, and as weaker-than-expected July data suggested the economy is starting to cool under the weight of higher fi nancing costs and a slowing property market.

In June, sources told Reuters that the central bank would hold off on further policy tightening and could even slightly loosen its grip in coming months. Re-sponding to market expecta-tions that the PBoC could cut banks’ reserve requirement ratio (RRR) again if it aims to achieve a steady money supply growth, Sheng said an RRR cut would send too strong a signal on policy loosening to the market.

“The central bank is much happier to increase money sup-ply via monetary tools like SLF, MLF and PSL,” he added.

Standing Lending Facility, Medium-term Lending Facil-ity and Pledged Supplemen-tary Lending are the monetary policy tools devised by the PBoC to provide short-term funds to the interbank market. The PBoC is expected to cut the reserve requirement ratio by 50 basis points (bps) in the fi rst quarter of 2018 to 16.5%, a Reuters poll showed in July.

Facebook samples China’s potential with sneaky appAFPShanghai

Facebook’s sneaky launch of a photo-sharing app in China, where its social network is banned, gives it a small taste of the massive market’s potential, but it may have to settle for just that for now.The US tech giant acknowledged last week that it was behind the Colorful Balloons application, which is similar to its Moments app but omits any mention of Facebook’s brand name.Facebook has strived to breach the “Great Firewall” – which tightly controls China’s Internet content – ever since its flagship social media platform was banned by Beijing in 2009.Facebook chief executive and co-founder Mark Zuckerberg has made high-profile visits to China and met with political leaders.

He is even studying Mandarin.“We have long said that we are interested in China, and are spending time understanding and learning more about the country in diff erent ways,” a Facebook representative said last week after the app’s origin was revealed by The New York Times.But analysts voiced doubts that Facebook will fully enter the Chinese market any time soon, and the app has had a humble beginning since it emerged in May.According to San Francisco firm App Annie, Colorful Balloons ranked 46th in the photo and video category for iPhone apps in China and a lowly 758th among all apps.“Facebook threw a curve ball in getting inside the China market.It may not be eff ective, but it is certainly a nice try,” said Zhang Yi, head of mobile-Internet consultancy iiMedia

Research Group. “But it will be diff icult for Facebook to enter the Chinese market as a whole because it is unlikely China will change its policies and laws any time soon.”The app has icons and features similar to Facebook’s Moments application.Chinese users must register with a local mobile number and the app will sort through the images stored on their phones based on dates.The app is not linked to Facebook accounts, so users can’t post pictures to their Facebook pages or view content from Facebook through the app.“If the app can’t cross the Firewall and (can) only be used in China, what’s the use of it,” one person commented on China’s Twitter-like Weibo social media network.Colorful Balloons was released in May by a company called Youge, according to Apple’s App Store and one of the

Android app stores. A company named Youge Linking Internet Technology was registered in Beijing in March, with a capital of one mn yuan ($150,000), according to the National Enterprise Credit Information Publicity System.While the app is not mentioned in the system it says the firm’s business covers internet information service and software development.Shortly after the company was registered, Facebook’s China representative Wang-Li Moser had a meeting with Shanghai’s commerce commission director Shang Yuying in May to talk about setting up a Facebook subsidiary in the city, according to the commission’s website.Facebook is among the several global internet giants that are blocked in China, whose security services closely monitor the web for sensitive content within the Great Firewall.

The government has implemented new cybersecurity measures this year to further police the internet.“China is not banning Facebook the company.Only its social networking platform is not allowed,” said Fu Liang, an independent technology analyst based in Beijing.“As long as this app does not go where it shouldn’t and stays as an innocent photo sharing app, China’s regulators won’t give it a hard time,” said Fu.Zhang Yi of iiMedia said Facebook could aff ord to try out an app that is limited to China’s huge market and not available elsewhere in the world.“China is too big a market for Facebook to pass up,” Zhang said. “And I think it is worth it to put down some chips in the game now, as long as it does not aff ect the operation of the parent company itself.”

The People’s Bank of China in Beijing. The PBoC is expected to cut the reserve requirement ratio by 50 basis points (bps) in the first quarter of 2018 to 16.5%, a Reuters poll showed.

BUSINESS5Gulf Times

Wednesday, August 16, 2017

AFPBeijing

Trade tensions between the United States and China heated up yes-terday as Beijing warned that it

“will not sit idle” if a US probe into its intellectual property practices leads to sanctions.

President Donald Trump’s decision to order the investigation comes on top of strains between the two nations over how to handle Beijing’s ally North Korea.

Trump on Monday signed a memo-randum directing US Trade Repre-sentative Robert Lighthizer to deter-mine whether Chinese policies hurt American investors or companies – with retaliatory measures a possible outcome.

“We will stand up to any country that unlawfully forces American companies to transfer their valuable technology as a condition of market access.

We will combat the counterfeit-ing and piracy that destroys American jobs,” Trump said.

“Washington will turn a blind eye no longer,” Trump said, vowing to safe-guard copyrights, patents and other in-tellectual property that are “vital to our security and to our prosperity”.

The president said the US would no longer tolerate Beijing’s “theft” of US industrial secrets, long a concern of major foreign corporations seeking a share of the huge Chinese market.

“We will engage in a thorough in-vestigation and, if needed, take action to preserve the future of US industry,” Lighthizer said.

China’s commerce ministry issued a statement voicing “serious concern” and warning that any US trade protec-tionism “will defi nitely harm bilateral trade relations”.

“If the US side take actions that im-pair the mutual trade relations, dis-regarding the facts and disrespecting multilateral trade rules, China will not sit idle,” the statement said.

The ministry said the country “is defi nitely going to adopt all appropriate measures to vigorously defend the law-ful rights and interest of China.”

The United States is China’s sec-ond-largest trading partner after the European Union, but Washington and Beijing have seen their relations grow increasingly fraught since a promising summit between Trump and China’s Xi Jinping in April.

The new intellectual property inquiry joins numerous investigations launched by Washington into Chinese trade prac-tices, notably those concerning steel and aluminium and their national se-curity consequences, which the Trump

administration began earlier this year.However, the start of a US probe will

not immediately result in open con-frontation.

Lighthizer will fi rst need to reach a preliminary fi nding of unfair practices by China before opening a formal inves-tigation, which could take as much as a year, administration offi cials said.

The Chinese commerce ministry said the country has “always been paying high attention to intellectual property right protection, continuously per-fecting the legislation”, and that the progress it has made on that front is “obvious to all”.

Yang Zhao, chief China economist at Nomura research fi rm, said a US tariff

penalty would only cause minor im-pacts on the Chinese economy and fall short of a full blown trade war.

“The decision to launch this probe may raise the risk of tit-for-tat trade protectionism,” Zhao said in a note.

“But we believe the Trump adminis-tration’s strategy is more likely to be one that looks to raise its bargaining power to reach a better longer-lasting solution over the start of, or the threat of, a real trade war.”

Since launching his successful run for the White House and then taking offi ce, Trump has frequently accused China of undermining the US economy.

The bilateral US trade defi cit with China approached $350bn in 2016, and

Trump has repeatedly blamed Chinese imports for gutting employment in US sectors such as steel.

Last week, Washington announced preliminary sanctions against Chinese imports of aluminium foil.

But so far, the US has not imposed heavier trade measures on Chinese goods.

On Thursday, Trump reiterated the suggestion that he could soften his po-sition on trade if Beijing were to do more to help rein in nuclear-armed North Korea.

China said it halted iron, iron ore and seafood imports from North Korea from yesterday, in accordance with new UN sanctions that Beijing voted to approve.

US administration offi cials, however, have denied any link between the latest trade action and Pyongyang’s nuclear ambitions.

Beijing echoed this view Monday, with the foreign ministry saying the two matters were “totally diff erent.”

Despite Monday’s expected action, Trump has so far refrained from mak-ing good on threats of retaliatory trade measures against China.

This includes in particular concerns over Beijing’s requirement that foreign companies establish local joint ven-tures.

According to Washington, this can mean surrendering technological know-how to Chinese partners.

China warns of retaliation as Trump launches trade probe

US President Donald Trump (left) and Chinese President Xi Jinping meet on the sidelines of the G20 Summit in Hamburg, Germany (file). The bilateral US trade deficit with China reached $350bn in 2016, and Trump has repeatedly blamed Chinese imports for gutting employment in sectors such as steel.

Australia’s biggest bank reveals further woesAFPSydney

Australia’s biggest bank has admitted failures costing staff and custom-ers millions of dollars as the troubled

lender faces legal action over alleged breach-es of money-laundering and terror fi nancing laws.

The Commonwealth Bank of Australia (CBA) was thrown into turmoil by a civil case launched earlier this month by fi nancial intel-ligence agency AUSTRAC for alleged “serious and systemic non-compliance” with the laws.

The case has overshadowed record annual profi ts and forced the bank to announce the retirement of its chief executive.

The embattled lender, Australia’s largest

fi rm by market capitalisation, has now said it was working to remedy other errors worth millions of dollars linked to customers’ in-surance, transactions, and staff pension pay-ments.

“We are providing an additional update on other issues we are putting right for our cus-tomers and employees,” CBA said in a state-ment late Monday, adding that the statement was “not an exhaustive list of all regulatory matters”.

The shortfall in staff pension payments is initially expected to amount to Aus$16.7mn (US$13mn) plus interest, with the full costs yet to be fi nalised.

Refunds to customers over disputed card transactions added up to some Aus$5mn, while the bank said it had notifi ed corporate regulator ASIC over a probe into whether it

did not cancel insurance to some deceased es-tates. Following scrutiny over the AUSTRAC action, the bank said Monday that chief exec-utive Ian Narev would retire by the end of the 2018 fi nancial year.

The company added last week the pay and bonuses of top executives were to be slashed.

CBA could face fi nes running into billions of dollars from the AUSTRAC case.

The bank is also facing an investigation from ASIC over its handling of the alleged breaches.

The latest revelations are not linked to the regulatory investigations the lender faces.

The Commonwealth has been delivering bumper returns for shareholders in recent years, but has also been hit by scandals over poor fi nancial planning advice and insurance payouts.

Uber defies Philippine govt’s order to haltoperations

BloombergManila

Uber Technologies Inc is defying

a Philippine government order to

suspend operations for a month,

saying it will continue to provide

ride-hailing services in the cities

of Manila and Cebu pending the

outcome of an appeal.

The world’s most valuable

startup, no stranger to clashes

with governments around the

globe, froze operations from 6am

local time yesterday, leaving tens

of thousands of would-be riders

stranded. It resumed service after

appealing the decision later in

the day, despite the threat of fines

and vehicle seizures.

“Uber’s operations will contin-

ue until the motion is resolved,”

the US company said in a post on

its Facebook page.

The Land Transportation Fran-

chising & Regulatory Board on

Monday imposed a monthlong

suspension on Uber’s ride-hailing

services after it was found to

have violated an order to cease

accepting new driver applica-

tions. The agency’s suspension

stands, ABS-CBN News cited

board member Aileen Lizada as

saying. Uber drivers who accept

bookings could be apprehended

and may face fines of as much as

120,000 pesos ($2,300) and have

their vehicles impounded, she

was cited as saying.

Uber’s accreditation is due to

expire this month and is under

review, Lizada told Bloomberg

Television Philippines separately.

The company could face a local

lawsuit and its foreign executives

may get deported, she added.

Senator Grace Poe, whose

Transportation Committee is

investigating the ride-hailing

service, said she would meet with

representatives from Uber and

the transportation agency today

to try to resolve the issue. The

regulator should have fined Uber

instead of halting its operations

because the public will suff er, she

said in a statement.

The Philippines is cracking

down on ride-hailing companies

including Uber and Grab, to limit

car usage and alleviate conges-

tion in a capital clogged by 2.4mn

vehicles. About 50,000 vehicles

operated by Uber and Grab are

plying the roads of metropolitan

Manila and other cities without

proper permits, according to the

transportation agency.

Sebi takes up 245 new cases for investigation

IANSMumbai

The Securities and Exchange Board of India (Sebi) on Monday reported a rise of

84.21% in the number of cases it took up for investigation during 2016-17.

According to the regulator’s an-nual report 2016-17 which was re-leased on Monday, 245 new cases were taken up for investigation and 155 cases were completed com-pared to 133 new cases taken up and 123 cases completed in 2015-16.

“There was a comparative in-crease in the number of cases taken up during 2016-17 mainly due to the references received from the Department of Income Tax in the matter of long-term capital gain, short-term capital loss in various scrips,” the report said.

“During 2016-17, 76% (185 out of 245) of the cases taken up for investigation pertained to market manipulation and price rigging compared to 63% (84 out of 133) cases in 2015-16.”

“While insider trading and takeover violation cases account-ed for 14% (34 cases) and 1% (3 cases) respectively, ‘Issue’ related manipulation and other viola-tions of securities laws accounted for 3% (8 cases) and 6% (15 cases) respectively.”

The market regulator initiates investigations based on references received from sources such as its Integrated Surveillance Depart-ment, other operational depart-ments within Sebi and external government agencies.

Beijing’s appetite for crude oil may become less voraciousBy Clyde RussellLaunceston, Australia

The sharp slowdown in China’s refinery processing in July may be another warning sign that the robust growth in crude oil demand this year in the world’s top importer is poised to moderate.Refinery throughput was 45.5mn tonnes of crude in July, or about 10.71mn barrels per day (bpd), the lowest operating rate since September last year, and a drop of 500,000 bpd from June.For the first seven months of the year, refinery runs were 11.04mn bpd, up 2.9% from the same period last year.While this is still a reasonable year-on-year growth rate, it does contrast with the strong 13.6% increase in imports of crude in the first seven months of this year, compared to the same period

in 2016. While imports have been rising partly to off set lower domestic crude output, the larger share of the additional overseas purchases has been flowing to inventories, both commercial ones held by refiners and strategic.It’s this inventory flow that has been behind the strong increase in China’s crude imports, but there are signs this source of growth may moderate in the second half.China doesn’t regularly report flows into strategic storage, but commercial crude inventories rose to a nine-month high of 30.57mn tonnes, or about 223mn barrels, in June, according to Reuters calculations based on percentage changes provided by the off icial Xinhua news agency and historical data.The amount of crude available for storage can be estimated by adding together domestic output and

imports, and then subtracting refinery throughput.Imports in the first seven months of the year were 8.57mn bpd and domestic output was 3.88mn bpd, giving a combined total of 12.45mn bpd.Subtracting refinery runs of 11.04mn bpd leaves a surplus of 1.41mn bpd.Not all of this will have flowed into strategic storage, especially as smaller, independent refiners have been building up their stockpiles as more of them were granted import permits, allowing them to purchase crude.China is about 46% of the way to meeting its target of strategic stockpiles equivalent to 90 days of imports, according to calculations by Thomson Reuters Oil Research and Forecasts.This means importing crude for stockpiling is likely to continue for

several years. However, a question mark has to be placed over whether the smaller refiners will continue to import at the pace seen so far this year, especially since many may have used up most of their off icial quotas for the year.No new applications for import quotas have been accepted since May, according to Thomson Reuters Oil Research, making it likely that overseas purchases by the smaller refiners may slow in the second half of the year.A glut of refined products in the domestic market has led to price-cutting for fuels as the state-owned majors attempt to defend market share against the independent refiners.This is likely to concern the authorities in Beijing, and off icial pressure may also limit the amount of crude being imported.The economic case for higher fuel demand also took a hit this week,

with data showing industrial output, investment and retail sales all expanding at rates below the market consensus.Ample commercial stocks, a glut of refined products and rising retail competition driving fuel prices lower all make it likely that growth in China’s crude imports may moderate in coming months.Add to this eff orts to restrict supplies by the Organisation of the Petroleum Exporting Countries and allied producers and the stage is set for a loss of momentum in China’s crude imports.As always, the jokers in the pack are how much crude will China buy for its strategic stockpiles, and how much can its refiners export back into the market as refined products.

Clyde Russell is a columnist for Reuters. The opinions expressed here are those of the author.

The Commonwealth Bank of Australia was thrown into turmoil by a civil case launched earlier this month by financial intelligence agency AUSTRAC for alleged “serious and systemic non-compliance” with the laws.

