German investor confidence reaches three-year high

Updated 23 January 2013
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German investor confidence reaches three-year high

FRANKFURT: Investor sentiment in Germany has soared to the highest levels since the start of the euro zone debt crisis in 2010 as the outlook for Europe's top economy continues to brighten, a survey found yesterday.
The widely watched investor confidence index calculated by the ZEW economic institute soared to 31.5 points in January from 6.9 points in December, its highest level since May 2010, when Greece had to be bailed out and the sovereign debt crisis began to unfold.
The indicator already re-entered positive territory for the first time in more than six months last month, and analysts had been projecting a modest rise again to around 12.0 points this month.
"The renewed rise in economic expectations shows that financial market experts believe the economic outlook for Germany to have improved for the next six months," said ZEW president Wolfgang Franz.
Reduced market uncertainty with regard to the future of the euro zone had contributed to this, Franz said. He suggested that improved sentiment will persuade companies to proceed with investment projects that they had long put on hold.
"Nevertheless, the economic starting point for many of Germany's key trading partners remains weak. This means the German economy will grow only moderately in 2013," Franz cautioned.
For the survey, ZEW questions analysts and institutional investors about their current assessment of the economic situation in Germany, as well as their expectations for the coming months.
And the sub-index measuring financial market players' view of the current economic situation in Germany edged up by only 1.4 points to 7.1 points.
"While the rise in sentiment is encouraging, it is too soon to conclude that the worst is over for Germany," said Capital Economics analyst Jennifer McKeown.
"Despite rising lately, the more reliable German business surveys still look much more pessimistic — some are consistent with a continued recession in Germany. And less timely hard data on trade and industrial production are still weakening rather than strengthening," she said.
A frequent criticism against the ZEW index is that it can be volatile and is therefore not particularly trustworthy.
Natixis economist Constantin Wirschke said he, too, was "remaining cautious with regards to Germany's prospects in 2013.
"While we believe Germany will still grow in 2013, growth should be slower than in 2012," he said.
The German economy expanded by only 0.7 percent last year, its weakest growth in four years. And the government has halved its forecast for 2013 to just 0.4 percent.
Annalisa Piazza at Newedge Strategy acknowledged that while the debt crisis "is far from being over, today's survey confirms that analysts and fund managers have now more faith in policymakers' response to the solution of the crisis."
The sub-index measuring investors' assessment of the current situation "remains well below the levels seen in 2011 as the German economy is still set to contract in the fourth quarter of 2012" and show no improvement early in 2013, she said.
Nevertheless, all in all, she viewed the ZEW survey as "a very encouraging report that paves the way for a modest reacceleration in the German economy in the first half of 2013," Piazza concluded.
Berenberg Bank economist Christian Schulz said "investors seem increasingly confident" that the safety net put in place by the European Central Bank "has averted the risk of a catastrophic eurozone break-up for good."
The ECB has undertaken a series of emergency measures, such as pumping vast amounts of liquidity into the markets and pledging to buy up the sovereign bonds of the countries hit hardest by the crisis.
"Serious risks remain, but the ECB can take comfort," Schulz said.
"Its commitment to unlimited bond purchases is increasingly passing through to the real economy," he said.


Saudi minister Al-Falih says Aramco IPO likely in 2019

Updated 25 May 2018
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Saudi minister Al-Falih says Aramco IPO likely in 2019

  • Energy Minister Khalid Al-Falih: “We are ready, the company (Saudi Aramco) essentially has ticked all the boxes. We’re simply waiting for a market readiness for the IPO.”
  • Khalid Al-Falih: “Most likely it will be in 2019 but we will not know until the announcement has been made. All I could say is stay tuned.”

RIYADH: Saudi Arabia is most likely to hold the initial public offering (IPO) of oil giant Aramco in 2019, Energy Minister Khalid Al-Falih said on Friday, confirming a delay from the initial plan to list the company this year.

“The timing I think will depend on the readiness of the market, rather than the readiness of the company or the readiness of Saudi Arabia,” Khalid Al-Falih, who’s also the company’s chairman, said at the St. Petersburg International Economic Forum in Russia on Friday.

“We are ready, the company essentially has ticked all the boxes,” he said. “We’re simply waiting for a market readiness for the IPO.”

For almost two years, Saudi officials said the IPO was “on track, on time” for the second half of 2018. But for the first time in March they suggested it could be delayed until 2019.

“Most likely it will be in 2019 but we will not know until the announcement has been made,” Al-Falih said. “All I could say is stay tuned.”

The Aramco IPO would be a once-in-a-generation event for financial markets. Saudi officials said they hope to raise a record $100 billion by selling a 5 percent stake, valuing the company at more than $2 trillion and dwarfing the $25 billion raised by Chinese retailer Alibaba Group Holding Ltd. in 2014.