BUSINESSBUSINESSMonday 1 January 2018

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Japan’s Nippon Life eyeing M&A

Nakilat showcases maritime expertise

8,523.38-2.62 PTS0.03%

QSE FTSE100 DOW BRENT7,687.77+64.89 PTS0.85%

24,719.22-118.29PTS0.48% Dow & Brent before going to press

$60.10 +0.26

Funds bet big on Qatar stocks for 2018SATISH KANADY

THE PENINSULA

DOHA: Qatar stock market finished the final month of a diffi-cult 2017 on high note, as the benchmark index surged 10.49 percent or 809.12 points in December, compared to the previous month. The index fell 0.03 percent to 8,523.38 points before closing the tumultuous year, yesterday.

The benchmark index lost 18.33 percent or 1,913.38 points in 2017. But top fund managers from the region predicted a strong market recovery in the new year. 2018 is going to be the year, when earnings start kicking up with the aggressive govern-ment spending, they believe.

Qatar stocks’ valuation and trading volume are at significant discounts. This would provide an attractive entry point for inves-tors in 2018, especially in a healthier oil price scenario. A synchronised global growth is also going to influence the local market. Oil prices are spiking up. There will not be any major

macro concern for Qatar in 2018, analysts said.

“The global economy is enjoying synchronised growth and is a key driver helping oil prices. We expect another posi-tive year for oil prices in 2018. While this will directly benefit few Qatari listed stocks, the govern-ment will be boosted by increased hydrocarbon revenues offering it the option to add to spending if it chooses,” Akber Khan (pictured), Senior Director-Asset Manage-ment Group, Al Rayan Investment told The Peninsula, yesterday.

Middle East fund managers

will continue to bet on Qatar in 2018. A Reuters poll of 13 leading Middle Eastern asset managers, released yesterday, found 10 will continue to hold their positions in Qatar and two will increase their exposure to Qatar.

The institutions that took part in the survey are: Al Mal Capital; Al Rayan Investment LLC; Amwal Qatar; Arqaam Capital; Emirates NBD; Global Investment House; Invest AD; FAB Securities; NBK Capital; Rasmala Investment Bank; Schroders Middle East; The National Investor; and Waha Capital.

The year 2018 is expected to be the comeback year for real estate and banking sectors on Qatar Stock Exchange (QSE). The real estate shares jumped a huge 35.32 percent in December. Investors are increasingly bet-ting on Qatar’s proposed law to permit expatriates to own properties.

The banking and financial Services sector, which lost 7.90 percent in 2017, was up 9.28 per-cent in December, compared to the previous month. Banks are

expected to remain the key ben-eficiaries of the government’s huge project spending in the new year.

The 2018 state budget charts out infrastructure spending that continues to average $500m a week. This is combined with an almost 10 percent jump in the wage bill to partly accommodate new government schools, new university faculties, and a raft of

new healthcare related projects. Heightened infrastructure spend will benefit the banking sector who will be called upon to fund a significant proportion of the new infrastructure. Consumer related sectors may start to see some relief as the population continues to expand and some of the initia-tives to bring back tourists start to bear fruit, Akber Khan said.

Rami Jamal, a portfolio

manager at Doha-based Amwal said introduction of ETFs to the Qatari market should stir both institutional and foreign inves-tors’ appetite in 2018. “In 2018, investors will position their port-folios favouring companies with higher dividend yields and diver-sified growth potential. After recent budget announcement emphasizing importance of the local private sector, food secu-rity and continued infrastructure spending, the fund manager sees value in the logistics and con-sumer sectors, “where we saw resilience to the recent geopolit-ical events,” Jamal told Bloomberg.

2017 was a difficult for year for the Qatar Stock market; this was further exacerbated by the imposition of the blockade in early June as investors sold down, worried about a very uncertain outlook. All this occurred while oil prices rose steadily, so a number of stocks look set to con-tinue the December rally during 2018, especially as some now have more than 6 percent divi-dend yield, Akber Khan said.

MEC urges local startups to join‘National Product’ initiativeTHE PENINSULA

DOHA: The Ministry of Economy and Commerce (MEC) has called on local startup companies to join its ‘National Product’ initi-ative which was launched last November in collaboration with Al Meera Consumer Goods Company and Bedaya Center for

Entrepreneurship and Career Development (Bedaya Center), QNA reported.

The initiative aims to sup-port local startups and entrepre-neurs in marketing their prod-ucts and provides them with easy access to consumers, which contributes to the growth of their companies, development of their

businesses and acquisition of expertise, the statement notes.

It also supports the State’s efforts in promoting local prod-ucts as part of the government’s strategic economic diversifica-tion plans aimed at achieving Qatar National Vision 2030. The MEC had previously launched several initiatives to support

small- and medium-sized enter-prises and investors, including streamlining procedures and licensing conditions for business center’s, granting licenses for home business, regulating the work of street vendors and offering 12 investment opportu-nities to license mobile vendors.

Macron signs 2018 State Finances French President Emmanuel Macron delivers a speech after he signed three legal texts including those concerning 2018 State Finances and 2018 French Health Care Financing as government spokesman Benjamin Griveaux (left) looks on, at the Elysee Palace in Paris, France.

Qatar Central Bank’sinternational reserves rise REUTERS

DOHA: The Qatar central bank’s

(QCB) international reserves and

foreign currency liquidity rose

slightly in November, official

data showed yesterday, as capi-

tal outflows caused by sanctions

imposed by other Arab states

appeared to ease.

The reserves and liquid-

ity, a measure of the central

bank’s ability to support the riyal

currency, increased to $36.9bn

last month from $36.1bn in

October.

The global economy is enjoying synchronised growth and is a key driver helping oil prices. We expect another positive year for oil prices in 2018. While this will directly benefit few Qatari listed stocks, the government will be boosted by increased hydrocarbon revenues offering it the option to add to spending if it chooses.

2018 is going to be the year,

when earnings start kicking up

with the aggressive

government spending.

Siemens to gauge interest of state funds in Healthineers IPOREUTERS

FRANKFURT: Siemens will test the appetite of sovereign wealth funds ahead of the planned listing of its healthcare unit Healthineers next year, its chief executive told a German weekly, possibly to secure anchor investors for the flota-tion. The listing of a minority of the unit, which makes X-ray and MRI machines, is set to take place in the first half of 2018 and is expected to value Health-ineers as a whole at around ¤40bn ($48bn).

Siemens is expected to sell 15-25 percent of Healthineers, sources have said, implying stock worth ¤6-10bn could be sold - Germany’s biggest share offering since Deutsche Tel-ekom in 1996.

“Internal preparations are going well and we are still plan-ning the listing in the first half of 2018, if markets play along,” Joe Kaeser (pictured) said in an interview yesterday.

“In any case, we are plan-ning to test the interest of rele-vant anchor shareholders, including sovereign wealth funds.” Asked whether this included Norway and China, home to the world’s largest and

third-largest state funds, respectively, Kaeser said: “We will probably cover the range of the most important state funds, yes. The advantage would be that we would gain anchor investors. The disadvan-tage: the free float of shares is not as high.”

The move is designed to enable the unit to raise its own funds for takeovers and invest-ments in the healthcare sector as well as crystallizing its stan-dalone value, removing some of the “conglomerate discount” that weighs on Siemens’ valuation.

In 2016, utility RWE won BlackRock as an anchor investor in the initial public offering of its Innogy unit. RWE ended up selling a 23.2 percent stake in the networks, renew-ables and retail unit.

22 MONDAY 1 JANUARY 2018BUSINESS

Nakilat showcases maritime expertiseTHE PENINSULA

DOHA: Nakilat demonstrated full support for the ‘Made in Qatar 2017’ Exhibition organised by Qatar Chamber of Commerce (QC) by participating alongside more than 300 local companies from various sectors.

Under the patronage of HH the Emir Sheikh Tamim bin Hamad Al Thani, the exhibition which was held at the Doha Exhi-bition & Convention Center, aimed to promote local industry products and services available in the domestic market to reduce dependence on imports, as well as diversify sources of income in

alignment with Qatar National Vision 2030.

The company’s various busi-ness interests across Qatar offer great commercial and economic opportunities for local busi-nesses. Via its joint-ventures at the world-class Erhama Bin

Jaber Al Jalahma Shipyard, Nak-ilat offers a comprehensive range of ship repair and construction services for a variety of marine and offshore vessels. To date, Nakilat-Keppel Offshore & Marine (N-KOM) has completed repairs for more than 740 marine and offshore vessels, while Nak-ilat Damen Shipyards Qatar (NDSQ) has delivered 38 vessel newbuilds. Other joint ventures such as Nakilat Svitzerwijsmuller (NSW) has undertaken more than 12,500 tug jobs for the Port of Ras Laffan this year while Nakilat Agency Company (NAC) handles an average of 4,000 port calls annually in all Qatari Ports.

The four-day exhibition was a valuable platform to attract interests of local entrepreneurs, manufacturers and marine enthusiasts in exploring the

abundance of opportunities in the shipping and maritime sec-tor. As the essential transportation link in Qatar’s L N G s u p p l y c h a i n ,

Nakilat’s participation at the event highlighted its commit-ment to promote the sustainable development of the shipping and maritime industry for the nation.

Nakilat’s pavilion at the recently concluded “Made in Qatar 2017” exhibition.

