Trade war rumbles hit emerging stocks sending Indian rupee to record low

An Indian cycle rickshaw driver waits for customers next to a busy road in New Delhi. Facing a widening emerging market selloff, India’s rupee plumbed a fresh record low, with nationwide protests adding to the pressure. (AFP)
Updated 10 September 2018
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Trade war rumbles hit emerging stocks sending Indian rupee to record low

  • MSCI’s emerging market equity index slipped as much as 1 percent to hit its weakest level since July 2017
  • Markets in Asia chalked up hefty losses after US President Donald Trump warned on Friday he was ready to slap tariffs on virtually all Chinese imports to the US

LONDON: Fears over a rapid escalation of trade wars hit emerging markets on Monday, sending stocks to a fresh 2018 low and hurting major currencies with India’s rupee tumbling to record lows and Russia’s rouble at its weakest in two years.
MSCI’s emerging market equity index slipped as much as 1 percent to hit its weakest level since July 2017 with markets in Asia chalking up hefty losses after US President Donald Trump warned on Friday he was ready to slap tariffs on virtually all Chinese imports to the US.
Beijing warned it would retaliate.
Chinese mainland stocks ended as much as 1.5 percent lower with shares in suppliers to Apple dropping after Trump tweeted on Saturday that Apple should make products in the US if it wanted to avoid tariffs on Chinese imports.
Bourses in export heavyweights such as Hong Kong and Taiwan as well as India’s BSE index nearly matched those declines.
Emerging currencies painted a similar downbeat picture, with the EM currency index falling around 0.5 percent and edging back toward a 17 month low hit last week.
“Emerging economies have borne the brunt of the market stress since the start of the year,” Didier Saint-Georges, managing director at French asset manager Carmignac wrote in a note to clients.
“In drying up the global flow of dollars, the Fed has weakened the entire EM asset class and literally wrecked those countries most reliant on dollar financing. The trade standoff initiated by the Trump administration thus amounts to a double whammy, with contagion doing the rest of the damage.”
Facing a widening emerging market selloff, India’s rupee plumbed a fresh record low, with nationwide protests adding to the pressure while an official at the country’s finance ministry pledged the government would take measure to stem the slide in the currency.
With a general election less than nine months away, demonstrations against record high petrol and diesel prices shut down businesses, government offices and schools in many parts of India while in some places protesters blocked trains and roads and vandalized vehicles.
Russia’s rouble weakened beyond 70 versus the dollar for the first time since March 2016 before recovering its losses, buckling under pressure from uncertainty about US sanctions and concern ahead of a central bank meeting on Friday.
Governor Elvira Nabiullina said rates could stay on hold or go higher. But Kremlin economic aide Andrei Belousov said a rate increase would be “highly undesirable,” echoing comments by Prime Minister Dmitry Medvedev who stated late last week that lending rates should be lower.


Abu Dhabi Commercial Bank picks Barclays to advise on merger

Updated 15 November 2018
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Abu Dhabi Commercial Bank picks Barclays to advise on merger

  • Potential merger involves ADCB, Union National Bank (UNB) and Al Hilal Bank
  • A merger of the trio could create an entity with around $113 billion in assets

ABU DHABI: Barclays has been appointed by Abu Dhabi Commercial Bank (ADCB) to advise on a potential merger plan involving Union National Bank (UNB) and Al Hilal Bank, banking sources told Reuters.
The merger, announced by the banks in September, is the latest consolidation among state-owned companies in the United Arab Emirates’ (UAE) capital.
ADCB, majority owned by the Abu Dhabi government and the second largest bank in the emirate after First Abu Dhabi Bank (FAB), declined to comment. Barclays also declined to comment.
If it goes ahead, a merger of the trio could create an entity with around $113 billion in assets, according to Refinitiv data, and the UAE’s third-biggest lender after FAB and Emirates NBD.
A separate source said two banks could be created out of the consolidation, with the conventional banking units of ADCB and UNB merging to create one lender.
Another could be formed through combining the Islamic banking units of ADCB and UNB, along with Al Hilal.
AlKhaleej newspaper reported the same arrangement was being considered last month, citing sources.
The tie-up was at an early stage, UAE Central Bank governor Mubarak Rashed Al-Mansoori told reporters last week on the sidelines of a conference, adding he expected more consolidation in the future.
FAB was created by last year’s merger between National Bank of Abu Dhabi and First Gulf Bank.
The emirate of Sharjah is weighing a merger between three of its banks — Bank of Sharjah, Invest Bank and United Arab Bank, Reuters reported in September, citing sources.