Saturday, May 14, 2016Sha’baan 7, 1437 AH

BUSINESSGULF TIMES

Apple invests $1bn in Uberrival in China

RARE MOVE | Page 3

Petrobras posts lossof $358mn

Q3 RESULTS | Page 11

US retail sales rise strongly, boost economic outlook

BIGGEST INCREASE IN A YEAR: Page 12

Opec signals greater oil glut as its output surgesForecast drop in 2016 non-Opec supply is uncertain; Opec output climbs in April; implied surplus rises; leaves 2016 oil demand growth view unchanged; says global market could be in deficit in 2017

Reuters, AFPLondon

Opec said the global oil market is oversupplied and signalled the glut

may increase this year, as surg-ing output from its members makes up for losses from other countries whose production has been hit by a price fall.

Supply from the Organisa-tion of the Petroleum Exporting Countries (Opec) is climbing af-ter sanctions on Iran were lifted and an initiative with Russia and other non-members to tackle a supply glut by freezing output failed last month.

Opec pumped 32.44mn bar-rels per day (bpd) in April, the group said in a monthly report citing secondary sources, up 188,000 bpd from March. This is the highest since at least 2008, according to a Reuters review of past Opec reports.

“Fundamentally, oversupply still persists,” Opec said in the report published yesterday. “Oil output remains high.”

A persistent surplus could weigh on prices, which despite a recovery to $47 a barrel from a 12-year low of $27.10 in Janu-ary, are less than half their level in mid-2014. Opec’s 2014 strat-egy shift to defend market share against higher-cost rival output helped deepen the decline.

The price drop is hitting non-Opec supply as companies have delayed or cancelled projects around the world. Opec fore-

casts supply from outside pro-ducers will decline by 740,000 bpd in 2016 led by the US, little changed from last month.

Opec cited factors that could lead to a bigger supply drop, such as the impact of wildfi res in Canada that have cut pro-duction. The evidence of falling non-Opec supply should lead to a stronger market next year, it said.

“Outside the US, there have been consistent signs of declines in non-Opec production, which should likely fl ip the global oil market into a net defi cit in 2017.”

But Opec supply has been climbing since the 2014 policy shift led by top two producers Saudi Arabia and Iraq. The re-turn in December 2015 of Indo-nesia as an Opec member has

also increased total output. So far this year, Iran is driving

the growth. Tehran had refused to join the supply freeze ini-tiative and the deal fell apart on April 17 in Doha after Saudi Ara-bia insisted Iran took part.

Opec left its forecast that world oil demand will rise by 1.20mn bpd this year un-changed. It sees demand for Opec crude averaging 31.49mn bpd in 2016, broadly unchanged from last month’s forecast.

The report points to a 950,000-bpd surplus on average in 2016 if Opec keeps pumping at April’s rate, up from 790,000 bpd implied in last month’s re-port.

Oil prices slipped yester-day, ending a three-day rally as a strong dollar weighed and

investors cashed in on recent gains, but losses were cushioned by outages in Nigeria that have slashed output to the lowest in over two decades.

Brent crude futures were down 26¢ at $47.82 a barrel by 1:22 p.m. ET (1722 GMT). US crude fell 50¢ to $46.20.

Prices recovered slightly as US oil production looked set to continue its decline after drill-ers cut rigs for an eighth straight week to the fewest since October 2009, oil services company Bak-er Hughes said.

“The market sentiment re-mains biased to the upside, sup-ported by a growing view that the global oil complex is already in a rebalancing pattern,” said Dominick Chirichella, senior partner at the Energy Manage-

ment Institute in New York. The markets were boosted

earlier after Exxon Mobil Corp declared force majeure on ex-ports of Nigeria’s largest crude grade as a portion of production had been curtailed following damage to a pipeline by a drill-ing rig.

Output from Africa’s largest oil producer has fallen to 1.65mn barrels per day (bpd) due to mili-tant attacks, Finance Minister Kemi Adeosun said, from 2.2mn bpd.

Petromatrix oil analyst Olivier Jakob said Nigerian production was unlikely to be much above 1mn bpd, excluding condensates. “We expected more supply dis-ruptions out of Nigeria this week but the pace of new supply prob-lems from that country beats our expectations,” he said.

Unplanned oil supply out-ages have risen this month to the highest in at least fi ve years because of wildfi res in Canada and further losses in Nigeria and Libya.

The Canadian wildfi res forced the closure of oil sands facilities and declarations of force ma-jeure from at least four major oil fi rms.

The oil market has been rocked by chronic oversupply in recent years, badly hurting pro-ducers but translating into lower prices at the petrol pumps for consumers.

Despite the week’s gains, the market remains far below the $100-a-barrel mark of mid-2014 — and sank underneath $30 earlier this year on the back of abundant supplies.

Signs that supplies are coming down won further support this week from data showing that Nigeria’s oil output had slumped to a 22-year low because of pipe-line sabotage and increasing un-rest that has seen major compa-nies evacuate staff .

Qatar slated to see near-term ‘pressure’ on banking sectorprofitability: EIRBy Santhosh V PerumalBusiness Reporter

Qatar, whose economic growth

is expected to outpace the Gulf

region as a whole, particularly

this year and in 2017, is slated

to see near-term “pressure” on

profitability in its banking indus-

try, but a lack of large write-

downs suggests lower stress in

the system, according to Edison

Investment Research (EIR).

Moreover, the Qatari stock

market is trading below its

longer-term average forward P/E

(price earning) multiple and of-

fers an attractive dividend yield

and a change in the status of the

market by FTSE Russell should

lead to a about $850mn passive

investments into Qatari equities,

said EIR, whose client is London

Stock Exchange-listed Qatar

Investment Fund (QIF).

Although there has been a li-

quidity squeeze which is putting

near-term pressure on the profit-

ability of the banks, a lack of

large write-downs suggests that

there is not much stress in the

system, EIR said, adding govern-

ment funding is in place during

2016, which should alleviate the

liquidity squeeze.

In the recent earnings season,

the banks have posted strong

results, it said, adding loan

growth is continuing, illustrating

that companies are borrowing

to execute on infrastructure

projects.

Although QIF portfolio re-

mains overweight in the banking

(and financial services) sector

given continuing credit growth,

a rising population, international

expansion of Qatari banks and

spending on infrastructure

projects; its exposure to the

sector has declined over the last

12 months as the manager had

concerns about profitability.

EIR’s fund manager remains

positive on the outlook for

economic growth in Qatar due

to spending on infrastructure

projects, population growth and

a shift away from a depend-

ence on hydrocarbon revenues.

As a result, Qatar is believed

to be in a better position than

other countries in the region

to withstand a low oil price

environment.

Qatar is the world’s largest

producer of liquefied natural

gas, and although contract

pricing has been under some

pressure, the country has main-

tained its market share and the

long-term nature of contracts

provides revenue visibility, the

research note said.

Quoting the International

Monetary Fund, EIR said Qatar’s

GDP (gross domestic product)

growth has been strong in

recent years and “is expected to

outpace the GCC (Gulf Coopera-

tion Council) region as a whole,

particularly in 2016 and 2017.”

Infrastructure spending in

Qatar over the next few years

is generally anticipated to be

around $200bn ahead of the

2022 FIFA World Cup, it said,

adding this is in line with the

Qatar National Vision 2030,

which focuses on transforming

the Qatari economy away from

its dependence on hydrocarbon

production; non-hydrocarbon

nominal GDP increased from

41% of total GDP in 2011 to 62.6%

at the end of 2015.

Finding that growth is led by

infrastructure projects ahead

of the 2022 FIFA World Cup

and an increasing population; it

said “the outlook is for above-

average growth in the region to

continue.”

Although Qatar is expected

to run a budget deficit in 2016

for the first time in 15 years,

more than 45% of budgeted

expenditure is allocated to the

infrastructure, health and

education sectors and the

deficit is expected to be lower in

percentage terms versus other

GCC states.

Opec pumped 32.44mn barrels per day (bpd) in April, the group said in a monthly report, citing secondary sources, up 188,000 bpd from March. This is the highest since at least 2008, according to a Reuters review of past Opec reports.

Only 29% of Mideast executives recognise cybercrime risk compared to 47% globally: EYOnly 29% of executives in the Middle East recognise cybercrime risk, compared to 47% globally, according to EY’s latest ‘Global Fraud Survey, Corporate misconduct – individual consequences’.The survey found that many respondents maintain the view that fraudulent activity is not their problem, despite recognising the prevalence of the issue in their own countries.Michael Adlem, EY’s Mena Fraud Investigation & Dispute Services (FIDS) leader, said, “As the use of technology to disrupt organisations’ systems becomes increasingly rampant, companies are becoming more and more susceptible to cyber breaches. However, executives in the Middle East do not recognise cybercrime as a high risk. “This hints at two possibilities – either executives in the Middle East are overly optimistic and believe their systems are more sophisticated than those globally, or – there is a general lack of awareness around the subject, which is why management does not view it as a concern. To combat such threats, it is imperative that organisations develop a cyber-breach response plan that brings together all parts of the business in a centralised response structure.”Approximately one in five respondents in the Middle East explicitly stated that they are willing to act unethically and off er

entertainment to win or retain business. Globally, 42% of respondents can justify unethical behaviour to meet financial targets, with 23% of respondents in the Middle East agreeing that it is common practice to use bribery to win contracts. Stuart Jones, executive director, Fraud Investigation & Dispute Services at EY, said, “There is a problem when it comes to unethical behaviour to win business, and this applies to countries around the world. Unless senior management and the board are involved to remedy the situation, it is highly unlikely that such issues will resolve on their own. Leadership need to understand the emerging fraud trends and ask themselves whether the health and integrity of their companies are being jeopardised.” With respect to due-diligence, 40% of companies in the Middle East stated they are not assessing anti-corruption policies compared to 29% of respondents globally. “The fact is that fraud, corruption and criminal activity are inevitable in today’s business environment. They are however, manageable and to an extent preventative provided companies know the risks they are exposed to – risks such as cybercrime and inadequate due diligence are becoming more prevalent regionally and require serious attention from executive management immediately,” Adlem added.

Iraq oil projects face delays as companies resist spending cutsIraq asked oil firms to make drastic spending cuts; some companies said to consider halting Iraq operations; slump in oil prices has squeezed Baghdad’s revenues

ReutersBaghdad

International oil fi rms have warned Iraq that projects to increase its crude output will be delayed if the government insists on drastic

spending cuts this year, a senior Iraqi oil offi cial said yesterday.

Oil companies helping Iraq develop its mas-sive oil fi elds eff ectively perform a role similar to oil service fi rms in that they have to clear spending with the government each year. They are then repaid with crude oil produced from existing fi elds.

The arrangement worked smoothly when oil prices were above $100 a barrel but since crude has collapsed to $40 a barrel, Iraq has been struggling to fi nd enough oil to repay the com-panies for their investment.

Iraq relies on oil for nearly all its revenues and is spending heavily to fi ght Islamic State in its northern and western provinces.

With its fi nances stretched, Iraq has asked foreign oil companies to rein in their budgets for developing the country’s oil resources for a second year in a row but the two sides have

failed so far to agree on spending levels. The Iraqi government request was contained in Oil Ministry letters, seen by Reuters, to BP, Royal Dutch Shell , Exxon Mobil, Eni, Lukoil and Pet-ronas.

“There has been no agreement so far with the foreign companies on the proposed budg-ets, and that is causing delays in all key oil fi eld projects,” said the Iraqi offi cial, adding that the talks were continuing.

The government has also argued that prices for goods and services have fallen steeply dur-ing the market downturn so oil companies should be getting less.

Some companies, however, have complained that the proposed budgets may prevent them from continuing operations in Iraq, the offi cial said, giving no details. He said BP, Shell and Lukoil have already objected to the proposed investment budgets.

Iraq’s outgoing Oil Minister Adel Abdel Mahdi had said in February that the budget for foreign oil company development costs had been revised down to just over $9bn in 2016

from $23bn, following complex negotiations. Among Opec members, Iraq’s supply rose

last year and output reached a record 4.775mn barrels per day in January 2016.

According to a summary of Iraq’s proposals seen by Reuters:

BP has been asked to cut its 2016 budget to $2.48bn and target output of 1.4mn barrels per day (bpd) at the Rumaila fi eld it operates. BP proposed a budget of $3.25bn for 2015, though the amount agreed with Iraq may have diff ered.

Lukoil is expected to cut spending to $1.26bn and aim for a production of 400,000 bpd at the West Qurna 2 project. The Russian company proposed a 2015 budget of $2.1bn.

Eni should cut spending to $1.62bn and aim for production of 351,000 bpd at the Zu-bair fi eld. The Italian fi rm said in February it would cut spending by 20% across the board this year, without specifying the size of cuts in Iraq.

ExxonMobil was asked to slash spending to $878mn and aim for output of 379,000 bpd at the West Qurna 1 project. Last year, the US company insisted on spending $1.8bn.

Shell should cut spending to $855mn and aim for a 200,000 bpd from the Majnoon fi eld. Last year, it proposed a budget of $1.5bn.

Petronas should reduce costs to $712mn and target production of 100,000 bpd from the Garraf fi eld.

The oil companies in question either declined to comment or had no immediate comment.

Oil companies helping Iraq develop its massive oil fi elds eff ectively perform a role similar to oil service fi rms in that they have to clear spending with the government each year. They are then repaid with crude oil produced from existing fi elds

BUSINESS

Gulf Times Saturday, May 14, 20162

China banks sharply cut back new loans in AprilReutersBeijing

Chinese banks sharply cut back new lending in April after a record fi rst-quarter credit

spree, reinforcing views that the coun-try’s leaders have turned more cautious about the risks of over-stimulating the cooling economy.

The government is trying to arrest a prolonged slowdown in the econo-my, which expanded 6.9% in 2015, the slowest pace in a quarter of a century. It has unleashed a fl urry of fi scal, mone-tary and administrative measures since 2014.

March data showed improvement, but a report in the offi cial People’s Daily this week, quoting an “authoritative person”, warned too much reliance on debt to kick-start activity could lead to a fi nancial crisis or an economic reces-sion.

Banks made 555.6bn yuan ($85.21bn) in net new yuan loans in April, much lower than expected and less than half the 1.37tn yuan seen in March, data showed yesterday.

“Banks may have sought to slow down the pace of lending after rapid rises in Q1 and March,” said Li Huiyong, an economist at Shenyin & Wanguo Se-curities in Shanghai.

“Also, it could be related to (recent) government controls on the property sector and tighter lending rules,” Li said, referring to recent attempts to curb sharp home price rises in big cities and limit credit to unprofi table busi-ness sectors.

Broad M2 money supply grew 12.8% from a year earlier, the lowest since last June and slowing from March’s 13.4%. Outstanding yuan loans grew 14.4% on-year.

Analysts polled by Reuters had ex-pected new loans of 900bn yuan and predicted outstanding loans would rise by 14.8%. Money supply was forecast to rise by 13.5%.

In an encouraging sign, long-term loans accounted for 69% of April new loans, the same as in the fi rst quarter.

China’s outstanding total social fi -nancing - the central bank’s measure of broad credit - was up 13.1% year-on-year at the end of April, amounting to 145.59tn yuan. In March it was 144.75tn yuan.

Corporate bond fi nancing also slowed sharply, refl ecting heightened credit risks, economists at ANZ noted.

Data earlier this week showed trou-bled loans at China’s commercial banks reached 4.6tn yuan ($706bn) at end-March, a jump of 428bn yuan from De-cember.

Bad debts in China have now risen for 18 consecutive quarters, refl ecting the prolonged economic slowdown but also a legacy of the last big government

stimulus binge during the global fi nan-cial crisis. Still, Premier Li Keqiang said the economy is operating steadily and he is confi dent that main economic growth targets will be reached this year, Xinhua news agency said yesterday.

However, some analysts warned the credit numbers are not as soft as they look because they only include house-hold and corporate loans, and do not refl ect all government borrowing.

“They don’t include all the new

government debt issuance - a signifi -cant portion of which is being used to refi nance existing local government fi nancing vehicle debt,” said Julian Evans-Pritchard, China economist at Capital Economics in Singapore.

“That isn’t captured in the total so-cial fi nancing fi gures and if you add it back in you see that broad fi nanc-ing was actually at a 26-month high in April.”

Debt owed by China’s state-owned

enterprises (SOE) is higher than in any other rated nation and failure to reduce risks from these liabilities would curb growth, lower credit availability and ul-timately lead to state support, Moody’s said on Tuesday.

The credit rating agency said SOE li-abilities stood at 115% of gross domes-tic product (GDP), far exceeding levels seen in countries such as Japan and South Korea where the state sector also plays a signifi cant role.

Banks in China made 555.6bn yuan ($85.21bn) in net new yuan loans in April, much lower than expected and less than half the 1.37tn yuan seen in March, data showed yesterday.

ReutersSeoul

South Korea’s central bank kept its policy rate at a record low 1.50% yester-

day for an 11th straight month as expected, believing economic recovery could continue at the current level without a cut, al-though many analysts expect a move in June.

