Global shares near record levels as vaccines inject hope

Video-streaming app Kuaishou is pictured on a mobile phone in this illustration picture taken January 25, 2018. (REUTERS Illustration/File Photo)
Video-streaming app Kuaishou is pictured on a mobile phone in this illustration picture taken January 25, 2018. (REUTERS Illustration/File Photo)
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Updated 06 February 2021

Global shares near record levels as vaccines inject hope

Global shares near record levels as vaccines inject hope
  • An index of the world’s major 50 markets, MSCI ACWI, rose 0.21 percent to 668.1, coming within reach of a record high of 670.82 touched about two weeks ago

LONDON: Global shares approached record highs on Friday while the dollar and oil topped recent milestones, as progress in vaccine distribution and US stimulus hopes prompted bets on further normalization in the global economy.

An index of the world’s major 50 markets, MSCI ACWI, rose 0.21 percent to 668.1, coming within reach of a record high of 670.82 touched about two weeks ago. It was the fifth consecutive day of gains.

The STOXX index of Europe’s 600 largest stocks was up 0.3 percent at 410.8, though slower vaccination rollouts in continental Europe and disappointing industrial data from Germany tempered optimism.

On the corporate front, Chinese short-video app company Kuaishou — a major rival to TikTok — nearly tripled on its market debut following a $5.4-billion initial public offering that was the biggest for an Internet firm since Uber’s May 2019 listing.

US President Joe Biden’s drive to enact a $1.9 trillion coronavirus aid bill gained momentum on Friday as the US Senate narrowly approved a budget blueprint allowing Democrats to push the legislation through Congress in coming weeks, with or without Republican support.

“Following from a positive US trading session on Thursday supported by decent earnings numbers, it looks as though Democrats will go on their own on stimulus and not try to compromise with Republicans, so you might get something closer to the $1.9 trillion rather than a compromise,” said Philip Shaw, chief economist at Investec in London.

It seems markets are now trying to trade on economic normalization based on progress in vaccination.

Arihiro Nagata, GM of global investment at Sumitomo Mitsui Bank

Longer-term US Treasury yields rose in anticipation of the large pandemic relief bill from Washington as well as on rising inflation expectations.

The benchmark 10-year yield stood at 1.130 percent, having risen to a three-week high of 1.162 percent the previous day. The 30-year bond yielded 1.922 percent, near its 10-1/2-month high of 1.951 percent touched on Thursday.

Bond yields rose in Europe as well, with Germany’s 30-year government bond yield climbing back into positive territory for the first time since September.

Germany’s DAX index was flat after data showed orders for German-made goods fell more than expected in December.

MSCI’s gauge of Asian shares outside Japan rose 0.4 percent while Japan’s Nikkei rallied 1.5 percent.

A market gauge of future US inflation was at its highest since October 2018. A similar gauge for the euro zone hit its highest since May 2019.

While it was a strong day for conventional assets, the leading names in the recent US retail-share trading fad fared worse.

The “Reddit rally” stocks GameStop and AMC Entertainment plunged further after two weeks of wild swings fueled by the WallStreetBets Reddit forum.

Deep-pocketed investors instead last week pumped a record $4.2 billion into big technology stocks, BofA’s flow data showed, taking advantage of the slight pullback on Wall Street while retail traders plowed into the Reddit favorites.

The dollar headed for its best weekly gain in three months, confounding dollar bears and tracing a trading pattern known as the “Dollar Smile,” which in previous years has preceded major US economic rebounds and currency surges.

The US dollar index stood near a two-month high, having risen 1.1 percent so far this week, on course for its biggest weekly increase since late October.

“It seems markets are now trying to trade on economic normalization based on progress in vaccination,” said Arihiro Nagata, general manager of global investment at Sumitomo Mitsui Bank.

“The fact that the only currencies that are doing better than the dollar over the past two days are the British pound and the Israeli shekel, the two countries that are going further ahead in vaccination, seems to support that.”

