Egypt ruling to reinstate ergot ban renews wheat import uncertainty

Egypt’s state grain buyer expecting to import around 7 million tons of wheat in the fiscal year that began in July. Egypt has to ship in wheat from other producers since local production is not enough for the production of heavily subsidized bread, the country’s main staple food. (Reuters)
Updated 15 November 2017
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Egypt ruling to reinstate ergot ban renews wheat import uncertainty

DUBAI/CAIRO: Egypt's agriculture ministry is awaiting instructions from the cabinet after a court ruling reinstating a ban on wheat imports containing the common ergot fungus, it said on Wednesday, renewing uncertainty over the policy.
Egypt, the world's largest wheat buyer, stunned grain markets last year when it began imposing a zero tolerance level on ergot, leading suppliers to boycott state tenders until it adopted a 0.05 percent tolerance level, a common international standard.
Tuesday's court ruling cancelled that decree, according to a lawyer that raised the case.
The agriculture ministry, which heads a quarantine service that has argued that even traces of ergot can harm plant and animal health, said any policy adjustment was up to the cabinet.
"The ruling was against a decision that was issued by the cabinet so we have to await directions from there to know whether it will affect our process," Hamid Abdel Dayem, spokesman for the ministry told Reuters. "Until then it is business as usual," he said.
Dayim said the court ruling, if applied, would be retroactive, suggesting it could affect cargoes that have already been contracted for under the old specifications that allowed for up to 0.05 percent.
If implemented, the court order would restore a strict import rule that suppliers have said is impossible to guarantee and which has them led them to add hefty premiums to their tender bids to account for the added risk of cargo rejection.
The flow of wheat in Egypt is politically sensitive because it is used by the government to supply a sprawling bread subsidy program relied on by tens of millions of Egyptians at a time of economic austerity.


Chinese smartphone maker Xiaomi lowers target as it kicks off IPO

Updated 10 min 12 sec ago
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Chinese smartphone maker Xiaomi lowers target as it kicks off IPO

HONG KONG: Chinese smartphone maker Xiaomi kicked off its initial public offering Thursday but the firm is likely to pull in about $6.1 billion, far less than originally expected, with investors having mixed views about its main business.
Xiaomi had hoped to raise $10 billion with the Hong Kong IPO, making it the biggest since Alibaba’s $25 billion New York debut in 2014 and valuing the company at about $100 billion.
However, the firm is offering 2.18 billion shares at HK$17-HK$22 apiece, according to Bloomberg News, which values it at about $53.9-$69.8 billion.
Xiaomi had hoped to be the first company to list shares in Hong Kong at the same time as launching new Chinese Depository Receipts (CDRs) in Shanghai under new rules announced in April by mainland authorities to open up markets in the world’s number two economy.
But on Tuesday it put off its decision on listing the CDRs until it completes its IPO in Hong Kong. The China Securities Regulatory Commission said it has canceled a listing review originally scheduled for June 19.
This delay, as well as differing market views about Xiaomi’s business model, were also among reasons for the lower valuation.
CEO Lei Jun claimed it was an Internet services company making money via online games and advertisements despite 70 percent of its revenues coming from selling hardware, particularly smartphones.
The firm, which mainly sells cheap but high-quality smartphones in China, is looking to push into Europe — recently opening its first flagship store in Paris — as the home market reaches saturation point.
China Mobile and US wireless-chip giant Qualcomm are among the cornerstone investors and it is expected to list on July 9.
Chinese authorities devised the CDR program, under which homegrown companies listed abroad can simultaneously list at home, after watching technology heavyweights Alibaba and Baidu list on Wall Street.
The objectives of the plan include helping to develop China’s still relatively immature and volatile share markets while allowing domestic investors to invest in the country’s big tech champions.
Alibaba and Hong Kong-listed Tencent have expressed an interest in the plan.
Xiaomi shipped 28 million smartphones worldwide from January to March, an 88-percent surge year-on-year.
That was fourth in the world after Samsung, Apple and China’s Huawei, according to figures from the International Data Corporation.