The company’s various business interests across Qatar offer great commercial and economic opportunities for local businesses.

QPAY wins highest payments industry security certificationTHE PENINSULA

DOHA: QPAY, a Qatari company offering Made-In-Qatar electronic payment solutions, has become the first company in Qatar to achieve Payment Card Industry Data Security Standard (PCI-DSS) version 3.2 – the highest level of security in the global card industry.

According to data from Nielson International Research, 94.5 percent of all card fraud cases are an inside job; if a user’s card information is com-promised, it is most likely because card information was leaked from an internal bank employee.

Further enhancing its posi-tion as a pioneer of innovation in Qatar’s financial sector, QPAY invested a great deal of time and resources in technol-ogy, security and infrastructure to achieve the PCI-DSS version 3.2, which ensures a user’s card information is kept confiden-tial and sealed from internal employees of the card provider as well as from external hack-ers. PCI-DSS version 3.2 is adopted by leading global pay-ment networks such as VISA, MasterCard, American Express, China Union Pay, Discover Card and more.

The security and infrastruc-ture required to achieve PCI-DSS ensures no bank employee can access a user’s card or PIN information. QPAY embarked on a year-long project to rewrite every line of code, reconfigure every server, and retrain staff, demonstrat-ing to banks and financial sector entities that QPAY is their trusted partner for unmatched, secure electronic payments. No bank, insurance company, no telco or exchange house in Qatar has ever achieved end-to-end PCI DSS security.

“We believe that cash will eventually disappear and will be replaced by electronic pay-ments. However, if electronic

payments are not secured, then it will be very easy for cyber-criminals and hackers to take from trusting Qatari customers. By becoming the first Financial Technology (FINTECH) com-pany to achieve PCI DSS 3.2; we are taking leadership and mak-ing a public commitment that Qatari consumer data is very important, it must be secured to the highest standards, and shall not be taken lightly,” said Nebil Ben Aissa (pictured), CEO and founder of QPAY International.

“Achieving PCI DSS certifi-cation, and the dedication of the QPAY team to the highest standards, is a strong business message to our bank partners that they can trust QPAY, and outsource certain activities to QPAY; leverage our invest-ments and achieve the highest levels of PCI DSS for their own customers, said,” Aizaz Tahsil-dar, Director, Corporate Business development, at QPAY.

“We see various enterprises investing in Qatari real-estate, construction and projects in preparation for the FIFA World Cup 2022. At QPAY, we are also investing in Qatar and building a secure financial services eco-system in order to assure safe and secure electronic payments in 2022 and beyond.”

Founded in 2011, QPAY is the largest Financial Technol-ogy (FINTECH) Company in Qatar, with a primary focus on servicing Qatar’s Small and Mid-size Enterprise (SME) sector.

Trump tears into Amazon, urging `much more’ in postal feesBLOOMBERG

WASHINGTON: President Donald Trump said the US Postal Service should charge Amazon.com Inc more to deliver pack-ages, the latest in a series of public criticisms of the online retailer and its billionaire founder.

The post office “should be charging MUCH MORE” for package delivery, the president tweeted Friday from his Mar-a-Lago estate in Florida, where

he’s spending the holidays.“Why is the United States

Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer?” Trump told his 45 million followers.

Trump regularly criticizes Amazon and its chief executive officer, Jeff Bezos, who also owns the Washington Post newspaper and is currently the

world’s richest man. In August, Trump accused the company of causing “great damage to tax paying retailers,” even though the internet giant began collect-ing sales tax on products it sells directly in April.

As with prior missives tar-geting the company, Trump’s message appeared to concern investors. A sudden increase in postal service rates would cost Amazon about $2.6bn a year, according to an April report by Citigroup. That report predicted

United Parcel Service Inc. and FedEx Corp. would also raise rates in response to a postal service hike.

Amazon regularly uses the Postal Service to complete what’s called the “last mile” of delivery, with letter carriers dropping off packages at some 150 million residences and busi-nesses daily.

The Postal Service reported a net loss of $2.1bn in the third quarter of 2017 and has $15bn in outstanding debt. The service

has lost $62bn over the last dec-ade. USPS’s chief financial officer, Joseph Corbett, wrote in a post for PostalReporter.com in August that the service is required by law to charge retail-ers at least enough to cover its delivery costs.

“The reason we continue to attract e-commerce customers and business partners is because our customers see the value of our predictable service, enhanced visibility, and com-petitive pricing,” he wrote.

Wall Street eyes 2018 gains with a side of cautionREUTERS

NEW YORK: US stocks are expected to keep rising in 2018 because a massive drop in the corporate tax rate is seen boost-ing the economy and corporate profits, but strategists say siza-ble gains could either be short-lived or elusive.

The bull market is on track to mark its ninth birthday in March, with the S&P 500 climb-ing 20 percent for 2017 - its biggest increase since 2013. The drop in the corporate tax rate in 2018, to 21 percent from 35 per-cent, is seen by many as the biggest factor for the stock mar-ket next year.

Yet 2018 share gains are expected to be smaller than 2017 with the S&P 500’s price/earn-ings ratio - a measure of stock prices against expected profits - is around its highest level since June 2002. Many on Wall Street cite potential pitfalls even though they see no signs of a recession.

“We’ve had six years in a row where stocks have

(outperformed) earnings, and I think we break that streak with stocks going up but not as much as earnings,” said Robert Doll, chief equity strategist at Nuveen Asset Management in Princeton, New Jersey.

Some say the tax bill’s ben-efit will be short lived. David Kelly, chief global strategist at JP Morgan Asset Management described the bill as “more carbs and less protein,” because the tax overhaul will improve spending but does nothing to boost productivity.

“It’ll be a one-year wonder,” said Kelly. “People should enjoy the party while it lasts but just make sure you know where your coat is.”

Several strategists cite the risk that faster economic growth could cause inflation to increase at a pace that would lead the US Federal Reserve to raise inter-est rates faster than expected.

Wall Street’s rosy forecasts seem “well supported by the tre-mendous string of good news which the economy has deliv-ered,” according to Jim Paulsen,

chief investment strategist with L e u t h o l d G r o u p i n Minneapolis.

But he said, the news is too good: “The problem with getting good news is that at some point you can’t be positively surprised any more.”

Paulsen does not expect a recession. But when the eco-nomic surprise index - which compares economic data to con-sensus expectations - is at high levels, equity performance tends to be weaker, according to Paulsen.

The Citi Economic Surprise index was at 77 on Thursday, not far from its almost six-year high of 84.5 reached on December 22.

“We’re going to have a 10-15 percent correction at some time in 2018. I wouldn’t be surprised if we’re down for the year,” Paulsen said.

“If we get a correction and people get scared I’ll probably be buying again.”

Investors will keep a close watch on the on US mid-term elections in 2018 because a Republican loss of control of the

Senate or the House of Repre-sentatives could stall the party’s agenda.

In 10 of the last 17 US mid-term election years, equity price moves for the full year followed January’s direction, according to Jeff Hirsch, editor of the Stock Trader’s Almanac.

Investor moods in January may depend on whether the US Congress reaches an agreement to raise the country’s debt ceil-ing. Investors will also be hoping Congress can reach a 2018 budget pact by Jan. 19. These are just some of the worries traders are contending with.

But the market has history against it. The S&P 500 rises on average 1.3 percent in the so-called Santa Clause rally - the period between Dec. 22 and Jan. 3 - according to Hirsch. This year, five days in, the S&P has risen just 0.1 percent.

“The failure of stocks to rally during this time tends to precede bear markets or times when stocks could be purchased at lower prices later in the year,” Hirsch wrote in a blog post.

China tightens rules on oversea cash withdrawalsAFP

BEIJING: China has tight-ened rules on how much cash cardholders can with-draw overseas in a bid to clamp down on money laundering, terrorist financing and tax evasion, authorities said.

The annual limit will be set at 100,000 yuan ($15,355) per person from today -- no matter how many cards a person has.

Currently, there is an annual ATM cap of 100,000 yuan for each separate card, but there is nothing to stop users withdrawing many times this amount using multiple cards.

The new rules will “pre-vent law breakers from withdrawing a large amount of cash with differ-ent cards from different banks,” the State Adminis-tration of Foreign Exchange said according to state news agency Xinhua.

Anyone exceeding the limit will be barred from withdrawing cash overseas for the remainder of the year and the following year.

The move comes as China has struggled with capital flight and tightened capital controls this year to stem the outflow of money.

Mitsubishi says on track to deliver long-delayed jetsREUTERS

NAGOYA: Japan’s Mitsubishi Heavy Industries Ltd is on track to deliver its repeatedly delayed commercial jet by mid-2020, the head of its aircraft unit said, despite a risk of an order cancel-lation.

The Mitsubishi Regional Jet (MRJ) aircraft has been delayed five times from an original delivery target of 2013, leading to spiraling costs. News this month that an order for the air-craft from Eastern Air Lines was “likely to be lost” has spurred more questions about the out-look of the project.

“We are proceeding pretty much in line with plans,” said Hisakazu Mizutani (pictured), president of Mitsubishi Aircraft

Corp, referring to the mid-2020 deadline. “We can just about make it.”

He was speaking to report-ers in Nagoya on December 8, on the condition that his com-ments not be published until January 1. Mizutani said the planemaker was at risk of

losing Eastern Air Lines’ order for 20 MRJ aircraft with an option for 20 more, but that it was “continuing conversations” with the airline.

