GCC ‘single currency to further strengthen economic stability’

GCC ‘single currency to further strengthen economic stability’
Updated 03 April 2013

GCC ‘single currency to further strengthen economic stability’

GCC ‘single currency to further strengthen economic stability’

A senior foreign exchange analyst attending the 4th Saudi Money Expo and Conference 2013 has predicted a rise in global gold prices in 2014.
Peter Rosenstreich, chief FX Analyst and associate director of Swissquote Bank SA, speaking to Arab News on the sidelines of the conference yesterday, said: “Currently the relationship between inflation and gold prices is no longer there. Therefore, without that connection people really don't have a reason to trade gold. If we start seeing global inflation rising at the end of 2013, we will tell investors to start buying gold again to offset inflation, which would make gold prices to rise.”
Saudi businessmen should take extra precautions while investing funds to avoid financial losses, Prince Saif Al-Islam bin Saud bin Abdulaziz, said while inaugurating the 4th Saudi Money Expo and Conference 2013 at the Faisaliah Hotel in Riyadh yesterday.
The expo is organized by Stayconnected in collaboration with Alawsat for Economic Consultancy for Prince Dr. Saif Al-Islam bin Saud bin Abdulaziz in partnership with Alpari UK.
“The main objective of the two-day expo is to strengthen the country’s market analysis and trading (national and international) policies as Saudi Arabia has already been ranked as a top player in the investment sector, with almost 28 percent investment in currency markets, oil and gold,” the prince said.
He pointed out that the event is in line with the new industry report released by Fitch Rating Agency, one of the largest international rating agencies, which claimed that the foolproof fiscal and economic policies followed by the Kingdom, under Custodian of the Two Holy Mosques King Abdullah’s directions, have led to an elevation of Kingdom's rating to AA.
The prince pointed out that the program of the forum is designed to inform the participants about the risks involved in investments. He stressed that inaccurate information provided by some organizations could mislead the investors to incur heavy financial losses in their ventures.
Referring to the economic crisis in Cyprus, he said that although some banks suffered severely, Arab banks stood the test of time due to proper planning.
He added that the proposed GCC single currency will further strengthen the economic stability of the region since such a uniform currency will ensure stability of prices in all commodities within the region.
With the strong backing of consistent success of the last three editions of the expo, the event began with the participation of a number of major Gulf companies, financial and economic institutions from 10 European countries, including the United States, and almost 3,000 investors from the Kingdom, who also attended the free training courses offered by the field experts.
The exhibition brought together some of the leading minds in banking and FX trading, shedding light on the present state of FX trading in the world and some of the most widely used trading strategies by experts. Additionally, it featured the most recent technologies, products, security and safety services that are becoming available in the online trading industry.
Walid Ead, director of Stayconnected, said the expo rendered a great platform and opportunity to the participants to meet the top officials of leading foreign companies and get an enriching experience through discussions about the latest trading technologies.
"The expo brings to light crucial and sensitive issues such as latest trends in the global market, especially in the Kingdom, which promises a bright future of investment and trading sector. Consequently, the expo has bestowed a golden chance to the participants to interact directly with the world’s leading analysts and experts," Ead added.
Alpari UK, a leading British company, gave an insight into the techniques used to interpret financial market indicators. The event also featured a panel discussion wherein top officials discussed the future of Online Currency Trade business. It also provided free educational sessions designed specifically to educate the young investors about day-to-day market fluctuations.
The Kingdom with a population as of July 2010 estimated to be 25,731,776 is the richest country in the Middle East. According to Bloomberg Business Week, it has around 170,000 millionaires and is ranked 19 among countries with the most millionaires in 2010.
Over 35 percent of Middle East FX retail traders are living in the Kingdom and invest an average of $ 35,000 in FX trading over the course of their trading experience.
The expo is co-sponsored by Amana Capital (strategic sponsor), FX Solutions (official sponsor), FXDD (main sponsor), Swissquote Bank (banking partner), Arab Financial Brokers (diamond sponsor) and ADSS (platinum sponsor).