Many market participants believe the Bank of Korea (BoK) should cut rates to support eco-nomic activity, given weak ex-ports and an ongoing restruc-turing of South Korea’s massive shipping and shipbuilding in-dustries.

“The governor showed he is willing to coordinate with the government on future policy. I think he kept the door open to-day to another cut – the only issue is when,” said Kim Jina, fi xed-income analyst at IBK Se-curities.

“Just because there was a unanimous vote to hold rates today doesn’t change the fact that the new board members will change their tendencies.”

Four new board members who made their monetary policy de-but yesterday were widely per-ceived as doves by investors and analysts, and therefore likely to favour rate cuts.

Kim said the BoK is likely to cut in June, unchanged from her previous view.

All but two of the 26 analysts surveyed by Reuters this week had forecast the Bank of Korea would leave its base rate un-changed at yesterday’s meeting but a majority of respondents did see the bank cutting soon.

The won had dropped nearly 1% early in the session before the rate decision on broad dol-lar strength and expectations of a future BoK rate cut, but those losses had evaporated by the time governor Lee Ju-yeol was fi nished speaking at his news conference, with traders jolted by the unanimous vote.

The won was down 0.4% ver-sus the greenback as of 0308 GMT.

Lee off ered no sign of what as-sistance the Bank of Korea might provide to the two state-run banks most exposed to the trou-bled shipping and shipbuilding industries, although the gover-nor said the board was watching the situation very closely.

“We are currently in discus-sions on how the Bank of Korea can support the corporate re-structuring process. I will refrain from commenting further on the subject at this time,” said Lee, despite being pressed repeatedly to address the issue.

A joint taskforce consist-ing of the government, central bank, and other institutions such as the fi nancial regulator are currently in talks to ensure the state-run banks do not hit a credit crunch in the corporate overhaul of the sector.

The taskforce said it will an-nounce its shipping industry restructuring plans by end-June.

Bank of Korea holds interest rates at 1.50%

Fosun among bidders for Singapore-based ACRReutersSingapore/Hong Kong

China’s Fosun International is among suit-ors bidding for ACR Capital Holdings, the owner of Singapore’s biggest reinsurance

fi rm, in a deal valued at around $1bn, people with knowledge of the matter said.

If Fosun were to be successful, it would be the fi rst major deal for the conglomerate since its chairman, Guo Guangchang, went briefl y miss-ing late last year. The latest move also represents a shift in Fosun’s strategy, which in recent years has struck deals outside Asia.

Fosun and several other suitors are preparing to submit second round bids for the holding com-pany of Asia Capital Reinsurance Group which has operations in the Middle East, China and Japan, the people said. The names of other bidders could not be immediately ascertained.

While Fosun is known as a highly acquisitive fi rm, its presence in the bidding does not neces-sarily signal a done deal, said a source with direct knowledge of the matter.

“There are other Western and Chinese stra-

tegics,” the source said. ACR confi rmed that its owners are examining the interest of a number of strategic buyers. “We are however not at liberty to

discuss the identities of these potential investors,” it said in a statement.

Fosun declined to comment. Sources declined to

be identifi ed as the discussions were confi dential. ACR’s owners include London-based private

equity fi rm 3i, Malaysian state investor Khazanah Nasional, Singapore state investor Temasek Hold-ings and Japanese trading house Marubeni Corp.

The disappearance of Guo, a self-styled student of investor Warren Buff ett and one of China’s most successful business tycoons, for a few days last year had raised investor concerns.

Fosun has since sought to reassure investors, saying Guo was assisting authorities with an in-vestigation into his personal aff airs and business was running as usual.

Fosun has more than one third of its total as-sets invested in insurance businesses, and Gou has been keen to wade deeper into reinsurance, ana-lysts say. In 2013, Fosun helped set up Hong Kong-based reinsurer Peak Re.

Asia and Australia account for less than 20% of global reinsurance premiums, below what the region’s population and economic growth would warrant, Fitch Ratings said in a report last year, citing industry estimates.

Gou has spent more than $30bn over the past decade building a business empire that also in-cludes real estate and leisure interests.

Dr Reddy’s sees more challenges in US business

ReutersMumbai

India’s second largest drugmaker Dr Reddy’s Laboratories is bracing for another challenging year in its biggest market, the US, where its business has been hurt by regulatory scrutiny and fewer new drug approvals. The company is working on bringing three of its key manufacturing plants in India back into compliance after the US Food and Drug Administration issued a warning letter in November citing inadequate manufacturing standards there. Dr Reddy’s plans to send a final response to the agency this month outlining the remedial measures it has taken at the plants, chief operating off icer Abhijit Mukherjee told Reuters on Thursday. The factories contribute about 12% to the

company’s total revenue, and the company cannot launch products made there until the issues are resolved. It has been working on transferring products to other approved sites, and the COO said he believes the current financial year would be “more eventful” in terms of new product launches in the US. Mukherjee also said its emerging markets sales are expected to grow by more than 10% this year after the company took a write-off in its fourth quarter results related to Venezuela’s economic crisis. Several companies including Dr Reddy’s have been trying for months to recover funds from the Opec member Venezuela as oil prices sink and food scarcity and power cuts stir public protest in the country. Dr Reddy’s said it took a hit of Rs4.31bn ($64.7mn) in its fourth quarter because it could not get approval from the Venezuelan government to recover any

more money beyond the $4mn it has already received. “The country is not doing very well at the moment, so we have cleaned up our receivables,” Mukherjee said. As a result, the company’s profit slumped nearly 86% to Rs746mn in the three months to the end of March. Analysts polled by Thomson Reuters expected a profit of Rs5.52bn on average, without taking into account the Venezuela write-off . While revenues from North America, Dr Reddy’s biggest market, rose 12%, and those from India were up 11%, they could not off set declining sales in Europe and emerging markets. “We will continue to actively engage with the Venezuelan government to provide aff ordable medicine to fulfil the need of the people of the country, subject to repatriation of funds,” Dr Reddy’s chief executive GV Prasad said in a statement.

A company logo of Fosun International is seen at the Fosun Fair held alongside the annual general meeting of the Chinese conglomerate in Hong Kong. The company has more than one third of its total assets invested in insurance businesses, analysts say.

Ruias seek to pump shale natural gasBloombergNew Delhi

Essar Oil has approached the government for permission to further explore shale forma-tions in its eastern India coal-bed methane

block as part of its eff ort to maximize the produc-tion of unconventional resources.

The company’s current production of coal-bed methane, which generates a large volume of wa-ter, can complement shale gas exploration, which involves blasting water, sand and chemicals un-derground to release fuel, according to Manish Maheshwari, chief executive offi cer of Essar Oil’s exploration and production business.

“The unconventional can become the new conventional in India,” Maheshwari said in an in-terview. “The unconventional will include CBM, shale and tight gas.” Essar Oil’s optimism about shale production from its Raniganj block in West Bengal has been further boosted by a streamlined government hydrocarbon policy announced in

March that allows companies to explore and pro-duce for all forms of hydrocarbons in a designat-ed area under a single license.

The company is currently producing around 900,000 cubic meters a day of coal-bed meth-ane from the Raniganj block and plans to double the volume by March. It aims to hit peak output of 3mn cubic meters a day by March 2019, a delay of four years, which the company attributed to reser-voir and technical diffi culties. Essar Oil is part of a group of companies that includes shipping, steel and energy units controlled by the billionaire Ruia brothers. Extracting both shale and CBM from the same block won’t be easy for Essar, said Sachin Mehta, an analyst at Centrum Broking.

“It could be technically very challenging to extract shale gas out of coal-bed blocks and then the cost required to achieve that could make it more diffi cult,” he said. “Commercial viability is an issue as shale is viable only at a certain price.”

The Raniganj block holds proved, probable and possible reserves of 1.1tn cubic feet of coal-bed methane, according to Maheshwari.

BUSINESS3Gulf Times

Saturday, May 14, 2016

ReutersBeijing

Apple Inc said on Thursday it has invested $1bn in Chi-nese ride-hailing service Didi

Chuxing, a move that Apple chief executive Tim Cook said would help the company better understand the critical Chinese market.

The tech giant’s rare investment gives it a stake in two burgeoning waves of technology – the sharing economy and car technology – as the iPhone business that propelled it to record profi tability shows signs of maturing.

Apple is trying to reinvigorate sales in China, where it has come under greater pressure from regu-lators, and Cook is travelling to the country this month.

The move aligns Apple with Uber Technologies Inc’s chief rival in China, as automakers and technol-ogy companies forge new alliances and make cross investments. Gen-eral Motors, for example, recently bought autonomous driving tech-nology company Cruise Automation and has also taken a stake in US ride-sharing company Lyft.

Cook said in an interview that he saw opportunities for Apple and Didi Chuxing to collaborate in the future.

“We are making the investment for a number of strategic reasons, including a chance to learn more about certain segments of the China market,” he said. “Of course, we be-lieve it will deliver a strong return for our invested capital over time as well.”

Didi Chuxing, formerly known as Didi Kuaidi, said in a statement that the funding from Apple was the single largest investment it has ever received. The company, which pre-viously raised several billion dollars, dominates the ride-sharing market in China. The company said it com-pletes more than 11mn rides a day, with more than 87% of the market for private car-hailing in China.

Analysts say the deal off ers a glimpse of how Apple may diversify its business as sales of the iPhone

level off . Apple has emphasized its burgeoning revenue from serv-ices such as Apple Music and mo-bile payment Apple Pay, a strategy that the ride-sharing investment appears to reinforce, said analyst Patrick Moorhead of Moor Insights & Strategy.

“After all the hints about the serv-ice business and what they would like to do in the future, it’s all start-ing to fi t together,” he said.

Investors are eagerly watching to see whether Apple will enter the au-tomotive business. Apple has hired a wide range of automotive experts,

and the company is exploring build-ing a self-driving car, sources have told Reuters.

Apple reaps much higher margins on the iPhone than most automak-ers enjoy, but the investment sug-gests that the tech giant is contem-plating transportation services that could prove more lucrative, said Bob O’Donnell, an analyst with TECH-nalysis Research.

“This investment shows they are thinking not just about cars but business models around transporta-tion, and that is a very encouraging and interesting sign,” he said.

Cook said Apple remained fo-cused on the in-car experience with its CarPlay system, which links smartphones to vehicle infotain-ment systems.

“That is what we do today in the car business, so we will have to see what the future holds,” he said.

Although Apple’s sales in China have slumped amid slowing eco-nomic growth there, Cook stressed he remained confi dent in the market.

“(The deal) refl ects our excite-ment about their growing business ... and also our continued confi -dence in the long term in China’s

economy,” Cook said. Apple has enjoyed warmer relations with the Chinese government than some American tech companies, but regu-lators recently shut down its online book and fi lm services, triggering concerns among investors. The true value of Apple’s investment in Didi might be in shoring up that rela-tionship, said analyst Ben Bajarin of Creative Strategies.

“This is as much about sending signals about their seriousness in that country as it is about helping Didi build a ride-sharing platform,” he said.

Apple invests $1bn in China ride-hailing service fi rm

Refi ners struggle to stay afl oatas Asia drowns in gasolineReutersSingapore

Asia’s refi ned product markets are being swamped by a wave of gasoline as a long-lasting

crude oil glut spills into the one fuel market refi ners had hoped would save them, ruining margins and dragging down share prices across the region.

Singapore’s benchmark gasoline margins – long the bright spot for Asia’s oil processors amid rock-bot-tom profi ts earned on diesel, jet and shipping fuel – have more than halved since the beginning of 2016, when they were near at least a seven-year high for fi rst-quarter values.

With gasoline’s slump, overall re-fi ning margins in Singapore have dropped nearly 60% since the begin-ning of the year, buckling under the weight of the fuel products pumped out of oil plants as refi ners feasted on crude prices that were as low as three-quarters of their mid-2014 levels.

Besides dragging down crude refi n-ers’ share prices, this drop in margins could also undercut global oil prices that have struggled up from 12-year lows hit early this year, and refi n-ers say the situation will not improve anytime soon.

“We don’t expect 2016 refi ning margins to improve. In fact, the situ-ation could worsen from second-half of 2016 as the peak maintenance sea-son in Asia will be over,” said KY Lin, spokesman for Formosa Petrochemi-cal Corp, meaning that more fuel would hit the market once shutdown refi neries restart.

In a sign of just how bloated the market has become, Singapore’s light distillate stocks, which includes gaso-line, hit nearly 16mn barrels late last month, the highest on record, accord-ing to government fi gures. The stocks have dropped back since, but there’s still enough gasoline in the tanks to fi ll up almost 50mn average-sized vehicles.

Lin said some of the main contribu-

tors to the gasoline glut have been private Chinese refi ners, known as “teapots”, that have started exporting their surplus petrol, overwhelming demand.

The collapsing margins are a sharp reversal from expectations of a few months ago. Just in February South Korea’s SK Innovation, a major Asian refi ner, said its margins would remain strong as demand for gasoline and naphtha off set weaker markets for other fuels.

Formosa Petrochemical operates a 540,000 barrels per day (bpd) refi nery in Mailiao, Taiwan, the island’s larg-est and one of the 10 biggest in Asia. Formosa produces about 3mn bar-

rels of gasoline a month, over half of which it usually exports. The impact of tumbling refi ning profi ts has been refl ected in the stock markets.

The market capitalisation of SK Innovation has fallen by half a bil-lion dollars in the last three weeks to 14.6tn won ($12.5bn) as its share pric-es dropped by 15%.

The trend has been similar for For-mosa Petrochemical and others – such as Japan’s major refi ners JX Holdings, TonenGeneral, Cosmo Energy and Idemitsu Kosan – with shares down between 5-10% so far in May.

The slumping processing profi ts are fallout from a crude glut that emerged in 2014 as exporters around the world

raced to ramp up output in a fi ght for Asian market share.

With daily output last year eventu-ally exceeding demand by as much as 2mn bpd, crude prices fell by around 75% between mid-2014 and early 2016.

This was a signal for refi ners to ramp up operating rates across Asia to profi t from still strong demand for fuel, especially from China and India.

“That caused global oversupply and refi ning margins to tumble as demand couldn’t (keep) supporting the in-creasing supply,” said Kim Woo-ky-ung, an SK Innovation spokeswoman, adding that her company now had high volumes of unsold fuel.

Jean Liu, the president of Didi Chuxing at a news conference in Beijing. The ride-hailing service firm said in a statement that the $1bn funding from Apple was the single largest investment it has ever received.

China’s outbound M&A deals could rise to $150bn this year

ReutersBeijing

China’s outbound M&A deals could rise to

$150bn this year, smashing last year’s record as

abundant liquidity allows firms to upgrade their

technology and acquire brands, a top executive

at the country’s leading domestic investment

bank said.

Chinese firms have launched $103bn worth of

overseas M&A deals so far this year, approach-

ing the annual record of $106bn in 2015, accord-

ing to Thomson Reuters data.

But this could soar to $130bn-$150bn for the

year with deals like state-owned ChemChina’s

record $43bn purchase of Swiss-based Syngenta

still in the works, China International Capital

Corp (CICC) head of M&A Wang Zilong said.

“These large-scale deals are capital-driven

and taking place during a period of ample

liquidity, due to China’s abundant foreign

exchange reserves and high new loan growth

created by economic stimulus,” he said in an

interview late on Wednesday. “The sustain-

ability of the trend would be questionable if

liquidity was the only driver.” CICC, which is

advising ChemChina on the Syngenta deal and

is part-owned by KKR & Co and TPG Capital, is

expanding its M&A business to capitalise on

Chinese firms’ pursuit of overseas assets, Wang

said. Big private and state-owned companies,

with interests in lifestyle industry, technology

upgrading, infrastructure and health care, were

the most active buyers in the market, he added.

But the pace of China’s outbound M&A activ-

ity could slow in the second half, as Beijing took

measures to control forex outflows to ease the

pressure on its currency.

“Foreign exchange is an issue during transac-

tions,” Wang said. “Sellers pay attention to the

certainty to close a deal. Sometimes the seller

won’t select a Chinese bidder despite a higher

off er under a competitive bidding process, if

uncertainty is too high.”

CICC was ranked No.2 behind Morgan Stanley

in China-involved M&A last year, with an 11%

market share, Thomson Reuters data shows.

This year CICC is ranked No1 in China-involved

M&A deals, partly helped by foreign invest-

ment banks scaling back their mainland China

operations. But Wang said the Beijing-based

investment bank, which added 10 bankers to its

M&A team last year, still needed to lift its game

outside China.

“Foreign financial advisers, such as Goldman

Sachs, have the capability of getting done sensi-

tive, large-scale, cross-border transactions. On

that front, CICC still has room for improvement,”

Wang said. CICC is hiring staff from top foreign

banks to build its overseas team, and has opened

overseas off ices in New York, London, Singapore

since 2007 and in Hong Kong since 1998.