LATEST MARKET CLOSING FIGURES

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 Cinema & Film Distrib

Qatar Insurance CoOoredoo Qsc

National LeasingMazaya Qatar Real Estate Dev

Mesaieed Petrochemical HoldiAl Meera Consumer Goods Co

Medicare GroupMannai Corporation Qsc

Masraf Al RayanAl Khalij Commercial Bank

Industries QatarIslamic Holding Group

Gulf Warehousing CompanyGulf International Services

Ezdan Holding GroupDoha Insurance Co

Doha Bank QscDlala Holding

Commercial Bank PqscBarwa Real Estate Co

Al Khaleej Takaful GroupAamal Co

Al Ahli Bank

75.00

67.20

8.95

16.17

8.62

8.60

64.50

71.80

136.50

56.60

43.00

56.00

47.50

94.80

17.23

33.85

8.20

105.10

7.40

194.60

25.00

69.00

89.60

13.58

10.40

13.20

153.00

80.00

75.80

40.50

12.71

91.60

49.10

46.10

20.45

12.06

14.31

30.50

18.24

30.10

33.15

15.90

11.04

31.50

0.00

-1.18

0.56

-2.59

-2.60

1.53

-0.77

4.36

-0.87

-0.35

0.00

-0.36

0.64

0.85

-1.60

0.00

1.23

-1.68

-1.07

-0.51

0.00

-0.43

-1.54

0.97

-2.07

0.38

-0.52

-1.96

-1.30

-1.22

0.00

-0.54

-0.20

-1.71

0.69

-1.23

0.00

-0.33

-0.87

0.00

-1.04

-3.64

1.19

0.00

-

29,110

4,031,927

465,952

18,848

5,643

163,707

1,890

111,553

1,239

4,000

79,578

15,214

24,480

83,520

-

33,265

18,987

155,403

14,560

-

14,405

47,486

45,404

157,046

126,644

762

31,026

2,027

204,469

50

47,017

1,623

17,379

1,473,019

112,625

-

234,701

169,828

370,778

88,774

14,366

11,021

-

QATAR

Company Name Lt Price % Chg Volume

United Wire Factories CompanEtihad Etisalat Co

Dar Al Arkan Real Estate DevSaudi Hollandi Bank

Rabigh Refining And PetrocheBanque Saudi Fransi

Saudi Enaya Cooperative InsuMediterranean & Gulf Insuran

Saudi British BankMohammad Al Mojil Group Co

Red Sea International CoTakween Advanced Industries

Sabb TakafulSaudi Arabian Fertilizer Co

National GypsumSaudi Ceramic Co

National Gas & IndustrializaSaudi Pharmaceutical Industr

ThimarNational Industrialization C

Saudi Transport And InvestmeSaudi Electricity Co

Saudi Arabia Refineries CoArriyadh Development Company

Al-Baha Development & InvestSaudi Research And MarketingAldrees Petroleum And Transp

Saudi Vitrified Clay Pipe CoJarir Marketing Co

Arab National BankYanbu National Petrochemical

Arabian CementMiddle East Specialized Cabl

Al Khaleej Training And EducAl Sagr Co-Operative Insuran

Trade Union Cooperative InsuArabia Insurance Cooperative

Saudi Chemical CompanyFawaz Abdulaziz Alhokair & C

Bupa Arabia For CooperativeWafa Insurance

Jabal Omar Development CoSaudi Basic Industries Corp

Saudi Kayan Petrochemical CoEtihad Atheeb Telecommunicat

Co For Cooperative InsuranceNational Petrochemical Co

Gulf Union Cooperative InsurGulf General Cooperative Ins

Basic Chemical IndustriesSaudi Steel Pipe Co

Buruj Cooperative InsuranceMouwasat Medical Services Co

Southern Province Cement CoMaadaniyah

Yamama Cement CoJazan Development Co

Zamil Industrial InvestmentAlujain Corporation (Alco)