Egypt’s economy to rebound from 2022, S&P Ratings says

Egypt’s economy to rebound from 2022, S&P Ratings says
Updated 08 May 2021

Egypt’s economy to rebound from 2022, S&P Ratings says

Egypt’s economy to rebound from 2022, S&P Ratings says
  • Real GDP growth will average 5.3 percent between 2022 and 2024

DUBAI: Egypt’s gross domestic product (GDP) growth will begin to rebound from 2022 onward on its foreign reserve buffers and debt market access, ratings agency S&P Global said, as it affirmed the country’s credit rating at “B/B” with a stable outlook.
Real GDP growth will average 5.3 percent between 2022 and 2024, S&P forecasts, due to higher public and private investment.
That compares to an expected 2.5 percent growth in 2021, where the impact of the pandemic was felt in full force, affecting major sectors such as tourism, manufacturing, and construction.
Still, S&P’s rating of the North African country is constrained by its wide fiscal deficit, large public debt and low-income levels.
But ongoing fiscal and economic reforms present strong medium-term growth prospects for Egypt, the new report said, and recovering growth and lower domestic interest rates will put the debt ratio back on a downward path.
“We expect Egypt’s foreign exchange reserves and access to domestic and external debt markets will allow it to cover higher external financing needs and upcoming maturities,” the report added.
Remittance inflow into the country will remain at high levels, and higher oil prices this year will have a balanced impact on its hydrocarbon exports and imports.
Egypt’s main sources of foreign exchange will remain under pressure, the report warned, as tourism and Suel Canal receipts still struggle amid the pandemic.


US job growth far below expectations

US job growth far below expectations
The unemployment rate rose to 6.1% in April from 6% in March. (Reuters)
Updated 08 May 2021

US job growth far below expectations

US job growth far below expectations
  • Nonfarm payrolls increased by only 266,000 jobs last month after rising by 770,000 in March, says Labor Department

WASHINGTON: US employers hired far fewer workers than expected in April, likely frustrated by labor shortages, leaving them scrambling to met booming demand as the economy reopens amid rapidly improving public health and massive financial help from the government.

Nonfarm payrolls increased by only 266,000 jobs last month after rising by 770,000 in March, the Labor Department said in its closely watched employment report on Friday.
Economists polled by Reuters had forecast payrolls advancing by 978,000 jobs.
The jobs report, the first since the White House’s $1.9 trillion COVID-19 pandemic rescue package was approved in March, will probably do little to change expectations that the economy entered the second quarter with strong momentum and was on track for its best performance this year in almost four decades.
Twelve months ago, the economy purged a record 20.679 million jobs as it reeled from mandatory closures of nonessential businesses to slow the first wave of COVID-19 infections. New claims for unemployment benefits have dropped below 500,000 for the first-time since the pandemic started.
Americans over the age of 16 are now eligible to receive the COVID-19 vaccine, leading states like New York, New Jersey and Connecticut to lift most of their coronavirus capacity restrictions on businesses.
But the resulting burst in demand, which contributed to the economy’s 6.4 percent annualized growth pace in the first quarter, the second-fastest since the third quarter of 2003, has triggered shortages of labor and raw materials.

SPEEDREAD

● The jobs report will probably do little to change expectations that the economy entered the second quarter with strong momentum and was on track for its best performance this year in almost four decades.

● Twelve months ago, the economy purged a record 20.679 million jobs as it reeled from mandatory closures of nonessential businesses to slow the first wave of COVID-19 infections.

● From manufacturing to restaurants, employers are scrambling for workers. A range of factors, including parents still at home caring for children, coronavirus-related retirements and generous unemployment checks, are blamed for the labor shortages.

From manufacturing to restaurants, employers are scrambling for workers. A range of factors, including parents still at home caring for children, coronavirus-related retirements and generous unemployment checks, are blamed for the labor shortages. The moderate pace of hiring could last at least until September when the enhanced unemployment benefits run out.
The labor market remains supported by very accommodative fiscal and monetary policy. President Joe Biden plans to spend another $4 trillion on education and childcare, middle- and low-income families, infrastructure and jobs. The Federal Reserve has signaled it intends to leave its benchmark interest rate near zero and continue to pump money into the economy through bond purchases for a while.
The unemployment rate rose to 6.1 percent in April from 6.0 percent in March. The jobless rate has been understated by people misclassifying themselves as being “employed but absent from work.” Millions of Americans remain out of work and many have permanently lost jobs because of the pandemic.