‘Nissan will scrap Mitsubishi deal if fuel scandal widens

AFPTokyo

Nissan’s top executive warned Friday that he would kill a $2.2bn off er to buy a major stake in Mitsubishi Motors if its fuel-economy cheating scandal spreads beyond Japan. The country’s number two automaker threw a surprise lifeline to Mitsubishi on Thursday by off ering to buy 34% of its shares, in a deal that would give Nissan eff ective control over the smaller firm. But the deal will be dead if Mitsubishi was not being honest about claims the cheating was limited to cars sold only in its home market, Nissan’s chief Carlos Ghosn said. Japanese authorities are to release a report on an investigation into the matter this month, which is expected to lay bare more details about the cheating. “We have today a memorandum of understanding. The deal will come after (we do) due diligence,” Ghosn told a roundtable of international media. “There is no problem in the US, in Europe - soon we are all going to know about that. So when we will have to conclude the deal we will

know exactly what is the situation. “I don’t think there is any doubt that if there is any implosion...we won’t do the deal,” he said in response to questions. Mitsubishi last month admitted it had been falsifying fuel-economy tests for years, manipulating data to make cars seem more eff icient than they were in reality. The scandal – reported to cover almost every model sold in Japan since 1991 – also includes mini-cars produced by Mitsubishi for Nissan as part of a joint venture. It was Nissan that first uncovered problems with the fuel economy data, but Mitsubishi has said Nissan had no part in the cheating. Ghosn said yesterday that Nissan would try to help Mitsubishi restore its tattered reputation. “This is a serious issue. There is a breach of trust and this is the responsibility of (Mitsubishi). We are going to support them.” Mitsubishi was pulled from the brink of bankruptcy a decade ago after it was discovered that it covered up vehicle defects that caused fatal accidents. At the time, the Mitsubishi group of companies stepped in with a series of bailouts to save the firm.

Carlos Ghosn, chairman and CEO of the Renault-Nissan Alliance, speaks during a news conference in Yokohama. Ghosn said yesterday the $2.2bn off er to buy a major stake in Mitsubishi Motors will be dead if it was not being honest about claims the cheating was limited to cars sold only in its home market.

BUSINESS

Gulf Times Saturday, May 14, 20164

Asia stocks slide as Apple suppliers take a beatingAFPTokyo

Asia stocks ended a choppy week with more losses yesterday following a neg-ative lead from New York and Europe,

with Apple suppliers taking a hit after the tech giant’s shares tumbled in US trade.

Oil prices also retreated after hitting new six-month highs on a prediction from the In-ternational Energy Agency that a global sup-ply glut would ease in the second half of 2016.

Tokyo fi nished 1.4% lower after a disap-pointing earnings season and as the yen edged higher despite the Bank of Japan’s chief re-peated a pledge that he was ready to unleash more stimulus measures to boost the sag-ging economy. The greenback was trading at 108.83 yen in the afternoon, against 109yen on Thursday in New York.

But Nissan soared 4% a day after saying it will buy a one-third stake in scandal-hit Mitsubishi for $2.2bn. Mitsubishi was down almost 2% after soaring more than 16% on Thursday on the buyout talk.

Apple suppliers were dragged lower af-ter the US fi rm suff ered a 2.4% loss in New York, which extended a sell-off that began on April 26 when it reported its fi rst ever drop in iPhone sales. In Tokyo Japan Display sank 6.1% and Alps Electric lost 3.2%, while Seoul-listed LG Display sank 3.2%.

“We’re losing sight of Apple’s growth sto-ry,” Juichi Wako, a senior strategist at Nomura Holdings in Tokyo told Bloomberg News.

“We should keep a close eye on some elec-tronic shares related to Apple” in Tokyo trad-ing. Apple announced yesterday that it had invested $1bn in Chinese ride hailing app Didi Chuxing, a bitter rival of US fi rm Uber.

The tie-up fi ts the California fi rm’s desire to shore up sales in the Asian giant, and its ru-moured plans to enter the auto sector.

In other markets, Hong Kong fell 1.4%, Sydney lost 0.5% and Taiwan slipped 0.6%.

Shanghai fl itted in and out of positive terri-tory before ending down 0.3% with investors cautious ahead of the Saturday release of re-

tail sales and industrial production data. Concerns about the world’s second larg-

est economy returned last week after a dis-appointing trade report, while a government warning over debt levels has sparked fears Beijing will hold off introducing any fresh stimulus for the time being.

Seoul lost 0.5% as South Korea’s central

bank yesterday kept its record-low interest rate unchanged for an 11th straight month, despite a slowdown in economic growth.

Oil prices fell after rallying to new peaks in US trade on the back of IEA predictions that the global supply glut would ease this year. In afternoon trade West Texas Intermediate was 1.2% off and Brent slipped 0.8%.

In its monthly report, the agency predicted “solid” growth in oil demand during 2016, after stronger-than-expected demand in the fi rst quarter, mainly driven by India.

And though it kept its 2016 demand fore-cast unchanged, the Paris-based agency said it was more likely to be revised higher than lower.

Shanghai-Hong Kong stock link draws more institutionsReutersHong Kong

A landmark scheme connecting Shanghai

and Hong Kong stock markets is finally

starting to attract more global institu-

tional investors, as a lag in trading and

settlements that posed a risk to investors

has been ironed out.

More institutional activity on the

platform will likely speed up reforms and

the rollout of another scheme linking

the southern city of Shenzhen and Hong

Kong, market participants say.

“I dismiss the thought that it is only a

retail product,” Kevin Rideout, head of

business development at the Hong Kong

Stock Exchange, said at the FIX confer-

ence on Thursday.

“What I can see is that the recent top

10 overall stock connect volumes are

made up from the international firms

and that probably tells me that it’s largely

institutional.”

Launched in November 2014, the

Shanghai-Hong Kong Stock Connect had

promised to open up China’s capital mar-

kets to foreign investors, heralding bolder

stock market reforms with the ultimate

goal of full capital account convertibility.

Instead, it was criticised for being used by

retail investors and hedge funds to dab-

ble in mainland markets.

Quotas inbound and outbound have

not been fully used up, aggravated by a

mid-year stock market crash in 2015 and

volatility in the renminbi that spooked

investors.

The failure of the scheme to draw

institutions, such as insurance companies

and funds, forced Beijing to postpone the

launch of the Shenzhen project and also

from expanding the scope of the existing

programme.

Recent reforms, however, particularly

in stock delivery and settlement services,

have removed some uncertainty for

investors.

Connect brokers were hopeful of more

institutional participation since last year

but problems around settlement issues

were only resolved in April.

China follows a unique T+0 settlement

model – shares are exchanged on the day

they are traded but funds are transferred

the following day. In most markets, includ-

ing Hong Kong, a T+2 model is followed.

A lag in settlement gives rise to broker

counterparty risks.

This last setback was ironed out in April

when a “delivery versus payment (DVP)”

model was introduced.

“We are seeing more institutional flows

on our platform going into the north-

bound leg with more participation from

the European funds,” said the head of

electronic trading at a US bank in Hong

Kong.

While overall aggregate quota utilisa-

tion on the Shanghai leg of the scheme

remains low at 42%, below a peak of 57%

last June, there are signs of a pick-up.

Greater institutional participation

bodes well for China’s stock markets at

a time when turnover on the Shanghai

bourse is near its lowest point this year.

The share of the top-ranked broker

category, which services institutional

clients, has grown recently and accounts

for nearly 70% of turnover on the China-

bound leg, Hong Kong stock exchange

data shows.

“We are definitely seeing more institu-

tional clients on our platforms focused on

stock connect and the cheap valuations

are an additional attraction,” said Andrew

Sullivan, managing director of sales trad-

ing at Haitong International Securities in

Hong Kong.

A pedestrian stands in front of a quotation board flashing the Nikkei key index in Tokyo. Japanese stocks fell 1.4% yesterday after a disappointing earnings season.

BloombergManila

Investors are betting one of the biggest win-ners from the post-election markets rally in the Philippines will be an island. They may have a

long time to wait.With the Philippine Stock Exchange Index cap-

ping the largest two-day gain since 2013 after the election of Rodrigo Duterte as president, the top performers are stocks that may benefi t from in-vestment and development plans for Mindanao. The country’s second-largest and southernmost island is home to 11 of the 20 poorest provinces and has suff ered four decades of Islamic insurgency by Muslim extremist groups such as Abu Sayyaf.

“Buying stocks with Mindanao exposure is a good trading strategy and will be a recurring theme under Duterte’s presidency,” said James Lago, head of research at PCCI Securities Brokers Corp. “In-vestors shouldn’t be throwing out valuations and fundamentals in chasing this theme. This won’t happen overnight.”

Equities soared this week after earlier uncer-tainty over the election outcome and whether economic gains under outgoing President Be-nigno Aquino can be sustained, given Duterte’s lack of policy-making experience. The economy has posted average annual growth of 6.2% over the past six years, the fastest pace since the 1970s.

Philippine stocks surged 3.1% on Wednesday, adding to Tuesday’s 2.6% gain, after weeks of uncertainty over the elections that pressed on fi -nancial markets. Overseas investors bought a net $40.3mn of the nation’s equities on Wednesday, the most in more than a year, sending the stock measure to the highest level since August 14. The benchmark index gave back some gains on Thurs-day, dropping 1% at the close of trading in Manila.

Mindanao is home to many of the Philippines’ 5mn Muslims, and has produced a separatist in-surgency demanding autonomy in a nation where more than 80% of the population is Roman Catho-lic. Aquino hasn’t managed to get his signature peace deal with the separatist group Moro Islamic Liberation Front through Congress in his term that was aimed at ending a confl ict that has killed more than 200,000 people. Kidnappers in the region, including the Abu Sayyaf group, often take hos-tages for ransom.

“Many Filipinos voted for Duterte because he plans to reduce Manila centrism,” Victor Felix, an analyst at AB Capital Securities Inc in Manila, said in an interview. “While initial market reac-tion is positive, Duterte has yet to give a clear-cut indication of how he will reduce the poverty lev-els in Mindanao. The property and consumer sec-tors have also expressed interest to expand in the Mindanao region but they don’t have any clear plans yet.”

Duterte, the presumptive president after the May 9 vote, is mayor of Davao city in Mindanao, where a quarter of the Philippines’ more than 100mn people live. The island accounts for less than 15% of the national gross domestic product as a four-decade Muslim insurgency discouraged government and private sector investments. In his campaign, he vowed to forge peace with Muslim and leftist rebels.

Duterte, who will become the fi rst president from Mindanao, will push for the southern region’s economic development as “many poor provinces are located in Mindanao,” spokesman Pete Lavina said in a mobile-phone message on Wednesday. The island also serves as the nation’s gateway to the Association of Southeast Asian Nations, he said. SM Prime Holdings and Aboitiz Equity Ventures, which have investments in Mindanao, soared more than 8% over two days to records. SM Prime, the nation’s largest shopping mall devel-oper, may accelerate a 15bn peso three-year plan to double its commercial center space in Mindanao should Duterte push forward with his plans for the region, said Alex Pomento, vice president at the Manila-based company.

Robinsons Land Corp, which has four shop-ping malls in Mindanao, has climbed 9.4% in two days, while Robinsons Retail Holdings Inc, which has grocers, department stores and convenience shops in Mindanao, posted its steepest two-day rally since February 2014. JG Summit Holdings, which has investments in Visayas and Mindanao, has surged 12% to an all-time high.

San Miguel Corp, the nation’s largest company by sales, plans to increase its investments in the southern region with projects in power, steel and an industrial park, president Ramon Ang said in a mobile-phone text message. San Miguel shares rose 5.4% on Wednesday.

Power producers such as Alsons and First Gen Corp also stand to benefi t from Duterte’s victory. Mindanao, which has vast agricultural lands and mineral deposits worth $300bn from nickel to cop-per, has a power defi cit of 154 megawatts, or more than 10% of capacity.

Amid Philippine market rally, investors bet on strife-torn island

Sensex hits 2-week low; rupee losesBloombergMumbai

Indian stocks dropped the most in two weeks after retail infl ation quickened more than estimated in April, raising

concerns about the central bank’s ability to cut interest rates further.

Adani Ports & Special Economic Zone was the worst performer in the S&P BSE Sensex. Hindustan Unilever, the nation’s largest home-products company, slid to a two-month low. Bharti Airtel dropped to a one-week low, while Dr Reddy’s Labora-tories fell for a third time this week. ICICI Bank and Tata Steel lost at least 2.4%.

The Sensex decreased 1.2%, the most since April 28. The index rose the most in two weeks on Thursday before offi cial data released after trading ended showed con-sumer prices rose 5.39% in April from a year ago after a 4.83% climb in March. The median of 35 estimates in a Bloomberg sur-vey had forecast a 5.05% increase.

“Disappointing infl ation number may limit the Reserve Bank of India’s room to cut rates further,” Rajendra Wadher, a di-rector at PRB Securities, said by phone from Mumbai. “Company earnings are recovering but valuations have factored in most of the upside.”

Reserve Bank of India governor Raghuram Rajan wants to limit price gains to 5% by March 2017 as he looks to the performance of the June-September monsoon rainfall to determine whether there’s scope to add to fi ve interest-rate cuts since early 2015. The Sensex posted its best week in a month amid optimism corporate earnings in the world’s fastest-growing major economy are recov-ering after the worst run since the global fi -

nancial crisis. Eight out of 15 Sensex compa-nies that have posted March- quarter results so far beat or matched estimates.

Investors have also been drawing com-fort from this year’s prediction for above-normal rainfall after back-to-back defi cits and the passage of key economic bills in parliament. Lawmakers passed a bill on Wednesday to overhaul archaic insolvency laws, taking Prime Minister Narendra Modi closer to fulfi lling his pledge to make it eas-ier to do business in the country.

“The quarterly results, the monsoon forecast and the fair amount of reforms passed in parliament despite the opposi-tion have been factored in,” Sanjeev Prasad, co-head and senior executive director at Kotak Institutional Equities in Singapore, said in an interview with Bloomberg TV India on Friday. “India actually looks fi ne, barring the valuation.”

The Sensex trades at 15.7 times 12-month projected earnings, higher than the fi ve-year mean of 14.3 times. The MSCI Emerg-ing Markets Index is valued at a multiple of 11.3. Foreign investors sold $49mn of lo-cal stocks on May 11, taking this year’s in-fl ows to $1.8bn. They invested $585mn last month after an infl ow of $4.1bn in March, which was the highest in three years.

Meanwhile, extending its losses for the second straight session, the rupee yesterday fell by another 15 paise to 66.77 a dollar on sustained demand for the US currency from banks and importers on the back of higher greenback overseas amidst sharp fall in do-mestic equities. The rupee resumed lower at 66.78 per dollar as against the Thurs-day’s closing level of 66.62 at the Interbank Foreign Exchange market and moved down further to 66.83 before fi nishing at 66.77, showing a loss of 15 paise or 0.23.

China commodities selloff spreads as steel suffers worst week since ’09

ReutersShanghai/Manila

Chinese steel futures posted their biggest weekly fall since 2009 yesterday, as a selloff in the country’s commodities showed signs of spreading to other global markets for raw materials such as palm oil and base metals. Weakening fundamentals along with strong measures by Chinese exchanges to stamp out speculative activity have helped reverse momentum in China’s massive commodity futures markets from bullish to bearish in less than a month. The deepening losses have started to weigh on global markets elsewhere, in a similar manner to the boom and bust cycle in the country’s stock markets last year. Malaysian palm oil futures, the global benchmark for the commodity, fell more than 2% yesterday, with traders blaming a 4% fall in China’s vegetable oil futures. Iron ore futures in China have fallen more than 27% from their April peak, pulling the global spot benchmark down 21% from last month’s high. The crackdown on speculators in China’s steel markets has doused a recovery in base metals prices on the London Metal Exchange and the sustained fall in Chinese commodities has similarly pressured grain futures on Chicago Board of Trade, analysts say. Rising levels of open interest, or open contracts, in China’s steel and iron ore futures, as prices fall deeper suggest investors are looking at more downside risk. “The sentiment is very bearish now, and investors are looking for opportunities to take more short positions,” said Wu Wei, an analyst at Yong’an Futures in China’s Hangzhou city. The softer outlook for the Chinese

economy, rising steel production and waning seasonal demand have fuelled the sharp losses in steel-linked futures, said Wu. The most-traded rebar on the Shanghai Futures Exchange closed down 4.6% at 2,030 yuan ($311) a tonne after falling by the 6% maximum allowed by the exchange. Rebar, or reinforcing steel used in construction, surged 80% from last December to April, but has since dropped 27%. It has lost more than 12% this week, the most since the contract was launched in 2009. The price rally pushed some shuttered steel mills in the world’s top producer to resume production, but the ensuing price rout could make them unprofitable again. Iron ore on the Dalian Commodity Exchange fell 5.2% to close at 363 yuan a tonne after also dropping by its 6% downside limit. “We are now kind of at or past the peak in seasonal demand so prices are coming down. And maybe since we overshot on the upside so we can undershoot on the downside,” said Ian Roper, commodity strategist at Macquarie. Other steelmaking raw materials hit hard yesterday included coke and coking coal on the Dalian exchange, which fell 5.3% and 3.6% respectively. Agriculture futures also slumped with soybean oil and palm olein on Dalian down 4% and Shanghai rubber falling 5%. Egg and soybean dropped almost 3%. Investors appear to have pulled out more funds from Chinese markets as exchanges keep up the pressure to control speculative investment and crack down on high-frequency trading. The Dalian exchange on Thursday said it will stop the 50% transaction fee discount on intraday trading of soybean meal, corn starch, palm oil, and soybean oil futures from May 16.