Tabuk Agricultural DevelopmeUnited Co-Operative Assuranc

Qassim Cement/TheSaudi Advanced Industries

Kingdom Holding CoSaudi Arabian Amiantit Co

Al Jouf Agriculture DevelopmSaudi Industrial Development

Bishah AgricultureRiyad Bank

The National Agriculture DevHalwani Bros Co

Arabian Pipes CoEastern Province Cement Co

Al Gassim Investment HoldingFiling & Packing Materials M

Saudi Cable CoTihama Advertising & Public

Saudi Investment Bank/TheAstra Industrial Group

Saudi Public Transport CoTaiba Holding Co

Saudi Industrial Export CoSaudi Real Estate Co

Saudia Dairy & Foodstuff CoNational Shipping Co Of/The

Methanol Chemicals CoAce Arabia Cooperative Insur

Mobile Telecommunications CoSaudi Arabian Coop Ins Co

Axa Cooperative InsuranceAlsorayai Group

Weqaya For Takaful InsuranceBank Albilad

Al-Hassan G.I. Shaker CoWataniya Insurance Co

Abdullah Al Othaim MarketsHail Cement

18.00

17.98

6.16

0.00

12.52

30.90

18.01

12.01

25.75

0.00

18.14

11.88

26.81

61.98

12.48

27.05

33.34

33.70

36.84

14.16

0.00

23.43

33.78

19.09

27.90

66.15

26.06

45.98

152.61

24.10

53.42

32.25

7.86

19.34

26.74

19.86

15.77

35.53

47.47

115.12

25.19

67.10

97.87

8.45

7.88

91.06

16.68

17.83

17.50

21.00

16.78

33.97

157.40

50.10

21.75

16.09

15.81

27.02

22.07

13.10

14.28

46.20

13.15

10.39

6.63

29.25

11.16

0.00

10.76

28.70

47.78

13.41

23.64

0.00

33.87

10.81

45.33

14.52

16.10

14.17

42.30

30.97

20.60

117.60

32.16

6.70

47.00

8.68

19.92

20.44

8.51

0.00

18.52

12.85

31.69

122.80

9.37

1.47

0.00

-2.69

0.00

-0.71

2.49

-1.42

-2.99

0.78

0.00

-1.57

-2.62

-2.47

-0.69

-2.42

0.00

0.12

-0.85

-1.10

-0.91

0.00

-0.17

-2.43

-0.26

0.50

-9.74

-3.52

0.17

0.36

1.26

-2.34

0.19

1.16

2.98

-0.30

-1.39

0.45

-0.20

4.49

-2.23

-1.22

-0.13

-0.09

-1.52

0.64

-0.80

-0.54

-3.47

-1.52

0.43

-1.29

-3.16

-2.22

-0.69

-4.86

0.31

-0.32

-0.66

-1.12

-2.24

-4.03

-0.32

-0.08

1.66

-4.88

-3.47

-1.24

0.00

0.19

-1.00

-1.20

-0.59

-1.50

0.00

-2.11

0.00

-6.13

0.28

-0.19

0.07

-1.15

-2.12

-0.10

0.05

0.06

-1.33

-1.55

-0.12

-9.17

-2.11

0.47

0.00

-1.02

0.71

-1.68

0.43

0.00

810,544

948,067

28,838,075

-

1,583,184

514,766

441,273

2,456,358

285,183

-

176,741

3,983,909

261,797

72,292

108,142

62,872

34,171

81,168

477,699

1,206,758

-

750,729

194,311

83,281

674,157

1,356,091

205,239

23,795

35,946

231,682

450,429

50,408

6,713,886

529,994

278,591

394,691

747,779

68,118

449,344

60,156

4,899,918

104,573

2,389,012

4,720,625

1,793,573

36,537

90,788

599,964

747,626

263,802

98,349

466,424

2,517

8,701

306,153

68,282

602,505

119,626

955,003

2,299,152

1,197,119

28,200

418,287

818,209

4,472,584

650,563

746,835

-

467,581

777,292

16,657

175,347

49,493

-

175,322

-

1,547,638

84,033

70,901

664,134

18,877

263,864

129,597

39,414

191,496

1,424,324

69,388

2,903,214

1,454,267

343,468

430,135

-

258,310

1,652,850

976,290

24,192

186,843

SAUDI ARABIA

Company Name Lt Price % Chg Volume

Saudi Re For Cooperative ReiSolidarity Saudi Takaful Co

Amana Cooperative InsuranceAlabdullatif Industrial Inv

Saudi Printing & Packaging CSanad Cooperative Insurance

Saudi Paper Manufacturing CoAlinma Bank

Almarai CoFalcom Saudi Equity Etf

United International TranspoHsbc Amanah Saudi 20 Etf

Saudi International PetrocheFalcom Petrochemical Etf

Walaa Cooperative InsuranceBank Al-Jazira

Al Rajhi BankSamba Financial Group

United Electronics CoAllied Cooperative Insurance

Malath InsuranceAlinma Tokio Marine

Arabian Shield CooperativeSavola

Wafrah For Industry And DeveFitaihi Holding Group

Tourism Enterprise Co/ ShamsSahara Petrochemical Co

Herfy Food Services Co

6.76

18.75

23.17

13.42

21.87

0.00

8.01

16.29

76.48

28.10

22.55

29.55

14.00

26.70

28.11

12.41

62.56

24.15

42.72

15.14

21.34

24.36

46.89

47.25

22.03

13.56

29.65

13.33

49.97

-2.03

-1.21

2.61

-1.03

-0.86

0.00

-0.12

-0.61

-1.73

-0.35

0.00

0.00

0.00

0.00

-3.37

-0.48

0.10

0.54

-1.07

0.73

-5.20

-1.62

-0.74

-1.21

-0.94

-0.80

-1.46

-0.45

-1.05

1,813,062

903,765

6,767,943

803,100

4,995,357

-

1,565,762

24,809,151

197,802

229,498

446,825

73

1,421,738

-

304,046

715,584

1,996,797

359,996

130,326

1,990,855

407,470

149,212

61,459

117,157

422,799

144,142

262,597

665,314

113,604

SAUDI ARABIA

Company Name Lt Price % Chg Volume

Securities Group CoSultan Center Food Products

Kuwait Foundry Co SakKuwait Financial Centre Sak

Ajial Real Estate EntmtGulf Glass Manuf Co -Kscc

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

Al-Madar Finance & Invt CoGulf Petroleum Investment

Mabanee Co SakcCity Group

Inovest Co BscKuwait Gypsum Manufacturing

Al-Deera Holding CoAlshamel International Hold

Mena Real Estate CoNational Slaughter House

Amar Finance & Leasing CoUnited Projects For Aviation

National Consumer Holding CoAmwal International Investme

Jeeran HoldingsEquipment Holding Co K.S.C.C

Nafais HoldingSafwan Trading & Contracting

Arkan Al Kuwait Real EstateGfh Financial Group Bsc

Energy House Holding Co KscpKuwait Slaughter House Co

Kuwait Co For Process PlantAl Maidan Dental Clinic Co K

National Ranges CompanyAl-Themar Real International

Al-Ahleia Insurance Co SakpWethaq Takaful Insurance Co

Salbookh Trading Co KscpAqar Real Estate Investments

Hayat CommunicationsKuwait Packing Materials Mfg

Soor Fuel Marketing Co KscAlargan International RealBurgan Co For Well Drilling

Kuwait Resorts Co KsccOula Fuel Marketing Co

Palms Agro Production CoIkarus Petroleum Industries

Mubarrad Transport CoAl Mowasat Health Care Co

Shuaiba Industrial CoAan Digital Services Co

First Takaful Insurance CoKuwaiti Syrian Holding Co

National Cleaning CompanyEyas For High & Technical EdUnited Real Estate Company

AgilityKuwait & Middle East Fin Inv

Fujairah Cement IndustriesLivestock Transport & Tradng

International Resorts CoNational Industries Grp Hold

Marine Services Co KscWarba Insurance Co

Kuwait United Poultry CoFirst Dubai Real Estate Deve

Al Arabi Group Holding CoKuwait Hotels Sak

Mobile Telecommunications CoAl Safat Real Estate Co

Tamdeen Real Estate Co KscAl Mudon Intl Real Estate Co

Kuwait Cement Co KscSharjah Cement & Indus Devel

Kuwait Portland Cement CoEducational Holding Group

Bahrain Kuwait InsuranceAsiya Capital Investments Co

Kuwait Investment CoBurgan Bank

Kuwait Projects Co HoldingsAl Madina For Finance And In

Kuwait Insurance CoAl Masaken Intl Real Estate

Intl Financial AdvisorsFirst Investment Co Kscc

Al Mal Investment CompanyBayan Investment Co Kscc

Egypt Kuwait Holding Co SaeCoast Investment Development

Privatization Holding CompanKuwait Medical Services Co

Injazzat Real State CompanyKuwait Cable Vision Sak

Sanam Real Estate Co KsccIthmaar Holding Bsc

Aviation Lease And Finance CArzan Financial Group For Fi

Ajwan Gulf Real Estate CoKuwait Business Town Real Es

Future Kid Entertainment AndSpecialities Group Holding C

Abyaar Real Eastate DevelopmDar Al Thuraya Real Estate C

Al-Dar National Real EstateKgl Logistics Company Kscc

Combined Group ContractingZima Holding Co Ksc

Qurain Holding Co

0.00

0.00

280.00

98.00

153.00

0.00

44.00

175.00

39.70

44.50

570.00

318.00

418.00

736.00

356.00

245.00

247.00

40.10

34.10

70.00

600.00

81.00

23.80

114.00

19.50

37.50

784.00

0.00

125.00

0.00

34.50

0.00

21.10

0.00

35.00

770.00

90.00

44.20

0.00

45.80

195.00

0.00

85.90

149.00

35.50

0.00

145.00

0.00

28.50

0.00

448.00

51.00

60.00

71.00

89.80

0.00

124.00

185.00

75.00

76.50

126.00

89.90

0.00

71.20

480.00

280.00

0.00

59.10

35.30

45.50

850.00

88.00

841.00

29.00

76.00

240.00

31.90

144.00

0.00

95.90

0.00

50.00

94.00

0.00

496.00

0.00

409.00

36.70

420.00

76.50

985.00

357.00

0.00

42.00

108.00

370.00

361.00

43.80

250.00

75.00

35.70

45.40

15.50

48.80

175.00

44.10

52.80

0.00

88.90

33.00

42.00

39.50

370.00

37.00

65.00

47.80

116.00

94.00

25.10

0.00

0.00

52.80

568.00

52.00

0.00

0.00

0.00

-2.44

0.00

0.00

0.00

-2.22

-2.78

0.00

-1.11

-0.35

0.00

1.21

-0.54

0.56

0.00

0.82

-6.74

-0.29

0.00

0.00

0.12

0.42

0.00

2.63

-0.79

-0.63

0.00

0.81

0.00

0.00

0.00

0.96

0.00

-2.51

0.00

0.00

0.45

0.00

-0.22

0.00

0.00

2.26

-10.24

0.00

0.00

0.00

0.00

0.00

0.00

-0.67

0.00

-3.69

0.00

0.00

0.00

-3.13

0.00

0.00

1.32

-2.33

0.00

0.00

-0.42

0.00

0.00

0.00

-2.48

-1.94

-2.15

0.00

0.00

-0.71

0.00

-0.26

0.00

0.00

-0.69

0.00

0.00

0.00

2.46

0.11

0.00

1.43

0.00

-0.24

1.10

0.00

0.00

-0.51

-0.83

0.00

0.00

2.86

0.00

-2.17

0.69

-1.57

0.00

-0.56

-1.30

0.65

-1.61

0.00

0.46

-0.38

0.00

0.00

16.20

-2.33

1.80

-0.80

2.49

0.00

0.63

0.00

0.00

-0.79

0.00

0.00

3.73

0.18

0.00

0.00

-

-

192,700

10,000

1,000

-

36,000

205,034

160,000

169,500

190,166

40,624

444,509

2,368,471

150,000

1,290,217

884,785

232,000

745,974

228,600

100,000

240,000

182,188

2,429,637

485,220

414,900

304,639

-

106,002

-

6

-

296,800

-

43,000

50

20,011

1,210

-

100,125

200

-

95,500

608,397

1,726

-

1,250

-

52,110

-

53,010

102,400

120,000

2,912

29,055

-

328,769

993,000

200

10

1,165,390

100

-

930,130

526

1,014

-

29,928

1,550,200

120,000

110

13,101

1,015,975

100,250

769,586

209,045

116,000

2,698,419

-

43,386

-

349,350

76,000

-

11,034,216

-

3,036

82,501

376,400

36,009

18,600

18,910

-

18,238

899,714

1,421,001

124,431

813,668

337,850

18,528

1,793,900

636,807

593,855

840,495

200,000

1,227,880

1,686,900

-

52,504

263,222

190,002

892,070

81,169

1,248,311

151

119,961

93,847

200

2,686,800

-

-

1,379,202

500

244,910

-

KUWAIT

Company Name Lt Price % Chg Volume

Voltamp Energy SaogUnited Power/Energy Co- Pref

United Power Co SaogUnited Finance Co

Ubar Hotels & ResortsTakaful Oman

Taageer FinanceSweets Of OmanSohar Power Co

Sohar PoultrySmn 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

Port Service CorporationPhoenix Power Co Saoc

Packaging Co LtdOoredoo

OminvestOman United Insurance Co

Oman Textile Holding Co SaogOman Telecommunications Co

Oman Refreshment CoOman Packaging

Oman Orix Leasing Co.Oman Oil Marketing Company

Oman National Engineering AnOman Investment & Finance

Oman Intl MarketingOman Hotels & Tourism CoOman Foods International

Oman Flour MillsOman Fisheries CoOman Fiber Optics

Oman Europe Foods IndustriesOman Education & Training In

Oman ChromiteOman Chlorine

Oman Ceramic CompanyOman Cement Co

Oman Cables IndustryOman Agricultural Dev

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

National SecuritiesNational Real Estate Develop

National PharmaceuticalNational Mineral Water

National Hospitality InstituNational Gas Co

National Finance CoNational Detergent Co Saog

National Biscuit IndustriesNational Bank Of Oman Saog

Muscat Thread Mills CoMuscat National Holding

Muscat Gases Company SaogMuscat Finance

Majan Glass CompanyMajan College

Hsbc Bank OmanHotels Management Co Interna

Gulf StoneGulf Plastic Industries Co

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 UniversityDhofar Tourism

Dhofar PoultryDhofar Intl Development

Dhofar InsuranceDhofar Fisheries & Food Indu

Dhofar CattlefeedDhofar Beverages Co

Construction Materials IndComputer Stationery Inds

Bankmuscat SaogBank SoharBank Nizwa

Bank Dhofar Saog

0.47

1.00

3.55

0.12

0.13

0.18

0.11

1.34

0.16

0.21

0.69

1.05

1.88

4.35

0.23

0.60

1.33

1.38

2.50

0.17

0.90

0.18

0.12

2.21

0.43

0.48

0.34

0.00

1.06

1.91

0.28

0.17

1.66

0.15

0.15

0.52

0.40

0.00

0.85

0.10

0.00

1.00

0.16

3.64

0.49

0.42

0.43

1.57

0.00

0.10

0.15

0.04

5.00

0.11

0.05

0.00

0.26

0.15

0.69

3.75

0.21

0.08

0.86

0.56

0.12

0.18

0.49

0.11

1.25

0.12

0.00

0.31

0.07

0.11

0.20

10.50

0.16

0.07

0.39

0.11

0.10

0.00

0.49

0.18

0.31

0.20

1.28

0.19

0.26

0.03

0.26

0.37

0.15

0.09

0.22

0.00

0.00

0.00

0.00

0.00

0.00

-2.65

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-2.75

0.00

0.00

0.00

0.00

0.00

0.00

-1.85

0.00

0.00

0.00

0.00

-1.31

-1.92

0.00

0.00

0.00

0.00

-5.71

0.00

0.00

0.00

0.00

0.00

0.00

-1.83

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-5.05

0.00

0.00

0.00

-2.33

0.00

0.00

0.00

-0.85

-5.26

0.00

-0.87

0.00

0.00

0.00

0.00

-4.00

0.00

0.00

0.00

0.00

-2.78

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-1.07

0.00

-2.13

0.00

-

-

-

-

-

-

96,691

-

140

-

-

-

-

-

1,326

-

-

-

-

-

-

13,000

11,000

-

-

207,188

-

-

544,483

-

-

-

-

46,479

125,000

-

-

-

-

1,778,445

-

-

-

-

5,000

-

5,294

-

-

-

-

-

-

-

-

-

156,536

-

-

-

80,023

-

-

-

73,523

10,000

-

134,000

-

-

-

-

57,000

-

717,500

-

-

329,871

-

-

-

-

-

-

-

-

-

-

-

-

-

1,070,752

1,557,101

149,030

-

OMAN

Company Name Lt Price % Chg Volume

Areej Vegetable Oils SaocAloula Co

Al-Omaniya Financial ServiceAl-Hassan Engineering Co

Al-Fajar Al-Alamia CoAl-Anwar Ceramic Tiles Co

Al Suwadi PowerAl Shurooq Inv Ser

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

Ahli BankAcwa Power Barka Saog

Abrasives Manufacturing Co SA’saff a Foods Saog

Oman Oil Marketing Co-Pref

0.00

0.53

0.28

0.05

0.75

0.12

0.15

0.00

0.10

1.40

0.30

0.10

0.06

0.31

0.55

0.25

0.14

0.07

0.88

0.14

1.13

0.09

0.14

0.17

0.79

0.05

0.59

0.25

0.00

0.00

0.00

0.00

0.00

-0.80

-3.33

0.00

0.00

0.00

0.00

-2.88

-3.08

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-2.76

0.00

0.00

0.00

0.00

0.00

-

-

-

-

-

511,000

115,000

-

50,000

-

-

1,732,666

532,526

-

-

-

450

161,700

-

1,110

-

-

62,418

-

-

-

-

-

OMAN

Company Name Lt Price % Chg Volume

Waha Capital PjscUnited Insurance Company

United Arab Bank PjscUnion National Bank/Abu Dhab

Union Insurance CoUnion Cement Co

Umm Al Qaiwain Cement IndustSharjah Islamic Bank

Sharjah Insurance CompanySharjah Group

Sharjah Cement & Indus DevelRas Al-Khaimah National Insu

Ras Al Khaimah White CementRas Al Khaimah Ceramics

Ras Al Khaimah Cement Co PscRas Al Khaima Poultry

Rak PropertiesOoredoo Qsc

Oman & Emirates Inv(Emir)50%Nbad Oneshare Msci Uae Ucits

National Takaful CompanyNational Marine Dredging Co

National Investor Co/TheNational Corp Tourism & Hote

National Bank Of Umm Al QaiwNational Bank Of Ras Al-Khai

National Bank Of FujairahFirst Abu Dhabi Bank Pjsc

Methaq Takaful InsuranceManazel Real Estate Pjsc

Invest BankIntl Fish Farming Co Pjsc

Insurance HouseGulf Pharmaceutical Ind Psc

Gulf Medical ProjectsGulf Cement Co

Fujairah Cement IndustriesFujairah Building Industries

Foodco Holding PjscFirst Gulf BankFinance House

Eshraq Properties Co PjscEmirates Telecom Group Co

Emirates Insurance Co. (Psc)Emirates Driving Company

Dana GasCommercial Bank Internationa

Bank Of SharjahAxa Green Crescent Insurance

Arkan Building Materials CoAlkhaleej InvestmentAldar Properties Pjsc

Al Wathba National InsuranceAl Khazna Insurance Co

Al Fujairah National InsuranAl Dhafra Insurance Co. P.S.

Al Buhaira National InsurancAl Ain Ahlia Ins. Co.

Agthia Group PjscAbu Dhabi Ship Building Co

Abu Dhabi Natl Co For BuildiAbu Dhabi National Takaful C

Abu Dhabi National InsuranceAbu Dhabi National Hotels

Abu Dhabi National Energy CoAbu Dhabi Islamic Bank

1.72

2.00

1.61

4.49

1.86

1.30

1.61

1.36

3.85

1.50

0.99

4.10

1.02

2.51

0.77

3.70

0.68

90.00

0.58

6.20

0.70

4.20

0.54

2.46

3.00

4.65

3.00

0.00

0.87

0.52

2.66

1.50

0.83

2.40

2.05

0.99

1.15

1.56

6.00

0.00

1.61

0.82

18.00

6.00

7.30

0.59

1.26

1.19

0.68

0.62

1.31

2.31

12.75

0.32

300.00

3.84

2.20

47.00

5.42

2.20

0.50

5.00

3.20

3.24

0.54

3.59

-3.37

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-5.71

0.00

0.00

-0.40

0.00

0.00

0.00

0.00

0.00

0.00

0.00

2.44

0.00

0.00

0.00

1.97

-0.33

0.00

0.00

1.96

0.00

-1.32

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

1.23

0.84

0.00

0.00

0.00

14.55

-0.83

0.00

-6.06

0.00

-0.43

0.00

0.00

0.00

0.00

0.00

0.00

-1.45

0.00

0.00

0.00

0.00

0.00

0.00

-0.28

4,386,451

-

-

40,480

-

-

-

-

-

-

125,000

-

-

650,000

38,000

-

4,465,713

-

-

-

-

1,077

-

-

-

176,959

776,332

-

1,098,239

6,259,010

-

60,000

-

-

-

-

-

-

-

-

-

50,498,774

782,542

-

-

-

21,040

35,737

-

248,500

-

3,537,482

-

-

-

-

-

-

48,620

-

-

-

-

-

2,023,892

863,650

UAE

Company Name Lt Price % Chg Volume

Zain Bahrain BsccUnited Paper Industries Bsc

United Gulf Investment CorpUnited Gulf BankTrafco Group Bsc

Takaful International CoTaib Bank -$Us

Seef PropertiesSecurities & Investment Co

National Hotels CoNational Bank Of Bahrain Bsc

Nass Corp BscKhaleeji Commercial Bank

Ithmaar Holding BscInvestcorp Bank -$Us

Inovest Co BscGulf Monetary Group

Gulf Hotel Group B.S.CGfh Financial Group Bsc

Esterad Investment Co B.S.C.Delmon Poultry Co

Bmmi BscBmb Investment Bank

Bbk BscBankmuscat Saog

Banader Hotels CoBahrain Tourism CoBahrain Telecom Co

Bahrain Ship Repair & EnginBahrain National Holding

Bahrain Kuwait InsuranceBahrain Islamic Bank

Bahrain Flour Mills CoBahrain Family Leisure Co

Bahrain Duty Free ComplexBahrain Commercial Facilitie

Bahrain Cinema CoBahrain Car Park Co

Arab Insurance Group(Bsc)-$Arab Banking Corp Bsc-$Us

Aluminium Bahrain BscAlbaraka Banking Group

Al-Salam BankAl-Ahlia Insurance Co

Ahli United Bank B.S.C

0.00

0.32

0.00

0.00

0.28

0.00

0.00

0.26

0.00

0.00

0.66

0.12

0.11

0.14

8.65

0.43

0.00

0.52

0.48

0.11

0.00

0.78

0.00

0.40

0.00

0.06

`

0.21

0.00

0.00

0.00

0.15

0.38

0.00

0.76

0.73

1.48

0.00

0.51

0.29

0.50

0.42

0.09

0.00

0.72

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-4.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-0.95

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-0.99

0.00

-3.19

0.00

0.00

-

300,000

-

-

30,700

-

-

50,000

-

-

60,000

351,100

75,000

69,440

62,300

54,654

-

10,000

893,000

33,060

-

14,224

-

17,000

-

1,810,669

-

133,766

-

-

-

17,608

8,950

-

16,552

15,000

20,000

-

1,918,520

160,000

39,279

25,000

320,600

-

831,999

BAHRAIN

Company Name Lt Price % Chg Volume

Boubyan Intl Industries HoldGulf Investment House Ksc

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

Osos Holding Group CoAl-Eid Food Ksc

Qurain Petrochemical IndustrAdvanced Technology Co

Ekttitab Holding Co SakKout Food Group Ksc

Real Estate Trade Centers CoAcico Industries Co Kscc

Kipco Asset Management CoNational Petroleum ServicesAlimtiaz Investment Co Kscc

Ras Al Khaimah White CementKuwait Reinsurance Co Ksc

Kuwait & Gulf Link TransportHuman Soft Holding Co Ksc

Automated Systems Co KsccMetal & Recycling Co

Gulf Franchising Holding CoAl-Enma’a Real Estate Co

National Mobile TelecommuniAl Bareeq Holding Co Kscc

Housing Finance Co SakAl Salam Group Holding Co

United Foodstuff IndustriesAl Aman Investment Company

Mashaer Holdings Co KscManazel Holding

Mushrif Trading & ContractinTijara And Real Estate Inves

Kuwait Building MaterialsJazeera Airways Co Ksc

Commercial Real Estate CoFuture Communications Co

National International CoTaameer Real Estate Invest C

Gulf Cement CoHeavy Engineering And Ship B

Refrigeration Industries & SNational 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 IndAl Nawadi Holding Co Ksc

Kuwait Finance HouseGulf North Africa Holding Co

Hilal Cement CoOsoul Investment Kscc

Gulf Insurance Group KscKuwait Food Co (Americana)

Umm Al Qaiwain Cement IndustAayan Leasing & Investment

47.00

33.60

426.00

218.00

124.00

0.00

345.00

0.00

36.20

0.00

42.00

260.00

77.00

899.00

168.00

83.00

187.00

60.80

4,300.00

170.00

94.00

74.90

40.20

1,175.00

0.00

0.00

51.00

0.00

46.50

0.00

40.10

0.00

54.00

0.00

575.00

88.00

0.00

63.00

34.40

80.00

214.00

0.00

122.00

38.70

1,390.00

70.10

390.00

63.80

368.00

482.00

0.00

570.00

35.50

0.00

57.00

720.00

2,035.00

0.00

44.30

2.84

-1.18

0.95

-0.46

1.64

0.00

1.17

0.00

0.56

0.00

-1.18

0.00

0.00

0.00

0.60

3.75

0.00

1.33

0.00

-5.56

0.00

0.00

0.00

0.43

0.00

0.00

0.39

0.00

0.22

0.00

-1.72

0.00

0.00

0.00

-0.86

0.69

0.00

-3.08

-2.27

0.13

2.39

0.00

0.00

0.00

-0.64

-0.43

0.00

0.00

2.22

0.21

0.00

0.53

0.28

0.00

0.00

0.00

0.00

0.00

0.68

246,300

157,501

1,025,401

6,933,279

104,165

-

137,305

-

37,598

-

100

220,081

13,219

1,000

6,698,415

20,983

960

96,457

104,038

2,550

4,510

8,628

702,500

7,034

-

-

356,000

-

402,420

-

322,000

-

580,819

-

20,100

1,322,600

-

353,400

28,936

11,508

1,020

-

110,100

555

10

524,388

12,500

339,292

20,250

1,836

-

10,407,051

328,692

-

21,400

25,000

462

-

2,306,244

KUWAIT

Company Name Lt Price % Chg Volume

BUSINESS

Gulf Times Wednesday, August 16, 20176

CURRENCIESDOLLAR QATAR RIYAL SAUDI RIYAL UAE DIRHAMS BAHRAINI

DINARKUWAITI

DINAR

Europe stocks extend rallyas North Korea fears waneAFPLondon

World stock markets rose yes-terday, extending the previ-ous day’s rally as fears re-

ceded over a potential clash between the US and North Korea.

Investors have cashed out of haven assets, like gold and the Japanese yen, and ploughed back into riskier assets like equities, with the US dollar also gaining ground.

Asian stocks extended a relief rally into a second day, after Pyongyang ap-peared to put on ice its plan to launch missiles near Guam, and after a strong showing on Wall Street overnight.

Europe followed suit, with London’s FTSE 100 gaining 0.4% to 7,383.85 points, Frankfurt’s DAX 30 climbing 0.1% to 12,177.04 and in Paris CAC 40 gaining 0.4% at 5,140.25 points at close yesterday. That however marked a slowdown from the 0.7% expansion in the fi rst quarter.

“The rhetoric between the US and

North Korea appears to have softened somewhat, helping risk market senti-ment,” NFS Macro analyst Nick Sta-menkovic told AFP.

“In addition, robust German sec-ond-quarter GDP data highlights the favourable fundamental backdrop for European equities.

“Indeed, it appears investors have perceived last week’s sell-off as an op-portunity to raise exposure to stocks.”

Traders also breathed a sigh of relief as senior US fi gures dialled down ten-sions with North Korea, after a war of words had sent stocks tumbling last week.

US Defence Secretary Jim Mattis and Secretary of State Rex Tillerson wrote in The Wall Street Journal that America has “no interest” in regime change in Pyongyang, and stressed the importance of a diplomatic solution to the crisis.

And North Korean leader Kim Jong-un hinted yesterday that he would hold off on a plan to test-fi re missiles to-wards the US Pacifi c island territory of Guam, saying he would “watch a little

more the foolish and stupid conduct of the Yankees”.

In New York approaching midday, Wall Street was a touch higher, with the Dow index managing to remain just above 22,000.

The dollar rose after New York Fed-eral Reserve president William Dudley indicated that another interest rate increase this year was likely and sug-gested the central bank would reveal plans to reduce its balance sheet next month.

The British pound showed particular weakness against its peers after infl a-tion data showed that price rises have been very muted despite post-Brexit weakness in sterling, pretty much rul-ing out a Bank of England interest hike anytime soon, analysts said.

Oil futures had another weak day “after having tanked by more than 5% in less than a week”, LCG analyst Ipek Ozkardeskaya said. Analysts expect more evidence of rising US shale oil production, seen as undermining ef-forts by Opec members and their allies to cut the global oil glut.

Traders at the Frankfurt Stock Exchange. The DAX 30 gained 0.1% to 12,177.04 points yesterday.