The British pound stood at $1.3696, not far from a two-and-a-half-year peak of $1.3759 hit late last month.

The shekel has risen over the past two days, reversing its decline since mid-January after the Bank of Israel intervened to stem its rise.

Gold edged up 0.7 percent to over $1,805 per ounce, but was still set for its worst weekly dip in four after hitting a two-month low of $1,785.10 on Thursday.v


UAE economy minister to visit Britain seeking trade deal

UAE economy minister to visit Britain seeking trade deal
Updated 19 September 2021

UAE economy minister to visit Britain seeking trade deal

UAE economy minister to visit Britain seeking trade deal
  • Trade between the two countries was worth almost $8.1 billion in 2020

DUBAI: The UAE’s economy minister will lead a high-level delegation to Britain this week, the ministry said on Sunday, as the Gulf state seeks to deepen trade ties.

Abdulla bin Touq Al-Marri and the delegation will meet British ministers, officials and representatives from the private sector to discuss recently announced UAE economic policies.

One of those policies includes the UAE seeking to seal what it calls a comprehensive economic agreement covering trade and foreign investment with Britain and seven other countries.

The delegation would also discuss ways to develop economic ties and strengthen cooperation in trade, investment, healthcare and energy, among other sectors, the ministry said.

The UAE last week announced it had expanded an investment partnership with the British government, committing  £10 billion ($13.7 billion) to invest in the UK over five years.

The UAE delegation will also include local government, investment company and private sector representatives, the ministry said.

Britain is the UAE’s third largest non-oil trade partner in Europe, with trade between the two countries worth almost $8.1 billion in 2020, it said.


Iraq launches project to reduce flaring at oilfields

Iraq launches project to reduce flaring at oilfields
Updated 19 September 2021

Iraq launches project to reduce flaring at oilfields

Iraq launches project to reduce flaring at oilfields
  • Iraq is the second-biggest user of flaring worldwide after Russia.

BAGHDAD: Iraq has launched a new project that aims to recover gas normally set alight during oil extraction at two oilfields in the country’s south.
Flaring, or burning off excess gas during oil extraction, is a highly polluting practice but far less costly than processing it for sale.
According to the World Bank, Iraq is the second-biggest user of flaring worldwide after Russia.
The new project, signed in 2017 with oil services company Baker Hughes, will eventually allow 200 million cubic feet (around 5.6 million cubic meters) of gas a day that is usually torched on the Nasiriyah and Gharraf oilfields to be captured, according to a statement from the Oil Ministry sent to the media on Sunday.
It seeks to “exploit the gas that escapes from all oilfields across all Iraq, consolidate national gas production” and help preserve the environment, Oil Minister Ihsan Ismail was quoted as saying in the statement.
A ministry official told AFP that the implementation of the project and exploitation of the gas would have to wait 30 months for the completion of infrastructure works.
The World Bank said the amount of gas torched in Iraq annually reached 17.37 million cubic meters last year.
Earlier this month, French giant TotalEnergies signed a contract to invest in oil, gas and solar production in Iraq.
The French major plans initially to invest $10 billion in infrastructure, the proceeds of which will then allow a second round of investments of $17 billion, the officials said.
One of the projects will see the construction of a complex to exploit production from the sector’s gas fields.
Rather than flaring or burning off the excess, the plan is to recover it for use in electricity generation.
The premier’s office has said this will “reduce gas imports.”


Saudi holdings of US treasury bills rose for 2nd month in a row

Saudi holdings of US treasury bills rose for 2nd month in a row
Updated 28 min 27 sec ago

Saudi holdings of US treasury bills rose for 2nd month in a row

Saudi holdings of US treasury bills rose for 2nd month in a row
  • The Kingdom is the 16th largest holder of US debt

RIYADH: Saudi Arabia’s holding of US Treasury securities increased for the second consecutive month in July, reaching $128.1 billion, according to new data from the US government.