CURRENCIESDOLLAR QATAR RIYAL SAUDI RIYAL UAE DIRHAMS BAHRAINI

DINARKUWAITI

DINAR

Bright economic data shine on Europe stocksAFPLondon

A raft of upbeat economic data helped push up European equity markets yesterday, with London

overcoming a dire Brexit warning from the IMF.

Frankfurt stocks won 0.9% to touch 9,952.90 points as data showed that the German economy grew by a better-than-expected 0.7% in the fi rst quarter of this year.

Paris advanced by 0.6% to 4,319.99 points in value, aided also by separate fi gures showing the 19-member euro-zone economy grew 0.5% in the same period.

London also managed a gain of 0.6% to 6,138.5points despite poor British construction data and after the Inter-national Monetary Fund warned again of “signifi cant downside risks” from Britain’s potential EU exit.

Markets in Europe had fl atlined for most of the day but won a partial boost

in afternoon deals from bright eco-nomic data in the US.

US consumers came back to stores in April, spending more than expected to reverse a worrisome stall in the fi rst quarter of the year, Commerce Depart-ment data showed yesterday.

But with April’s gains mostly in auto sales and gasoline — the latter due to rising prices — the data in other cat-egories was still not as robust as hoped.

Retail sales, including food services, jumped 1.3% from March, to $453.4bn, and were up 3.0% from a year ago. Analysts had expected a 0.8% rebound from March.

“The overall market sentiment has slightly changed towards positive since the release of the latest US economic data,” said Markus Huber, trader at City of London Markets.

Wall Street didn’t get much of a boost, however, with the Dow down 0.08% approaching midday, as earn-ings from two major retailers were seen as disappointing.

“US stocks are lower in early ac-

tion, though they have pared losses in the wake of a stronger-than-expected April domestic retail sales report, which is partially off setting a decline in crude oil prices and more lackluster results from the retail sector, courtesy of results from J.C. Penney and Nor-dstrom,” said analysts at brokerage Charles Schwab.

Nordstrom reported a 64% drop in fi rst-quarter earnings to $46mn, while Penney saw comparable sales fall 0.4% during the period, sustaining a trend of weak retail earnings.

Nordstrom shares plunged nearly 15% in early trade but had cut the loss to around 11% by late morning.

Meanwhile, Penney lost 5.1% at the open but was showing a gain of 1.7% in late morning trade.

While London slipped into the red for much of the day, as the IMF warned that Britain’s potential departure from the European Union posed a “signifi -cant downside risk” to the economic outlook, it climbed back in late after-noon trading.

Traders chat in the trading room of the Frankfurt Stock Exchange. Frankfurt stocks won 0.9% to touch 9,952.90 points yesterday.

BUSINESS5Gulf Times

Saturday, May 14, 2016

Apple IncMicrosoft Corp

Exxon Mobil CorpJohnson & JohnsonGeneral Electric Co

Procter & Gamble Co/TheJpmorgan Chase & Co

Wal-Mart Stores IncVerizon Communications Inc

Coca-Cola Co/ThePfizer Inc

Chevron CorpVisa Inc-Class A Shares

Home Depot IncWalt Disney Co/The

Intel CorpMerck & Co. Inc.

Cisco Systems IncIntl Business Machines Corp

Unitedhealth Group IncMcdonald’s Corp

Nike Inc -Cl B3M Co

Boeing Co/TheUnited Technologies CorpGoldman Sachs Group Inc

American Express CoDu Pont (E.I.) De Nemours

Caterpillar IncTravelers Cos Inc/The

91.54

51.72

89.33

113.84

30.02

81.89

61.90

65.28

51.23

45.77

33.41

101.47

77.67

134.92

101.18

30.10

54.41

26.81

149.40

129.58

129.81

57.89

169.96

134.18

101.44

158.42

64.68

63.88

71.20

112.87

1.33

0.40

-0.38

-0.35

-0.23

-0.63

0.21

-2.34

-0.47

-0.13

0.65

-0.64

-0.28

0.54

-0.52

1.13

0.54

0.51

0.38

-0.12

-0.24

-0.17

-0.11

-0.18

-0.02

0.22

0.53

-0.62

-0.70

0.20

20,404,290

6,437,683

3,024,762

2,283,631

9,370,366

2,124,607

5,627,932

6,997,780

3,218,869

3,050,186

7,317,464

2,045,586

2,204,006

2,083,240

2,965,903

6,031,523

2,345,592

6,917,120

830,744

1,071,174

2,162,700

2,883,564

622,017

1,390,205

973,506

840,571

1,458,581

578,939

2,128,364

365,799

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/TheSabmiller Plc

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 Plc

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 HoldingsBarratt 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

#N/A

1,591.00

264.40

3,871.00

189.80

3,912.00

223.25

955.00

3,162.50

1,038.00

1,789.00

162.55

181.60

317.00

507.00

862.00

1,533.00

1,162.00

931.50

4,115.00

2,250.00

2,492.00

255.00

592.50

4,222.00

467.60

492.90

1,728.50

1,718.00

210.70

648.50

1,988.50

632.00

1,233.00

6,834.00

6,170.00

1,277.00

2,830.00

1,955.00

809.50

8,930.00

168.80

5,325.00

1,009.00

1,342.00

430.90

834.50

426.20

2,580.00

66.28

215.00

1,143.00

356.50

2,869.00

204.50

292.30

507.50

3,322.00

2,630.00

757.50

669.00

3,765.50

429.90

1,262.00

571.50

130.55

1,449.00

280.00

1,114.00

1,253.00

1,433.00

413.70

366.00

1,889.50

6,160.00

2,023.00

1,279.00

1,350.00

202.60

3,628.00

1,075.00

1,141.00

2,067.00

439.35

718.50

4,208.50

361.75

820.30

2,934.00

530.00

165.25

486.60

957.50

416.40

3,930.50

3,032.00

873.50

921.50

412.20

574.90

1,846.00

479.80

0.00

-0.31

0.72

-0.08

1.66

-0.36

0.22

0.26

0.75

-1.80

-1.32

4.47

-0.11

0.67

3.45

0.47

0.07

1.31

0.59

1.23

-0.09

1.10

0.99

0.59

-0.15

-1.74

-1.24

-0.46

-0.35

0.52

0.78

0.84

0.08

0.16

0.16

0.00

0.16

1.65

0.21

0.43

-0.11

-0.12

1.43

0.65

-1.18

-0.12

-4.90

0.47

0.23

2.11

0.42

0.18

-0.36

0.21

-2.62

0.69

-1.55

-0.12

-1.42

-4.60

-0.22

-0.54

1.50

1.37

-0.61

-0.42

0.56

0.11

3.63

-0.40

-1.65

-0.55

-2.01

0.56

-1.91

0.10

0.63

-3.36

0.15

-0.17

0.37

0.09

-0.77

0.42

0.28

-0.05

0.46

1.61

0.38

0.95

1.47

-0.25

0.05

0.24

1.30

0.56

-1.24

1.49

1.50

-0.02

-1.23

0.93

0.00

2,340,276

3,815,807

296,911

3,940,936

315,604

26,338,169

718,314

1,096,205

580,523

431,433

18,145,181

7,005,942

2,464,570

7,008,386

649,102

1,545,499

1,540,375

1,326,022

1,731,518

207,345

163,336

4,447,915

1,541,172

2,429,948

1,776,297

1,680,536

6,071,058

4,343,982

10,814,880

1,503,097

4,082,841

844,054

1,601,730

652,539

392,792

3,041,804

260,297

561,161

1,350,666

26,485

4,634,499

331,549

2,865,892

1,239,291

761,105

961,633

4,242,815

245,722

84,946,872

10,374,086

1,964,652

2,379,437

214,716

24,444,181

1,703,905

4,217,544

289,108

966,902

3,726,976

526,034

1,378,532

18,167,403

290,654

1,419,988

44,551,286

4,740,552

3,610,300

821,738

1,923,630

1,116,569

1,122,446

4,279,270

2,017,150

339,955

710,628

2,581,304

545,755

11,915,303

363,209

882,997

1,517,436

273,699

9,515,621

2,031,608

1,614,578

19,043,832

6,770,863

362,998

2,043,981

30,407,695

2,396,032

239,888

6,808,520

1,221,161

555,257

1,628,867

3,230,063

3,054,235

8,144,560

365,088

872,410

-

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

9,792.00

1,359.50

4,484.00

2,207.50

1,505.00

2,108.50

408.40

226.10

2,450.50

6,026.00

436.30

7,255.00

918.90

381.00

18,960.00

992.40

5,454.00

3,299.00

6,806.00

-1.06

-2.79

-1.41

0.16

-1.57

-1.03

-1.38

1.44

-0.22

2.27

-2.24

-0.62

-3.59

-2.28

-1.46

-2.27

-1.78

-3.17

-0.13

978,900

7,205,000

1,842,800

1,433,300

1,530,700

4,774,000

17,560,000

40,775,000

1,895,100

2,140,100

15,428,000

1,632,600

11,298,800

12,196,000

395,400

4,319,500

11,254,800

11,463,600

2,202,000

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 Insurance

Mazda Motor CorpKomatsu Ltd

West Japan Railway CoMurata Manufacturing Co Ltd

Kansai Electric Power Co IncDenso Corp

Sompo Japan Nipponkoa HoldinDaiwa House Industry Co Ltd

Jx 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 LtdFuji Heavy Industries Ltd

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

1,155.00

5,284.00

1,028.50

476.10

4,872.00

1,418.00

329.80

1,208.50

3,298.00

2,956.50

28,500.00

2,847.00

1,648.00

4,699.00

811.20

398.40

717.60

1,806.00

510.00

498.90

565.20

15,965.00

16,680.00

4,335.00

7,297.00

1,907.50

8,592.00

3,620.00

1,651.50

1,278.50

6,127.00

1,298.00

1,740.50

1,762.50

6,505.00

12,510.00

1,000.50

3,996.00

2,824.50

3,043.00

433.70

2,165.00

2,927.50

4,992.00

2,483.00

2,630.50

5,181.00

9,085.00

0.00

944.30

1,466.00

3,754.00

2,897.00

3,928.00

336.00

4,511.00

408.20

1,259.00

606.30

5,838.00

164.10

444.00

2,549.00

3,850.00

2,782.00

3,011.00

1,108.00

1,506.00

3,550.00

66,900.00

8,196.00

1,187.00

2,288.00

6,173.00

26,240.00

1,822.50

15,350.00

6,642.00

1,093.00

3,049.00

3,903.00

-5.44

-1.34

4.09

-1.79

-2.77

-3.24

-1.02

-2.15

-1.85

-2.17

-1.79

-3.52

-2.60

-0.78

-4.23

2.65

-2.57

-0.74

-2.34

-2.20

-1.94

-1.90

0.48

1.57

0.50

-0.65

1.08

-1.42

-0.09

-1.08

0.00

-2.99

-2.05

-2.35

-2.87

-4.36

-1.96

-1.53

-1.64

0.86

-2.80

-2.10

-3.98

-2.37

-0.04

-1.99

1.29

-1.51

0.00

-1.41

-0.61

-3.07

1.65

-1.33

-0.59

-1.07

-1.52

-1.72

-2.60

-3.71

-1.74

-3.35

-0.49

-0.80

-1.40

-3.09

-3.74

-3.00

-0.42

0.15

-1.25

-4.00

-1.74

-1.04

-3.87

-1.94

-1.38

0.73

-2.93

-0.97

-2.28

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 Hldgs Intl

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 Pacific Ltd

Esprit Holdings LtdFih Mobile Ltd

Hang Lung Properties LtdHang Seng Bank Ltd

Henderson Land Development

2.36

26.85

2.98

4.55

4.67

21.65

12.12

91.15

2.99

4.62

16.44

21.45

83.95

21.70

5.09

17.16

17.48

12.60

11.50

8.88

10.92

70.00

8.89

7.90

6.28

2.47

13.90

132.60

44.50

-2.07

-2.89

-0.67

-1.30

9.37

-2.70

-0.82

-1.14

-4.17

-1.28

-0.72

0.94

-2.04

-2.03

-0.78

-1.38

-2.56

-1.25

-3.36

0.45

-0.73

-3.18

-1.77

-0.88

-2.79

-3.14

-0.86

-2.00

-1.55

14,473,229

7,635,766

275,737,681

32,050,536

43,326,539

15,592,767

3,144,892

11,460,028

8,765,882

253,432,743

54,103,213

4,736,907

17,356,280

25,324,534

91,009,380

2,956,112

15,092,710

6,804,779

21,669,891

33,520,066

24,297,667

7,651,439

64,236,558

5,752,130

1,426,622

15,660,195

9,601,277

2,678,269

6,594,327

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

14.32

179.50

47.30

0.00

3.87

4.15

38.25

7.07

5.29

33.60

75.45

11.14

87.00

80.85

155.10

41.70

-0.83

-1.16

-1.05

0.00

-1.28

-3.71

-0.52

-0.70

-1.31

-1.47

0.73

-1.76

-3.33

-0.12

0.58

0.12

13,423,784

7,012,784

28,694,763

-

303,923,126

33,949,647

4,232,362

19,366,834

83,086,162

47,436,918

5,248,740

9,440,624

9,550,269

2,161,879

18,092,191

7,720,924

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

448.85

950.55

539.65

98.00

3,151.65

479.80

322.65

70.35

389.95

2,523.40

795.05

184.85

978.15

77.60

144.75

203.75

141.00

3,846.25

1,312.75

1,588.70

1,286.50

708.25

319.35

1,207.25

1,065.20

113.55

226.50

1,166.00

831.80

89.30

2,912.60

1,140.90

723.15

4,251.75

379.60

2,917.20

281.45

531.70

135.15

20,676.15

354.90

927.80

122.75

155.10

2,517.70

490.65

943.65

217.25

188.55

1,457.10

0.30

-0.47

-0.49

-4.76

-2.35

-0.29

-2.40

-0.71

0.75

-1.67

-1.06

-1.94

-1.48

-2.21

0.59

-1.24

-0.32

-0.21

-1.62

-1.72

-2.25

-2.55

0.36

-0.23

-0.08

1.43

-2.29

-2.50

-2.49

-4.39

-1.30

-0.71

1.18

-0.17

-2.13

-1.83

-0.85

-0.86

-1.24

-1.19

-1.99

0.15

-2.27

-1.62

-1.23

-0.39

1.60

-1.70

-3.38

-0.36

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

17,706.36

2,063.71

4,752.58

13,799.24

45,596.02

52,388.02

6,126.37

4,314.67

9,943.87

8,715.10

16,412.21

1,320.19

19,719.29

5,396.27

1,315.47

25,489.57

7,814.90

2,734.91

24,612.74

4,761.72

-14.14

-0.40

+15.25

+11.44

-89.80

-853.30

+22.18

+21.40

+81.75

+52.00

-234.13

-17.08

-196.17

-27.17

-1.04

-300.65

-85.50

-10.48

+41.77

-41.61

Doha Securities MarketSaudi Tadawul

Kuwait Stocks ExchangeBahrain Stock Exchage

Oman Stock MarketAbudhabi Stock MarketDubai Financial Market

9,941.42

6,694.82

5,395.51

1,111.46

5,969.47

4,387.25

3,344.67

+53.03

+40.62

+19.23

+7.01

+20.91

+1.67

+15.77

“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.”