Mitsubishi Aircraft said the order has not yet been canceled.

Overall, the Mitsubishi unit has orders for 233 of the 90-seat aircraft, the company has said previously, and aims to sell more than 1,000 of the planes over two decades.

Buyers such as ANA Hold-ings have said they have no plans to cancel orders despite the delays.

Mitsubishi Aircraft is major-ity owned by Mitsubishi Heavy Industries, with Toyota Motor Corp and Mitsubishi Corp also holding stakes.

23MONDAY 1 JANUARY 2017 BUSINESS

Bulgaria to take over EU PresidencyA newly minted partially gold coin made to commemorate the Bulgarian Presidency of the Council of the European Union in Sofia.

Reform economies when ‘sun is shining’: LagardeAFP

PARIS: International Monetary Fund chief Christine Lagarde (pictured) has urged France and other countries to push through reforms “while the sun is shining” on the global economy.

In an interview with France’s Le Journal du Dimanche published yesterday Lagarde said the strength of the global economic recovery had taken the IMF by surprise.

“In 2017, for the first time in a long time, we revised our growth forecasts upwards whereas previously we used to lower them,” she said.

Global growth of 3.6 percent was both “stronger and more widely shared” in 2017, she said, noting that developed econo-mies were now growing again under their own steam and no longer merely being pulled along by demand in emerging markets.

Lagarde said the favourable climate lent itself to imple-menting reforms.

“When the sun is shining you should take advantage to fix the roof,” she said, using one of her favourite maxims.

This year’s global growth is on a par with the average of the two decades leading up to the

global financial crisis of 2007-2008.

The IMF has forecast a fur-ther slight improvement in 2018, to 3.7 percent.

In Lagarde’s native France, seen for years as one of Europe’s

weak links, the recovery kicked in in earnest this year.

From 1.1 percent in 2016, growth is expected to rise to 1.9 percent in 2017 -- still short of the 2.4 percent forecast for the eurozone as a whole but better than the 1.6 percent initially forecast in the eurozone’s second-largest economy.

C e n t r i s t P r e s i d e n t Emmanuel Macron aims to con-solidate the momentum and bring down stubbornly high unemployment with an ambi-tious programme of labour, tax and welfare reforms.

Lagarde said the changes were key to boosting France’s credibility at a time when Macron is pushing for reforms at the European level, including closer integration among euro-zone members.

The managing director of the IMF was France’s finance minister in 2008, when the euro looked to be in serious jeopardy.

Nearly 10 years later, the currency is out of the woods.

But, Lagarde warned, “the mission has not been accom-plished -- and maybe never will -- because Europe is not united on moving towards greater inte-gration while maintaining national sovereignty.”

This year’s global growth is on a par with the average of the two decades leading up to the global financial crisis of 2007-2008. The IMF has forecast a further slight improvement in 2018, to 3.7%.

Japan’s Nippon Life eyeing M&A for foreign boutique bond & fundsREUTERS

TOKYO: Japan’s Nippon Life Insurance Co which recently struck a deal to buy about a quarter of US investment firm TCW Group, is scouting for opportunities to buy boutique managers of bonds and alterna-tive assets, its president said.

“Asset management is a busi-ness that can generate synergy with life insurance and it needs to be operated globally. We have been looking widely for poten-tial partners,” Yoshinobu Tsutsui (pictured) told Reuters in an interview.

The bulking up of asset

management overseas by Japan’s largest private-sector life insurer comes as the nation’s insurers are increasingly shifting money away from Japanese government bonds (JGBs), their main invest-ment, into riskier but higher-yielding ones such as foreign corporate bonds to diversify their returns.

Insurers in Japan have been hurt by diminishing investment returns after the Bank of Japan launched aggressive monetary easing in April 2013.

In December, Nippon Life announced a deal to acquire 24.75 percent of TCW from pri-vate equity firm Carlyle Group

LP. Nippon Life has about 74 tril-lion yen ($653.25bn) in assets. Tsutsui said potential targets are likely to be asset management

companies with bond investment expertise, as the insurer’s port-folio has been traditionally made up of fixed-income products.

He also said the company is looking for specialists in alter-native investments, whose real estate and other portfolios offer diversification from conven-tional bond and stock investments.

“As we have to diversify investment assets globally, alter-native is a very important field,” he said. “The United States has a very big and deep market for asset management. There are huge companies but there are also small but unique boutiques.

We would like to keep looking there,” he said. Tsutsui said while his company will curb fresh investment in JGBs further, US interest rate rises pose a chal-lenge to its effort to increase for-eign bond holdings.

“Hedging costs will rise with US rate increases, that will diminish returns (from US Treas-uries),” he said. Japanese insurers usually hedge against currency swings when they buy foreign assets to protect their yen-denominated value. “There is an issue of how to build foreign bond portfolios and French gov-ernment bonds are in the spot-light now,” said Tsutsui, 63, who

took over the helm of the com-pany in 2011. Sources with the direct knowledge have said Nippon Life is in talks to buy a majority stake in the Japanese unit of US-based MassMutual Financial Group in an attempt to boost its bancassurance sales.

Tsutsui declined to confirm the MassMutual talks but said his company has been searching for ways to build up domestic sales channels in addition to tradi-tional door-to-door sales representatives.

“For bank branch sales channel, we are thinking about mergers and acquisitions,” he said.

Chinese ban on ivory sales goes into effectAFP

BEIJING: China’s complete ban on ivory trade went into effect yesterday, officials said, a major step forward in Beijing’s efforts to rein in what was once the world’s largest market for illegal ivory.

“From today... the buying and selling of elephant ivory and goods by any market, shop or vendor is against the law!” the forestry ministry said on its official account on Chinese social media plat-form Weibo.

“From now on, if a mer-chant tells you ‘this is a state-approved ivory dealer’... he is duping you and knowingly violating the law.”

The ministry added that the ban also applied to online sales and souvenirs pur-chased abroad.

According to the Xinhua state news agency, a partial ban had already resulted in an 80 percent decline in sei-zures of ivory entering China. Domestic prices for raw ivory are down 65 percent, it said.

The total domestic ban was announced at the end of last year.

By this March, Xinhua reported, 67 factories and shops involved in China’s ivory trade had closed. The remaining 105 were expected to close yesterday.

China had previously banned imports of all ivory and ivory products acquired before 1975, after pressure to restrict a trade that sees thousands of elephants slaughtered every year.

African ivory is highly sought after in China, where it is seen as a status symbol, and used to fetch as much as $1,100 a kilogramme.

Russian bank to fund Iran’s development projectsIANS

TEHRAN: Iran will use funds from the Eximbank of Russia to implement some infrastructure projects, media reports said yesterday.

The Central Bank of Iran and the Export Insurance Agency of Russia signed a deal recently to pave the way for

Russian banks to fund Iranian projects, reported Xinhua, citing Iran’s Financial Tribune daily.

Four Iranian banks, including Bank Sepah, Export Development Bank of Iran, Par-sian Bank and Bank Pasargad, signed last week an “unlimited finance deal” with the Eximbank of Russia, the report said.

Air India Chairman urges employees to ‘perform or perish’IANS

MUMBAI: Strategic divest-ment-bound Air India employees need to “perform or perish”, according to the new Chairman of the national carrier.

In his address to the airline staff, Air India CMD Pradeep Singh Kharola (pictured), who took over earlier this month, has said that only a professional and productive work culture would help turn around the loss-making state-run com-pany. “I implore all of you to sustain this effort to resurrect the pride and glory of the air-line. We have to perform if we do not want to perish,” he said, emphasising that the onus to steer the company out of trou-bled times lies on everyone.

“Each one of you is a brand ambassador of Air India and you have to ensure that our flag always flies high. We have to adopt a professional and pro-ductive work culture which will hold the key for our turna-round,” he said.

Following the cabinet’s in-principle approval in June this year to privatise Air India and its five subsidiaries, the govern-ment is working on the modal-ities of strategic disinvestment of the airline.

“Your hard work has helped Air India to improve in some of the key operational parameters in recent times, but still, we have miles to go,” Kharola said.

“The onus is on us to steer our company out of turbulence into clear skies again with single-minded determination and grit. We must aim to improve our performance in every sphere to match up to industry benchmarks.”

Air India has to beat com-petition in on-time perform-ance, load factor and cleanli-ness, among other parameters, he said. Exhorting employees to take pride in their work, Kharola urged them to cast aside the deterrents that have been holding Air India back “from tapping the immense potential inherent in our airline and make it soar ahead of competition”.

S Korea finalises energy plan to boost renewablesREUTERS

SEOUL: South Korea has final-ised a power supply plan that aims to make renewables the country’s fuel of choice for power generation for the next 15 years, its energy ministry said.

The plan is largely unchanged from a draft released earlier this month that outlined the gradual reduction in use of coal and nuclear fuel as the usage of gas and renewables for power generation increased over 2017-2031.

“We plan to carry out the country’s energy policy shift smoothly based on the outline of the plan,” the ministry said in a statement. South Korea plans to meet 20 percent of its total electricity consumption with renewables by 2030.

To achieve that goal, Asia’s fourth-largest economy aims to increase its installed capacity of renewable power to 58.5 giga-watts (GW) by 2030, from 11.3 GW this year.