The holdings increased by 0.2 percent from June, and 2.8 percent from July last year. However, the Saudi holdings in July is down by 5.2 percent from the beginning of the year when it was $135.1 billion, the data showed.

This increase in June and July is in line with global trends, as countries around the world increased their holdings by 5.7 percent in the two months leading up to July.

However, analysis showed that Saudi holdings are still down from their peak of $184.4 billion in February 2020. As the global pandemic took hold in March last year, the Saudi government decreased its holding, as the Kingdom’s reserves were hit by the collapse in oil prices.

In July last year, Saudi Arabia began to boost its holdings once again, peaking in November and then continuing to decline by low single percentages till May 2021.

“The rise in US Treasury holding was expected “given the higher yields on US T-bills compared to bank deposit,” Dr. Mohamed Ramady, a London-based independent economist, told Arab News.

He said in the case of Saudi Arabia, higher oil prices have also provided it with more flexibility in its investment portfolio maturity profile. 

The Kingdom is the 16th largest holder of US debt. Japan remains No.1 with $1310.2 billion in US bonds, followed by China ($1068.3 billion), the UK ($539.5 billion), Ireland ($319.7 billion) and Switzerland ($298.3 billion).

The UAE holds $58 billion, an increase of nearly 100 percent year-on-year. Kuwait holds $46.4 billion, down by 3.1 percent year-on-year.


Saudi Arabia’s Algosaibi family plans recovery after $7.5bn debt deal

Saudi Arabia’s Algosaibi family plans recovery after $7.5bn debt deal
Updated 19 September 2021

Saudi Arabia’s Algosaibi family plans recovery after $7.5bn debt deal

Saudi Arabia’s Algosaibi family plans recovery after $7.5bn debt deal
  • It comes after successful negotiations over its $7.5 billion in debt since 2009 – a case many experts saw as a test for Saudi Arabia’s new bankruptcy law

DUBAI: The Algosaibi family is looking to restore some of its businesses after its landmark deal with creditors last week, Bloomberg has reported, citing the conglomerate’s chief restructuring officer, Simon Charlton.

In an interview, Charlton said the company was looking “where it would make the most sense and at what sort of level to return to the market.”

It comes after successful negotiations over its $7.5 billion in debt since 2009 – a case many experts saw as a test for Saudi Arabia’s new bankruptcy law.

Under the deal, Ahmah Hamad Algosabi & Brothers Co (AHAB) will repay its creditors 26 percent of their claim values through a mixture of cash, shares, and Saudi real estate.

“Our hope is that as the company emerges from this and gets access to credit and is back into the credit markets and will be able to raise working capital finance, we’ll be able to rebuild those businesses,” Charlton said.

AHAB will retain most of its operating manufacturing businesses, he added, including logistics, hospitality, and retail.


Aramco’s Wa’ed invests in online gifts marketplace Joi Gifts

Aramco’s Wa’ed invests in online gifts marketplace Joi Gifts
Updated 19 September 2021

Aramco’s Wa’ed invests in online gifts marketplace Joi Gifts

Aramco’s Wa’ed invests in online gifts marketplace Joi Gifts
  • The funds will be used to drive short-term growth, with initiatives including awareness campaigns and product development

DUBAI: The entrepreneurship unit of Aramco, Wa’ed, was one of the investors in Joi Gift’s recent funding round that gained $2.5 million in proceeds.

Joi Gifts is an online marketplace for gifts, which operates in eight countries, including Saudi Arabia, the UAE, Jordan, and Egypt.

Dubai-based Knuru Capital also participated in the Series A funding round, the startup said in a statement.

The funds will be used to drive short-term growth, with initiatives including awareness campaigns and product development. The company is also planning further regional expansion, after it announced its eighth country market earlier this year.

“We are thrilled with this investment, which enables Joi Gifts to further enhance and improve what is already the MENA region’s leading online one-stop shop for gifts,” Rami Kahale, Joi Gifts chief, said.

The company said the UAE and the Kingdom had some of the highest average spend on gifts globally, which contributes to its success.