21,370,000

1,647,900

32,523,000

22,826,000

5,256,200

4,473,100

10,142,000

6,371,000

7,248,800

5,016,600

874,500

1,871,500

7,317,900

2,026,400

9,026,900

25,906,400

6,368,000

3,725,500

13,064,900

57,533,600

10,229,100

1,415,200

332,500

1,474,600

834,700

2,655,300

1,243,800

1,853,700

2,992,600

7,938,700

2,079,600

5,371,800

6,454,000

4,656,300

983,400

1,498,700

2,091,400

2,576,000

1,412,600

3,445,000

14,365,700

3,465,200

4,203,700

3,135,000

2,627,300

3,412,000

3,786,000

1,729,200

-

7,746,000

8,593,100

6,355,700

16,662,700

2,993,800

27,996,000

3,104,000

5,131,000

4,777,900

6,928,000

6,846,900

126,268,900

28,177,600

3,617,400

5,402,900

4,681,900

4,818,000

4,909,000

7,335,300

1,511,300

139,200

1,492,200

5,782,000

5,700,400

1,506,200

339,300

6,157,000

461,400

1,380,600

6,519,700

3,683,000

1,556,200

2,116,624

3,362,300

903,379

18,981,622

172,763

1,110,054

6,358,145

3,650,688

14,831,485

858,212

2,681,643

17,970,698

3,535,226

6,858,249

3,898,866

5,590,887

2,718,981

505,841

639,290

680,989

1,556,035

1,523,055

6,554,734

2,908,920

1,111,601

5,181,153

23,929,425

2,896,580

2,576,666

14,349,128

274,129

1,490,751

3,863,174

63,216

1,073,841

707,382

3,997,648

955,261

2,493,728

23,861

4,061,719

595,992

4,504,912

11,768,825

176,460

7,754,356

2,527,974

1,186,026

16,501,514

219,873

ACROSS1. Gem (5)4. Fruit (7)8. Esteem (7)9. Spell (5)10. Prophet (4)11. Chat (8)13. Rational (4)14. Golf-club (4)16. Satanic (8)17. Tardy (4)20. Artless (5)21. Conspicuous (7)22. Lofty (7)23. Aggregate (5)

DOWN1. Law (13)2. Squander (5)3. Ogle (4)4. Writer (6)5. Reclamation (8)6. Vexation (7)7. Moody (13)12. Lazy (8)13. Staying-power (7)15. Failed to hit (6)18. Adroit (5)19. Monotonous (4)

ACROSS1. Raise one in a big crowd (5)4. Smaller charge to enter a big cat (7)8. It responds to changes on the road (4-3)9. Cater for a very small amount (5)10. Still without bumps (4)11. Begin with vessel for ashes in top performance (4,4)13. Initially overt reactions are likely to be verbal (4)14. Mary starts with beer, being no lady, of course (4)16. Flying not finally settled (2,3,3)17. Strikes with fear when you and I go in (4)20. Live and prosper, losing nothing (5)21. In two, because not up to the mark (7)22. Where the birds are cheated? (7)23. Do they extract the juicy news? (5)

DOWN1. He usually takes the lot (7,6)2. One speed when angry (5)3. Lined cylinder, perhaps (4)4. Slackness shown by 10 amongst non-professionals (6)5. Flare-up leads to being on strike at the interval (8)6. Deletion is certain after a period (7)7. The dimensions at the back of the boat call for severe steps (5,8)12. University player looking faint? (4,4)13. He got no change despite being active (2,3,2)15. The crime of a large, amorous girl? (6)18. Fix firmly in the Western border (5)19. Extract information from some of the top umpires (4)

Quick CluesCryptic Clues

Weekly’s Solutions

QUICKAcross: 3 Aftermath; 8 Norm; 9 Statement; 10 Entice; 11 Brunt; 14 Recur; 15 Tame; 16 Flair; 18 Post; 20 Extol; 21 Match; 24 Beacon; 25 Interview; 26 Pall; 27 Temporary.Down: 1 Interrupt; 2 Criticism; 4 Fate; 5 Enter; 6 Moment; 7 Tune; 9 Scarf; 11 Brash; 12 Tactician; 13 Feelingly; 17 Renew; 19 Take up; 22 Cover; 23 Once; 24 Bear.

CRYPTICAcross: 3 Off spring; 8 Bore; 9 Petrol can; 10 Escort; 11 Harem; 14 Tests; 15 Firm; 16 Elate; 18 Veer; 20 Vicar; 21 Rests; 24 Floats; 25 Varieties; 26 Acre; 27 Sentiment.Down: 1 Objective; 2 Trickster; 4 Feet; 5 Syria; 6 Relief; 7 Noah; 9 Prose; 11 Heads; 12 Mischance; 13 Impressed; 17 Evils; 19 Resist; 22 Totem; 23 Lake; 24 Fern.

Adam

Pooch Cafe

Garfi eld

Bound And Gagged

Sudoku is a puzzle

based on a 9x9 grid.

The grid is also

divided into nine

(3x3) boxes. You are

given a selection of

values and to com-

plete the puzzle,

you must fill the

grid so that every

column, every row

and every 3x3 box

contains the digits

1 to 9 and none is

repeated.

Sudoku

Weekly’s Solutions

BUSINESS/LEISURE

Gulf Times Saturday, May 14, 20166

Mall Cinema (1): 24 (Tamil) 1pm; The Perfect Match (2D) 3.45pm; All Roads Lead To Rome (2D) 5.30pm; Term Life (2D) 7.15pm; The Trust (2D) 9pm; 24 (Tamil) 10.45pm.Mall Cinema (2): Angry Birds Movie (2D) 1.15pm; Angry Birds Movie (2D) 3 & 4.45pm; Captain America. Civil War (2D) 6.30pm; Captain America. Civil War (2D) 9pm; Hellions (2D) 11.30pm.Mall Cinema (3): Azhar (Hindi) 1pm; Kangar Hoppiena (Arabic) 3.15pm; Hepta (Arabic) 5.15pm;

The Jungle Book (2D) 7.15pm; Hepta (Arabic) 9pm; Jacob’s King Of Heaven (Malayalam) 11pm.Royal Plaza Cinema Palace (1) : Angry Birds Movie (2D) 1.30, 3.15 & 5pm; The Jungle Book (2D) 6.45pm; Captain America. Civil War (2D) 8.30 & 11pm.Royal Plaza Cinema Palace (2) : The Trust (2D) 2pm; The Perfect Match (2D) 3.45pm; All Roads Lead To Rome (2D) 5.30pm;

The Trust (2D) 7.15pm; Hepta (Arabic) 9pm; Azhar (Hindi) 11.15pm.Royal Plaza Cinema Palace (3) : Term Life (2D) 1pm; Mah - E - Mir (Urdu) 2.45pm; Kangar Hoppiena (Arabic) 5.30pm; Hepta (Arabic) 7.30pm; Term Life (2D) 9.45pm; Hellions (2D) 11.30pm.Asian Town Cinema: Jacobinte Swargarajyam (Malayalam) 1, 3, 4, 6, 7, 8.30, 9, 10pm 12 & 1am; 24 (Tamil) 1, 4, 7, 9, 10pm & 1am; Baaghi (Hindi) 12.45 & 3.15pm; Azhar (Hindi) 12.45, 5.45 & 11.30pm.

Smartphone downturngoing from bad to worseBloombergHong Kong

For investors contemplating prospects for the smartphone market after a shaky earnings

report from Apple Inc, Asian suppli-ers just provided a few hints: It’s go-ing to get worse before it gets better.

Three suppliers that seldom com-mand much attention, working be-hind the scenes to make devices sold under the brands of better-known customers, put out back-to-back earnings reports on Tuesday. They spell trouble ahead for smartphone makers and other companies that once thrived on mobile mania.

Pegatron Corp, which assem-bles iPhones, missed profi t expec-tations and said April sales dived 16%. Minebea Co, which makes LED lights for mobiles, lagged its own forecasts for revenue and earn-ings. Japan Display, which supplies screens to Apple and others, said profi t has deteriorated so rapidly it will lose money for the fi scal year and suspend a promised dividend. Adding to the gloom, Lenovo Group tumbled to a four-year low as ana-lysts warned of rising competition.

Asian components makers are positioned early in the supply chain so they often signal what’s ahead for giants like Apple, Samsung Elec-tronics Co and Xiaomi Corp. The iPhone maker off ered evidence of a deteriorating market with its fi rst quarterly sales decline in 13 years. Now, some are bracing for a possi-ble triple-whammy: sliding sales, an unfettered market- share competi-tion and crumbling prices.

“The smartphone industry will continue to slow down this year,” said Richard Ko, a Taipei-based analyst at KGI Securities Co. “Com-petition will worsen and prices will likely continue to fall.”

Pegatron and its peers are merely

the latest in a string of ill omens for a market facing its worst pace of ex-pansion since Apple introduced the iPhone in 2007. Much of the gloom centres on China, the phenomenal growth engine that’s now headed for an epic shakeout. Smartphones are no longer a novelty and most domestic brands target the mid- and low-price ranges, where buyers don’t upgrade as frequently as those for high-end Ap-ple and Samsung phones.

FIH Mobile, which assembles devices for Sony Corp, Lenovo and Xiaomi, is expecting fi rst-half profi t to get virtually wiped out. All three of those customers suff ered lower smartphone shipments in the March quarter. While Samsung was able to boost phone earnings on the early release of more profi table models, the world’s biggest producer warned of weaker demand.

In addition, Taiwan Semiconduc-tor Manufacturing Co - one of the largest manufacturers of the appli-cation processors that are a mobile device’s brains – cut its 2016 smart-phone demand forecast in April. Its major customers include Apple, Qualcomm Inc and Huawei Tech-

nologies Co, according to data com-piled by Bloomberg.

To be sure, not all are predicting doom and gloom. Optimists point out that legions of users in develop-ing markets - like India - have yet to adopt high-speed 4G technol-ogy, and that will drive sales. While acknowledging the malaise, TSMC expressed confi dence last month that ever-more powerful and func-tional mid-end phones will bring out cost-conscious buyers in emerging countries.

The next key signpost for the in-dustry might come around Septem-ber, when Apple typically releases new iPhone models. Rolling out the devices has traditionally galvanized the market over the holiday shopping season and could off er some relief for suppliers of the microchips and other widgets that go into the device.

Still, that is at least four months away.

“The pace of deceleration may not be as bad as some have feared,” said Mark Li, an analyst at Sanford C. Bernstein & Co Still “the trend of smartphone deceleration is pretty clear.”

Japan Display, which supplies screens to Apple and others, said profit has deteriorated so rapidly it will lose money for the fiscal year and suspend a promised dividend.

BUSINESS

Gulf Times Saturday, May 14, 20168

Warning of downward spiral, IMF sees no economic upside to BrexitIMF warns of hit to economy, markets from Brexit; Lagarde backs BoE view on recession risk; IMF to publish Brexit hit forecasts in June; anti-EU group says IMF record is laughable

ReutersLondon

International Monetary Fund chief Christine Lagarde said yesterday there were no economic positives

to Britain leaving the European Union and that the impact would range from “pretty bad to very, very bad”.

Her blunt warning came as the IMF said the country risks falling into a spi-ral of weaker economic growth, lower house prices and diminished foreign investment if voters opt to leave the European Union after the referendum next month.

The fund, in an annual report on Britain’s economy, said an exit vote would “precipitate a protracted period of heightened uncertainty, leading to fi nancial market volatility and a hit to output.”

A sudden stop to investment in key sectors of the economy such as com-mercial real estate and fi nance could exacerbate Britain’s record-high cur-rent account defi cit, the report said.

“Such market reactions could sharp-ly contract economic activity, further depressing asset prices in a self-re-inforcing cycle,” the Fund said. It also repeated a warning that a Brexit shock could upset the global economy.

British voters have been bombarded with Brexit warnings in recent weeks. On Thursday, the Bank of England said the economy would slow sharply, and pos-sibly even enter a brief recession, a pos-siblility backed by Lagarde yesterday.

The Organisation for Economic Co-operation and Development has also warned that British voters risk paying a “Brexit tax” equivalent to a month’s

salary by 2020 if they leave the EU. La-garde said the Fund would publish de-tailed forecasts for the size of a Brexit hit to Britain’s economy probably on June 16, a week before the referendum and the same day that fi nance minis-ter George Osborne and BoE Governor Mark Carney are due to make high-profi le speeches at the annual Mansion House dinner.

Anti-EU campaigners hit back at the IMF quickly, questioning the Fund’s

authority when it comes to forecasting. “Very few people in the media ever

pause to ask that question, but its track record is laughable,” Arron Banks, a co-founder of the Leave.EU group, said. “Its forecasts are never right, it backed the euro and it didn’t see the fi nancial crisis coming.”

Vote Leave, the offi cial “Out” cam-paign, said Britain was being bullied by the IMF.

So far, the barrage of warnings about

the economy do not appear to have swayed many voters. Opinion polls show Britons believe staying in the EU would be best for the economy but they are more or less evenly split on how they intend to vote.

Lagarde defended the Fund’s deci-sion to publish a report that closely echoed the warnings of Prime Minister David Cameron and fi nance minister Osborne who worked closely with La-garde when she was France’s fi nance

minister. “We are not doing it out of politics, this is not the job of the IMF. We’re doing it because it’s a signifi cant downside risk. And second, it’s not just a domestic issue ... it’s an international issue,” she said.

The IMF said Britain, after a Brexit vote, could take years to renegoti-ate trade deals with the EU and other countries, hitting investment and weighing heavily on economic senti-ment.

Christine Lagarde, managing director of the IMF, meets Britain’s Chancellor George Osborne prior to a press conference at the Treasury in London yesterday. Lagarde’s warning to Britain came as the IMF said the country risks falling into a spiral of weaker economic growth, lower house prices and diminished foreign investment if voters opt to leave the European Union after the referendum next month.

Ryanair would pull investment from UK ifleaves EU: CEO

ReutersDublin

Ryanair would move some invest-

ment out of Britain if it votes to leave

the European Union and the “extreme

volatility” that would follow such an

outcome could put downward pres-

sure on air fares in the short term, its

chief executive said yesterday.

The Irish low-cost airline, Europe’s

largest by passenger numbers, flies

40mn of its 100mn-plus passen-

gers a year to and from the United

Kingdom and has its largest hub at

London’s Stansted Airport.

CEO Michael O’Leary is one of the

most vocal business leaders cam-

paigning for a vote to remain ahead

of the June 23 referendum on EU

membership. “After 9/11, after every

crisis Ryanair is selling cheaper

fares, we keep people flying. So the

fact is it would have a downward

eff ect on our pricing for six to 12

months, but we will keep people

flying,” O’Leary told reporters.

“The longer term eff ect though is

we will invest less in the UK, we will

certainly switch some of our existing

UK investment into other Euro-

pean counties because we want to

continue to invest in the European

Union and it will be bad for air travel

and British tourism.” British air fares

could also rise sharply in the long

term if a vote to leave threatened

Britain’s access to EU air services

agreements, he added.

A Brexit may also put some down-

ward pressure on aircraft prices

and O’Leary said there is always an

opportunity for Ryanair to stock up

in such a downturn, though its cur-

rent supply of Boeing planes takes it

out until 2023. However, he said the

“Remain” campaign should be cau-

tious about warning of “apocalyptic

scenarios”. While a period of extraor-

dinary volatility would undoubtedly

follow for six to 12 months after

a Brexit, fundamental economics

would then take over and sterling

would recover, O’Leary said.

BUSINESS9Gulf Times

Saturday, May 14, 2016

ReutersHong Kong

Hong Kong’s economy shrank in the fi rst quarter from the fi nal quarter of 2015, hit by falling

exports and weak consumer spending, with the risk that momentum will slow further.

On the doorstep of the world’s sec-ond-largest economy, Hong Kong has been buffeted by China’s slowdown. A slump in visitors from the main-land, weak retail sales and falling as-set prices have combined to put the economy on the verge of recession.

The trade-dependent economy contracted 0.4% in the first quarter, the first contraction in nearly two years.

On an annual basis, growth was just 0.8% in the first quarter, its weakest pace in four years. It was worse than economists’ expectations for 1.48% growth and less than half the pace of the fourth quarter.

“We think in the second quarter, or even the second half, there should be even more of a slowdown,” said Kevin Lai, senior economist at Daiwa Capi-tal Markets in Hong Kong.

“I am also worried that the whole macro situation in Hong Kong looks like we are not any better than 1997 and 1998,” he said referring to the pe-riod before the Asian financial crisis.

Hong Kong’s economy grew 2.4% in 2015, about half the pace of 2011, as China’s slowdown and a weaker yuan curbed Chinese spending, while a volatile stock market also hit domes-tic consumption.

A string of retailers from fashion to jewellery firms have posted grim performance figures, with retail sales contracting for the 12th successive month in March,

Hong Kong’s tourist arrivals, which dropped 20.5% in February, slid 4.3% from a year earlier to 4.21mn in March. Mainland visitors, which ac-counted for 72% of the total, fell 6.9%

to 3.02mn. Cracks are also widening in the city’s real estate market, one of the most expensive in the world, and ac-counting for nearly a fifth of econom-

ic output. Apartment prices are down by 12% from a September high and in-vestment banks predict a further 20% decline in coming months.

While the city’s leaders have an-nounced a range of relief measures in its March budget, a turnaround in economic activity is unlikely in the

near term given weak global growth and Hong Kong’s strong links to a slowing Chinese economy, analysts say.

Hong Kong GDP contracts on weak exports, spending

Qihoo’s $9.3bn buyout to hit FX regulator impasseBloombergBeijing

The Qihoo 360 Technology Co buy-out consortium, seeking to take the Chinese company private in a

$9.3bn deal, has hit an impasse with the nation’s foreign- exchange supervisor as the regulator scrutinises the deal, people with knowledge of the matter said.

China’s State Administration of For-eign Exchange, whose approval is need-ed to convert large sums of yuan into US dollars, told the investor group it can’t move the acquisition funds off shore in a single batch, according to the people. The consortium, led by Qihoo chairman

Zhou Hongyi, is still negotiating with offi cials from SAFE, the people said, asking not to be identifi ed as the infor-mation is private.