Last week, the energy min-istry said the plan called for

adding 30.8 GW of solar power generating capacity and 16.5 GW of wind power capacity.

South Korea now generates more than 70 percent of its power from coal and nuclear, while renewables account for 6 percent.

Under the plan, coal’s share of power generation will fall to 36.1 percent in 2030 and nuclear to 23.9 percent, but the sectors will still make up more than half of the country’s total power gen-eration at the end of the next decade.

A wind turbine is seen over the panels of a solar power plant of Korea South East Power Co in Incheon, South Korea, in this file picture.

24 MONDAY 1 JANUARY 2018BUSINESS

Last trading dayTraders celebrate the last trading day of 2017 on the floor of the Philippine Stock Exchange in the financial district of Makati, Metro Manila, Philippines.

UK may impose new taxes on tech giantsREUTERS

LONDON: Britain may impose new taxes on tech giants like Google and Facebook unless they do more to combat online extremism by taking down material aimed at radicalising people or helping them to prepare attacks, the country’s security minister said.

Ben Wallace (pictured)accused tech firms of being happy to sell people’s data but not to give it to the government which was being forced to spend vast sums on de-radicalisation programmes, surveillance and other counter-terrorism measures.

“If they continue to be less than co-operative, we should look at things like tax as a way of incentivising them or compen sating for their inac-tion,” Wallace told the Sunday Times newspaper in an interview.

His quotes did not give fur-ther details on tax plans. The newspaper said that any demand would take the form of a windfall tax similar to that imposed on privatised utilities by former Prime Minister Tony Blair’s government in 1997.

Wallace accused the tech giants of putting private profit before public safety.

“We should stop pretending that because they sit on bean-bags in T-shirts they are not ruthless profiteers,” he said. “They will ruthlessly sell our details to loans and soft-porn companies but not give it to our democratical ly elected government.”

Facebook executive Simon Milner rejected the criticisms.

“Mr Wallace is wrong to say

that we put profit before safety, especially in the fight against terrorism,” he said in an emailed statement. “We’ve invested mil-lions of pounds in people and technology to identify and remove terrorist content.”

YouTube, which is owned by Google, said it was doing more every day to tackle violent extremism.

“Over the course of 2017 we have made significant progress through investing in machine learning technology, recruiting more reviewers, building part-nerships with experts and col-laboration with other compa-nies,” a YouTube spokeswoman said.

Britain suffered a series of

attacks by Islamic extremists between March and June this year that killed a total of 36 people, excluding the attackers.

Two involved vehicles ram-ming people on bridges in London, followed by attackers stabbing people. The deadliest, a bombing at a concert in the northern city of Manchester, killed 22 people.

Following the second bridge attack, Prime Minister Theresa May proposed beefing up regu-lations on cyberspace, and weeks later interior minister Amber Rudd travelled to Cali-fornia to ask Silicon Valley to step up efforts against extremism.

“We are more vulnerable than at any point in the last 100 years,” said Wallace, citing extremist material on social media and encrypted messaging services like WhatsApp as tools that made life too easy for attackers.

“Because content is not being taken down as quickly as they could do, we’re having to de-radicalise people who have been radicalised. That’s costing millions. They can’t get away with that and we should look at all the options, including tax.”

Facebook said it removed 83 percent of uploaded copies of terrorist content within one hour of its being found on the social media network.

It also highlighted plans to double the number of people working in its safety and secu-rity teams to 20,000 by the end of 2018.

YouTube said that progress in machine learning meant that 83 percent of violent extremist content was removed without the need for users to flag it.

If they continue to be less than co-operative, we should look at things like tax as a way of incentivising them or compen sating for their inaction.

Armenia looks to solar energy to move out of Russia’s shadowAFP

YEREVAN: Landlocked and poor, Armenia has long relied on Russia for its energy needs, but the government is hoping to reduce that dependence by tapping a resource that is plen-tiful in the region: the sun.

With few fossil fuel resources of its own and its sole nuclear power plant nearing the end of its working life, Armenia is banking on renewable energy to reduce its dependence on its former Soviet master, which accounts for nearly 83 percent of gas imports.

And with Armenia much sunnier than most of Europe -- according to government fig-ures, it receives 1,720 kilowatt hours per square metre of sun-light every year, compared to an average of 1,000 in Europe -- solar energy looks to be the most promising.

“To ensure its energy secu-rity and independence, Armenia, like any other country, strives to diversify energy sources,” the ex-Soviet republic’s Deputy Energy Minister Hayk Haruty-unyan told AFP.

Within four years, up to eight percent of the country’s energy needs will be covered by

renewables, according to the government’s policy paper, “Energy Roadmap.”

The document estimates the country’s potential capacity of solar energy production at up to 3,000 megawatts -- enough to meet domestic demand and even make Armenia a net electricity exporter.

Harutyunyan said that a consortium of investors from 10 countries will soon start building a solar plant capable of pro-ducing 55 megawatts of electricity.

One of the backers, the World Bank, has earmarked some $60m (¤51m) for the project, as part of its initiative to reduce global greenhouse gas emissions.

So far, three solar power plants with capacity of one meg-awatt each have been built across the country and seven more will follow by the end of 2018.

Next year, the headquarters of the Armenian cabinet of min-isters will fully switch to solar energy, subsequently followed by all governmental buildings.

A pilot project was launched in March to instal rooftop solar panels in remote villages across the country to provide

households with electricity and hot water.

In late 2015, an Armenian tycoon with business interests in Russia, Samvel Karapetyan, bought out Armenia’s indebted electricity distribution company from a Kremlin-controlled holding, Inter RAO.

Karapetyan’s Tashit Group

is investing in solar projects and has already spent some $500,000 (¤425,000) in building a solar power plant in the mountainous tourist town of Tsaghkadzor.

In addition to increasing the share of renewables, the Arme-nian government is seeking to reduce that of natural gas and

oil by more than a third by 2020, compared with 2010 levels.

Moscow tightened its grip on Armenia’s economy and politics in 2006 by taking complete con-trol over Armenia’s power plants and distribution companies.

Russia provides more than 80 percent of the natural gas used by the landlocked Caucasus nation and supplies all of the fuel for the country’s sole nuclear power plant, the Metsamor.

The European Union has repeatedly called on Armenia to shut down the aging Metsamor -- which produces more than a third of the country’s electricity -- for security reasons.

But the Armenian govern-ment has decided to extend the plant’s operations until its pro-duction capacities are fully replaced by alternative energy in 2026.

“We have never had any illu-sion that the nuclear power plant could work forever. One day, we will have to stop it and we must be ready for this,” said Harutyunyan.

“That’s why, during the last several years, Armenia has been stepping up efforts to develop all types of renewable energy -- hydro, wind, and solar.”

The extent of Russia’s

influence on the ex-Soviet republic became clear in 2013 when Yerevan made a surprise foreign policy U-turn and joined the Moscow-led Customs Union economic bloc, instead of signing a long-negotiated pact on polit-ical association and economic integration with the European Union.

A member of the Collective Security Treaty Organisation -- designed as Russia’s counter-weight to NATO -- Armenia is also the Kremlin’s closest mili-tary ally in the Caucasus region, which has historically been an arena of geopolitical rivalry between global powers.

For decades, Armenia has been locked in territorial con-flict with Turkey-backed Azerbaijan over the disputed Nagorno-Karabakh region. And in the face of the perceived threat from its arch-foes in Ankara and Baku, Armenia has been forced into Moscow’s orbit.

“Alternative energy may not fully replace conventional energy sources, but it will help reduce Armenia’s energy dependence on Russia and, as a result, weaken the Kremlin’s political leverage over Yerevan,” Armenian energy analyst Alex-andre Avanesov told AFP.

A house with solar panels and solar water heaters on its roof in the village of Lernamerdz, some 40 kilometres northwest of the Armenian capital of Yerevan.

Brazil’s Eletrobras takes a step toward saleBLOOMBERG

SAO PAULO: Brazilian President Michel Temer signed a measure that paves the way for the priva-tization of Eletrobras, Latin America’s largest power company, according to a govern-ment official.

Eletrobras can now join the ranks of government-run busi-nesses that Brazil’s privatizing, with a decree that’s ready to be

signed, according to Paulo Ped-rosa, executive secretary for the Ministry of Mines and Energy. Its shares jumped as much as 5.5 percent in Sao Paulo.

The provisional measure, kickstarting the formal process of selling the state’s controlling 67 percent stake in the utility giant, comes as Temer tries to fix a deep budget crisis. He’s seeking to attract investors to jump-start the economy

following prolonged political turmoil that’s included one pres-ident being impeached, another charged with corruption and dozens of executives and politi-cians imprisoned over a massive kickback scheme.

It also creates conditions for the sale of Eletrobras’s indebted distribution units, according to Pedrosa. Those six units should be sold off by the middle of next year, a key step in attracting

investors for the overall utility.The planned selloff is also

part of a broader effort to over-haul Brazil’s energy sector. A new regulatory framework is geared toward undoing inter-ventionist policies created under former leaders Luiz Inacio Lula da Silva and Dilma Rousseff. Seven out of 10 Brazilians are against the privatization of state-owned companies, according to pollster Datafolha.

German lawmaker blasts EU for opposing Niki sale to LufthansaREUTERS

BERLIN: The German govern-ment will probably lose a ¤150m government-backed loan to insolvent Air Berlin because the European Union opposed Lufthansa’s purchase of Air Berlin’s Austrian unit, Niki, a senior member of Chan-cellor Angela Merkel’s conserv-atives said yesterday.

British Airways owner IAG said on Friday that it would buy Niki for ¤20m and provide additional liquidity to the com-pany of up to ¤16.5m, closing the final chapter in the demise of Air Berlin. Air Berlin filed for insolvency earlier this year.

“The damages will be borne by creditors and German tax-payers, who will see nothing of the Air Berlin bridging loan in the amount of ¤150m,” said Hans Michelbach, deputy leader of the Bavarian CSU party in parliament and financial spokesman for the conserva-tive bloc.

The situation would have been different if Lufthansa had been allowed to buy the airline for nearly ¤200m, Michelbach said. Lufthansa backed out of an agreement to buy Niki after the European Commission indi-cated it would block the sale.

The German government had also criticised the Commis-sion’s position earlier this month, forecasting that only part of the bridging loan from the KfW bank would be repaid.

The Bavarian lawmaker called for a detailed investiga-tion of the Air Berlin and Niki insolvencies and the actions of the European Commissioner Margrethe Vestager.

He said details that had emerged appeared to show that the EU had carried out secret negotiations and provoked Lufthansa’s withdrawal of its takeover offer for Niki in order to “make possible the takeover by a certain investor at a bar-gain price.”

“By doing so, the Commis-sion violated its neutrality obli-gation in the worst sense and acted against the interests of creditors,” he said. No further details were provided.

No comment was immedi-ately available from the Com-mission. In December, it said Lufthansa’s purchase of Niki would have posed serious risks for European consumers.

Michelbach also called for a detailed examination of whether Niki’s landing rights in Germany could legally be sold to IAG.

China recalls record number of cars in 2017AUTOMAKERS recalled more

than 20 million defective cars in

China this year, hitting a new high

for the fourth consecutive year,

according to an official with the

top quality authority.

China is only after the US in

the amount of recalled cars, said

Yan Fengmin, head of the law

enforcement department of the

General Administration of Qual-

ity Supervision, Inspection and

Quarantine. In 2017, airbag and

seat belt problems were the fac-

tors behind the recall of 10.64

million vehicles, 53.1 percent of

the total. Defective airbags from

Japanese manufacturer Takata

caused 29 automakers to recall

9.87 million vehicles in 2017 alone.

25MONDAY 1 JANUARY 2018 BUSINESS

‘Robi’ the robotSchool children listen to a presentation about the internet security given by ‘Robi, the robot’ in their classroom of a primary school in Szolnok, east of Budapest, Hungary. The little robot has been enrolled by police in Hungary to help their work by bringing an electric jolt to their presentations in schools and pensioner clubs.

China’s December factory growth easesREUTERS

BEIJING: Growth in China’s manufacturing sector slowed slightly in December as a punishing crackdown on air pollution and a cooling property market start to weigh on the world’s second-largest economy.

The data support the view that the economy is beginning to gradually lose steam after growing by a forecast-beating 6.9 percent in the first nine months of the year, but the find-ings did not appear to suggest a risk of sharper slowdown at this point.

The official Purchasing Man-agers’ Index (PMI) released yes-terday dipped to 51.6 in December, down from 51.8 in November and in line with fore-casts from economists in a Reu-ters poll.

But the overall reading still appeared relatively solid, and marked the 18th straight month that the sector has expanded. The 50-point level divides growth from contraction on a monthly basis.

The figures showed that Chi-na’s full-year 2017 economic growth would be at about 6.9 percent and around 6.5 percent for 2018, according to the China Federation of Logistics and Pur-chasing, which compiles the data. Both predictions would be slightly stronger than those in a

Reuters poll. “Overall, 2017’s economic performance con-tinues to be steady and good, establishing a generally good foundation for 2018,” the feder-ation said.

“Recent PMI surveys show companies are confident for economic development in the new year, with production and operating activity expectation indices showing significant improvement.”

Boosted by hefty govern-ment infrastructure spending, a resilient property market and unexpected strength in exports, China’s manufacturing and industrial firms have been a major driver behind solid eco-nomic growth this year, with their strong appetite for raw materials boosting global com-modity prices.

However, a slowdown has started to take hold in the last

few months due to a wide-ranging combination of govern-ment measures, from a crack-down on smog in heavily industrialised northern prov-inces to continued curbs on the housing market which are weighing on property investment.

Chinese steelmakers in 28 cities have been ordered to curb output between mid-November and mid-March, while a cam-paign to promote cleaner energy by converting coal to natural gas has also hampered manufac-turing activity in some cities, leading to shortages and sending prices spiking.

Still, there are signs that steel mills, smelters and plants in parts of the country with fewer restrictions have ramped up pro-duction to win more market share, largely offsetting the “rustbelt” declines on a nation-

wide basis.A PMI sub-reading for pro-

duction fell to 54 from 54.3 in November, but was bang in line with the average over the last six months.

Total new orders also dipped in December, to 53.4 from 53.6, but export orders grew at the fastest pace in six months, pointing to sustained strength in global demand heading into the new year and helping boost business optimism to the highest since September.

Chinese manufacturers con-tinued to face stiff pressure from

rising costs, however. A sub-index for input prices rose to 62.2 from 59.8 in November, while output price gains also picked up, which could pressure profit margins on companies further down the supply chain. Slowly rising borrowing costs due to a government crackdown on riskier lending practices are also expected to drag more prominently on economic activity in 2018.

The central bank nudged up interbank rates earlier this month for the fourth time this year, though policymakers are

keen not to tap the brakes too sharply and risk a sharper eco-nomic slowdown.

Sources have told Reuters that Chinese leaders are likely to stick with a growth target of around 6.5 percent for 2018, the same as in 2017, even as they continue efforts to defuse the risks from a rapid build-up of debt.

In a further sign of resilience, growth in China’s services sector, which was already robust, kicked up another notch in December, a sister survey showed.

Singapore’s economy grew 3.5% in 2017: Prime Minister LeeBLOOMBERG

SINGAPORE: Singapore’s economy expanded 3.5 percent this year more than double the initial government forecast as the country benefited from the global economic upswing, Prime Minister Lee Hsien Loong (pictured) said in his message, yesterday.

Lee said the city-state would press on with economic restructuring and infrastructure projects such its fifth airport terminal as well as review healthcare policies to prepare for an aging population.

“All these are essential investments in our future. They require time and resources, and will stretch way beyond this term of government. We have to plan well ahead for them,” Lee said in a statement released by his office.

Singapore’s 2017 growth comes at the top end of the most recent trade ministry prediction of 3 to 3.5 percent and com-pares with the median 3.3 per-cent forecast in a Bloomberg survey.

The government is due to release preliminary gross domestic product figures for the fourth quarter tomorrow, with a Bloomberg survey of econo-mists predicting annualised growth of 1.6 percent from the previous three months.

Steady growth in the export-reliant economy has

raised the possibility of fiscal and monetary policy tightening in the coming year.

The Monetary Authority of Singapore is forecasting growth of 1.5 percent to 3.5 percent in 2018.

DBS economist Irvin Seah expects growth to moderate to 3 percent in 2018 but adds that this shouldn’t be seen as “a neg-ative thing” as it shows Singa-pore’s economy “shifting from a recovery to a normalised profile”.

Prime Minister Lee also said Singapore’s external environ-ment would remain uncertain in 2018, citing tensions on the Korean Peninsula as well as ter-rorism and a US foreign policy approach that remains “yet to be fully articulated”.

“We hope to keep relations with our immediate neighbors steady as they gear up for elec-tions – Malaysia this year, and Indonesia the next,” Lee said.

Venezuelacryptocurrency to launch in daysREUTERS

CARACAS: Venezuela’s cryptocurrency will launch within days and be backed by 5.3 billion barrels of oil worth $267bn, in a bid to offset a deep financial crisis, the socialist government said.

President Nicolas Maduro surprised many earlier this month when he announced the “petro” cryptocurrency, to be backed by Opec member Venezuela’s oil, gas, gold and diamond reserves.

Despite the scepticism of cryptocurrency experts who do not think Venezuela has the wherewithal to pull it off, communications minister Jorge Rodriguez said the first petro offering would come within days.

“Camp one of the Ayacucho block will form the initial backing of this crypto-currency,” Rodriguez told reporters, referring to part of Venezuela’s southern Orinoco Belt. “It contains 5.342 billion certified barrels of oil. We’re talking about backing of $267 billion,” said Rodriguez, adding that that differentiated the petro from other crypto-currencies such as Bitcoin.

Miners were already lined up, he said, without giving more details. Cryptocurren-cies are obtained by users set-ting up computers to do com-p l e x m a t h e m a t i c a l calculations in a process known as mining.

Cryptocurrencies are decentralized and their suc-cess relies on transparency, clear rules and equal treat-ment of all involved. Vene-zuela gave no technical details about the petro.

The government appears to be hoping the petro will offset a collapse in Venezue-la’s currency - 97 percent in one year against the US dollar on the black market - and iso-late the country from the US dollar and Washington.

Rodriguez also hopes to use the petro as part of a mechanism to pay interna-tional providers, many of whom have stopped sup-plying to Venezuela given its inability to pay its debts.

A worker disentangles wool yarn at a spinning machine at a factory owned by Hong Kong’s Novetex Textiles Limited in Zhuhai City, Guangdong Province, China.