British Airways owner IAG expects travel recovery from July

British Airways owner IAG expects travel recovery from July
IAG’s first quarter operating loss before exceptional items of €1.14 billion was slightly better than the €1.17 billion loss forecast by analysts. (AFP/File)
Updated 08 May 2021

British Airways owner IAG expects travel recovery from July

British Airways owner IAG expects travel recovery from July
  • IAG’s first quarter operating loss before exceptional items of €1.14 billion was slightly better than the €1.17 billion loss forecast by analysts

LONDON: British Airways owner IAG is confident travel will recover from July onwards after forecasting only a minimal increase in its capacity to 25 percent for the April to June quarter.
IAG, which also owns Iberia and Vueling in Spain and Aer Lingus in Ireland, declined to forecast how much it would fly from July but said the recovery would be properly underway by then after more than a year of pandemic restrictions.
“We consider in the second half that we are going to be flying and we are prepared for that,” IAG Chief Executive Luis Gallego told reporters on Friday after the company posted a loss of €1.14 billion ($1.4 billion) in the first quarter.
Before July, however, Gallego said government action was needed on some issues, such as opening travel corridors between countries with high vaccination rates, including the United Kingdom and the US.
The rise to 25 percent of pre-pandemic capacity puts IAG’s plans behind those of rival airlines, and is only a marginal increase from the 19.6 percent it flew in the first three months of 2021.
Britain, which along with Spain is one of IAG’s main markets, is set to publish later on Friday its “green list” of low risk places where people can travel without needing to quarantine on their return.
Gallego said IAG was expecting only a small list of countries initially with more being added from June onwards.

FASTFACTS

● IAG, British Airways’ owner declined to forecast how much it would fly from July but said the recovery would be properly underway by then after more than a year of pandemic restrictions.

● The rise to 25 percent of pre-pandemic capacity puts IAG’s plans behind those of rival airlines, and is only a marginal increase from the 19.6 percent it flew in the first three months of 2021.

“Part of the reason we’re not giving guidance (for third quarter capacity) is simply because we don’t know what’s on the green list yet,” Chief Financial Officer Steve Gunning said.
Air France-KLM expects to operate 50 percent of its pre-pandemic flight capacity in the second quarter, picking up to 55 percent to 65 percent in July-September. Lufthansa expects to fly at about 40 percent of its pre-pandemic capacity for 2021 as a whole.
IAG’s first quarter operating loss before exceptional items of €1.14 billion was slightly better than the €1.17 billion loss forecast by analysts.
Shares in the company, which have risen 30 percent since the beginning of the year, traded up 0.7 percent.
“The company delivered a solid set of results and is pointing to the start of the recovery into the summer,” Goodbody analyst Mark Simpson said.
Given the ongoing uncertainty over COVID-19, IAG said it could not provide a profit outlook for 2021.


China propels BMW to strong profits, Germany lags

China propels BMW to strong profits, Germany lags
A BMW Vision Next car is seen during the 19th Shanghai International Automobile Industry Exhibition in Shanghai. (AFP)
Updated 08 May 2021

China propels BMW to strong profits, Germany lags

China propels BMW to strong profits, Germany lags
  • BMW net profit rose to €2.83 billion ($3.42 billion) from €574 million in the year-earlier period

FRANKFURT: Booming sales in China helped propel German luxury carmaker BMW to stronger profits in the first three months of the year even as its home market Germany trailed the ongoing recovery in global car markets from the worst of the pandemic shutdowns.
BMW said that its sales in China nearly doubled in the quarter to 230,120 vehicles, partly reflecting the shutdowns in early 2020 as China was hit first by the pandemic. Sales in the overall Asia region however exceeded even pre-pandemic levels.
Sales were up by double-digit percentages in most of Europe and in the US. An exception was the company’s home market in Germany, where sales dropped 5 percent. The earnings underscored the German auto industry’s strong connections with China; competitor Volkswagen said Wednesday that it recorded a 61 percent increase in first-quarter unit sales there, helping it sharply increase profits.
The company said higher sales volume across key global markets as they rebound from the pandemic recession was accompanied by improved prices. Earnings were also supported by better used car prices in the US, which increases revenues from the sales of cars that have been leased to customers.

NUMBER

BMW revenues rose 15 percent to €26.78 billion.