BUSINESS7Gulf Times

Wednesday, August 16, 2017

Apple IncMicrosoft Corp

Exxon Mobil CorpJohnson & JohnsonGeneral Electric Co

Jpmorgan Chase & CoProcter & Gamble Co/The

Wal-Mart Stores IncVerizon Communications Inc

Pfizer IncVisa Inc-Class A Shares

Chevron CorpCoca-Cola Co/The

Intel CorpMerck & Co. Inc.

Cisco Systems IncHome Depot Inc

Intl Business Machines CorpWalt Disney Co/The

Unitedhealth Group Inc3M Co

Mcdonald’s CorpNike Inc -Cl B

United Technologies CorpBoeing Co/The

Goldman Sachs Group IncAmerican Express Co

Du Pont (E.I.) De NemoursCaterpillar Inc

Travelers Cos Inc/The

161.35

73.31

77.79

133.69

25.16

92.83

92.16

81.29

48.45

33.41

102.47

107.97

45.99

35.99

62.91

32.03

149.72

142.90

101.87

194.36

207.07

158.25

58.62

116.17

238.47

227.96

86.55

81.34

113.64

128.83

0.94

-0.38

-0.56

0.16

-0.81

0.37

0.56

0.73

-0.68

0.30

0.58

-0.68

0.41

-0.97

0.37

0.60

-2.95

0.41

0.46

0.34

-0.14

0.63

-1.94

-0.84

0.55

0.26

1.26

0.23

-0.06

0.03

10,391,312

4,873,311

3,479,848

1,072,104

10,641,824

3,467,128

2,093,827

2,042,636

4,649,329

7,163,840

1,905,389

1,863,509

2,026,815

7,135,337

1,501,000

8,367,461

6,917,480

1,422,389

2,311,792

598,204

308,169

679,521

2,906,542

552,772

861,915

911,972

1,118,046

581,587

622,488

330,940

DJIA

Company Name Lt Price % Chg Volume

Wpp PlcWorldpay Group Plc

Wolseley PlcWm Morrison Supermarkets

Whitbread PlcVodafone Group Plc

United Utilities Group PlcUnilever Plc

Tui Ag-DiTravis Perkins Plc

Tesco PlcTaylor Wimpey Plc

Standard Life PlcStandard Chartered Plc

St James’s Place PlcSse Plc

Smith & Nephew PlcSky Plc

Shire PlcSevern Trent Plc

Schroders PlcSainsbury (J) Plc

Sage Group Plc/TheAbi Sab Group Holding Ltd

Rsa Insurance Group PlcRoyal Mail Plc

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

Royal Bank Of Scotland GroupRolls-Royce Holdings Plc

Rio Tinto PlcRexam Ltd

Relx PlcReckitt Benckiser Group Plc

Randgold Resources LtdPrudential Plc

Provident Financial PlcPersimmon Plc

Pearson PlcPaddy Power Betfair Plc

Old Mutual PlcNext Plc

National Grid PlcMondi Plc

Merlin EntertainmentMediclinic International Plc

Marks & Spencer Group PlcLondon Stock Exchange Group

Lloyds Banking Group PlcLegal & General Group PlcLand Securities Group Plc

Kingfisher PlcJohnson Matthey Plc

Itv PlcIntu Properties Plc

Intl Consolidated Airline-DiIntertek Group Plc

Intercontinental Hotels GrouInmarsat Plc

Informa PlcImperial Brands Plc

Hsbc Holdings PlcHargreaves Lansdown Plc

Hammerson PlcGlencore Plc

Glaxosmithkline PlcGkn Plc

Fresnillo PlcExperian Plc

Easyjet PlcDixons Carphone Plc

Direct Line Insurance GroupDiageo Plc

Dcc PlcCrh Plc

Compass Group PlcCoca-Cola Hbc Ag-Di

Centrica PlcCarnival Plc

Capita PlcBurberry Group Plc

Bunzl PlcBt Group Plc

British Land Co PlcBritish American Tobacco Plc

Bp PlcBhp Billiton Plc

Berkeley Group Holdings/TheBarratt Developments Plc

Barclays PlcBae Systems Plc

Babcock Intl Group PlcAviva Plc

Astrazeneca PlcAssociated British Foods Plc

Ashtead Group PlcArm Holdings Plc

Antofagasta PlcAnglo American Plc

Admiral Group Plc3I Group Plc

1,599.00

421.90

0.00

248.20

3,853.00

222.05

917.50

4,466.50

1,318.00

1,511.00

177.25

191.20

0.00

778.70

1,184.00

1,405.00

1,366.00

958.00

3,845.50

2,268.00

3,398.00

242.20

684.00

0.00

652.00

401.90

2,169.50

2,130.00

263.30

912.50

3,376.00

0.00

1,676.00

7,403.00

7,200.00

1,811.00

1,892.00

2,503.00

621.50

7,475.00

202.20

4,270.00

965.90

2,009.00

466.30

737.00

322.40

3,861.00

65.66

270.60

1,018.00

308.10

2,727.00

170.00

250.30

630.50

4,803.00

3,989.00

744.50

702.50

3,225.00

744.80

1,354.00

572.50

331.95

1,496.50

314.20

1,500.00

1,514.00

1,321.00

250.10

395.60

2,537.00

6,840.00

2,724.00

1,646.00

2,563.00

201.10

5,385.00

667.00

1,749.00

2,303.00

296.90

620.00

4,919.50

445.10

1,343.00

3,665.00

606.00

200.75

594.50

850.50

524.50

4,462.00

3,159.00

1,589.00

0.00

920.50

1,241.50

2,179.00

944.50

1.20

2.03

0.00

0.98

0.03

-0.02

-1.18

1.22

2.17

-0.07

0.57

-0.10

0.00

1.22

0.42

-0.35

1.41

0.26

1.38

-0.61

-0.21

0.87

0.59

0.00

0.46

0.53

-0.55

-0.23

1.43

1.00

-1.08

0.00

1.02

-0.24

-3.16

0.19

-3.27

-0.44

0.97

1.42

2.38

-2.84

0.22

0.25

0.13

-1.01

-0.34

0.34

1.23

-0.22

0.20

1.42

-0.62

0.53

-0.04

2.85

1.41

-0.37

0.27

0.07

2.23

0.23

-0.66

0.00

0.02

1.08

-0.79

-3.04

1.27

4.43

0.85

-0.68

1.48

-0.94

2.44

0.80

-0.12

0.55

1.60

1.52

0.11

0.52

-0.02

0.65

1.53

-0.22

-1.32

1.08

0.25

0.48

2.41

0.24

0.67

1.18

0.13

0.76

0.00

-1.02

-1.19

0.55

1.07

1,897,113

10,832,112

-

3,325,870

214,549

15,644,714

903,293

1,405,589

1,079,598

595,649

13,912,593

6,775,071

-

2,826,078

1,075,109

1,704,671

1,229,249

573,077

1,614,161

431,769

152,514

2,613,488

803,390

-

1,259,007

1,010,457

2,373,517

4,724,397

5,414,224

2,037,879

2,538,221

-

1,493,759

480,512

447,184

1,831,874

614,783

657,413

1,536,742

153,554

6,957,972

838,556

3,024,735

658,678

775,703

912,180

4,332,813

274,689

50,990,169

5,746,898

888,949

5,374,088

247,614

5,703,304

1,943,370

6,600,646

222,778

379,705

678,515

355,685

990,370

8,425,835

1,189,784

1,096,887

21,958,579

3,805,283

4,013,651

803,075

1,241,982

2,670,920

2,655,869

3,662,407

2,469,497

57,227

1,341,253

932,892

255,529

6,590,276

229,218

534,979

1,101,770

242,506

10,341,222

2,124,425

1,423,299

13,191,221

4,964,402

288,509

1,676,914

16,219,958

6,674,519

449,177

3,209,840

801,444

439,747

692,525

-

1,008,751

2,615,048

280,386

1,028,376

FTSE 100

Company Name Lt Price % Chg Volume

East Japan Railway CoItochu Corp

Fujifilm Holdings CorpYamato Holdings Co Ltd

Chubu Electric Power Co IncMitsubishi Estate Co Ltd

Mitsubishi Heavy IndustriesToshiba Corp

Shiseido Co LtdShionogi & Co Ltd

Tokyo Gas Co LtdTokyo Electron Ltd

Panasonic CorpFujitsu Ltd

Central Japan Railway CoT&D Holdings Inc

Toyota Motor CorpKddi Corp

Nitto Denko Corp

10,350.00

1,749.00

4,245.00

2,183.00

1,442.50

1,965.50

432.80

298.00

4,603.00

5,710.00

582.40

15,180.00

1,493.00

835.80

18,310.00

1,587.00

6,275.00

2,956.00

9,832.00

1.47

0.95

7.69

1.16

0.91

1.00

0.12

3.83

2.43

0.81

0.00

1.91

2.86

1.13

0.85

0.28

1.54

1.58

0.45

656,700

4,720,300

6,898,500

1,061,200

1,340,800

3,273,300

12,971,000

26,217,000

2,217,100

1,059,800

5,957,000

1,208,000

6,398,400

12,611,000

491,700

2,764,800

7,298,300

5,313,700

664,900

TOKYO

Company Name Lt Price % Chg Volume

Rakuten IncKyocera Corp

Nissan Motor Co LtdHitachi Ltd

Takeda Pharmaceutical Co LtdJfe Holdings Inc

Ana Holdings IncMitsubishi Electric Corp

Sumitomo Mitsui Financial GrHonda Motor Co Ltd

Fast Retailing Co LtdMs&Ad Insurance Group Holdin

Kubota CorpSeven & I Holdings Co Ltd

Inpex CorpResona Holdings Inc

Asahi Kasei CorpKirin Holdings Co Ltd

Marubeni CorpMitsubishi Ufj Financial Gro

Mitsubishi Chemical HoldingsFanuc Corp

Daito Trust Construct Co LtdOtsuka Holdings Co Ltd

Oriental Land Co LtdSekisui House Ltd

Secom Co LtdTokio Marine Holdings Inc

Aeon Co LtdMitsui & Co Ltd

Kao CorpDai-Ichi Life Holdings Inc

Mazda Motor CorpKomatsu Ltd

West Japan Railway CoMurata Manufacturing Co Ltd

Kansai Electric Power Co IncDenso Corp

Sompo Holdings IncDaiwa House Industry Co Ltd

Jxtg Holdings IncNippon Steel & Sumitomo Meta

Suzuki Motor CorpNippon Telegraph & Telephone

Ajinomoto Co IncMitsui Fudosan Co Ltd

Ono Pharmaceutical Co LtdDaikin Industries Ltd

Bank Of Yokohama Ltd/TheToray Industries IncAstellas Pharma Inc

Bridgestone CorpSony CorpHoya Corp

Sumitomo Mitsui Trust HoldinJapan Tobacco Inc

Osaka Gas Co LtdSumitomo Electric Industries

Daiwa Securities Group IncSoftbank Group Corp

Mizuho Financial Group IncNomura Holdings Inc

Daiichi Sankyo Co LtdSubaru Corp

Ntt Docomo IncSumitomo Realty & Developmen

Sumitomo Metal Mining Co LtdOrix Corp

Asahi Group Holdings LtdKeyence Corp

Nidec CorpIsuzu Motors Ltd

Unicharm CorpShin-Etsu Chemical Co Ltd

Smc CorpMitsubishi CorpNintendo Co Ltd

Eisai Co LtdSumitomo Corp

Canon IncJapan Airlines Co Ltd

1,314.50

6,712.00

1,100.00

725.20

5,971.00

2,171.50

405.30

1,686.50

4,161.00

3,056.00

32,630.00

3,825.00

1,996.00

4,494.00

1,056.00

564.40

1,296.00

2,436.00

692.90

700.10

948.50

21,995.00

19,465.00

4,531.00

8,083.00

1,916.00

8,047.00

4,504.00

1,692.00

1,619.50

6,805.00

1,879.50

1,650.50

2,824.50

8,117.00

17,220.00

1,524.00

5,361.00

4,379.00

3,917.00

517.00

2,674.00

5,607.00

5,276.00

2,235.50

2,428.00

2,260.50

11,335.00

0.00

999.70

1,384.50

4,825.00

4,299.00

6,376.00

3,946.00

3,775.00

431.50

1,766.00

625.30

8,776.00

191.00

643.70

2,319.50

3,952.00

2,578.50

3,314.00

1,804.00

1,801.50

4,659.00

52,550.00

12,485.00

1,428.50

2,734.00

9,633.00

35,350.00

2,525.00

36,640.00

5,654.00

1,556.50

3,869.00

3,746.00

1.66

1.13

1.80

0.62

0.91

-0.44

0.60

0.93

1.46

0.82

1.49

1.86

1.55

0.56

-0.14

1.93

1.77

0.47

1.60

1.68

1.16

1.06

0.31

0.04

0.21

1.67

0.14

1.24

1.01

1.19

1.80

0.72

1.23

-0.98

1.02

0.94

0.63

1.34

2.15

1.27

-0.15

0.26

0.13

0.50

1.41

0.56

0.69

1.70

0.00

0.95

1.17

0.75

0.99

2.02

1.23

-0.21

0.02

2.76

0.19

1.32

1.43

1.53

0.45

1.18

1.32

0.03

-0.77

0.53

-0.47

2.28

0.89

0.14

1.75

-0.21

3.39

0.08

1.75

0.73

1.27

1.50

0.43

TOKYO

Company Name Lt Price % Chg

Aluminum Corp Of China Ltd-HBank Of East Asia Ltd

Bank Of China Ltd-HBank Of Communications Co-H

Belle International HoldingsBoc Hong Kong Holdings Ltd

Cathay Pacific AirwaysCk Hutchison Holdings Ltd

China Coal Energy Co-HChina Construction Bank-H

China Life Insurance Co-HChina Merchants Port Holding

China Mobile LtdChina Overseas Land & Invest

China Petroleum & Chemical-HChina Resources Beer Holdin

China Resources Land LtdChina Resources Power Holdin

China Shenhua Energy Co-HChina Unicom Hong Kong Ltd

Citic LtdClp Holdings Ltd

Cnooc LtdCosco Shipping Ports Ltd

Esprit Holdings LtdFih Mobile Ltd

Hang Lung Properties LtdHang Seng Bank Ltd

Henderson Land Development

5.16

33.50

3.90

5.71

0.00

37.95

11.60

102.00

3.82

6.52

23.55

23.55

86.75

25.10

5.68

19.26

22.75

15.46

18.46

11.94

11.54

82.70

8.58

8.97

4.52

2.45

19.34

177.10

46.80

-3.91

-0.30

1.56

0.53

0.00

-0.52

-0.85

0.00

-2.30

1.09

-0.42

-1.26

-0.80

-0.20

-3.07

-1.03

-0.44

2.66

-3.85

-0.67

-0.86

0.30

-1.49

-2.07

4.87

-0.41

-1.63

-1.01

-0.85

48,924,621

1,416,669

644,411,359

29,764,764

-

11,922,690

5,516,518

5,512,756

24,864,280

529,045,137

64,458,162

5,995,968

19,851,349

12,565,077

173,063,912

4,304,571

5,742,478

7,191,435

38,063,770

66,382,050

6,814,273

2,993,607

93,206,675

1,110,357

34,358,299

6,535,835

3,983,720

1,060,687

3,903,491

HONG KONG

Company Name Lt Price % Chg Volume

Hong Kong & China GasHong Kong Exchanges & Clear

Hsbc Holdings PlcHutchison Whampoa Ltd

Ind & Comm Bk Of China-HLi & Fung Ltd

Mtr CorpNew World Development

Petrochina Co Ltd-HPing An Insurance Group Co-H

Power Assets Holdings LtdSino Land Co

Sun Hung Kai PropertiesSwire Pacific Ltd - Cl ATencent Holdings Ltd

Wharf Holdings Ltd

14.84

211.20

75.05

0.00

5.55

2.80

45.10

10.26

4.86

57.55

77.90

12.86

122.00

79.35

318.80

70.95

0.13

-0.47

-0.60

0.00

2.78

0.00

0.11

-0.77

-1.82

0.35

-0.70

0.00

-0.25

-0.87

-1.60

-3.27

13,413,004

6,378,129

16,543,706

-

628,419,423

5,116,007

5,189,469

14,924,017

162,134,320

39,887,143

6,953,641

3,243,656

2,882,176

1,329,222

23,926,140

6,671,773

HONG KONG

Company Name Lt Price % Chg Volume

Zee Entertainment EnterpriseYes Bank Ltd

Wipro LtdVedanta Ltd

Ultratech Cement LtdTech Mahindra Ltd

Tata Steel LtdTata Power Co Ltd

Tata Motors LtdTata Consultancy Svcs Ltd

Sun Pharmaceutical IndusState Bank Of India

Reliance Industries LtdPunjab National Bank

Power Grid Corp Of India LtdOil & Natural Gas Corp Ltd

Ntpc LtdMaruti Suzuki India Ltd

Mahindra & Mahindra LtdLupin Ltd

Larsen & Toubro LtdKotak Mahindra Bank Ltd

Itc LtdInfosys Ltd

Indusind Bank LtdIdea Cellular Ltd

Icici Bank LtdHousing Development Finance

Hindustan Unilever LtdHindalco Industries Ltd

Hero Motocorp LtdHdfc Bank Limited

Hcl Technologies LtdGrasim Industries Ltd

Gail India LtdDr. Reddy’s Laboratories

Coal India LtdCipla Ltd

Cairn India LtdBosch Ltd

Bharti Airtel LtdBharat Petroleum Corp Ltd

Bharat Heavy ElectricalsBank Of Baroda

Bajaj Auto LtdAxis Bank Ltd

Asian Paints LtdAmbuja Cements Ltd

Adani Ports And Special EconAcc Ltd

517.20

1,778.50

288.50

289.15

3,960.50

402.20

623.75

79.55

375.40

2,469.40

471.80

278.20

1,573.05

143.20

222.75

161.70

171.75

7,608.45

1,355.75

966.85

1,146.90

982.60

271.25

981.45

1,624.70

86.30

291.80

1,713.95

1,155.70

229.15

3,957.05

1,757.20

860.10

1,108.65

372.50

2,002.05

238.15

570.05

0.00

22,138.10

408.55

478.35

126.45

142.25

2,831.60

491.75

1,154.00

265.10

396.20

1,784.80

2.44

2.25

-0.41

3.60

0.97

-0.15

4.52

3.92

0.24

-1.07

4.84

-0.70

1.73

2.03

1.76

1.28

1.72

2.03

0.57

2.76

1.32

-0.97

-0.09

-0.63

-0.04

0.12

1.69

1.10

0.25

3.69

3.02

0.47

-1.40

4.52

0.96

-0.45

0.95

5.29

0.00

-2.14

-1.45

-1.23

1.16

0.00

1.56

0.42

0.88

0.66

3.51

1.38

SENSEX

Company Name Lt Price % Chg

WORLD INDICESIndices Lt Price Change

GCC INDICESIndices Lt Price Change

Dow Jones Indus. AvgS&P 500 Index

Nasdaq Composite IndexS&P/Tsx Composite Index

Mexico Bolsa IndexBrazil Bovespa Stock Idx

Ftse 100 IndexCac 40 Index

Dax IndexIbex 35 Tr

Nikkei 225Japan Topix

Hang Seng IndexAll Ordinaries Indx

Nzx All IndexBse Sensex 30 Index

Nse S&P Cnx Nifty IndexStraits Times Index

Karachi All Share IndexJakarta Composite Index

22,001.92

2,465.42

6,340.69

15,097.29

51,248.52

68,648.02

7,389.70

5,140.81

12,180.07

10,477.00

19,753.31

1,616.21

27,174.96

5,803.99

1,427.71

31,449.03

9,794.15

3,294.93

31,110.68

5,835.04

+8.21

-0.42

+0.46

-22.62

+81.05

+363.36

+35.81

+19.14

+14.95

+15.80

+216.21

+17.15

-75.27

+25.36

+8.91

+235.44

+83.35

-13.76

-969.02

+33.55

Doha Securities MarketSaudi Tadawul

Kuwait Stocks ExchangeBahrain Stock Exchage

Oman Stock MarketAbudhabi Stock MarketDubai Financial Market

9,134.36

7,103.24

6,843.66

1,311.80

4,938.53

4,471.11

3,579.56

-57.37

-22.23

-15.61

-7.30

-39.00

-9.47

-6.35

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

4,755,400

831,100

15,714,900

21,341,000

2,000,400

4,706,200

10,199,000

5,249,000

6,532,700

4,094,600

493,500

1,653,600

2,807,500

2,018,600

4,061,700

11,891,800

2,549,000

2,338,000

7,073,800

67,155,700

5,005,000

613,800

354,900

1,425,000

587,100

2,377,800

670,100

2,584,200

1,559,800

5,432,900

1,186,600

5,261,800

6,545,900

4,393,400

606,100

597,900

1,772,800

1,854,000

1,179,400

1,272,600

12,110,900

3,669,900

1,407,400

3,356,800

1,963,100

2,309,500

1,612,500

756,200

-

3,995,200

5,381,900

2,398,100

5,558,500

779,100

2,176,700

3,881,100

5,270,000

4,024,500

7,909,000

4,399,100

135,150,800

20,093,400

2,193,200

2,786,900

3,769,800

1,784,000

3,640,000

3,896,400

1,239,600

288,200

626,100

3,141,400

1,529,600

1,532,200

233,200

3,273,400

2,177,400

498,800

3,212,300

3,209,700

1,376,900

2,765,653

2,126,957

1,792,731

13,855,689

91,292

1,507,712

9,276,595

8,765,694

8,806,000

407,742

22,319,611

25,762,042

3,363,971

5,803,064

2,878,733

4,145,649

4,396,538

356,134

709,155

1,529,989

2,029,755

2,720,781

11,110,395

1,986,040

947,152

8,837,148

8,800,112

2,332,983

594,579

11,835,265

272,461

939,869

422,263

1,462,930

2,843,169

911,913

3,297,662

4,388,448

-

44,569

2,214,877

5,103,013

2,627,538

17,096,012

174,962

4,287,168

569,305

2,224,005

2,901,827

608,410

Volume

Volume

BUSINESS

Gulf Times Wednesday, August 16, 201712

Danone succumbs to investor incursion as US’ Corvex buys inBloombergGeneva

Danone became the latest European company to attract an activist inves-

tor as the French yogurt maker struggles to boost sales in an industry reeling with fi ckle con-sumer demand.

Corvex Management, a New York-based activist fund run by Keith Meister, has built a stake worth about $400mn, according to people familiar with the mat-ter. The news sent the stock up as much as 3% in Paris, the most in France’s benchmark CAC 40 Index.

Activist investors increas-ingly have European companies in their sights, and Dan Loeb’s purchase of a stake in Nestle has shown that not even the region’s biggest company is im-mune. An improved economic outlook and declining politi-cal risks in the region present attractions to funds that have seen targets in the US start to dry up.

At Danone, Corvex will put pressure on chief executive of-fi cer Emmanuel Faber to deliver on his sales and profi tability tar-gets, wrote Andrew Wood, an analyst at Sanford C Bernstein. “Danone is very ineffi cient and has great scope for margin im-provement,” he said.

The purchase would be Cor-vex’s second high-profi le Eu-ropean investment in as many months. The fund teamed up with investment fi rm 40 North last month to increase their stake in Clariant to more than 10%, part of an eff ort to scupper the Swiss chemical company’s $6.7bn takeover of Huntsman Corp.

Corvex believes Danone stock will rebound if management improves operations and suc-cessfully positions the business to benefi t from the health and wellness trend, the people said. The fi rm doesn’t currently plan to publicly push for manage-ment changes or launch a proxy fi ght, though that stance could change, they also said.

Representatives for Corvex

and Danone declined to com-ment.

Announcements of cost cuts and other reshuffl es tend to fol-low after activists announce their targets. A month after Nel-son Peltz said he had a stake in Danone in 2012, the company revealed a plan to reduce costs by about €200mn ($235mn). Just days after Loeb’s stake in Nestle became public, the KitKat mak-er said it would buy back 20bn francs ($20.6bn) of shares. In both cases, the companies de-nied the moves were related to activists.

Another European consum-er-goods giant, Unilever, is also sharpening its focus on profi ta-bility after fending off a bid from Kraft Heinz Co earlier this year. While not an activist fund, Kraft Heinz is backed by investment fi rm 3G Capital, which is known for its aggressive pursuit of shareholder returns. In the US, meanwhile, Peltz’s Trian Fund Management last month began a proxy fi ght to win a board seat at Procter & Gamble Co.

Danone CEO Faber is trying to

rejuvenate the company after last year’s like-for-like sales growth was the weakest since 1997. While the $10bn purchase of soy-milk maker WhiteWave Foods Co is brightening earnings prospects, weakness in yogurt has weighed on a business that generates half the company’s revenue.

Shares of Danone have de-clined about 5% in the last 12 months, valuing the business at about €45bn. The stock cur-rently trades at 23 times earn-ings, compared with 27.3 at Nestle SA and 24.5 at Unilever, according to data compiled by Bloomberg.

Investors in the French com-pany may benefi t from takeo-ver speculation. Danone would “make sense” as a target for Kraft Heinz because it is “a relatively cheap under-earning asset,” Exane BNP Paribas ana-lysts including Jeff Stent wrote in a note in June. Other possible suitors include Pepsico and Co-ca-Cola Co. The longstanding wisdom that Danone is immune from a take-out is no longer valid amid the shift in the French

political landscape, the analysts wrote.

Danone would probably try to quash any bid by Kraft with the backing of the French govern-ment, while Coca-Cola would have antitrust issues with a takeover of Danone, and it would also be a big strategy shift, Bern-stein’s Wood wrote.

Meister, who previously worked for billionaire activ-ist investor Carl Icahn, formed Corvex at the end of 2010. As of the end of March, the invest-ment fi rm also had active posi-tions in oil exploration and pro-duction company Energen Corp, online radio fi rm Pandora Me-dia, and Yum! Brands, the parent company of KFC and Taco Bell, according to regulatory fi lings.

“It’s incumbent on all of us as investors to be activist,” said Ni-cholas Melhuish, head of global equities at Amundi Asset Man-agement. “Activists often just end up verbalising a debate that has been going on behind the scenes between other investors and the company, but they do it in a much more dramatic way.”

US hedge fundmay end up with yogurt all over its faceBy Andrea FelstedBloombergLondon

Ooh Danone.The French dairy company has become the latest European consumer group to be targeted by an activist investor. Corvex Management has built a stake on the belief it’s significantly undervalued, Bloomberg News reported yesterday.On first glance, Danone ticks many of the boxes for a hedge fund looking to unlock value.Its performance has been lacklustre. Last year’s like-for-like sales growth was the weakest since 1997, after a relaunch failed to revive appetite for its core Activia yogurt brand.That doesn’t instil confidence that Danone can make the most of its $10bn purchase of WhiteWave Foods Co, the US maker of dairy alternatives, already an expensive deal on conventional measures.So there is clearly scope for Danone to be better managed, and its assets worked harder. Cost savings could also be ramped up. The company has already announced €1bn ($1.2bn) of these by 2020, but there is probably scope to go further. Wringing more synergies from WhiteWave would be another lever to pull. And there’s always the possibility of carving off assets, such as the nutrition arm.Danone’s valuation, lagging those of both Unilever and Nestle on a forward price earnings ratio, is also inviting to an agitator for change.But there are two important caveats.Firstly, both Kraft Heinz Co’s assault on Unilever and Dan Loeb’s purchase of a stake in Nestle prompted the companies to quickly raise leverage and return cash to shareholders.There’s less scope for this at Danone. After its purchase

of WhiteWave, its net debt is forecast to be about four times its earnings before interest, tax, depreciation and amortisation this year. That’s high for the sector, and leaves little scope for loading up on debt.Of course, Danone could always pare expenditure, such as research and development spending, to try to boost returns. But that could leave the business under-invested, says Duncan Fox, analyst at Bloomberg Intelligence, weakening future prospects.Secondly, an activist could look to create value by trying to put Danone in play. Analysts at Exane BNP Paribas believe it could be a target for Kraft Heinz, Pepsico or Coca-Cola Co.The conventional wisdom has always been that Danone is shielded from takeover threats because of political reluctance to see it fall into foreign hands. Now there’s hope that President Emmanuel Macron’s more pro-business stance could change that.But that’s not straightforward either. It’s not clear whether his attitude toward French enterprise would extend to allowing a national champion to be acquired by an overseas rival, particularly one intent on cutting costs, and jobs. Just look at his government’s decision to block an Italian takeover of France’s STX shipyard.For Danone, there might be a benefit just from an activist showing up. Indeed, shares rose as much as 3% after Bloomberg revealed Corvex’s stake.There’s no doubt the company has appeal on activist grounds. But there’s work to be done to tackle the stumbling blocks to realising value. Otherwise, Corvex could end up with yogurt on its face.

This column does not necessarily reflect the opinion of Bloomberg and its owners.

A worker watches as bottles of prostokvashino pasteurised milk pass along a conveyor belt before packaging at the Group Danone in Russia dairy production plant, operated by Danone, in Saint Petersburg. At Danone, Corvex will put pressure on chief executive off icer Emmanuel Faber to deliver on his sales and profitability targets, says Andrew Wood, an analyst at Sanford C Bernstein.

BUSINESS13Gulf Times

Wednesday, August 16, 2017

Asia markets extend gains into second dayAFPHong Kong

Asian equities extended a relief rally into a second day yesterday as traders were emboldened by

a receding risk of clashes between the United States and North Korea, with safe haven assets continuing to lose ground.

Most major regional indices were glowing green, with prices jumpstarted by a strong performance on Wall Street and further fuelled after Pyongyang ap-peared to put on ice its plan to launch missiles near Guam.

Markets also breathed a sigh of relief as senior US fi gures dialled down ten-sions, after a war of words last week had sparked global alarm.

Tokyo powered more than 1% high-er, with the weakening yen providing an extra boost to the Nikkei which had closed at its lowest level for more than three months on Monday.

Shanghai and Sydney also closed up, although Hong Kong gave up gains in late trade to fi nish lower.

Seoul was closed for a public holiday.“Tensions between the US and North

Korea seemed to cool a little — at least on the US side — and that emboldened the bulls to buy stocks once again,” said Greg McKenna, an analyst at AxiTrader.

Asian investors also appeared to take in their stride rising trade tensions between China and the US as Beijing warned that it “will not sit idle” if a US probe into its intellectual property prac-

tices leads to sanctions. US stocks were solidly higher Monday, with the S&P 500 advancing 1%.

The dollar moved off recent lows after New York Federal Reserve Bank presi-dent William Dudley indicated another interest rate increase this year was likely and suggested the central bank would reveal plans to reduce its balance sheet next month.

On forex markets on Monday, the greenback was trading at about ¥110.3, after falling to eight-week lows under ¥109 as investors fl ed to safe haven as-sets at the height of the crisis last week.

The US currency also rose against the euro and the pound as calm returned to markets and geopolitical tensions eased, with European stocks also gain-ing ground in opening trade yesterday.

US Defence Secretary Jim Mattis and Secretary of State Rex Tillerson wrote in The Wall Street Journal that America has “no interest” in regime change in Pyongyang, and stressed the impor-tance of a diplomatic solution to the crisis.

And North Korean leader Kim Jong-un hinted yesterday he would hold off on the plan to test-fi re missiles towards the US Pacifi c island territory of Guam, saying he would “watch a little more the foolish and stupid conduct of the Yan-kees”. South Korean President Moon Jae-in also weighed in, saying Seoul would avoid a second Korean War at all costs.

On commodities markets, classic safe haven asset gold was trading at about $1,275 an ounce, down from $1,292 reached last Friday.

US crude remained well below $48 a barrel after slumping Monday on fears of falling oil demand in China.

“Last night it seems traders grasped the news of Chinese refi nery runs hit-ting a 10-month low and sold hard,” McKenna noted.

The stronger dollar and relatively weak industrial output data from China Monday also weighed on prices.

Traders were awaiting US commercial crude inventory numbers from industry group American Petroleum Institute and the US Department of Energy today.

In Tokyo, the Nikkei 225 closed up 1.1% at 19,753.31 points; Hong Kong — Hang Seng fell 0.3% at 27,174.96 points and Shanghai — Composite ended up 0.4% at 3,251.26 points yesterday.

Asia assets’ rally seen at riskBloombergLondon

Donald Trump’s bellicose rhetoric

is going to end the rally in Asian

assets, according to strategists at

AllianceBernstein.

It may not happen right away

– in fact, there’s a good chance

Trump’s increasingly ominous war

of words with North Korea will

blow over by the end of the month

– but US foreign policy is likely to

send Asian markets into a tailspin

at some point during his presi-

dency, strategists led by Michael

Parker wrote in a note to clients on

Monday.

“Apocalyptic ranting at North

Korea reflect a lack of judgment

that Asian markets simply cannot

weather indefinitely,” Parker wrote

in the report, titled “The end of the

Asia rally... Is the US becoming a

“Rogue State?” “Asian markets just

do not have the resilience, or the

risk-off asset portfolio, for three-

and-a-half (or seven-and-a-half)

more years of this.”

Given the staid language that

typically accompanies compliance-

obsessed Wall Street research, the

warnings stand out.

AllianceBernstein says the Trump

administration is increasingly

exhibiting the characteristics of a

rogue state and risks disrupting

the post-Cold War order that has

turbo-charged cross-border trade

and capital flows.

In Asia, that would reverse a rally

that sent a benchmark stock gauge

to a record earlier this month.

Volatility gauges temporar-

ily awoke from their slumber last

week while risk-taking eased, after

Trump’s fiery broad-swipes at the

regime in Pyongyang upset mar-

kets. White House off icials sought

to tamp down on the nervousness

over the weekend by saying war

was far from imminent, spurring

stock gains around the world on

Monday.

The MSCI All-Country World

Index now sits within about one per-

centage point of the all-time high it

hit earlier this month.

Parker wrote that the US could

soon be viewed by international

powers as “defiant, isolated, unable

to engage constructively, aggres-

sive.” That, they say, could lead to

a fundamental shift in geopolitical

alignments in Asia, and possibly

Europe that would upend global

trade and isolate the US should it

threaten unilateral military action in

the Korean peninsula.

While the analysts concede

that comparing the US to a rogue

power is an exercise in rhetorical

license, they have little doubt it will

eventually have a sustained impact

on markets.

The MSCI AC Asia Ex-Japan Index

is up 21% this year.

“There is perhaps only a 10%

chance that Asia is unaff ected by

this new brand of US diplomacy,”

they wrote. “In our view, this is the

‘thing’ which we are all staring at

that eventually ends the Asia rally.”

Strong dollar weighs on EM stocks, currencies

ReutersLondon

A stronger dollar weighed on

emerging assets yesterday, with

stocks and currencies failing to

benefit from an easing of the

North Korea standoff .

Having hit a one-month low last

week amid a bellicose exchange

of words between US President

Donald Trump and North Korean

leader Kim Jong Un, MSCI’s bench-

mark emerging equity index trod

water following a more than 1%

jump on Monday.

Overall, global markets traded

a touch higher following Kim’s

decision to delay firing missiles

towards Guam while he waits to

see what the United States does

next.

Adding to the mood were

comments from South Korea’s

president saying Seoul would seek

to prevent war by all means.

But the gains failed to boost

riskier emerging market stocks as

the dollar index extended gains

for a second day, with higher US

yields giving the greenback a lift.

However, emerging dollar bond

yield spreads narrowed another 2

basis points, nearly trading back

at levels last seen a week ago

before Trump rattled markets

with his “fire and fury” threat to

Pyongyang.

Shahzad Hasan, portfolio man-

ager for emerging markets fixed

income at Allianz Global Investors,

said the overall backdrop for

emerging markets was “positive

right now”:

“Risk is back on, fears of conflict

with North Korea are receding,

emerging market spreads are

tighter.”

A stronger dollar also weighed

on some emerging currencies.

Mexico’s peso weakened 0.2%

against the greenback, with Tur-

key’s lira nearly matching the fall.

Yet oil prices broadly stabilising

after Monday’s tumble and copper

futures snapping a four-day losing

streak provided some support,

with Russia’s rouble strengthen-

ing 0.1%. In South Africa, the rand

struggled 0.1% higher after the

high court quashed an anti-graft

watchdog’s proposal to change

the central bank’s mandate.

The watchdog’s report,

published in June, had called

on lawmakers to amend South

Africa’s constitution to relax the

central bank’s inflation-targeting

mandate.

It had rattled investors, who

feared a change could undermine

the bank’s role in keeping the

financial system stable at a time

when the economy has sunk into

recession, the country’s credit

rating has been downgraded and

its politics are dominated by ques-

tions over President Jacob Zuma’s

stewardship.

Employees work at the Tokyo Stock Exchange. The Nikkei 225 closed up 1.1% to 19,753.31 points yesterday.

Yuan’s strength against dollar fails to snuff out depreciation hopesReutersShanghai

China has given those who bet against the yuan a bloody nose this year thanks to policy moves

and intervention by the authorities.And yet, many traders and investors

are still tipping the Chinese currency to decline against the US dollar in the next year.

They argue that after a Communist Party leadership meeting in the fall, which is expected to solidify President Xi Jinping’s grip on power, there will be room for the yuan to weaken.

The Chinese government is deter-mined to keep the fi nancial system and the wider economy stable ahead of the gathering, which is held once every fi ve years.

Even after three consecutive months of strengthening against the US dollar, the fi rst such positive run since 2014, many market participants are uncon-vinced by the gains.

David Qu, markets economist at ANZ Bank in Shanghai, said he doesn’t believe that even with its recent strength the yuan’s broad downward trend of recent years has been fundamentally reversed. “I don’t think the renminbi is back on an appreciation path,” he said, using the other name for the currency.

The People’s Bank of China (PBoC), the nation’s central bank, did not pro-vide answers to faxed questions about

the yuan’s trajectory. A Reuters poll of foreign exchange analysts published on August 3 found the yuan is forecast to weaken to 6.85 per dollar in six months and to 6.9 per dollar in a year.

It settled at 6.6715 per dollar at the late night close on Monday.

The yuan slumped around 6.5% against the surging dollar last year, its largest decline since China unifi ed of-fi cial and market exchange rates in 1994.

The global dollar index, which meas-ures the dollar against a basket of major currencies, rose 3.6% in 2016.

This year, the yuan has gained around 4% as the greenback has slumped, but analysts say it should be up even more given that the dollar is down about 9% against other major currencies.

Companies wary of foreign exchange risks are keeping the yuan’s gains in check.

“Half of our corporate clients who are purchasing dollars at current levels are still betting on a decline in the yuan in the belief that the rebound in the yuan has been a result of the weakness in the dollar and central bank intervention,” said a forex trader at a regional bank in Shanghai.

Against other currencies, the yuan’s value on a trade-weighted basis has ac-tually fallen more than 1% this year, indi-cating it is actually weaker than the dol-lar exchange rate suggests.

Tighter controls on capital outfl ows have been a big reason for yuan strength this year, along with dollar weakness and

signs that the Chinese economy is im-proving, said Wang Tao, chief economist at UBS in Hong Kong.

“Some fundamental drivers of capital outfl ows remain — there is still strong demand among households and corpo-rates to diversify their wealth into FX and overseas assets, while concerns about domestic asset bubbles and high leverage also remain high,” Wang said.

Much of the money changed into dol-lars in China will actually stay in Chinese bank accounts, rather than circumvent-ing capital export controls, but it sill serves as a hedge, experts say.

Another sign that the market still wants dollars: the daily local closing price has been persistently weaker than the same day’s benchmark fi xing set by the PBoC prior to the market opening.

This has been the case even after the May introduction of a mysterious “counter-cyclical factor” into the offi cial midpoint formula, with this X factor de-signed to reduce price swings and stabi-lise market expectations.

In 44 out of 53 trading sessions be-tween June 1 and August 14, the yuan was weaker than the midpoint at the close.

Shan Kun, head of local-markets strategy at BNP Paribas in Shanghai, said impetus for the yuan to retreat could grow.

“We have concerns that companies and fi nancial institutions could decide that the yuan has become too strong in a short period of time and resume expansion of their holdings of dollar-

denominated assets, and increase their enthusiasm for dollar buying,” Shan said. Foreign currency deposits held by house-holds and companies have been rising steadily this year.

The volume stood at $793.1bn at the end of June, up 20.9% from a year ear-lier, offi cial data from the central bank showed.

Derivatives and other gauges also sug-gest weakness ahead.

One-year dollar/yuan non-delivera-ble forwards, considered the best avail-able proxy for forward-looking market expectations for the yuan’s value, on Monday showed that the yuan was ex-pected to weaken to 6.8205 per dollar, a drop of more than 2% from the day’s midpoint.

One-year risk reversals for the dollar against the yuan onshore, a gauge that measures the premium paid for calls over puts, have shown an upward trend since late July to a nearly two-month high at one point on Monday.

That indicates that bullish call options remained more expensive than bearish put options, underscoring how the mar-ket is positioning for further yuan depre-ciation.

“The Chinese yuan would be still vul-nerable to any upward correction in the US dollar.

If there is a potential rebound in the dollar, the impact on the yuan would be relatively huge,” said Ken Cheung, sen-ior Asian FX strategist at Mizuho Bank in Hong Kong.

A man changes foreign currency into Chinese yuan at a currency exchange off ice in Hongqiao airport in Shanghai. China has given those who bet against the yuan a bloody nose this year thanks to policy moves and intervention by the authorities.

BUSINESS

Gulf Times Wednesday, August 16, 201714

Wanda bonds trade like they’re junk despite AAA China ratingBloombergShanghai

Nearly two months after reports about Chinese regulators’ scrutiny of the country’s top

dealmakers, the concerns have left a mark in the local bond market, where one of those companies is facing yields double the national average.

Yields on onshore securities with-out put or call options of Dalian Wanda Commercial Properties Co, which has an AAA rating onshore, are above 9%, according to valuations compiled by Chinabond. That compares with the average 4.55% yield on top-rated notes due in three years from all cor-porate borrowers in the country. It’s also higher than the 5.8% average yield on three-year notes with AA-ratings, considered junk in China.

People familiar with the matter said in June that the Chinese banking regulator asked some banks to provide information on overseas loans made to top dealmakers including Dalian

Wanda Group Co, the parent of the property subsidiary. Wanda’s disposal of tourism and hotel assets to two ri-val Chinese developers last month has added to investors’ confusion.

“Chinese investors are concerned about non-operational risks,” said Qin Han, chief bond analyst at Guotai Ju-nan Securities Co in Shanghai. “Un-certainties about the risks may stay for some time. But it doesn’t mean any particular problem with the company’s credit fundamental.”

Wanda Group declined to comment.The yield on Wanda Commercial’s

4% April 2021 notes has climbed 235 basis points to 9.36% since June 22, the day of the news about the banking regulator scrutiny. The rate on its 3.7% bond due March 2021 has risen 234 basis points to 9.34%. That compares with no change in the average yield of three-year AAA corporate notes in the period.

Wanda Commercial has taken a break from raising money in the on-shore and off shore bond market, set for its fi rst quarterly hiatus since

June 2015, according to Bloomberg-compiled data. The company delisted from the Hong Kong stock exchange in

September, with the aim of eventually re-listing in China as billionaire Wang Jianlin seeks higher valuation in the

mainland. “What worries the investors is the unspoken reasons behind Wan-da’s disposals,” said Chuanyi Zhou, credit analyst in Singapore at Lucror Analytics. “The company also lacks transparency after the delisting from Hong Kong exchange.”

Wanda Group agreed in July to sell a 91% stake in a collection of cultural and tourism projects across the nation to Sunac China Holdings for 43.8bn yuan ($6.57bn). Guangzhou R&F Prop-erties Co separately agreed to pick up some city hotels from Wanda for 19.9bn yuan – assets that originally were to be sold to Sunac when the deal was fi rst announced on July 10.

After the Shanghai Stock Exchange in May approved Wanda Commercial’s plan to sell 30bn yuan of bonds, the de-veloper hasn’t made any announcement on when it’s going to off er the notes.

“The refi nancing risk has also been increasing, given the government’s crackdown on off shore investment and onshore lending,” said Zhou.

Dagong Global Credit Rating Co hasn’t released any announcement

after confi rming Dalian Wanda Com-mercial’s issuer and bond ratings of AAA in May, according to China-money website. The press department of Dagong declined to comment on whether the rating fi rm plans to revise the credit score.

The top score by Dagong contrasts with a BBB-rating, the lowest invest-ment-grade ranking, from S&P Global Ratings. On July 17, S&P placed it on creditwatch negative because of the un-expected sales of the company’s tourism projects and hotels.

Wanda Commercial’s property sales will likely decline signifi cantly after it offl oads its tourism projects, which in-clude the bulk of its land reserves, ac-cording to S&P.

Nomura Holdings recommends a “small underweight” position on Wanda Commercial’s off shore bonds on concern about Wanda Group’s li-quidity situation because of the par-ent’s aggressive overseas acquisitions and the reported scrutiny from the government, according to credit desk analyst Tony Chen.

Residential buildings stand under construction beyond a newly constructed bridge inside the Dalian Wanda Group project site in China. Yields on onshore securities without put or call options of Dalian Wanda Commercial Properties, which has an AAA rating onshore, are above 9%, according to valuations compiled by Chinabond.

Pimco sees ‘handsome’ rewards in emerging local bondsBloombergLondon

Emerging-market local bonds

are back in the spotlight, with

Pimco seeing “handsome”

rewards and Ashmore calling

them the best bet in the debt

world.

Pacific Investment Manage-

ment Co said on Monday the

local government debt market

will become much larger,

deeper and more liquid as coun-

tries including China and Egypt

are likely added to benchmark

indexes. This will increase the

attractiveness of assets that

are already being boosted by a

slumping US dollar, one of the

reasons Ashmore, BNP Paribas

Asset Management and Schrod-

ers are positive on developing-

nation debt.

Further gains in emerging-

market sovereign local bonds

would come on top of a 7.4%

rally since the end of 2016, the

strongest start to any year since

2010, when a Bloomberg gauge

for the asset class was initiated.

Investors’ hunt for yield amid

suppressed rates in industrial-

ised nations has boosted the

appetite for riskier assets this

year, while faster growth in

developing nations and stable

political backdrops have also

lent support.

“Emerging-market local

bonds are the cheaper part of

global fixed-income market and

should outperform,” said Jan

Dehn, the head of research at

London-based Ashmore Group,

whose Emerging Markets Local

Currency Bond Fund has beaten

85% of its peers in the past year.

“Real yields are very high; EM

currencies still very cheap.”

Dehn forecasts local notes

will return 50% over the next

five years, with 20 percentage

points coming from currency

gains and the balance from

price appreciation and interest

payments. Active portfolio man-

agement, he said, could boost

these returns.

BNP Paribas’s asset-man-

agement unit also recently said

gains in emerging-market local

bonds can come from the cur-

rency side, with the dollar look-

ing overvalued after years of

appreciation. (A measure of the

US currency’s strength reached

the highest level since at least

2002 late last year.) The firm

sees little room for emerging-

market yields to fall.

Jim Barrineau, the co-head

of emerging-markets debt

at Schroders in New York, is

overweight local bonds from

developing nations.

He says the firm’s money

managers are focusing on

higher-yielding countries such

as South Africa, Russia, Brazil

and Turkey.

JPMorgan Asset Manage-

ment says local-currency bonds

are the favourite asset class

within the emerging-market

debt space as they are still un-

dervalued. Diana Amoa, senior

portfolio manager, sees oppor-

tunity for further currency gains

in Poland, Hungary and Czech

Republic because of faster eco-

nomic growth in Europe, while

also favouring high-yielding

countries like Mexico, Indonesia

and Turkey.

HSBC hires Goldman veterans for its Asia equities businessBloombergHong Kong

HSBC Holdings has hired three execu-

tives from Goldman Sachs Group as it

seeks to bolster its equities business in

the Asia-Pacific region, people familiar

with the matter said.

Michael Chandler, formerly Goldman

Sachs’s co-head of Asia-Pacific research

sales, has joined HSBC as head of equity

sales for the region, the people said, asking

not to be named as they are not author-

ised to discuss personnel matters. Martin

Zoll, an equity derivatives specialist at

Goldman Sachs, will become a global head

of corporate equity derivatives and equity

linked products, one of the people said.

Chito Jeyarajah has been hired to help run

HSBC’s equity capital markets business in

the region, the people said.

HSBC is bolstering its equities pres-

ence in the region after it became the

first foreign bank to win permission for a

majority-owned securities joint venture

in China, a structure its competitors have

unsuccessfully lobbied to secure for sev-

eral years. Other banks have also been

trimming jobs and cutting expenses in

regional equities in recent years, at a

time of tightening commissions and lack-

lustre trading volumes.

Additional pressure has been created

ahead of the January implementation of

the MiFID II regulations in the European

Union, which will force banks to charge

separately for their equity research.

Lauren Fraser, a Hong Kong-based

representative for HSBC, declined to

comment, as did Connie Ling, a Hong

Kong-based spokeswoman at Goldman

Sachs. Zoll will start around the end of

October and will focus on broadening

HSBC’s equity derivatives and equity-

linked off erings, one of the people said.

HSBC is reshaping its investment-

banking unit after hiring Matthew

Westermanfrom Goldman Sachs last

year to run the business. Earlier this

year, it appointed Hossein Zaimi as Hong

Kong-based global head of equities, and

in June, it won approval to invest $135mn

for 51% stake in a China securities joint

venture with Qianhai Financial Holdings

Co, based in southern China.

Hedge fund betting on 70% yuan devaluation digs in amid gainBloombergHong Kong

Kevin Smith may not be the most famous China bear around, but he’s certainly one of the most

persistent.Despite watching his bets against

the Chinese currency and stock mar-ket backfi re since March 2016, the Denver-based founder of Crescat Capital is as sure as he’s ever been that the country is headed for a major de-valuation.