UK receives first shipment from new Russian LNG projectAFP

LONDON: The first tanker carrying liquefied natural gas (LNG) from a new Russian plant in the Siberian Arctic has docked in Britain, the National Grid operator said.

The shipment, estimated at some 170,000 cubic metres, arrived on the Christophe de Margerie tanker in the Isle of

Grain port, east of London, a National Grid spokeswoman told AFP.

Bought by Petronas LNG UK, the British arm of Malaysian group LNG, the delivery was the first from the $27m LNG ter-minal in the port of Sabetta on the Yamal peninsula. The Yamal project is majority-owned by the Novatek group, currently under sanction by the US in retaliation

for Russia’s involvement in Ukraine.

Other investors include French oil and gas group Total, as well as the Chinese state-owned CNPC and Silk Road Fund. The chilled fuel is now being stored in the UK, but it is not intended for domestic con-sumption and will be sold on elsewhere, the National Grid spokeswoman said.

IRS issues tax rate guidance for stockpiled foreign incomeBLOOMBERG

NEW YORK: The US Internal Revenue Service and Treasury Department will generally allow existing loans and other related-party transactions involving the overseas affiliates of multinational corporations to be taxed at the lower of two preferential rates, according to an official notice.

The notice says the IRS and Treasury “intend to issue” new regulations clarifying how multi-national companies must compute

tax bills on the foreign earnings they have accumulated to date.

The tax-overhaul bill signed last week by President Donald Trump requires companies to pay taxes on those earnings at two dis-counted rates, 15.5 percent on income held as cash and cash equivalents and 8 percent for illiquid assets. Those rates apply to an estimated $3.1 trillion in earnings stockpiled overseas since 1986.

The 22-page guidance notice from the two federal agencies

discusses how authorities plan to define the two types of income. It also addresses how US companies with ownership stakes in certain foreign corporations must tally up the earnings that will be subject to the tax rates when the U.S. entity and the foreign entity have different taxable years. And the new rules will “avoid double counting and double non-counting of earnings” subject to the new tax rates, according to the notice.

The changes come as the US

is transitioning away from its pre-vious international tax system as part of the Republican tax-over-haul plan. Previously, US.authorities applied a 35 per-cent tax rate to companies’ earn-ings globally, but allowed them to defer paying taxes on offshore income until they returned it, or “repatriated” it, to the US As a con-sequence, companies have accu-mulated years’ worth of profits offshore.

Many tax experts have won-dered how loans among related

foreign companies would be treated under the law -- as cash or non-cash. The notice says that “any receivable or payable” from one foreign corporation to another will be disregarded if both are owned by a US corporation.

“The guidance clarifies that inter-company loans shouldn’t cause an increase” in a company’s earnings and profits that are “treated as cash,” said Ray Beeman, co-leader of Ernst & Young LLP’s Washington Council practice.

Recent PMI surveys show companies are confident for economic development in the new year, with production and operating activity expectation indices showing significant improvement.

Growth in China’s

manufacturing sector slows

26 MONDAY 1 JANUARY 2018BUSINESS

QATAR STOCK EXCHANGE

QE Index 8,523.38 0.03 %

QE Total Return Index 14,293.20 0.03 %

QE Al Rayan Islamic Index 3,421.71 1.11 %

QE All Share Index 2,452.49 0.16 %

QE All Share Banks &

Financial Services 2,682.15 0.17 %

QE All Share Industrials 2,619.86 0.04 %

QE All Share Transportation 1,767.99 0.64 %

QE All Share Real Estate 1,915.44 1.28 %

QE All Share Insurance 3,479.69 2.35 %

QE All Share Telecoms 1,098.75 0.13 %

QE All Share Consumer

Goods & Services 4,963.24 1.99 %

QE INDICES SUMMARY QE MARKET SUMMARY COMPARISON WORLD STOCK INDICES

GOLD AND SILVER

31-12-2017Index 8,523.38

Change 2.62

% 0.03

YTD% 18.33

Volume 10,939,255

Value (QAR) 194,601,669.15

Trades 3,555

Up 29 | Down 13 | Unchanged 128-12-2017Index 8,526.00

Change 25.92

% 0.30

YTD% 18.31

Volume 7,391,753

Value (QAR) 189,948,929.68

Trades 2,992

EXCHANGE RATE

GOLD QR151.7684 per grammeSILVER QR1.9708 per gramme

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

All Ordinaries 6189.4 19.7 0.32 6190.6 5794.9

Cac 40 Index/D 5366.46 -2.38 -0.04 5536.4 4733.82

Dj Indu Average 24774.3 28.09 0.11 24876.07 19677.94

Hang Seng Inde/D 29863.71 266.05 0.9 30199.69 21883.82

Iseq Overall/D 7037.23 9.41 0.13 7157.43 6369.05

Kse 100 Inx/D 40371.31 224.58 0.56 53127.24 37736.73

S&P 500 Index/D 2682.62 2.12 0.07909 2694.97 2245.13

Currency Buying SellingUS$ QR 3.6305 QR 3.6500

UK QR 4.8635 QR 4.9321

Euro QR 4.3205 QR 4.3809

CA$ QR 2.8608 QR 2.9167

Swiss Fr QR 3.6958 QR 3.7472

Yen QR 0.03199 QR 0.03261

Aus$ QR 2.8086 QR 2.8641

Ind Re QR 0.0563 QR 0.0574

Pak Re QR 0.0325 QR 0.0334

Peso QR 0.0718 QR 0.0732

SL Re QR 0.0236 QR 0.0240

Taka QR 0.0437 QR 0.0445

Nep Re QR 0.0352 QR 0.0359

SA Rand QR 0.2928 QR 0.2987

Macro-data to drive equity marketsIANS

MUMBAI: Macro-economic data points coupled with the direction of foreign fund flows and fears of higher inflationary pressure are expected to influ-ence the Indian equity markets during the upcoming week.

According to market observers, triggers such as the global geo-political situation and crude oil price movement can unleash volatility.

“The markets next week would start with the PMI (Pur-chasing Managers’ Index) data for advance clues on where the manufacturing and services economy is going,” Devendra Nevgi, Founder and Principal Partner, Delta Global Partners, told IANS.

“As global investors mostly return to work late in the next week, the fresh year’s alloca-tions would be critical. Markets would also look for support from domestic investors con-tinuing in the new calendar year. Crude oil prices have already breached $66.5 per barrel, this combined with higher inflationary expecta-tions may dampen the sentiment.”

Key macro-economic data points like the monthly auto-mobile sales’ numbers, eight core industries’ (ECI) output,

PMI manufacturing and serv-ices’ figures will be released during the week staring Jan-uary 1, 2018.

According to D K Aggarwal, Chairman and Managing Director of SMC Investments and Advisors: “Macroeconomic data, trend in global markets, investment by foreign and domestic investors, the move-ment of rupee against the dollar and crude oil price movement will dictate trends on the bourses in the first week of the new year.”

Analysts opined that the

direction of foreign fund flows and near-term trends in the rupee’s movement against the US dollar will also affect market sentiments.

Provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) bought stocks worth Rs 1,676.07 crore, while domestic institutional investors (DIIs) purchased scrip worth Rs 25 crore during last week.

On the currency front, the rupee is expected to trade in the range of 63.60-64.10 to a US dollar. Last week, it had

strengthened by 18 paise to closed at 63.87 to a greenback.

“The Indian rupee is expected to remain firm due to a weak dollar and healthy inflows into the Indian debt and equity markets. The immediate short-term range is expected to be between 63.60-64.10,” Ani-ndya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Secu-rities, told IANS.

On technical levels, the underlying trend of the National Stock Exchange’s (NSE) Nifty remains bullish.

An employee works inside a metal workshop in Kolkata. Upcoming data about the performance of India’s manufacturing and services sectors is expected to determine the growth movement of Asia’s third largest economy.

Some of the best & worst assets of 2017BLOOMBERG

NEW YORK: It was a great year to hold bitcoin, but a bad time to have been invested in the Uzbek soum. As 2017 ends, a look at the winners and losers around the globe shows that, broadly speaking, the riskiest assets performed well, with bullish senti-ment on display in stocks, emerging-market sovereigns and corporate debt. Securities gener-ally seen as the safest and least volatile bets, think Japanese government bonds, trailed behind.

There was perhaps no investing idea that attracted more attention in 2017 than cryprocur-rencies, from Jamie Dimon’s dis-missal to Katy Perry quizzing Warren Buffett about the subject. Bitcoin soared almost 1,500 per-cent while smaller counterparts such as ethereum and litecoin gained at least 6,000 percent. Of course, the surges were accompa-nied by no shortage of pessimists calling a bubble.

Here’s our wrap-up of the best and worst performers in various asset classes over the past year. Bulls in Ukraine had a good year after the International Monetary Fund said in May that it sees “wel-come signs of recovery” for the economy and “a promising basis for further growth.” It was part of

a broader rally in emerging mar-kets as investors flocked to devel-oping nations in hopes of higher returns. It wasn’t a good year, how-ever, to have bet on stocks in Paki-stan. In Pakistan, the index was coming from a high base, but also suffered from foreigners pulling money out of the market.

The three-decade bull run for fixed income rolled on in 2017, defying yet again predictions that faster inflation and tighter mone-tary policy would bring it to an end.