The government has been seeking to control fund outfl ows amid a $42.6bn wave of privatisation off ers for US-list-ed Chinese companies since the start of last year. China wants to avoid encour-aging too many buyouts of overseas-traded companies that could increase depreciation pressure on the yuan, people with knowledge of the matter said earlier this week.

“China is at an infl ection point where it has to balance its objectives of grow-ing via outbound M&A as well as capital outfl ows,” Justin Tang, director of glo-

bal special situations at Religare Capital Markets in Singapore, said Thursday. “A loose approach to FX control could cause a stampede to do outbound ac-quisitions and deplete foreign reserves, which will result in undesirable conse-quences.”

Qihoo, which announced a defi ni-tive agreement with the investor group in December last year, would be the biggest buyout of a US-listed Chinese company. At least 47 such take- pri-vate off ers have been announced since the beginning of 2015, as companies were lured by the prospect of relist-ing at a higher valuation in Shanghai or Shenzhen, data compiled by Bloomberg show. The foreign-exchange regula-

tor has told the Qihoo investor group, which also includes Ping An Insur-ance (Group) Coand Sequoia Capital China, that it should move the acquisi-tion funds overseas in several batches, according to the people. SAFE is also requesting additional documentation on the transfers to ensure they comply with regulations designed to prevent capital fl ight, the people said.

Liu Li, a spokesman for Qihoo, said the privatization process is still on track and it’s “completely untrue” that there is disagreement between Qihoo and SAFE on how to move money abroad. Qihoo’s Zhou said in a mobile-phone text message that the privatization process is on track, declining to com-

ment further. SAFE didn’t immediately reply to a faxed request for comment.

Qihoo, which has said it aims to com-plete the transaction during the fi rst half of 2016, won shareholder approval March 30 and got the green light from China’s state planning agency, the Na-tional Development and Reform Com-mission, the next month. The parties have the right to terminate the merger agreement if it hasn’t been completed by September 18, according to a regula-tory fi ling in December last year.

Shares of Qihoo have been volatile this week as investors reacted to poten-tial measures China’s stock regulator is considering to curb the fl ow of domes-tic backdoor listings.

Visitors take photos on the waterfront of Kowloon peninsula facing Victoria Harbour and Hong Kong island. The trade-dependent Hong Kong economy contracted 0.4% in the first quarter.

Defying debt fears, China bets on property, infrastructure

ReutersBeijing

Local governments across

China are binging on debt again

to pump-prime their slack

economies. But this time round,

they are not wasting money

propping up zombie factories

or loss-making steel plants.

Investment in industries

hit by chronic overcapacity is

drying up quickly. Investment in

mining tumbled 18% in the first

quarter from a year earlier, the

most since at least the second

quarter of 2004, while invest-

ment in manufacturing grew

just 6%, the slowest in the same

period, according to the latest

data from the National Bureau of

Statistics. In recent years, miners

and manufacturers had tapped

easy-to-access bank credit and

government subsidies to fire up

production even as demand be-

gan to wilt. In a landmark move,

Beijing has ordered the closure

of debt-ridden zombie firms as

its policy priority for 2016.

In contrast, first-quarter

investment in infrastructure and

real estate surged 19.6% and

6.2%, respectively. The numbers

reflect the government’s strat-

egy of re-allocating capital to

other engines of the economy,

and in turn, providing a little

respite to the steel, cement,

energy and related services

sectors. China will invest $11.9bn

in aviation infrastructure this

year alone. It has also approved

a 27.4bn yuan high-speed rail

project linking Beijing’s new

airport with neighbouring Hebei

province. In real estate, China’s

March home prices rose at the

fastest clip in almost two years

on the back of a boom in top-tier

cities amid easy bank credit.

To boost infrastructure

investment, Beijing has given lo-

cal governments its blessings to

raise funds in the bond market,

much of it through local govern-

ment financing vehicles (LGFVs)

that skirt off icial spending

limits. LGFVs have raised tens

of billions of dollars through

bonds in the first quarter, ac-

cording to brokerage estimates,

even as China sceptics warn of

another debt bust. The AA-rated

LGFV issuances have appealed

to investors increasingly unsure

of the quality of corporate

paper. Overall local government

bond issuances in the quarter

totalled 955.4bn yuan, accord-

ing to investment firm China

International Capital Corp.

Investment in infrastruc-

ture and real estate is more

organised and demand-based

this time, and will have a better

chance of success than more

speculative developments in

the past, some economists say.

But that’s a subject for debate.

In Guizhou there are plans to

finance a 1.2bn yuan athletic

culture park and a stadium and

gym complex.

Toshiba raises net income forecastBloombergTokyo

Toshiba Corp more than doubled its full-year earnings forecast on asset sales and a projected recovery in its

power and computer memory divisions.Net income will total ¥100bn ($918mn)

in the 12 months ending March, Toshiba said in a release yesterday. That compares with a ¥40bn forecast in March.

Toshiba is trimming its empire as it tries to recover from a multi-year accounting scandal over padded profi ts. The con-glomerate agreed to sell its medical unit to Canon and home-appliance division to China’s Midea Group Co. Incoming presi-dent Satoshi Tsunakawa is facing the task of winning back investor confi dence after record losses, executive resignations and a plunge in its share price.

Toshiba kept its outlook for ¥120bn in operating profi t this fi scal year, rebound-ing from a loss of ¥719.1bn, with revenue forecast to reach ¥5.1tn. The company reported a net loss of ¥483bn for the year ended March on sales of ¥5.67tn yen.

Tsunakawa, currently a senior vice president, will replace Masashi Muromachi as president if shareholders approve the move at a meeting scheduled for late June. Muromachi took over as president temporarily in July after three of his predecessors stepped down amid the accounting scandal. He is staying on as a special adviser.

The energy systems solution business,

which includes Westinghouse, is expect-ed to return to profi t after writedowns last fi scal year. Operating income will be 51bn yen the 12 months ending March, compared with a ¥361.2bn loss a year earlier.

Storage and device solutions, which includes computer memory, is expected to have operating earnings of ¥32bn, it said. The company is investing ¥360bn

over a period of three years till March 2019 on a new factory which will make its proprietary 3D fl ash memory chips. Toshiba expects output to begin no earli-er than 2018. It maintains a fl ash memory partnership with SanDisk Corp and is in talks with the US- based company about investments in 3D fl ash, Toshiba said in March.

The PC unit will break even this year

after a loss of ¥87.1bn. Toshiba has also been in discussions with Fujitsu and Vaio Corp, the personal computer maker spun off from Sony Corp, on a possible merger of their PC operations. While Toshiba is still considering options, the business is in a position to make a profi t independ-ently after scaling back production and targeting enterprise clients, Tsunakawa said earlier this month.

A man walks past a Toshiba logo displayed on one of its television sets in Tokyo. The company said its net income will total ¥100bn ($918mn) in the 12 months ending March.

Australia, US boost effortsto protect steelmakers

AFPMelbourne

Canberra and Washington will step up joint eff orts to protect domestic steelmakers, Australian Prime Minister Malcolm Turnbull said on Thursday, amid concerns about China flooding the market with below-cost products. Turnbull made the remarks after a phone call with US President Barack Obama early Thursday. Steelmakers in both countries are under pressure amid low prices of the alloy - a result of a supply glut and falling demand in China as its economy softens. “The president and I have agreed that Australia and the US will intensify our collaboration to ensure that the overproduction of steel is addressed,” Turnbull told reporters in Melbourne. “I’ve also raised this issue, I should say, with the Chinese leaders, in particular with Premier Li (Keqiang), who undertook and has committed publicly as well to reducing China’s steel production by 150mn tonnes a year.” China is the world’s largest steel producer and accounts

for half of global production, with its manufacturers pumping out hundreds of millions of tonnes more each year than they need domestically amid the economic slowdown. The supply glut has hurt steel-producing nations and led to plant closures and job losses. In Australia, cash-strapped miner and steelmaking giant Arrium – which operates in 15 countries with 8,350 employees – was placed into voluntary administration in early April. Canberra has introduced new anti-dumping decisions to support the local steel industry and is also set to hold a government inquiry into steel dumping. “We need to address this issue because it is important that the viability of steelmakers in our country, and in the US and other nations, is preserved and not undermined by the exporting or the dumping of very cheap steel made in places where it is being produced at way below the real cost,” Turnbull added. Chinese off icials contend that overcapacity in its steel sector is a result of cyclical change in the economy, and that they are striving to shrink the sector.

BUSINESS

Gulf Times Saturday, May 14, 201610

German economy powers eurozone growth, butexports cloud pictureGDP grows 0.7% quarter on quarter; private consumption strong, state spending up; eurozone growth solid at 0.5%; eff ect of ECB stimulus gains traction

ReutersBerlin

Germany’s economy more than doubled its expansion rate in the fi rst quarter as spending

picked up, cementing its role as the growth engine for a region in which the eff ects of high-powered mon-etary stimulus appear to be gaining traction.

The eurozone’s dominant econ-omy grew 0.7%, its strongest quar-terly rate since an identical reading in the fi rst quarter of 2014 as higher state and household expenditure more than off set a dip in foreign trade, the Federal Statistics Offi ce said yesterday.

The fi gure beat forecasts as well

as a preliminary growth rate of 0.5% in the currency bloc as a whole an-nounced by European statistics agency Eurostat in Brussels.

Separate national GDP data pub-lished yesterday showed quarterly growth accelerated to 0.3% in Italy and to 0.5% in the Netherlands.

For the German economy, pri-vate consumption has overtak-en trade as the most important growth driver, with record-low unemployment, low interest rates and higher wages pushing house-holds to spend more.

Also yesterday, Germany’s big-gest trade union, IG Metall, said it agreed a two-stage wage increase of 4.8% over 21 months, which ana-lysts said should further boost con-sumption.

Investment in construction and capital goods rose, the statistics of-fi ce said, boosted by relatively mild winter weather that had a simi-lar impact in some other eurozone countries, while Europe’s migrant crisis also played a role.

“It is likely that higher public ex-penditure contributed to growth in a number of countries, in some cases lifted by spending to deal with the infl ux of refugees (which was true of Germany),” Howard Archer, chief European economist at IHS, said of the Eurostat data.

Policymakers at the European Central Bank said the investment jump was unlikely to be a blip, sup-porting the bloc’s slow but steady recovery which the bank has un-derpinned with its stimulus pro-gramme.

Buying €1.7tn ($1.93tn) worth of assets and cutting rates deep into negative territory, the ECB has pushed down borrowing costs for governments, businesses and households, hoping to kick-start spending to generate growth.

Though the ECB’s ultra-loose monetary policy has been criticised by German politicians, economists linked it to the rise in consumption as well as a booming real estate sec-tor.

Germany’s quarterly growth rate easily beat the 0.3% posted in the fi nal three months of 2015, and was also higher than all but four of the eurozone states for which Eurostat published quarterly fi gures.

But the unadjusted year-on-year fi gure of 1.3% missed the Reuters consensus forecast of 1.5%, and the economy ministry in Berlin said it expected German growth to slow.

That view was shared by econ-omists, who said the impact of weaker exports — a trend fuelled by a stronger euro currency — would eventually be felt as demand from emerging markets ebbs.

“Trade remains the problem child because of weakness in emerg-ing markets,” said Sal. Oppenheim economist Ulrike Kastens.

Holger Sandte of Nordea added: “Growth will not remain so strong, but strong enough so employment continues to rise.”

Economy Minister Sigmar Gabri-el said the government should in-crease investments, echoing calls

by the International Monetary Fund (IMF).

“The German economy started 2016 on a good footing: industry posted an increase in production, employment is noticeably rising, and higher income of private house-holds is leading to higher private spending,” Gabriel said.

“Our task is to use this momen-tum to invest in education, modern infrastructure and innovation.”

But ING economist Carsten Brze-ski said the strong data might pro-vide more ammunition for German politicians to resist calls by the IMF and the Organisation for Economic Co-operation and Development (OECD) to reform the economy.

The IMF has urged Germany to boost investment, and reform its labour market and pension system, while the OECD has also called for tax reductions.

“The strong growth performance also shows what currently is the big-gest risk for the German economy: complacency,” Brzeski said.

An employee of German car manufacturer Mercedes Benz works on the interior of a GLA model at their production line at the factory in Rastatt. Germany, the eurozone’s dominant economy grew 0.7%, its strongest quarterly rate since an identical reading in the first quarter of 2014 as higher state and household expenditure more than off set a dip in foreign trade, the Federal Statistics Off ice said yesterday.

SNB may need toact fastif Britainquits EUReutersZurich

A British exit from the European Union could lead to infl ows into the Swiss franc too strong for the central bank to

counter through currency intervention alone, economists say.

If the franc strengthens beyond parity with the euro, as some experts predict, the Swiss National Bank may be forced to cut already negative interest rates yet again to keep the currency from becoming over-valued.

The possible impact on the franc has been Switzerland’s main concern as Britain’s June referendum on whether to remain an EU member approaches. A stronger currency would make Swiss exports more expensive and competing imports cheaper.

“If the UK votes to leave the EU, then we would expect an appreciation of the euro-franc exchange rate toward parity -possibly overshooting this mark temporarily if the SNB does not immediately cut the sight deposit rate,” economist Nouriel Roubini’s research group said last week.

That would be the franc’s biggest surge since the central bank scrapped its 1.20 per euro limit on the franc’s value in January 2015.

Since then, the SNB has managed the franc with currency interventions and negative in-terest rates, charging banks 0.75% on some deposits and steering three-month money market rates towards -0.75%.

But investors looking for a safe haven are likely to head for the franc if Britain leaves the EU, analysts say.

“The Swiss franc may be the best hedge against ‘Brexit,’” HSBC’s foreign exchange strategists said. “The SNB may intervene, but we believe it would, at best, be able to slow the move rather than reverse it.”

The twin pillars of intervention and nega-tive rates have worked so far, SNB Chairman Thomas Jordan has said. But he warns the ef-fect of monetary policy alone was limited.

Traders say ongoing intervention by the SNB — spending as much as 2bn Swiss francs ($2.06bn) a week to buy foreign currencies in recent months — has played a big role in sta-bilising the franc, which the SNB regularly calls “signifi cantly overvalued”.

“Through directed interventions, the SNB has prevented fantasies of franc appreciation from even forming,” said Thomas Stucki, the chief investment offi ce at St Galler Kantonal-bank.

But the impact from a Brexit could over-whelm the SNB’s ability to intervene, HSBC strategists said, leaving the bank unable to stem the franc’s rise.

The SNB could increase interventions to 15bn to 20bn francs a week, a range seen in January 2015, said Daniel Kalt, UBS’s chief economist for Switzerland, but most agree there are limits.

The central bank’s balance sheet already exceeds Switzerland’s gross domestic prod-uct. Consequently, a rate cut looks likely, Kalt said. “They don’t have many other op-tions left.”

The SNB has not ruled out pushing rates further into negative territory, which would draw more criticism from banks, insurers and pension funds paying deposit charges.

World’s richest airlines can’t get enough hand-me-down jetsBloombergChicago

It’s a tale that could be dubbed “From Russia to Love.”

Two Boeing Co 737 jetliners swooped onto a factory airfi eld near Seattle in March, the last of the models once fl own by a collapsed Russian car-rier. They were headed for makeovers to erase the Cyrillic logos and any other trace of Transaero Airlines. Next stop: Dallas’s Love Field, where hometown carrier Southwest Airlines Co is on a record shopping spree.

The imports are integral to what Jon Stephens, Southwest’s director of fl eet transactions, describes as a “beauti-ful plan” to swap out some of its oldest models without spending lavishly. The carrier’s in the middle of acquiring 83 used Boeing 737-700s from around the world, the largest such haul in its more than four-decade history.

Southwest and its US competitors — now awash in cash after earning record profi ts last year — are scouring developing nations for second-hand jetliners as cheap fuel makes older, less effi cient aircraft more economical to operate. That bucks the traditional fl ow

of hand-me-down planes from North American carriers to counterparts in emerging-market countries and makes an already volatile market for Boeing Co and Airbus Group more unpredict-able.

“If you’ve got excess things with wings, you are probably trying to sell it in the US right now,” said George Fer-guson, senior air transport analyst at Bloomberg Intelligence.

Driving the shift is the collapse of crude prices. While the commodi-ties downturn has clipped economies from Russia to Brazil, lower fuel costs helped US airlines earn almost $19bn last year.

United Continental Holdings is im-porting as many as two dozen used Airbus A319s from China. Delta Air Lines, which pioneered the strategy, is studying taking used 737s as its Brazil-ian alliance partner, Gol Linhas Aereas Inteligentes, shrinks and restructures operations.

The carriers haven’t cut back on new aircraft orders, either, in a buyer’s market for cutting-edge jets. Because the used planes don’t need to be fl own heavily to recoup capital costs, they can be added selectively to routes “so air-lines have more schedule fl exibility and

can improve on-time performance,” said George Dimitroff , head of valua-tions for Ascend Flightglobal Consul-tancy.