Smith says the yuan could sink 70% over the next 12 months as China’s credit bubble fi nally bursts.

While similar pronouncements from hedge fund titans including Kyle Bass and David Tepper routinely made headlines as China’s currency slumped through the end of last year, Smith has far less company nowadays. Bears have largely gone into hiding as

the yuan rallied 4.3% from its January low, buoyed by stabilising economic growth and a government clampdown on capital outfl ows.

The average yuan forecaster tracked by Bloomberg now predicts a modest 3.5% drop by mid-2018.

Smith is unbowed. In his latest note to clients on August 5 – about three years after he began betting against the yuan – the former Kidder Peabody executive laid out a fresh 21-page ar-gument for why China faces an immi-nent credit crisis.

While it’s not the fi rst time he’s is-sued such a warning, Smith’s long-term track record makes him diffi cult to ignore. Even after a bad start to 2017, his Crescat Global Macro Fund has gained 285% since its inception nearly 12 years ago, trouncing a 6.7% gain in the HFRX Global Hedge Fund Index.

“Other China bears may have given up, but we are still in the game, with

the goal to win,” Smith, who oversees about $79mn, said in an interview. “Credit bubbles don’t just disappear – they burst. When it does, it will be extraordinary and we intend to be cor-rectly positioned.”

Smith, whose macro fund lost 14% in the fi rst seven months of this year, is betting against the yuan with curren-cy options and short positions in US-listed Chinese stocks and exchange-traded funds.

His wagers buck the market con-sensus. Three-month risk reversals on the yuan – an indicator of trad-ers’ willingness to bet against the ex-change rate with options – plunged to the lowest level since January 2014 in July, before rebounding slightly in re-cent days. The biggest US-listed ETF tracking China’s local stock market has climbed 19% this year.

Even Crispin Odey, a longtime Chi-na bear, says betting against the yuan is dangerous.

China’s economic speed bumpmay excite bond default waveBloombergHong Kong

China had unexpected buoyancy in its economy to thank for an easing off in corporate defaults

in the fi rst half. But as growth shows signs of pulling back, the question is: will it last?

Despite alarm over the risks posed by China’s daunting debt pile ticking up in the fi rst six months of the year, the country actually saw a drop in cor-porate distress, with 0.27% of issuers defaulting, versus 0.55% in all of 2016, according to China Lianhe Credit Rat-ing Co Goldman Sachs Group, too, saw Chinese company leverage drop in the fi rst half.

Economists including Raymond Yeung at Australia & New Zealand Banking Group Ltd put the improve-ment down to the economy, which seemed to turn a corner in late-2016. Growth accelerated in the fourth and fi rst quarters, the fi rst successive gains in seven years, which bolstered com-pany earnings, says Yeung.

“The macroeconomic conditions are much more favourable to Chinese cor-porates compared with the same time last year,” Yeung said in an interview in Hong Kong. “However, this cyclical adjustment will still face a limit. It is still too early to call the improvement a trend.”

And cracks may already be forming.Data on Monday showed growth in

both retail sales and factory output slackened in July, coming in weaker than economists had anticipated. In the same August 4 research note in which they detailed the decline in corporate leverage, Goldman analysts including Asian credit research chief, Kenneth Ho, said defaults could pick up “as the pace of growth in the second half of 2017 slows.”

Beijing’s campaign to reduce over-capacity and re-orient the $11tn econ-omy away from industrial and low-end manufacturing drivers has helped fuel profi t growth this year, says Xia Le, chief Asia economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong.

But it’s “unimaginable” that the gov-

ernment will persist with the reform program while ignoring how it is af-fecting downstream industries, he said. “That’s why I expect profi t growth to slow down.”

China’s industrial profi ts have had a good run, growing 19.1% in June. The move to cut capacity has helped bolster commodity prices such as coal, steel and cement, and the recovery in those sectors – which saw the most bond de-faults over the past two years – means banks’ asset quality is improving, Goldman analysts wrote in a note dated August 3.

After the second-quarter read on Chinese gross domestic product came in better than expected, analysts

boosted their forecasts for the coming quarters. The world’s second-largest economy will grow 6.7% this year, from a previous forecast of 6.6%, according to a survey conducted July 17-24.

“Low housing inventory, recovering private investment, and a strong in-frastructure pipeline suggest that eco-nomic growth will remain robust for the foreseeable future,” said Frederic Neumann, co-head of Asian economics at HSBC Holdings Plc in Hong Kong. “Over the longer term, a further im-provement of corporate fundamentals will not only depend on stable demand and cash fl ow, but also on structural re-forms to raise productivity growth.”

Bloomberg calculations put the

number of corporate bond defaults at 14 in the fi rst half, versus 17 in the same period of 2016. For the second half, the tally is already at fi ve defaults, with Wuyang Construction Group Co failing to pay back some principal and inter-est on an 800mn yuan bond puttable, which in turn triggered its default on a 560mn yuan note, according to a fi ling on Monday.

ANZ’s Yeung says the stronger yuan also underpinned company profi ts and helped stave off defaults by mitigating foreign-currency losses. The currency has gained 3.3% versus the dollar over the past three months but forecasters still expect it to weaken from current levels by the end of the year.

China’s property sector is also losing steam, which could underpin a wider economic pullback.

Jenny Zeng, a Hong Kong-based portfolio manager and head of credit research for Asian fi xed income at Al-lianceBernstein Holding LP, is worried about the refi nancing factor.

Chinese fi rms will see 3.1tn yuan ($465bn) of local debt mature next year, on top of the record 5.2tn yuan coming due in 2017, data compiled by Bloomb-erg show.

“We are yet to see better earnings translating into better cash fl ow,” she said, adding refi nancing was a “key risk” faced by private companies in China going in to next year.

BUSINESS15Gulf Times

Wednesday, August 16, 2017

Euro-pound parity call chimes as Morgan Stanley joins HSBCBloombergLondon

What once seemed a highly unlikely call on euro-sterling is gaining momentum, with

two of the world’s leading banks pre-dicting that Europe’s shared currency will attain and even go beyond parity with the pound for the fi rst time.

Morgan Stanley sees the pair at 1.02 by the end of March, which represents a 12% gain for the euro from current levels, while HSBC Holdings is stick-ing to its forecast that the euro will trade one-for-one against the pound by year-end. Standard Bank strate-gist Steve Barrow said “it’s not a huge leap of faith to suggest we could get up to the parity area.” It would be “fool-hardy” to rule out the prospect of the euro reaching the one-pound mark, according to Rabobank International’s

senior currency analyst Jane Foley. The euro has surged more than 6% against the pound this year amid speculation that the European Central Bank will announce a tapering of bond purchas-es by autumn. By contrast, the pound is being held down by uncertainty sur-rounding Brexit negotiations.

“In euro-sterling we’ve had a very strong conviction and it’s one of the biggest forecasts I ever remember making on a major currency,” David Bloom, HSBC’s London-based global head of currency strategy said in an in-terview last week.

That’s “a 20% move and that’s quite something. It’s very unusual that we make such, what was at that time, an outrageous forecast” but “we are roughly half way there and we believe in it,” he said.

Bloom fi rst made his parity call a year ago, when the euro was around 83 pence. HSBC predicts the euro and the

pound ending this year at $1.20, which are both “strong views,” he said.

Euro-sterling was little changed at 0.9085 in London yesterday, hav-

ing reached 0.9119 on August 11, its strongest level since October.

The pair reached a record 0.9803 in December 2008. Since France elected

pro-European leader Emmanuel Ma-cron in May, risks of the currency bloc fragmenting have diminished. In ad-dition, euro-region economic data are showing signs of improvement. In con-trast, Brexit negotiations are far from clear and that’s weighing on the pound. That’s the main concern for Standard Bank’s Barrow.

It all “depends a lot of how the Brexit negotiations go,” he said. “On euro-sterling previously we thought the 90-92 area might be the peak, but obviously now I no longer do.”

While Morgan Stanley’s parity call is partly due to a bullish-euro outlook, the UK currency is “likely to weaken in its own right, driven by weak economic performance, low real yields and in-creasing political risks,” Hans Redeker, head of foreign-exchange strategy, wrote in a client note dated August 10.

Still, the number of analysts calling for parity in the pair is relatively small.

Of the 62 participants in a Bloomberg currency survey, only HSBC and Mor-gan Stanley see the pair at or above 1by mid-2018.

For ING Group’s Viraj Patel, the re-cent move higher in the euro versus the pound is more of an “overshoot, rather than a broader trend toward parity.”

There are risks that “over-exuberant EUR markets are front-running ECB QE tapering, as well as fading cliff -edge Brexit risks, limit the scope to which EUR/GBP can move materially beyond 0.90,” he wrote in a client note last week. “Domestic and geopolitical uncertain-ties may see us trade in the 0.9000-0.9150 range in the near term, with greater risks of a downside breakout.”

Sterling is “a diff erent animal to most currencies,” as politics overshad-ows and complicates predicting it, ac-cording to HSBC’s Bloom. But when it comes to parity, “we are not a million miles away, so I am still in it.”

Euro-sterling was little changed at 0.9085 in London yesterday, having reached 0.9119 on August 11, its strongest level since October

Repricing aluminium’s supply risks is a chaotic work in progressBy Andy HomeLondon

Aluminium was the standout performer

among the major industrial metals last

week. On the London Metal Exchange

(LME), three-month metal jumped by

more than 7% to reach its highest in nearly

three years at $2,048 a tonne.

China outdid even that, with the most

actively traded contract on the Shanghai

Futures Exchange (ShFE) hitting a five-

year high of 16,480 yuan a tonne amid an

explosion in trading volumes and open

interest.

There is much speculative froth in these

moves, particularly in Shanghai, but there

is also a collective attempt to reassess this

market’s supply risks. China has embarked

on a policy of closing “illegal” smelter

capacity, meaning that which has been

constructed without the full gamut of of-

ficial approvals.

This being China, the largest producer

of aluminium in the world, there are big

implications for supply. One operator

alone, China Hongqiao, confirmed this

morning that it has closed 2.68mn tonnes

of capacity, equivalent to 4.5% of global

output last year.

These are extraordinary times for

aluminium. It is a metal with a history of

structural excess capacity and oversupply.

Crisis in the past has been defined by

too much metal rather than too little.

Which means there is no obvious

precedent for pricing this new supply-side

uncertainty.

Not helping is the uncertainty over

what exactly is going on and the impact

on actual production levels. When the

world’s largest aluminium producer, Hong-

qiao, closes that much capacity, the news

might be expected to be instantaneous

and clear-cut.

That is not how things happen in China,

however. When Hongqiao first confirmed

on August 2 that it would be cutting “more

than 2mn tonnes of outdated capacity”,

it was reacting to rumours that seem to

have been based on leaks from another

Chinese producer’s management meeting.

Hongqiao played down the impact, a

spokeswoman saying that what would

shut would be replaced by newer capacity.

Annual production volumes would

still exceed 7mn tonnes as “the utilisa-

tion rate goes over 100%”. On August 8

the Shandong Development and Reform

Commission released a statement saying

that it had found 3.21mn tonnes of illegal

capacity in the province.

The capacity, including 2.68mn tonnes

at Hongqiao, would be closed.

That statement, however, was actually

dated July 24, meaning that the news

had been circulating for at least a week

before seeping into the broader market

as rumour.

Only today did Hongqiao finally confirm

that it has already closed 2.68mn tonnes

of capacity, spread across five sites, on the

orders of the Shandong regional govern-

ment. Strictly speaking, the confirmation

didn’t even come from Hongqiao but from

a subsidiary, Shandong Weiqiao, in a state-

ment to the Shenzhen stock exchange.

Hongqiao’s own Hong Kong shares have

been suspended since March after re-

search firm Emerson Analytics published

a report alleging that the company under-

reported its costs.

That is a whole diff erent universe of

uncertainty. It will need a “replacement

permit” to prove that new production lines

are replacing older, inoperative produc-

tion lines. This new-for-old requirement

and environmental permit system seem

to be the two most common reasons for

capacity being deemed illegal.

Unsurprisingly, there is now an ac-

tive market in such permits, eff ectively

allowing capacity transfers across local

state borders. A total of 207,000 tonnes

of shuttered capacity in the province of

Henan, for example, will be transferred to

an unnamed company in Inner Mongolia,

according to a statement from the China

Nonferrous Metals Industry Association

(CNIA). Such transfers only add to the

news noise and risk muddying already

unclear waters.

The market could normally take some

comfort from the monthly production fig-

ures from the National Bureau of Statistics

(NBS) and the CNIA.

But both sets of figures come with

very strong health warnings. Analysts are

tending towards the view that “illegal”

production capacity was taken out of the

statistics before any of it actually closed.

That diminishes the power of any price

signal generated from the latest NBS

figures, which show national production

falling 8.2% in July from June’s record run

rate.

Andy Home is a columnist for Reuters.

The views expressed are those of the author.

Traders use telephones as they work on the trading floor at the London Metal Exchange (file). Aluminium was the standout performer among the major industrial metals on the LME last week.

Despite delay, US isexpected to impose steel import tariff sReutersLondon/Washington

US President Donald Trump is still expected to impose steel import tar-

iff s on national security grounds despite the delay of a probe into the matter and pursuit of mul-tilateral talks to reduce excess capacity, industry players and trade experts say.

US steel stocks have fallen nearly 10% since Trump de-layed the release of the so-called “Section 232” review of the US steel industry last month, partly refl ecting fears that his promises to protect the industry may not materialise.

But industry analysts say the falls might be overdone, and there is reason to think that im-port relief may still happen.

“Based on (Commerce Secre-tary Wilbur) Ross’s recent state-ments and our discussions with trade lawyers engaged in section 232, we still expect measures that will have a positive impact on US steel prices,” said Seth Rosenfeld, a steel industry ana-lyst at Jeff eries in London.

“The most likely outcome is tariff rate quotas where the level of tariff changes dependent on the volume of imports.

This structure serves as some-thing of an upside cap on steel pricing so they do not get out of control,” Rosenfeld added.

Trump launched the probe into whether steel imports com-promise US national security in April, boosting US steel stocks, but said in July a fi nal decision might have to wait until other top-priority issues are addressed.

Ross said he would defer to Trump’s lead and also cited multi-lateral talks to reduce ex-cess capacity, fuelling concern in the steel industry that the “232” review, initially scheduled to conclude in late June, might be scrapped or substantially wa-tered down.

A Trump administration of-fi cial told Reuters, however, that the steel probe remains active and “is still under the fi nal stages of review within the administra-tion”. He declined to comment on the possible timing of its release. By law, Ross has until

mid-January 2018 to conclude his review.

Trump would then have 90 days to act.

“Our hope and expectation is that there would be action on (section 232) sooner, rather than going the full time,” said Tom Gibson, president of the Ameri-can Iron and Steel Institute.

In a sign that some market players still anticipate a US tariff move, steel import permit appli-cations fell 12% in July from June, making up 28% of the market, according to US Commerce De-partment data compiled by AISI.

Trump’s planned steel restric-tions are mostly aimed at per-suading China, producer of more than half the world’s steel, to cut excess production capacity, but direct imports from China into the United State have already fallen dramatically due to pre-vious anti-dumping and anti-subsidy duties.

Instead, critics say broad new steel restrictions would hit US allies such as South Korea, Ja-pan, Germany and Turkey much harder, prompting warnings of retaliation against unrelated US products.

Diplomats also say “232” du-ties risk undermining the global trading system if national secu-rity becomes an accepted excuse to erect trade barriers. Trump during his election campaign promised supporters in rust-belt states such as Pennsylvania and Ohio that he would restore steel and coal jobs.

US-based trade analysts say Trump may still turn to steel im-port restrictions because he can invoke them without congres-sional approval after suff ering recent legislative setbacks.

“The healthcare bill went down, that’s a big loss.

What is Trump going to do to shore up his base? He sees tough action on trade as a political winner.

I think he’ll return to the mat-ter before the end of the year,” said Gary Hufbauer, a senior fel-low at the Peterson Institute for International Economics.

The steel investigation has also been caught up in Trump’s eff orts to secure China’s coop-eration to impose sanctions on North Korea.

US retail sales recordtheir biggest rise inseven months in JulyReutersWashington

US retail sales recorded their big-gest increase in seven months in July as consumers boosted

purchases of motor vehicles and lifted discretionary spending, suggesting the economy continued to gain momentum early in the third quarter.

Retail sales for June and May also were revised higher, which should help to as-suage concerns about a slowdown in consumer spending at the start of the year. Tuesday’s upbeat report from the Commerce Department likely keeps the Federal Reserve on course to raise inter-est rates again in December.