The bond world’s best per-formers were yesteryear’s losers, with Greece and Argentina among the standouts. It took effort to lose money on bonds this year -- the Japanese central bank’s stitch-up of its government-debt market, and Venezuela’s economic collapse made those two the worst per-formers in the developed and e m e r g i n g c a t e g o r i e s , respectively.

Tiny Belize earned top marks in the emerging government-debt category after an upgrade from Moody’s Investors Service in April. Turning to the corporate-debt world, US high-yield securities saw a wide dispersion of results, from high-flying food-and-beverage, retail and transport companies to trauma for holders of bonds sold by commercial printer Cenveo Corp.

AFTER René Castro-Salazar attended the first UN-led climate talks in Berlin in 1985

as Costa Rica’s environment and energy minister, he tried to talk about agriculture and climate change - but few wanted to join the conversation.

“There was always opposition - and we couldn’t understand why,” said Castro, now Assistant Director-General at the United Nations’ Food and Agriculture Organization (FAO).

To him, the need to tackle the topic was clear.

Agriculture, forestry and other land uses together account for nearly a quarter of the greenhouse gas emissions heating up the planet, according to the FAO.

Cutting these is essential if the world is to keep global temperature rise to a manageable level, said Castro.

Farms and forests can also store large amounts of carbon, and simple actions by all countries could result in immediate environmental benefits, he told the Thomson Reuters Foundation.

In the early years, the climate negotiations focused on reducing emissions from the energy sector - the largest emitter - while the relationship between agriculture and climate change was not fully understood.

Later on, poor states feared discussing the linkage would result in obligations for them to curb emissions from farming. Rich nations worried they would have to pay for poor farmers to adapt to a changing climate.

At November’s climate talks in Bonn, the stalemate was finally broken, with nations agreeing to move forward on issues related to agriculture and climate change.

“There is now clearly the

political will to see this resolved,” said Margarita Astralaga, Director of Environment and Climate at the International Fund for Agricultural Development

Farms and for-ests can also store large amounts of car-bon, and simple actions by all countries could result in immedi-ate environmen-tal benefits.

Monopoly power is a hot topic of economic debate. Economists are starting to ask whether increasing industrial concentration is choking off productivity

growth, reducing capital investment, throttling or deterring would-be entrepreneur, raising consumer prices and reducing the share of national income flowing to workers.

This is a good and important effort. But it’s also possible that with all the attention being paid to concentration at the industry level, there hasn’t been enough focus on the other end of the monopoly problem -- local labour markets.

Monopoly means there’s only one company to sell you products, like broadband services or airline tickets. If there’s only one company, or only a few, they can jack up the prices. But even if this is happening, the effect isn’t that severe. Looking at overall trends, we see that prices for consumer

goods such as clothes, furniture, electronics and toys have generally fallen, while the prices of essentials like food, housing and transportation have risen only modestly -- it’s health care and education that are driving inflation. But the real problem is the sluggish growth of real wages in recent years: Economists and policy makers worried about industrial concentration may be focusing too much on the prices companies charge consumers, and not enough on the wages they pay their workers. Higher

prices for airline tickets and broadband are annoying, but reductions in real wages are devastating, especially for the working class.

So in addition to monopolies, we need to think about local monopsonies -- cases where there’s only one employer, or a few employers, in town. A company doesn’t need to be nationally big in order to be locally dominant -- it could be a Wal-Mart branch, but it could just as easily be an independent lumber mill, coal mine or dairy farm.

If a locally dominant employer lowers wages, why don’t the workers just move away? They may be sentimentally attached to their home. They may not have the money to move, or may lack the networks that would allow them to find a job and settle in in a new location. Or they may be two-income families that can’t move without finding two new jobs. Whatever the reason, it’s undeniably true that Americans are moving around the country less than they used to. That potentially makes them more vulnerable to wage suppression by employers that dominate the local market. Recent empirical evidence suggests that these kinds of employers are, in fact, suppressing wages. A new paper by economists José Azar, Ioana Marinescu, and Marshall Steinbaum analyzes data from the website CareerBuilder.com, breaking down job postings by commuting zone and occupation. They find that for occupations that have fewer employers posting on the website within a commuting zone, wages are lower than for occupations where lots of companies are looking for workers.

That’s consistent with the story that dominant employers are using their market power to hold down wages in areas where workers don’t have many choices. There could be other explanations -- for example, towns with few employers tend to have lower wages in general. But Azar et al. control for the level of wages in the surrounding area. They also find that occupations that have only a few employers at the national level tend to have lower wages than other jobs in an area. That rules out most of the obvious alternative explanations for the correlation.

Azar et al.’s evidence is important, but it’s just the first step. Data sources other than one website should be analyzed to see if the pattern holds up.

So in addition to monopolies, we need to think about local monopsonies -- cases where there’s only one employer, or a few employers, in town.

Monopolies look worse for workers than for consumers

Reducing agriculture emissions essential for climate change

NOAH SMITHBLOOMBERG

THIN LEI WIN

REUTERS

OIL continued its revival from the biggest crash in a generation, with prices set for a second annual gain after a year marked by hurricanes, Middle East conflict and the tussle between Opec and US shale.

Futures are up more than 12 percent in 2017, having entered a bull market in September. The year’s gains were driven by out-put cuts by the Organization of Petroleum Exporting Countries (Opec) and Russia, along with geopolitical tensions in the Mid-dle East and pipeline disruptions from the North Sea to Canada and Libya. In 2018, investors will watch whether the price recov-ery triggers a new flood of US output.

“The current highs are unsus-tainable in the short-to-medium

term, with prices likely to head back below $60 once we get past January, but for now the season of goodwill appears to be in full swing,” said analysts led by Michael dei-Michei at consult-ants JBC Energy GmbH in Vienna.

Speculation is rising that American drillers will put more rigs to work as oil strengthens, with shale growth driving fore-casts of record US supply in 2018. That could undermine plans by producers including Saudi Ara-bia, who have pledged to extend production curbs through the end of 2018 to wipe out a global glut. After Hurricane Harvey shut Gulf Coast refiners at the end of August and hurt prices, violence in Iraq and a pipe crack in the UK have helped buoy crude.

Capping a year of gains, West Texas Intermediate is trading at the highest level since mid-2015, buoyed above $60 a barrel by a severe cold snap in the

Northeastern US that spiked demand for heating fuel. Oil topped natural gas as the biggest source of electricity in New Eng-land on Thursday morning, after temperatures plunged well below freezing.

WTI for February delivery was at $60.40 a barrel, up 57 cents, as of 12:20pm on the New

York Mercantile Exchange. Total volume traded was about 46 per-cent below the 100-day average. Front-month prices are about 12 percent higher this year, after ris-ing 45 percent -- the most since 2009 -- in 2016.

Brent for March settlement rose 73 cents to $66.88 a barrel on the London-based ICE Futures

Europe exchange. The February contract expired Thursday, after rising 28 cents to $66.72. The benchmark for more than half the world’s oil has gained 18 per-cent this year, after climbing 52 percent in 2016. It was at a pre-mium of $6.45 to March WTI. WTI traded at an average price of about $51 this year.

(IFAD). Many hope it will lead to the development of farming systems that are more resilient to weather extremes and can feed a growing population whose diets are shifting to more meat and dairy, without corresponding increases in emissions.

Andy Jarvis, research director at the Colombia-based International Center for Tropical Agriculture (CIAT), describes the relationship between climate and agriculture as an “unhappy marriage”.

“(They) are absolutely intertwined and completely connected to each other but actually pretty antagonistic,” he said, pointing to how crops are battered by climate extremes while farming emissions exacerbate global warming.

Scientists have warned that world temperatures are likely to rise by 2 to 4.9 degrees Celsius this century compared with pre-industrial times.

This could lead to dangerous weather patterns - including more frequent and powerful droughts, floods and storms - upping the pressure on agriculture.

Curbing climate change will require overhauling the world’s food production and distribution system, which is “off the rails”, said Olav Kjørven, chief strategy officer at the Oslo-based EAT Foundation.

Hunger is on the rise, biodiversity is being lost and poor diets now pose a bigger threat to human health than alcohol and tobacco, said Kjørven, a former senior UN official. Educating consumers will be key to changing that, especially in developed economies where there is high consumption of red meat, responsible for more emissions than other types of food, he said.

“People vote three times a day for a food system they want, in terms of the food they buy. There is enormous power there,” he told the Thomson Reuters Foundation.

EAT has commissioned scientists to produce a report next spring about what constitutes a healthy diet in a sustainable food system.

FAO’s Castro said making water usage more efficient - 70 percent of the world’s freshwater goes into agriculture - and rehabilitating 2 billion hectares of degraded land could deliver quick wins.

Livestock, meanwhile, account for nearly two-thirds of agricultural greenhouse gas emissions, but combining trees, crops and animals in “silvopastoral” systems can offset

some of those emissions and boost the quality of pasture, he added.

In Brazil, a major beef exporter, state agricultural research agency Embrapa is testing this practice, he added.

Another challenge is to boost food production without damaging forests, said IFAD’s Astralaga.

Agriculture is responsible for more than three-quarters of global deforestation, and if the trend continues, about 10 million square km of land will likely be cleared by 2050, she noted.

A 2016 report from the FAO said it would be possible to increase food security while maintaining or increasing forest cover, identifying 22 countries - including Gambia, Chile, Tunisia and Vietnam - that have managed to do so.

