IMF’s Lagarde warns protectionism, while now just words, may come to hurt Asia

Christine Lagarde said there had been no massive capital outflows from Asia thanks to central bankers’ cautious approach and clear communication around their policy shifts. (AFP)
Updated 08 November 2017

IMF’s Lagarde warns protectionism, while now just words, may come to hurt Asia

TOKYO: Protectionist sentiment has not yet gone beyond mere words, International Monetary Fund Managing Director Christine Lagarde said on Wednesday, but would hurt Asian economies with open and free markets if it did.
Lagarde brushed off the concerns of some investors that the divergent monetary paths of major central banks could disrupt Asian capital flows, stressing that policymakers had the tools and means of communication needed to prevent market upheaval.
Global policymakers have raised concerns over US President Donald Trump’s “America First” agenda that aims to slash US trade deficits, via which Washington appears to be walking away from or extensively renegotiating multilateral trade arrangements in favor of country-by-country deals.
Lagarde said that while protectionism had not so far been seen “other than in words,” trade deals must be improved in a way that included people who felt left behind by globalization.
“If there was protectionism, it would hurt economies that are very open, and based on free and fair movement of goods and services,” Lagarde said during a visit for the 20th anniversary of the IMF’s Asia-Pacific regional office in Tokyo.
“To continue to have trade as a global engine for growth, trade deals need to be improved,” she said, adding trade pacts had to include rules on labor practices and intellectual property.
Lagarde said trade deals must be “rules based” and make use of existing dispute-settlement mechanisms such as the World Trade Organization, though she declined to say whether Trump’s trade policies complied with these rules.
The IMF head said there had been no massive capital outflows from Asia thanks to central bankers’ cautious approach and clear communication around their policy shifts.
“We believe these conditions can help to ensure that monetary policy changes do not provoke unnecessary capital flow movements,” she said.
Lagarde said she would draw a “slight distinction” between the pace of policy shifts to be adopted by the US Federal Reserve and the European Central Bank.
She noted that the Fed was expected to raise interest rates steadily in coming months, while the European Central Bank had stressed that its quantitative easing would continue and interest rates would remain low for a long period of time.
“You can’t put the two — the Fed and the ECB — in the same basket,” she said.
Lagarde said Bank of Japan Governor Haruhiko Kuroda was acting appropriately by pledging to maintain the BOJ’s massive stimulus program until inflation accelerates.
“One of the strengths of central bankers is to be very clear in their communication and determined in their resolve, which clearly Governor Kuroda has demonstrated,” she said.
“One thing that is unanimously recognized is his resolve and clear determination to stay the course and to adjust when the circumstances would so require.”


Saudi Aramco shares soar at maximum 10% on market debut

Updated 11 December 2019

Saudi Aramco shares soar at maximum 10% on market debut

  • Company is now world’s largest publicly traded company, bigger than Apple

RIYADH: Saudi Aramco shares opened at 35.2 riyals ($9.39) on Wednesday at the Kingdom’s stock exchange, 10 percent above their IPO price of 32 riyals, in their first day of trading following a record $26.5 billion initial public offering.
Aramco has earlier priced its IPO at 32 riyals ($8.53) per share, the high end of the target range, surpassing the $25 billion raised by Chinese retail giant Alibaba in its 2014 Wall Street debut.
Aramco’s earlier indicative debut price was seen at 35.2 riyals, 10 per cent above IPO price, raising the company’s valuation to $1.88 trillion, Refintiv data showed.
At that price, Aramco is world’s most valuable listed company. That’s more than the top five oil companies – Exxon Mobil, Total, Royal Dutch Shell, Chevron and BP – combined.
“Today Aramco will become the largest listed company in the world and (Tadawul) among the top ten global financial markets,” Sarah Al-Suhaimi, chairwoman of the Saudi Arabian stock exchange, said during a ceremony marking the oil giant’s first day of trading.
“Aramco today is the largest integrated oil and gas company in the world. Before Saudi Arabia was the only shareholder of the company, now there are 5 million shareholders including citizens, residents and investors,” said Yasir Al-Rumayyan, the managing director and chief executive of the Saudi Public Investment Fund.
“Aramco’s IPO will enhance the company’s governance and strengthen its standards.”
Amin Nasser, the president and CEO of Saudi Aramco, meanwhile thanked the new shareholders for their confidence and trust of the oil company.
The sale of 1.5 percent of the firm, or three billion shares, is the bedrock of Crown Prince Mohammed bin Salman’s ambitious strategy to overhaul the oil-reliant economy.
Riyadh’s Tadawul stock exchange earlier said it will hold an opening auction for Aramco shares for an hour from 9:30 a.m. followed by continuous trading, with price changes limited to plus or minus 10 percent.

The company said Friday it could exercise a “greenshoe” option, selling additional shares to bring the total raised up to $29.4 billion.
The market launch puts the oil behemoth’s value at $1.7 trillion, far ahead of other firms in the trillion-dollar club, including Apple and Microsoft.
Two-thirds of the shares were offered to institutional investors. Saudi government bodies accounted for 13.2 percent of the institutional tranche, investing around $2.3 billion, according to lead IPO manager Samba Capital.
The IPO is a crucial part of Prince Mohammed’s plan to wean the economy away from oil by pumping funds into megaprojects and non-energy industries such as tourism and entertainment.
Watch the video marking Aramco’s opening trading: