Saudi Arabian stocks lower as weak banks outweigh rising petrochems

Saudi Arabian shares fell on Sunday as weakness in banks more than offset a rise in petrochemicals after Brent crude oil rebounded. (REUTERS)
Updated 25 February 2018
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Saudi Arabian stocks lower as weak banks outweigh rising petrochems

DUBAI: Saudi Arabian shares fell on Sunday as weakness in banks more than offset a rise in petrochemicals after Brent crude oil rebounded to around $67 a barrel at the end of last week.
The Saudi stock index fell 0.4 percent. Ten of 14 petchems climbed, with the biggest, Saudi Basic Industries , adding 0.6 percent.
Saudi Kayan Petrochemical gained 0.3 percent after swinging to a fourth-quarter loss of 220 million riyals ($58.7 million) due to scheduled maintenance at its plants. The loss was larger than 90 million riyals forecast by SICO Bahrain but much smaller than 417 million riyals predicted by NCB Capital.
Nine of 12 banks fell. Reuters reported on Thursday about rising Islamic tax liabilities at Saudi banks. In the last couple of weeks, several major banks have disclosed that the government is seeking additional zakat — or alms-giving — payments from them for years going back as far as 2002.
In some cases, the demands exceed half of a bank’s annual net profit, and analysts expect more banks to disclose additional zakat demands in coming weeks.
Abdulmohsen Al Hokair Group for Tourism and Development sank 6.1 percent after reporting annual net profit fell to 8.7 million riyals from 126.3‍ million riyals. The figures implied a 23.1 million riyal loss in the fourth quarter.
Dubai’s index added 0.6 percent as Dubai Islamic Bank rose 1.2 percent after saying its planned issue of up to 1.65 billion new shares would be offered at a discount of 45 percent to the market price.
DP World edged down 0.2 percent after saying on Thursday it would take legal action after Djibouti ended a contract with the company to run its Doraleh Container Terminal, a move which DP World called an illegal seizure.
The company said terminating the contract would have no material financial impact on it. The terminal has annual capacity of 1.25 million twenty-foot equivalent units, compared to 70.1 million TEU handled across DP World’s global portfolio of container terminals in 2017. ‍​
In Manama, Bahrain Telecommunications Co. jumped 4.9 percent to 0.216 dinar, rising above technical resistance on its February peak.
The company reported a 21.7 million dinar ($57.6 million) loss during the fourth quarter, compared to a net profit of 5.2 million dinars a year ago, because of impairment losses related to its investments in Yemen and Jordan.
But executives predicted profit of 40 to 45 million dinars in 2018 and said they were on the lookout for acquisition opportunities in the telecommunications and digital spaces.
Egypt’s index climbed 1.0 percent as Qalaa Holdings surged 3.6 percent after saying its unit Egyptian Refining Co. had obtained about $500 million of additional financing for a refinery project.


US unveils new veto threat against WTO rulings

Updated 23 June 2018
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US unveils new veto threat against WTO rulings

  • US tells WTO appeals rulings in trade disputes could be vetoed if they took longer than the allowed 90 days
  • Trump, who has railed against the WTO judges in the past, threatens to levy a 20 percent import tax on European Union cars

GENEVA: The United States ramped up its challenge to the global trading system on Friday, telling the World Trade Organization that appeals rulings in trade disputes could be vetoed if they took longer than the allowed 90 days.
The statement by US Ambassador Dennis Shea threatened to erode a key element of trade enforcement at the 23-year-old WTO: binding dispute settlement, which is widely seen as a major bulwark against protectionism.
It came as US President Donald Trump, who has railed against the WTO judges in the past, threatened to levy a 20 percent import tax on European Union cars, the latest in an unprecedented campaign of threats and tariffs to punish US trading partners.
Shea told the WTO’s dispute settlement body that rulings by the WTO’s Appellate Body, effectively the supreme court of world trade, were invalid if they took too long. Rulings would no longer be governed by “reverse consensus,” whereby they are blocked only if all WTO members oppose them.
“The consequence of the Appellate Body choosing to breach (WTO dispute) rules and issue a report after the 90-day deadline would be that this report no longer qualifies as an Appellate Body report for purposes of the exceptional negative consensus adoption procedure,” Shea said, according to a copy of his remarks provided to Reuters.
An official who attended the meeting said other WTO members agreed that the Appellate Body should stick to the rules, but none supported Shea’s view that late rulings could be vetoed, and many expressed concern about his remarks.
Rulings are routinely late because, the WTO says, disputes are abundant and complex. Things have slowed further because Trump is blocking new judicial appointments, increasing the remaining judges’ already bulging workload.
At Friday’s meeting the United States maintained its opposition to the appointment of judges, effectively signalling a veto of one judge hoping for reappointment to the seven-seat bench in September.
Without him, the Appellate Body will only have three judges, the minimum required for every dispute, putting the system at severe risk of breakdown if any of the three judges cannot work on a case for legal or other reasons.
“Left unaddressed, these challenges can cripple, paralyze, or even extinguish the system,” chief judge Ujal Singh Bhatia said.
Sixty-six WTO member states are backing a petition that asks the United States to allow appointments to go ahead. On Friday, US ally Japan endorsed the petition for the first time, meaning that all the major users of the dispute system were united in opposition to Trump.