To duplicate such practices, especially in the developing world, will require sharing of knowledge, experts say. Yet many nations still lack meteorological information that can improve crop and livestock production, said FAO’s Castro.

“They don’t know if the rain is coming ... if a drought is coming. They’re blind in terms of agricultural planning,” he said.

Much of the information they need is available, said Jarvis. CIAT and the International Food Policy Research Institute are leading a push to use “big data” in agriculture, and get it into the hands of poor farmers in places like Colombia and Honduras.

“As a result of that information, (you can) make much more strategic decisions in terms of when to plant, how to plant, what variety to plant,” he said.

Another pilot run by Microsoft and the International Crop Research Institute for the Semi-Arid Tropics sends text messages and automated calls to tell Indian farmers when to sow their seeds or warn them of a pest attack. But more investment and political will are needed to expand such projects, Jarvis said. EAT Foundation’s Kjørven said the world has “barely started to fight this battle” to make agriculture greener - and the coming few years will be decisive.

“The real test is whether we start to see countries passing different legislation, businesses and industries coming up with different ways of doing business in the food sector, and changes in consumer preferences and choices,” he said.

Futures are up more than 12 percent in 2017, having entered a bull market in September. The year’s gains were driven by output cuts by the Opec and Russia.

Oil resurrection sets stage for another Opec-shale clash in 2018HEESU LEE, GRANT SMITH

AND CATHERINE TRAYWICK

BLOOMBERG

27MONDAY 1 JANUARY 2018 BUSINESS VIEWS

A general illustration depicting the various sources of CO2 emissions from agriculture and farms sector.

Pump jacks seen in the Midway Sunset oilfield, California in this file photo.

The reasons for Asia’s dearth in offshore exploration and production (E&P) include high costs in Australia, declining reserves in Malaysia and Indonesia, as well as territorial disputes South China Sea.

28 MONDAY 1 JANUARY 2018BUSINESS

Financial imbalances including those in credit mar-kets and cryptocurrencies will shadow an otherwise robust 2018 US economy, said Goldman Sachs Group

Inc. economist Jan Hatzius.Hatzius has already made some predictions for the

new year: four Federal Reserve rate hikes, real US gross-domestic product growth quickening to an average of 2.6 percent, the jobless rate dropping to about 3.5 percent, and the yield curve not inverting.

In a new report, Hatzius reiterated his expectation for overall economic strength, while flagging some concerns.

“Asset valuations in some areas -- especially credit -- have risen to high levels by historical standards,” Hatzius said in the “10 Questions for 2018” report issued late Fri-day. “While we have not seen the type of large credit expansions that would be most worrisome for Fed offi-cials concerned about financial imbalances, there are now some signs of speculative behavior in financial markets, e.g. the cryptocurrency boom.”

Goldman isn’t the only firm to send up a warning flag about cryptocurrencies. JPMorgan Chase & Co. Chief Exec-utive Officer Jamie Dimon labeled bitcoin a “fraud.” Fed Chair Janet Yellen has said it is a “highly speculative asset,” and Bank of Japan Governor Haruhiko Kuroda said it’s being used for speculation. (Note that Goldman is also reportedly building a cryptocurrency trading desk.)

On the positive side of the economic ledger, according to Hatzius: Single-family hous-ing starts will rise further as the supply-demand imbalance continues to tighten, despite adverse changes from tax leg-islation signed into law by President Donald Trump.

US wage growth will resume acceleration as statis-tical distortions fade, and there’s “evidence that upper-income households have been trying to defer income in the hope of lower tax rates,” which could have held back some wage data until now, Hatzius said.

Core inflation will also accelerate from the current 1.5 percent, Hatzius said. Import prices weighing on the core personal consumption expenditures (PCE) could turn into a boost in the coming year, Also, “base effects” should help -- such as when the weak March 2017 reading, which par-tially reflected mobile phone service-price measurements, drops out. The Fed won’t adjust its balance-sheet normal-ization plan either way, and market pricing of the terminal funds rate will rise as the Fed increases rates by more than currently priced, if markets view the additional tighten-ing as appropriate, Hatzius said.

Still, as solid a picture as Goldman’s economist paints of the economic situation, the asset-valuation issue is seen as one to watch. And though the firm doesn’t see contin-ued easing of financial conditions in 2018, it does view that as something that could alter the picture significantly.

The Fed won’t adjust its balance-sheet normalisation plan either way, and market pricing of the terminal funds rate will rise as the Fed increases rates.

Goldman sees crypto, credit shadowing robust US economy

INsightBACK to business

CAPITALCOMMENT

(China’s) growth momentum still seems to

be steady, and thereby monetary policy will

continue to stay on put

Larry Hu, Chief China Economist at Macquarie Securities, Hong Kong.

Market Talk

NEW YORK/BLOOMBERG

REUTERS

SINGAPORE: Surveying the ocean floor for oil and natural gas reserves is gradually emerg-ing from a multi-year slump, everywhere apart from Asia.

That’s despite Asia being the world’s biggest consumer of oil, having by far the strongest demand growth while seeing its production fall faster than any-where else.

The reasons for Asia’s dearth in offshore exploration and pro-duction (E&P) include high costs in Australia’s promising waters, declining reserves in production hotspots Malaysia and Indone-sia, as well as territorial disputes in the oil- and gas-rich waters of the South China Sea.

“We only have two 3D ves-sels in Asia-Pacific, since there are fewer opportunities and less activity in that region,” said Bard Stenberg, vice president at Nor-wegian offshore survey company PGS (PGS.OL), adding that most of his company’s ves-sels were in the Atlantic.

A 2017 and 2018 activity map by geophysical surveillance firm TGS (TGS.OL) shows the most activity in the North Atlantic.

A similar map by Bernstein Research showed the Asia-Pacific basin to have only four

minor offshore developments of under 50,000 barrels per day (bpd). That compares to five major developments (above 50,000 bpd) and 11 minor ones in the Atlantic. On Canada’s Atlantic coast, Newfoundland’s offshore petroleum board recently issued record explora-tion licenses worth nearly C$2 billion ($1.6 billion). The next round, to be held in autumn 2018, has attracted an all-time-high of 38 nominations.

On Africa’s Atlantic coast, Ivory Coast’s government this week said it awarded BP (BP.L) and Kosmos Energy (KOS.N) five new offshore oil blocks under an agreement with state oil com-pany Petroci, after giving out several licenses to Tullow Oil (TLW.L) and Bouygues (BOUY.PA).

Asia’s dearth comes despite the region’s huge oil deficit, resulting from booming demand and declining output.

In one of the most promis-ing regions, Australia, the main problem is cost, in part due to a requirement for rigs to pay for Australian crew once in Austral-ian waters.

“Once any foreign-flagged vessel is in Australian waters, the ship operator has to pick up Aus-tralian workers ... They work 12

hours a day, 7 days a week for 4 weeks, then get 4 weeks off,” said Christy Cain of the Maritime Union of Australia.

When oil prices were high, this was not a big problem, drill-ers said. But in times of cheaper oil and low profit margins, the added cost deters explorers, sev-eral said. In another promising area, the South China Sea, con-flicting territorial claims, especially between China and Vietnam, have hindered E&P activity. Meanwhile, in Asia’s most established offshore oil and gas production basins of Malay-sia and Indonesia, recoverable reserves are depleting.

Malaysia’s state-owned Pet-ronas, Southeast Asia’s biggest oil producer, is increasingly focusing on downstream projects like the Pengerang Inte-grated Complex (PIC) in the southern state of Johor.

From 2019, PIC will refine crude oil into fuel and petro-chemical products. Significant amounts of its crude will come from Saudi Arabia.

With little E&P activity, Asia’s oil import bill - which has already more than doubled since 2000 to over $420 billion a year - will rise further, likely above $500 billion in 2017, leaving other regions to cash in on Asia’s

oil thirst. Gauging the health of the secretive offshore industry is difficult. But dozens of moth-balled rigs and support vessels sit idle in southern Malaysia’s Johor river delta, waiting to be used or scrapped.

Yet cautious optimism is emerging. “Activity to support new development projects may increase slightly (between 2018 and 2020), but is unlikely to approach historical high levels (2013/14),” Petronas said in an outlook this month.

Douglas Westwood, which monitors helicopter activity to and from offshore vessels, has a similar view.

“The offshore helicopter market has finally started to recover following three years of decline,” Westwood said, although it added that average annual growth between 2018 and 2022 will still only be 1 percent.

“Global utilization will aver-age 59 percent over the forecast,” it said, up from a pal-try 54 percent in 2017.

At the root of the industry malaise lies rampant overpro-duction in the years running up to 2014, which crashed crude prices LCOc1 from over $100 per barrel in 2014 to below $30 in 2016.

Offshore oil searches are back in fashion

China’s tax break, after US reformsAP

BEIJING: China is respond-ing to Washington’s tax overhaul by offering foreign companies a break on Chinese taxes in a bid to retain invest-ment.

The measure announced late Thursday is Beijing’s first major reaction to the US deci-sion to cut corporate tax rates. It follows a flurry of promises by communist leaders to spur growth in the slowing, state-dominated economy by opening more industries wider to foreign companies.

Foreign companies will be exempted from withholding taxes on profits they re-invest in industries specified by Bei-jing, the Finance Ministry and tax agency announced.