“American shoppers fl ocked to the malls and even department stores in July, suggesting consumers are well-posi-tioned to propel the economy forward in the second half of the year,” said Sal Gua-tieri, a senior economist at BMO Capital Markets in Toronto.

Retail sales jumped 0.6% last month, the largest gain since December 2016.

June’s retail sales were revised to show a 0.3% gain instead of the previously re-ported 0.2% drop. Economists had fore-cast retail sales increasing 0.4% in July.

May’s retail sales were revised to show no change instead of the previously re-ported 0.1% dip. Retail sales increased 4.2% in July on a year-on-year basis.

Excluding automobiles, gasoline, building materials and food services, re-tail sales surged 0.6% last month after an upwardly revised 0.1% gain in June. These so-called core retail sales, which correspond most closely with the con-sumer spending component of gross do-mestic product, were previously report-ed to have dipped 0.1% in June.

The report helped to shift investors’ attention from recent weak infl ation data as markets try to forecast the Fed’s next policy move.

The US central bank has raised rates twice this year and economists expect it will announce a plan to start unwinding its $4.2tn portfolio of Treasury bonds and mortgage-backed securities in Sep-tember. Prices of US Treasuries were

trading lower yesterday while US stocks were mixed. The dollar was stronger against a basket of currencies.

Consumer spending, which accounts for more than two-thirds of US econom-ic activity, increased at a 2.8% annual-ised rate in the second quarter.

That boosted GDP growth to a 2.6% rate in the April-June period. But per-sistently sluggish wage growth has pushed Americans to dip into their sav-ings to fund spending.

Economists say wage growth has to pick up to sustain consumer spending. Annual wage growth has struggled to break above 2.5%. The saving rate has dropped to 3.8% in the second quarter of this year from a rate of 6.2% in the sec-ond quarter of 2015.

Low savings and tepid wage growth suggest households would need to bor-row to maintain spending. “The decline

in the saving rate, however, raises some longer-term concerns about consumer spending,” said Michael Feroli, an econ-omist at JPMorgan in New York.”Savings can’t drop indefi nitely and future con-sumption growth will need to rely on stronger income growth.”

For now, the near-term outlook for the economy is brightening.

In a second report on Tuesday, the New York Fed said its Empire State gen-eral business conditions index climbed 15.4 points to 25.2 in August, the highest level in nearly three years.

Manufacturers in the region reported a jump in new orders and said they were taking longer to deliver goods and that inventories were declining.

Retail sales in July were lifted by a 1.2% surge in motor vehicle sales, the biggest rise since December 2016, after advanc-ing 0.9% in June. Faced with a huge in-

ventory of unsold cars, auto dealerships are resorting to hefty discounts to attract buyers. Prices for new motor vehicles re-corded their biggest drop in nearly eight years in July and have decreased for six straight months. Prices could decline further as a third report from the Labour Department yesterday showed the cost of imported motor vehicles fell in July for the second consecutive month.

Retail sales in July were also buoyed by a 1.2% increase in receipts at building material stores. That followed a 1.1% gain in June. Sales at online retailers vaulted 1.3% in July, the largest gain since De-cember 2016, likely buoyed by Amazon.com’s Prime Day promotion.

Sales at restaurants and bars rose 0.3%. Receipts at sporting goods and hobby stores also increased 0.3%. But sales at electronics and appliance stores slipped 0.5% last month.

Shoppers are seen at the JC Penney at the Columbia Mall in Bloomsburg, Pennsylvania. US consumers spent at a brisk pace in July, pushing US retail sales to their biggest increase in seven months, according to off icial figures released yesterday.

BUSINESSWednesday, August 16, 2017

GULF TIMES

UK Business faces more red tape under Brexit customs plansBloombergLondon

The UK outlined two potential visions

for a post-Brexit customs arrangement

with the European Union aimed at deliver-

ing “the freest and most frictionless” pos-

sible trade, albeit while imposing greater

red tape on businesses.

A 14-page document released yester-

day by Brexit Secretary David Davis’s de-

partment envisioned how to span Britain’s

departure from the EU in March 2019 to

a day when a new trading relationship is

ready to run.

During that time, according to the UK’s

proposal, Britain would be free to negoti-

ate and sign new trade deals with other

countries, but crucially wouldn’t be able to

implement them if they breach the terms

of the interim arrangements with the EU.

The bloc may challenge the vision, given it

has long warned the UK against trying to

cherry-pick and said Britain can’t enjoy as

easy a trading relationship as it does now

once outside the bloc.

“We’ve got to have some sort of a

transition arrangement for a year or two,”

Davis told BBC Television yesterday. The

interim agreement “would be as close

as we can to the current arrangements”

while giving Britain the freedom to line up

new trade deals, he said on BBC Radio 4.

The pitch underlined how complex the

process of Britain unpicking and renegoti-

ating ties with the world’s biggest trading

bloc will be. While Brexit campaigners said

the divorce would free British businesses

from bureaucracy imposed by Brussels,

the government’s two models of a future

customs deal would both impose new

requirements on companies.

Under the first plan, dubbed “a highly

streamlined customs arrangement,”

Britain would extend customs declara-

tion requirements currently in place for

other nations to EU exports and imports.

While Britain would “simplify” processes,

negotiate waivers and increase automa-

tion to prevent disruption at ports, “there

will remain an increase in administration

compared with being inside the customs

union,” the department said.

The second proposal, called a “new

customs partnership with the EU,”

imagines no need for an EU-UK customs

border, because the UK, would mirror EU

requirements for imports where the final

destination of those goods is the EU.

That would require a “robust enforce-

ment mechanism” to ensure goods that

don’t comply with EU trade policy stay in

the UK The government put forward two

mechanisms: a tracking process to track

all goods and components, and a repay-

ment mechanism — whereby importers

pay whichever is higher of the EU or UK

tariff s and claim a refund should the end

destination be the one with the lower

tariff s.

“This is an innovative and untested

approach that would take time to develop

and implement,” the Brexit Department

said, adding that it wants to “explore” the

approach with businesses to understand

the complexities involved.

Regardless of the EU talks, the UK

will need to legislate for a new customs

regime to be in place before March 2019,

and make changes to sales tax and excise

regimes. That’s because current rules gov-

erning customs are mainly in EU law, and

current UK customs law is “insuff icient,”

the department said.

The government intends to put a cus-

toms bill through Parliament before Brexit

that will also include provisions for stan-

dalone customs arrangements in case it

fails to reach a deal with the EU. “It is only

prudent that the government prepares for

every eventuality,” it said. “This is not the

government’s preferred outcome.”

Industry lobby groups have repeat-

edly warned against the potential for a

“cliff edge” of duties, border controls and

regulatory uncertainty on commerce

with the UK’s biggest market the day after

Brexit. They expressed relief before the

full proposals were unveiled yesterday.

“Business wants to see as frictionless a

customs system as possible,” Confedera-

tion of British Industry deputy director-

general Josh Hardie said in a statement.

“All eff orts should be made to deliver a

single-step transition, so that businesses

don’t have to adapt twice.”

The road map, though, will be likely to

run into opposition from the EU, given the

UK’s suggestion it be allowed to line up

trade accords with other countries during

the interim period, something remain-

ing fully inside the customs union would

prevent.

A European Commission spokesman

said the bloc welcomes the UK’s detailing

of its position as a “positive step” and pre-

dicted it would allow the talks to progress.

But he added that the EU would only turn

to future relations once “we have made

suff icient progress on the terms of the

orderly withdrawal” and that any agree-

ment “can only be finalised once the UK

has become a third country.”

Keir Starmer, the opposition Labour

Party’s Brexit spokesman, called the pro-

posals “fantastical and contradictory.”

Failure to maintain something akin to

the status quo could prove costly for the

British. The current arrangement saves

UK exporters from paying tariff s on goods

sold to the EU. Countries outside the

region and lacking a free-trade accord

with it pay about 10% on shipments of

cars alone.

A customs union-like relationship

would help clear up the matter of how

to police the border between Northern

Ireland and the Republic of Ireland. Irish

Prime Minister Leo Varadkar said earlier

this month that a new customs union

should be designed to avoid the need for

controls on the 310-mile (500-km) frontier

which forms the EU’s only land link with

the UK.

The Irish issue will be detailed more

fully by the British today when they

publish another paper that will express a

commitment to keeping a “seamless and

frictionless” border on the island.

Danske tells biggest clients it doesn’t want all their depositsBloombergCopenhagen

Danske Bank is telling corporate clients to think hard about what to do with their excess cash be-

fore December 31, because Denmark’s biggest lender doesn’t want it in de-posit accounts.

After a world-record-setting half decade of negative interest rates, Den-mark still has a few surprises up its sleeve that show how such a monetary regime works in practice. Though cor-porate clients need to pay to place their savings with the bank, Danske is strug-gling to deal with near-record amounts of deposits.

The bank’s deposits have risen 11% over the past 21 months, reach-ing 914bn kroner ($145bn) at the end of June (excluding repurchase agree-ments), second-quarter results show. Danske said it’s encouraging clients to place excess cash in other products of-fered by the bank, but declined to pro-vide more details.

Corporate and institutional clients have the biggest placement need, with savings growing 17% to 265bn kro-ner. That’s a quarter of Danske’s total deposits. The cash adds to the cost of complying with Denmark’s strict li-quidity rules.

Christoff er Mollenbach, Danske’s treasurer, says managing liquidity ra-tios is a diffi cult balancing act that means not all deposits are welcome. “We have to manage across the ratios, some of which are contradictory” and so “banks want to avoid large last-minute transactions,” he said in an in-terview in Copenhagen.

The so-called liquidity coverage ra-tio is designed to ensure lenders can survive a market freeze. But regulators recently began requiring banks to dis-tinguish between cash that fi rms keep on hand to run their business on a day-to-day basis, and non-operational de-posits. The latter of those two catego-ries generates a bigger liquidity buff er requirement, the argument being that such deposits are more likely to be withdrawn if times get tough.

Denmark imposes stricter liquidity requirements than the rest of the Euro-pean Union. Banks in the country need to prove they can withstand a three-month funding drought, compared with the one month that applies else-where in the EU. Danske had a liquid-ity buff er of 603bn kroner at the end of June, after extending the duration of its short-term funding and reducing the need for liquid assets.

Already last year, Danske found it-self potentially needing to turn clients away. The bank got “a number of re-

quests to take very sizeable deposits,” Mollenbach said.

Senior management debated what to do, before ultimately deciding they were ready to accept the cash. In the end, the placement demand wasn’t as great as initially expected. Excess de-

posits are particularly hard to deal with when money markets are volatile, as they were at the end of last year.

Mollenbach says one of the unin-tended consequences of stricter liquid-ity requirements is that banks’ “ability to absorb changes in customer behav-

iour is becoming more limited, and the year-end pricing is an example of that.”

“We generally saw money-market prices signifi cantly distorted over year-end,” he said. Such last-minute trans-actions are “the kind of thing Danske, and most other banks, would like to

avoid,” he said. Excess client cash is the biggest drag on bank liquidity coverage ratios, according to a December report by the European Banking Authority, which looked at 2015 numbers. Non-operational deposits, which include short-term unsecured interbank fund-ing, had “the greatest negative impact,” the EBA found.

The combination in Denmark of stricter liquidity rules and negative rates that most economists predict will last into 2019 are proving a challenging cocktail for the country’s banks. But Danske has shown that lenders can still perform very well in such an environ-ment. It delivered record profi ts in 2016 and its shares have gained about 16% this year, compared with the roughly 10% increase in European fi nancial stocks.

Cash and cash equivalents are testing pre-crisis levels at some of the Nordic region’s biggest companies, including giants such as Novo Nordisk and Volvo.

“As we move closer to the fourth quarter, we normally start to advise customers regarding their options on excess liquidity in preparation for the year end,” said Jakob Groot, who heads fi xed income, currencies and commod-ities at Danske.

“This will be even more important this year, given the volatility we saw at last year-end in deposit rates.”

RBS to cut 880 IT jobs by 2020, says unionReutersLondon

Britain’s Royal Bank of Scot-land plans to cut around 900 technology jobs at its London

offi ce by 2020, in its latest plan to reduce costs, the Unite union said, although the bank said no fi gures had been fi nalised.

Taxpayer-backed RBS plans to cut 40% of permanent IT staff , or 650 jobs, and 65% of contractors which equate to 230 roles, Unite said in a statement.

Unite said there would be 950 full-time IT staff by 2020, com-pared with 2,200 in 2016, but a spokeswoman for RBS said it had not yet begun any formal consulta-tions on job cuts and no numbers had been set.

“As we develop long term plans for our technology business, we have in the interests of transpar-ency, started to share our emerg-ing proposals on a future operating model with Unite.

We have not consulted on any headcount reduction, instead shar-ing a direction of travel with Unite which is subject to change,” the RBS spokeswoman said.

“Our proposed plans are de-signed to reduce the number of con-tractors we employ and strengthen our permanent workforce and while we are downsizing in London we are reinvesting in other UK hubs,” she added.

RBS, which is more than 70% state-owned, is in the midst of a major restructuring aimed at re-turning the bank to profi t after al-most a decade of losses.

In its 2016 annual report the bank revealed its global workforce has shrunk from around 226,000 in 2007 to around 77,000.

Earlier this month, the Edin-burgh-based lender, rescued in a £45.5bn ($59.8bn) bailout at the

height of the fi nancial crisis, beat fi rst-half profi t forecasts, showing signs a long-promised recovery is fi nally gathering momentum.

RBS has cut around 2,000 staff across Britain so far this year ex-cluding Unite’s latest fi gures, amounting to around 3.5% of its 57,000 staff in the country as of De-cember 2016.

“RBS’s fi xation with cutting employee numbers, restructur-ing and off shoring work that could reasonably be done by displaced staff within the RBS IT community is unacceptable,” Rob MacGregor, Unite national offi cer, said yester-day.

“Unite is angry that the massive scale of IT job losses will sap mo-

rale, productivity and faith in the company.” Most layoff s have been in its branch network, where the bank had announced plans in 2016 to cut about one in every 10 jobs.

In March, the lender said it planned to close about 180 bank branches in Britain and Ireland and about 1,000 roles were at risk in the latest round of cuts and closures.

RBS has also announced several rounds of job cuts earlier this year, with plans in June to cut 443 jobs dealing with business loans, many of them moving to India.

In May, the bank said it was eliminating 154 contractor roles and making an additional net 92 job cuts in an overhaul of its back offi ce operations.

A logo is seen on a pillar outside the Royal Bank of Scotland Group (RBS) headquarters in London. Unite said there would be 950 full-time IT staff by 2020, compared with 2,200 in 2016, but a spokeswoman for RBS said it had not yet begun any formal consultations on job cuts and no numbers had been set.

Pedestrians walk past a Danske Bank branch in Copenhagen. Danske’s deposits have risen 11% over the past 21 months, reaching 914bn kroner ($145bn) at the end of June (excluding repurchase agreements), second-quarter results show.

Microsoft Surface devices fail on reliability, saysConsumer ReportsReutersSan Francisco

The breakage rate for Microsoft Corp’s Sur-face devices is signifi cantly worse than for other manufacturers’ laptops and tablets,

Consumer Reports said, adding that it was remov-ing its “recommended” designation for Surface products.

The non-profi t publication surveyed 90,000 tablet and laptop owners and found that an esti-mated 25% of those with Microsoft Surface de-vices would be presented with “problems by the end of the second year of ownership,” according to a study published last week.

“If you are very concerned about how long your products are going to last, it might be better for you to go with a brand that has a higher predicted reliability,” Jerry Beilinson, electronics editor at the consumer goods testing publication, said in an interview.

Microsoft disputed the study, saying the com-pany’s return and support rates diff er signifi cant-ly from the Consumer Reports study.

“We don’t believe these fi ndings accurately re-fl ect Surface owners’ true experiences or capture the performance and reliability improvements made with every Surface generation,” the com-pany said in a statement.

According to the Consumer Reports survey responses, the Microsoft devices were found to freeze, unexpectedly shut down or have issues with their touchscreens, Beilinson said.

Altogether, the reliability issues made Mi-crosoft a statistical outlier compared with other brands.

Apple had the most reliable devices, Beilinson said.

Microsoft entered the hardware market with its fi rst Surface tablet in 2012. Since then, the com-pany has released a series of new Surface tablets and laptops, including the well-reviewed Surface Pro, which launched in May.

The Surface devices serve as a face for the company and exemplify how Microsoft’s manu-facturing partners can build hardware around the Windows 10 operating system.

However, Surface is a small part of Microsoft’s overall revenue, and Surface revenue has declined year-over-year for the past two quarters.

“The reality is that Microsoft has very lit-tle experience in some of the newer categories it’s entering very rapidly, which may expose it to more risk of problems in manufacturing,” said Jan Dawson, chief analyst at Jackdaw Research.