Older planes lost their stigma in the US during the last 15 years as four of the largest airlines fi led for bankruptcy. To cut costs, they deferred orders and made do with planes they previously would have swapped for newer models. They’ve expanded the practice even as fortunes have reversed this decade, tak-ing advantage of sophisticated mainte-nance operations to extend service.

Used-jet imports to North America jumped 29% to 198 airplanes last year with Southwest leading the way, fol-lowed by Allegiant Travel Co and Delta, according to Ascend data.

Lower fuel bills mean airlines are hanging onto older single-aisle jets rather than parking or scrapping them. Of the smallest Airbus and Boeing models, only one A319 and no 737-700s have been disassembled for parts this year, compared with a total of 17 in 2015, according to Ascend.

“It’s partly a function of oil and lease expense and there’s actually demand by airlines like United and Southwest that want to acquire these airplanes and fl y them,” Dimitroff said. “They’re more

valuable as fl iers than a collection of parts.”

The trend is adding to a topsy-turvy global aviation market for the lead-ing manufacturers, Boeing and Airbus. They already face slowing sales as air-lines navigate currency fl uctuations and sub-$50-a-barrel oil, which has reduced the incentive to buy more fuel-effi cient aircraft.

With fewer single-aisle jets retired to aviation boneyards, there’s a risk of a glutted market as Boeing and Airbus boost monthly output of single-aisle jetliners to about 60 apiece by the end of the decade from the present pace of 42. Lessors haven’t yet found airline customers for more than 900 narrow-body aircraft on order over the next fi ve years, according to a March 29 report by Goldman Sachs Group.

“I look at two guys producing nar-row-bodies at 60 per month and I’m thinking this is just not going to work out well,” said aviation consultant Rob-ert Mann.

For now, Boeing hasn’t seen demand slip for its workhorse 737 jetliners. In fact, more orders are expected since about 700 narrow-bodies are already past the 25-year mark, when planes typically are parked. That should

prompt a wave of retirements. “Air-lines that are buying used aircraft are also buying our new airplanes,” said Randy Tinseth, Boeing’s vice president for marketing. “We are not seeing any new trends that would change future demand.”

But the trading in used jets can skew the forces of supply and demand. Prices for decade-old Boeing 737-700 jetlin-ers actually rose last year as South-west dominated the market. The plane maker has delivered 1,116 of the -700, the smallest jet in its current lineup, and Southwest will fl y nearly half of them by the time its spree winds down in 2018.

Southwest is on the prowl for more used aircraft even though it has ordered 200 of the 737 Max, upgraded planes due to make their commercial debut next year. The Dallas-based carrier also struck a deal with Boeing for 33 new 737-800s late last year.

“If the economics don’t work, we’ll go new,” Stephens, the Southwest fl eet executive, said of the airline’s jet strat-egy. “That’s the trump card we hold. The leasing community knows that and knows what the Southwest deal is.”

The airline bought used planes as far back as the 1970s, the decade in which

it began fl ights. But the low-cost car-rier never thought seriously about making older planes a competitive weapon until about three years ago. Stephens’s team saw a glut of deeply discounted Boeing 737-700s as the perfect replacement for smaller Boe-ing 717s that Southwest planned to of-fl oad to Delta.

Prices and lease terms were so at-tractive that Southwest also decided to use the second-hand planes to help replace 737 Classics, older, crack-prone jets whose upkeep costs were soaring. A dispute with its pilots union was also a factor as the carrier accelerated its retirement date for the planes by four years to 2017.

The carrier turned to AerCap Hold-ings, the largest independent lessor, to help fi nd planes coming onto the mar-ket. As Transaero, then Russia’s sec-ond-largest airline, spiralled into crisis late last year, AerCap fl ew the planes to Ireland and eventually to the US Af-ter makeovers, they will look like every other Southwest jet.

“There are a lot of reasons why it makes sense,” Stephens. “It’s been a beautiful plan to replace the 717s, and bridging to the Max is huge. It positions us very, very well.”

BUSINESS11Gulf Times

Saturday, May 14, 2016

Brazil’s Petrobras reports net loss of 1.25bn reaisCORPORATE RESULTS

Brazil’s state-controlled oil company Petroleo

Brasileiro posted its third-straight quarterly loss

on Thursday as oil prices and production fell and a

weaker currency boosted debt costs.

The result missed analyst expectations of a profit.

The consolidated net loss at Petrobras, as the

company is known, was 1.25bn reais ($358mn) in

the three months ending March 31, compared with

a profit of 5.33bn reais a year earlier, the Rio de

Janeiro-based company said in a securities filing.

The average estimate of five analysts surveyed by

Reuters was for a profit of 3.64bn reais.

Petrobras has struggled mightily with a plunge in

world oil prices and its role at the centre of a mas-

sive corruption scandal. It is saddled the oil indus-

try’s largest debt and has also been hurt by falling

domestic demand due to Brazil’s worst recession

since the 1930s.

Petrobras’ net revenue, or total sales minus sales

taxes, fell 5.4% to 70.3bn reais. Adjusted earnings

before interest, taxes, depreciation and amortiza-

tion, or EBITDA, a measure of operating profit, fell

2% to 21.1bn reais.

Adjusted EBITDA adds up EBITDA plus participa-

tion in investments, impairment and charges for

improper capitalization, according to the Petrobras

statement.

Mechel

Indebted Russian coal and steel producer Mechel’s

core earnings jumped 54% year-on-year in 2015 due

to increased returns on investments that previously

threatened to sink the company.

The mining company, controlled by businessman

Igor Zyuzin, borrowed heavily before Russia’s

economic crisis and has struggled to keep up

repayments as demand for its products weakened

alongside tumbling coal and steel prices.

Mechel reached agreements in principle to

restructure $5.1bn of debt with creditors including

Russian lenders Sberbank, Gazprombank and VTB

in February, but has since struggled to get approval

from shareholders.

“Mechel’s operational and financial results im-

proved to a large extent due to the fact that our

key projects whose implementation had caused

our company’s debt growth, are reaching target

capacity utilization levels and increased returns on

invested capital,” said chief executive Oleg Korzhov.

Mechel’s earnings before interest, taxation, depre-

ciation and amortisation (EBITDA) totalled 45.73bn

roubles ($3.87bn) in 2015, the company said in a

statement.

Its net loss for the year totalled 115.16bn roubles,

compared with a loss of 132.7bn roubles in 2014,

largely due to foreign exchanges losses, Mechel

said. Revenue increased 4% year-on-year to

253.14bn roubles.

Mechel’s crude steel output increased 1% year-on-

year to 4.3mn tonnes in 2015, while coal production

rose 2% to 23.2mn tonnes.

Nvidia

Nvidia Corp forecast better-than-expected revenue

for the current quarter as it sees robust demand for

its chips that power complex computer graphics.

The chipmaker last week unveiled its GeForce GTX

1080 and 1070 graphics processors based on its

Pascal technology.

Revenue from its gaming business, which designs

graphics cards such as GeForce for PCs, rose 17%

to $687mn.

The company has weathered a shrinking personal

computer industry by focusing on game enthusi-

asts, who are willing to pay hundreds of dollars for

processors used in playing graphically demanding

games.

Revenue from its data centre business, which

includes its Tesla processors, rose 62.5% to $143mn.

The company said it expected second-quarter

revenue to be $1.35bn, plus or minus 2%. Analysts

were expecting $1.28bn for the quarter, according

to Thomson Reuters I/B/E/S.

Nvidia’s net income rose to $196mn, or 33¢ per

share, in the first quarter ended May 1 from $134mn,

or 24¢ per share, a year earlier.

Excluding items, the company earned 46 cents per

share, handily beating analysts’ expectations of 32¢.

Revenue rose 13.4% to $1.31bn, while analysts were

expecting $1.26bn.

The company also said it intends to return about

$1bn to shareholders in fiscal 2017 through quar-

terly dividends and share buybacks.

Kohl’s, Nordstrom

Kohl’s Corp and Nordstrom reported a surprise fall

in quarterly comparable sales on Thursday, high-

lighting the malaise in the department store sector

as consumers pull back spending on apparel.

Kohl’s cited weather as a factor behind weak sales.

However, Kohl’s, known to be the most weather-

sensitive among department store operators, said

macro-economic issues seemed to have dented

sales more than cool temperatures.

Nordstrom, which also slashed its full-year profit

forecast, said it had to resort to heavy discounts to

clear out unsold inventory in the first quarter.

The dismal first-quarter showing will accelerate

cost-cutting eff orts across the sector.

Kohl’s, which ended the quarter with 1,167 stores,

said it plans to shut 18 stores this year as it looks to

meet its profit target for the full year.

The company also said it was experiencing signifi-

cant labor costs due to wage increases.

Nordstrom said in April it was expecting to reduce

about 350-400 positions to generate savings.

Kohl’s same-store sales fell 3.9%, compared with

the 0.4% growth analysts on average had expected,

according to research firm Consensus Metrix.

Excluding items, the company earned 31¢ per share.

Sales fell for the first time in six quarters, declining

3.7% to $3.97bn.

Nordstrom’s net income fell by nearly two-thirds to

$46mn in the first quarter ended April 30.

Sales at Nordstrom stores open at least a year fell

1.7%. Analysts had expected sales to remain flat.

Shake Shack

Shake Shack, known for its juicy antibiotic-free

hamburgers and frozen custard shakes, on Thurs-

day reported results that topped expectations and

raised its same-restaurant sales forecast for the

year.

The company, which began as a hotdog stand in

New York City’s Madison Square Park in 2001, said

the recent launch of its Chick’n Shack sandwich

at US stores helped same-restaurant sales rise to

9.9%. That topped the 5.3% consensus estimate of

analysts polled by research firm Consensus Metrix.

The New York-based restaurant chain, which went

public in January 2015, reported a net profit of

$1.5mn, or 7¢ per share, compared to a net loss of

$12.7mn, or $1.06 per share, in the year-ago period.

Adjusted earnings were 8¢ per share. Analysts on

average had expected 5 cents, according to Thom-

son Reuters I/B/E/S.

Total revenue rose 43% to $54.2mn.

The burger joint’s stock rose as high as $37.49

shortly after the company released its results, be-

fore trading at $34.26. It has fallen more than 63%

from an all-time peak of $92.86 in May 2015.

The stock debuted on the New York Stock

Exchange at $21, more than twice the estimate,

buoyed by growth-hungry investors hoping the

burger chain would replicate the red-hot run of

industry darling Chipotle Mexican Grill.

BM&FBovespa

BM&FBovespa, Latin America’s largest financial

exchange operator, returned to profit in the first

quarter as increased market volatility bolstered

equities and derivatives revenues and eff orts to

contain expenses bore fruit.

Net income came in at 339.5mn reais ($98mn) last

quarter, while profit adjusted by one-time items

totalled 471.801mn reais. The average consensus

estimate compiled by Thomson Reuters was

480.2mn reais.

J.C. Penney

J.C. Penney Co joined Macy’s Inc and Kohl’s Corp in

reporting a drop in total sales in a quarter marked

by weak apparel demand, sending its shares down

sharply.

The department store operator also reported a

surprise drop in sales at stores open at least a year,

the first fall in six quarters for a company that has

been a bright spot in a sector struggling with a shift

in spending patterns.

Sales at Penney stores open at least a year fell

0.4% in the first quarter ended April 30, compared

with the 3.3% rise expected by analysts polled by

research firm Consensus Metrix.

J.C. Penney’s net loss narrowed to $68mn, or 22¢

per share, in the quarter, from $150mn, or 49¢ per

share, a year earlier.

Excluding items, the company reported a loss of

32¢ per share. Analysts on average had expected a

loss of 38¢, according to Thomson Reuters I/B/E/S.

However, net sales fell 1.6% to $2.81bn, the first

drop in five quarters. Sales also missed the average

analyst estimate of $2.92bn.

J.C. Penney cut its forecast for gross margin growth

for the year ending January 2017 to 10-30 basis

points from 40-60 points, as it starts selling appli-

ances at more stores and online sales increase.

Draghi cast as cash conspirator foretells German exit clashBloombergFrankfurt

Mario Draghi can’t fail to hear the complaints from Germany over European Central Bank

policy, but he’s just shown he doesn’t always have to listen.

Conservatives in Europe’s largest economy are vowing to push the ECB president to reverse last week’s de-cision to phase out the €500 ($569) note — and will amplify that call at a demonstration in the institution’s hometown of Frankfurt this weekend. While Draghi’s relationship with his host country might not be getting any easier, he is signaling he won’t bow to political pressure for now.

The skirmish could augur bigger bat-tles to come, as the gradual healing of the euro-area economy will one day justify a winding down of the unprec-edented stimulus measures that the ECB has thrown at it during Draghi’s four years in charge. In timing that exit, he may well face German pressure to tighten policy earlier than is warranted, risking the same mistake the Bank of Ja-pan was accused of in the early 2000s.

“When the economy or energy pric-es begin to push infl ation higher, the real test will be whether the ECB has the stamina to hold on,” said Christian Odendahl, chief economist at the Cen-tre for European Reform in London. The €500 note decision is “a good sign, because for that the ECB had a tough job communicating it in Germany — and they did it anyway.”

Draghi, an Italian, was given a rough ride in the run-up to his ECB presi-dency by German newspapers fearful he’d bring in infl ationary policies. Now

the central bank is pumping €80bn a month into the fi nancial system via bond purchases, has cut its deposit rate to a record-low minus 0.4%, and is about to start a series of operations that could see lenders paid to take cen-tral bank cash.

Infl ation is nowhere to be seen, and Draghi has given multiple interviews to national media to explain his strategy, yet he’s still resented by many in the population who see him as dismissive of German arguments. When the time comes to start unwinding those meas-ures, it’ll probably be a fi nely-calibrated decision that will spark a robust debate in the public domain and on markets.

In Germany, the debate is at risk of be-ing dragged into the campaigning for the

2017 general election. Draghi could even fi nd himself addressing the German par-liament. That would be an unusual step, but one he also took in 2012 amid the furore over the OMT bond-buying plan that helped stem the debt crisis.

Parliamentary challenge is be-ing joined by protest on the streets. A group called Stoppbargeldverbot — Stop The Ban on Cash — affi liated to the insurgent anti-euro Alternative for Germany party, has organised the Frankfurt demonstration for May 14. Its leaders see a creeping eff ort by the Ger-man government, commercial banks, the European Union and the ECB to eliminate cash and to subject citizens to the electronic surveillance of their fi nancial aff airs. The ECB says printing

of €500 notes is being halted because of concerns it facilitates criminal ac-tivities. The note will stay legal tender, other denominations will remain and Draghi has said cash will continue to have a role in payments.

Nevertheless, Clemens Fuest, presi-dent of the Munich-based Ifo institute, argued on May 4 that the decision “un-dermines trust” in the central bank.

“Why should we not press for this decision with the €500 note to be re-voked?” Max Otte, author of one of sev-eral books on the threat to cash published in German in the last 12 months, said in an interview. “The anti-cash lobby is very strong, and it’s also an anti-citizen lobby, an anti-freedom lobby.”

The suspicion that the ECB is up to something other than crime-fi ghting with its cash policy is spreading. In a world of negative interest rates, the abolition of cash would in fact come in handy for central bankers seeking to push the lower bound on interest rates further.

“Cash is the biggest enemy of nega-tive interest rates and the ECB’s latest action not only signifi es further central bank dominance but also an increased likelihood of deeper negative inter-est rates in the future,” said Salman Ahmed, chief investment strategist at Lombard Odier Investment Managers in London. “The impending death of the €500 note has huge implications on the conduct and shape of future mon-etary policy.”

Yet if the only German quibble with the ECB were its policy on banknotes, it may not matter much. But another is-sue — interest rates — is front and cen-tre among the grievances expressed by German public fi gures who speak of the “expropriation” of the interest income

otherwise owed to savers. German Fi-nance Minister Wolfgang Schaeuble has blamed ECB policies for contrib-uting to the rise of the Alternative for Germany party.

The general discontent isn’t limited to either Germany or the ECB. Half of respondents to an Ipsos-Mori poll in Belgium, France, Germany, Hungary, Italy, Poland, Spain and Sweden, pub-lished on Monday, believe their coun-try should hold a referendum on stay-ing in the European Union. An average of 49% said Britain will vote to leave in June’s referendum.

Draghi’s position is that rates will stay where they are or even lower until “well past” the end of the asset-pur-chase program, currently scheduled to run until March 2017 and predicted by many economists to go longer than that.

Yet the ECB itself forecasts that infl ation in the 19-nation euro area, which has fl uctuated around zero for more than a year, will start rising in the second half of 2016. When that hap-pens, the debate on the exit strategy may arrive in earnest.

The ECB, which was modelled on Ger-many’s Bundesbank, may fi nd that its heritage draws it towards a willingness to leave extraordinary monetary policy behind as soon as possible, according to Holger Schmieding, chief economist at Berenberg Bank in London.

The problem is that central banks have experienced what happens when policy is tightened too soon. Citing a nascent recovery, Bank of Japan of-fi cials lifted their key rate away from zero in August 2000. Six months later, they had to reverse course when defl a-tion returned. With hindsight, the ECB made a similar mistake itself in 2011.