BMW CEO Oliver Zipse said that the quarter showed “our business model is a successful one, even in times of crisis.” He said the company’s focus is on developing digitally connected, electric cars. The company more than doubled its sales of battery and electric vehicles in the quarter over the year earlier, to 70,200.
Zipse said that the fall in sales in Germany was less than that for the total market, meaning market share had increased, and said that sales in April, the first month of the new quarter, had been “significantly better.”
BMW net profit rose to €2.83 billion ($3.42 billion) from €574 million in the year-earlier period. Revenues rose 15 percent to €26.78 billion. Per-vehicle profitability, defined as operating result on sales, reached 9.8 percent, a big increase from 1.3 percent in the year-earlier quarter and within the company’s long-term target range.
Chief Financial Officer Nicolas Peter said that the company had not lost any production due to the shortage of semiconductors — the silicon chips that enable many of the electronic functions in today’s vehicles — that has affected the auto industry worldwide.

 


Europe’s consumers face rising prices but the ECB is unfazed

Europe’s consumers face rising prices but the ECB is unfazed
Lockdowns have deprived well-off consumers in Europe and elsewhere of the opportunities to spend their cash. (AFP/File)
Updated 08 May 2021

Europe’s consumers face rising prices but the ECB is unfazed

Europe’s consumers face rising prices but the ECB is unfazed
  • Many firms eye scope to raise prices; European consumers in buoyant mood
  • Even after stripping out energy, eurozone producer prices in March recorded a year-on-year increase of 2.3 percent, nearly double the gains seen in February

LONDON: Europe’s consumers will feel the hit from price rises this year as companies seek to recoup revenues and cover pandemic-related costs. But for now, this is inflation the European Central Bank believes it can live with.

Over the past year, the fallout from COVID-19 has contorted both the demand and supply sides of the global economy, creating bottlenecks in supply chains, havoc in freight markets and a rally in raw materials from corn to copper.
Lockdowns, meanwhile, have deprived well-off consumers in Europe and elsewhere of the opportunities to spend their cash, creating record levels of savings and a window of opportunity for companies to push through price increases.
While US inflation fears mount in the wake of President Joe Biden’s massive stimulus plans — prompting Treasury Secretary Janet Yellen to clarify this week that she sees no problem brewing — things look different in a European economy still weighed down by coronavirus restrictions.
On the surface, there is a perfect storm for price pressures to keep building as the region finally enters a recovery.
Even after stripping out energy, eurozone producer prices in March recorded a year-on-year increase of 2.3 percent, nearly double the gains seen in February. Typically, price rises at factory gates end up being passed onto consumers.
Moreover, those same consumers look more than ready to spend. Eurozone retail sales were up 2.7 percent month-on-month in March, a 12 percent surge from a year ago.
This could be music to the ears of companies whose revenue or profit has been hit by the pandemic fallout in the shape of travel restrictions, supply chain bottlenecks or global shortages of components such as semiconductors.
Germany’s Lufthansa signaled that despite competition from low-cost rivals, it and other airlines would no longer offer the kind of discounts that were common before the pandemic ravaged the industry.
“Early bookers may get good deals. But in the medium term there will be very disciplined prices because airlines can ill-afford high rebates and low fares as before,” CEO Carsten Spohr said in a call about first quarter results.
Germany’s BASF, the world’s largest chemicals and plastics maker by sales, said raw materials prices were higher than expected but it lifted its profit outlook because it was confidently passing those costs on to customers.
Other companies in Europe’s manufacturing powerhouse have been equally clear about the scope for price rises.
In the premium auto sector, the argument runs that the chip shortage has hit car production and canceled out excess supply, which might have led to offers to shift stock in the past.
Elsewhere, price rises are planned to pay for investment in the post-pandemic world. Dutch telecoms firm KPN said it was raising retail internet rates by 2.9 percent, a good percentage point above inflation, to pay for network upgrades.
This could be seen as the kind of reflation story told to justify a scaling down of ECB support for the euro economy. But that’s a narrative the bank wants to avoid for now.
Year-on-year inflation stood at 1.6 percent in April, comfortably below its near-2 percent target and it was only in that region because of a 10.3 percent surge in energy prices. Strip that out and core inflation was just 0.8 percent year-on-year, down from 1.0 percent in March.
While the ECB acknowledges that the time could be ripe for manufacturers to pass on higher costs, it believes the impact on consumers will be a one-off and limited.
In a blog last month, its chief economist Philip Lane cited staff estimates that the 38 percent increase in global basic metal prices between June 2020 and January 2021 would only add about 1.5 percent to economy-wide output prices.
A massive 355 percent increase in freight costs from China to the euro area over the same period would in itself lead to just a 0.3 percent rise euro area output prices, he said.