Draghi has given multiple interviews to national media to explain his strategy, yet he’s still resented by many in the population who see him as dismissive of German arguments.

EU member states agree roaming for Netfl ix

ReutersBrussels

Consumers will be able to access their online subscriptions for serv-

ices like Netfl ix , Sky and Canal+ when they travel across the Eu-ropean Union under proposals tentatively agreed by member states yesterday.

The law was presented by the EU executive, the European Com-mission (EC), last December as part of its eff orts to knock down national barriers in online services across the 28-member bloc.

Member state representatives endorsed the proposal yesterday, paving the way for it to be ap-proved by ministers when they meet on May 26.

Consumers with subscrip-tions to services such as Sky TV Now, ProSiebenSat.1MaxDome TV in Germany or Netfl ix in France, would be able to view content they have paid for when they temporarily travel abroad.

What constitutes temporar-ily was left open, but member states specifi ed that it is a “lim-ited amount of time”.

The EC hopes that the pro-posal will enter into force in 2017, the same year that roam-ing charges for using mobile phones when travelling within the 28-member European Union are supposed to be abolished.

Knocking down barriers to a single market in both the online and offl ine worlds is a key aim for Brussels.

BUSINESSSaturday, May 14, 2016

GULF TIMES

Foreign institutions’ and local retail investors’ buy support makes bourse best performer in GCC

QSE WEEKLY REVIEW

By Santhosh V PerumalBusiness Reporter

Reflecting the rebound in the global oil

prices, which neared six-month high; the

Qatar Stock Exchange (QSE) saw its key

index gain 193 points to become the best

performer among the Gulf Cooperation

Council bourses during the week.

The bullish momentum was on account

of buying support from foreign institu-

tions and local retail investors during

the week which saw Doha Bank receive

shareholders’ nod for its $5bn capital

boost through certificate of deposits and

Euro commercial papers.

Consumer goods, telecom, real estate,

industrials and transport counters wit-

nessed heavy demand during the week

which featured a report from Arab Petro-

leum Investments Corporation that said

Qatar would require $9bn for the next five

years in its power sector for generation

and transmission and distribution.

Islamic stocks were seen outperform-

ing the market during the week which saw

Doha Bank Assurance Company’s outlook

being revised to ‘negative’ from ‘stable’ by

global credit rating agency Standard and

Poor’s.

Small and microcap equities consider-

ably strengthened during the week which

saw the 20-stock Qatar Index surge 1.98%.

Dubai saw its bourse gain 1.12%, Saudi

Arabia (0.58%) and Kuwait (0.42%); where-

as Abu Dhabi fell 0.93%, Muscat (0.17%)

and Bahrain (0.12%) during the week

which saw Qatar Insurance Company an-

nounce the completion of rights issue.

The QSE is down 4.68% year-to-date

compared to a steep fall of 8.59% in Bah-

rain, 3.91% in Kuwait and 3.14% in Saudi

Arabia; whereas Muscat gained 10.42%,

Dubai 6.15% and Abu Dhabi 1.86%.

Opening the week marginally weak

at 9,730 points on Sunday, the market

was on a consistent path of gains for the

remainder of the session and thus its key

index settled at 9,941 points during the

week which saw banking, industrials and

realty stocks constituted more than 74%

of the trading volumes in the QSE.

The 20-stock Total Return Index soared

1.98%, All Share Index (comprising wider

constituents) by 1.85% and Al Rayan Is-

lamic Index 3.35% during the week which

saw Qatar First Bank (QFB) and Qatari

Investors Group dominate the trading ring

in terms of volume and value.

Consumer goods stocks appreciated

4.32%, telecom (4.05%), real estate (3.17%),

industrials (2.28%), transport (2.1%) and

banks and financial services (0.85%); where-

as insurance fell 1.32% during the week.

Market capitalisation shot up 1.58% or

more than QR8bn to QR535.09bn with

small, micro, large and midcap equities

gaining 3.28%, 2.74%, 1.65% and 0.68%

respectively during the week.

Mid, micro and small cap stocks have

gained 2.72%, 2.03% and 0.12% respec-

tively year-to-date; but large caps tanked

6.66%.

Of the 44 stocks, as many 33 rose, while

only nine fell and one was unchanged.

Another one was not traded. Eight of

the nine industrials; seven of the eight

consumer goods, six of the 13 banks and

financial services; all of the four realty;

three each of the five insurers and the

three transport; and all of the two telecom

stocks close higher during the week.

About 77% of the scrips extended gains

with major movers being Ooredoo, Ezdan,

Mazaya Qatar, United Development Com-

pany, Gulf Warehousing, Gulf International

Services, Aamal Company, Qatari Inves-

tors Group, Mannai Corporation, Medicare

Group, QNB, Masraf Al Rayan, Dlala and Al

Meera during the week.

However, QFB, Mesaieed Petrochemical

Holding, Qatar General and Reinsurance

and Qatar Islamic Bank were seen bucking

the trend during the week.

Foreign institutions’ net buying in-

creased considerably to QR84.33mn com-

pared to QR8.07mn the previous week.

Local retail investors turned net buyers

to the tune of QR7.65mn against net sell-

ers of QR7.8mn the week ended May 5.

However, domestic institutions’ net

selling strengthened perceptibly to

QR89.34mn compared to QR15.34mn the

previous week.

Non-Qatari individual investors

turned net profit takers to the extent

of QR2.64mn against net buyers of

QR15.08mn the week ended May 5.

Total trade volume fell 7% to 39.65mn

shares, while value rose 5% to QR1.39bn

and transactions by 12% to 24,661 during

the week.

There was 31% plunge in the consumer

goods sector’s trade volume to 3.6mn

equities and 13% in value to QR239.6mn

but on 42% increase in deals to 3,479.

The insurance sector’s trade volume

plummeted 26% to 0.45mn stocks and

value by 28% to QR32.27mn, while trans-

actions rose 15% to 584. The banks and

financial services sector saw 15% shrink-

age in trade volume to 14.17mn shares, 9%

in value to QR403.25mn and 10% in deals

to 6,869.

The real estate sector’s trade volume

declined 6% to 7.3mn equities and value

by 1% to QR147.56mn; whereas transac-

tions gained 12% to 3,742.

The market witnessed 6% fall in

telecom sector’s trade volume to 3.04mn

stocks and 1% in value to QR76.75mn but

on 3% rise in deals to 2,708.

However, the transport sector’s trade

volume shot up 28% to 3.08mn shares,

value by 55% to QR126.47mn and transac-

tions by 42% to 1,821.

The industrials sector reported 20%

surge in trade volume to 8.01mn equities,

47% in value to QR365.7mn and 32% in

deals to 5,458.

In the debt market, there was no

trading of treasury bills and government

bonds during the week.

US retail sales rise strongly, boost economic outlookRetail sales increase 1.3% in April; core retail sales rise 0.9%; March sales revised up

ReutersWashington

US retail sales in April recorded their biggest increase in a year as Americans stepped up pur-

chases of automobiles and a range of other goods, suggesting the economy was regaining momentum after growth almost stalled in the fi rst quarter.

The jump in sales reported by the Commerce Department yesterday is a boost for the sector that has been hit by sluggish demand. It comes days after major retailers, including Macy’s and Nordstrom, reported sales tumbled in the fi rst quarter and lowered their full-year profi t forecasts.

“The retail sales report shows that recent claims of the demise of the US consumer have been greatly exaggerat-ed,” said Steve Murphy, a US economist at Capital Economics in Toronto.

Retail sales surged 1.3% last month, the largest gain since March 2015, af-ter dropping 0.3% in March. Excluding automobiles, gasoline, building mate-rials and food services, retail sales shot up 0.9% last month after an upwardly revised 0.2% gain in March.

These so-called core retail sales cor-respond most closely with the con-sumer spending component of gross domestic product.

They were previously reported to have gained 0.1% in March. Econo-mists had forecast retail sales rising 0.8% and core retail sales gaining 0.3% last month.

Signs of an acceleration in consumer spending keep an interest rate hike from the Federal Reserve next month on the table.

“Today’s data materially strengthen the hand of those within the Fed for a rate increase in June but we remain doubtful as to whether this view will prevail, barring an especially robust employment report in early June,” said Anthony Karydakis, chief economic strategist at Miller Tabak in New York.

Consumer spending prospects got a boost from a separate report showing sentiment among households jumped to an 11-month high in early May.

The University of Michigan said its consumer sentiment index surged 6.8 points to 95.8 early this month, the highest reading since June. Sentiment increased among all income and age groups, with big gains among lower-income and younger households.

Last month’s strong core retail sales increase could prompt economists to raise their second-quarter GDP, cur-rently hovering around a 2% annual-ised rate. Economic growth braked to a 0.5% pace in the fi rst three months of the year after expanding at a 1.4% pace in the fourth quarter.

But another report from the Com-merce Department yesterday showing a 0.4% increase in business invento-ries in March suggest growth was much higher than initially estimated.

Data on retail sales, construction spending and factory orders have al-ready implied that the advance GDP growth estimate could be raised to a 0.9% rate when the government pub-lishes its revision later this month.

The dollar rose against the euro and the yen after the data, while prices for US government debt fell. US stocks were trading lower.

Retail sales have been sluggish in part because the strengthening labor market has not generated strong wage growth. Economists also say that some of the savings from cheaper gasoline over the past year-and-a-half have been absorbed by rising rents and med-ical care costs.

Macy’s, the largest department chain, said this week same-store sales fell 5.6% in the fi rst quarter, and ex-pected full-year sales to decline 3-4%.

Nordstrom reported that sales at stores open at least a year fell 1.7% in the fi rst quarter. It cut its profi t fore-

cast for the year to $2.50-$2.70 per share from $3.10-$3.35.

The Commerce Department report showed retail sales in April rose across all categories, with the exception of building materials and garden equip-ment. Auto sales advanced 3.2%, the largest increase since March 2015, after slumping 3.2% in March.

Receipts at service stations increased 2.2%, refl ecting recent increases in gasoline prices. Sales at clothing stores surged 1.0%, the largest increase since May 2015.

Online retail sales jumped 2.1%, the biggest gain since June 2014. Receipts at sporting goods and hobby stores rose 0.2% last month.

Sales at electronics and appli-

ance outlets increased 0.5%. Build-ing materials and garden equipment store receipts, however, fell 1.0% last month, the largest decline since Au-gust. Sales at restaurants and bars rose 0.3%.

In a separate report, the Labor De-partment said its producer price index climbed 0.2% last month after slipping 0.1% in March.

In the 12 months through April, the PPI was unchanged after dipping 0.1% in March.

Infl ation continues to be restrained by the lingering eff ects of the dollar’s surge and oil price plunge. The green-back gained 20% against the currencies of the US’ trading partners between June 2014 and December 2015.

Shoppers leave The Grove mall in Los Angeles. Retail sales surged 1.3% last month, the largest gain since March 2015, after dropping 0.3% in March. Excluding automobiles, gasoline, building materials and food services, retail sales shot up 0.9% last month after an upwardly revised 0.2% gain in March, the Commerce Department reported yesterday.

SWIFT reports ‘sophisticated’

hacker attack

AFPParis

SWIFT, the global fi nancial system used to move hun-dreds of billions of dollars

a day, yesterday said highly so-phisticated hackers had gained access to a bank aiming to hijack fund transfers made via the net-work.

SWIFT — the Society for Worldwide Interbank Financial Telecommunication — insisted its own system had not been compromised, but warned that this latest attack was clearly part of a wide-ranging campaign.

It comes months after a mul-ti-million dollar heist at the Bangladesh central bank.

“Forensic experts believe this new discovery evidences that the malware used in the earlier reported customer incident was not a single occurrence but part of a wider and highly adaptive campaign targeting banks,” the Brussels-based group said in a letter to clients.

In both cases, the hackers “ex-ploited vulnerabilities” at the two unnamed banks to gain access to their fund transfer systems, which then give instructions to the SWIFT network, it said.

“The attackers clearly ex-hibit a deep and sophisticated knowledge of specifi c opera-tional controls within the tar-geted banks — knowledge that may have been gained from ma-licious insiders or cyber attacks, or a combination of both,” SWIFT said.

In light of the latest attack, SWIFT called on its customers “as a matter of urgency” to re-view all their internal controls.

“This includes everything from employee checks to pass-word protection to cyber de-fences,” it said, stressing again that the SWIFT network had not been compromised.

In February, hackers got hold of $81mn from Bangladesh’s account at the Federal Reserve Bank of New York by making it move the funds to accounts in the Philippines.

Investigators are still trying to work out how the hackers got into the system in that instance amid growing concerns about bank security and what the di-verted funds might be used for.

SWIFT is an integral part of the global fi nancial system, and according to its website services some 11,000 institutional clients in more than 200 countries.

Alfa Romeo finally ready to rev up its 510-HP BMW killerBloombergMilan

It’s make-or-break time for Fiat Chrysler

Automobiles’s long-awaited revamp of Alfa

Romeo, with the sporty Italian brand’s first

luxury sedan about to go head-to- head

with the likes of the BMW 3-Series.

After at least six months of delays, the

Giulia sedan is now on sale in Europe. The

critical launch in the US, where it currently

only sells the 4C sports car, is planned for

the third quarter and will kick off with a

limited number of the 510- horsepower

Quadrifoglio performance version. The

standard model will follow in the final

three months of the year.

At least on the track, Fiat Chrysler’s

chief executive off icer Sergio Marchionne

is confident the Giulia, which accelerates

to 100km (62 miles) per hour in as little as

3.9 seconds compared with 4.1 seconds for

the BMW M3, can win.

“Tell me if there is any car in the same

class which can compete with this one:

The BMW? Come on, take one here on the

track and you’ll see,” Marchionne, who

used to drive cars from the German luxury

brand before joining Fiat in 2004, said

this week at Fiat’s Balocco test track in

northern Italy. “This is the best expression

of what we can do on a technical basis.”

But it will take more than extra horse-

power for Alfa to beat BMW, Audi and

Mercedes-Benz in the most crowded seg-

ment of the luxury-car market. The Ger-

man rivals have reputations built up over

decades and can draw in buyers through

vast networks of dealers and broad

slates of offerings. Before the Giulia —

which bears a resemblance to the BMW

3-Series — the brand’s lineup consisted

of two hatchbacks and the limited-run

4C. BMW, which has vowed to defend its

status as the world’s biggest luxury-car

maker, declined to comment on Fiat’s

efforts.

“While early reviews of the Giulia are

promising, it’s just one building block in

Alfa’s revival, and despite what Fiat Chrys-

ler might claim, it’s aimed foursquare at

one of the most competitive segments in

the world,” said Tim Urquhart, an analyst

with IHS Automotive in London. “It’s a

tough task.”

Backed by the Giulia, Alfa Romeo is

expected to more than double sales to

about 190,000 vehicles in 2019 from

91,000 in 2016, according to IHS. But even

if it reaches that level, it will remain a niche

player compared with Daimler AG’s Mer-

cedes and BMW, which are expected to

both deliver more than 2mn cars in 2019.

Revamping Alfa Romeo has been a pri-

ority for Marchionne since he joined Fiat in

2004. After failing to deliver on previous

promises to produce winning models, the

executive sought help relaunching the Ital-

ian sports-car maker, hiring Roberto Fedeli

from BMW in February as chief technical

off icer for Alfa Romeo and the Maserati

luxury brand.W

Fedeli, a former technical director at

Ferrari, said he “had several talks with

Marchionne” before being convinced me

to join Fiat. The turning point was a visit to

the Cassino plant in southern Italy, which

will be the focal point for Alfa production.

The factory “shows how the industrial

plan behind this project is hyper-solid,”

Fedeli said in an interview, adding that

the plant’s production line is “even more

advanced” than those at BMW’s German

facilities in Dingolfing, Leipzig and Munich.

Alfa Romeo’s ambitions are evident in

the Giulia’s sales price, which at €34,100

($38,700) for the 150-horsepower diesel

version is higher than rivals. The cheapest

BMW 3-Series is a 136-horsepower gaso-

line model for €30,500, while the Audi A4

starts at €31,100 and the Mercedes C-Class

at about €31,800.

The revival of the Alfa Romeo brand,

which was originally a crucial part of

Marchionne’s plan to more than double

the carmaker’s profit by 2018, was

delayed in January when Fiat postponed

the target to complete an expansion of

the new lineup by two years to 2020.

The company also dropped a goal

to boost sales more than fourfold to

400,000. Marchionne admitted that

the Giulia, which will be followed by the

brand’s first sport utility vehicle later this

year and by a third model in late 2017,

didn’t have an “easy” birth.

“Don’t ask me how much we spent,

it cost a lot” to develop the Giulia, said

Marchionne, who calls it the best car in its

class developed by Fiat.

Fiat Chrysler’s chief executive offi cer Sergio Marchionne is confi dent the Giulia, which accelerates to 100km (62 miles) per hour in as little as 3.9 seconds compared with 4.1 seconds for the BMW M3, can win