City of London pays early price of hard Brexit

City of London pays early price of hard Brexit
London’s daily trading volumes in other areas such as derivatives and foreign exchange still vastly outweigh its European neighbors. (AFP/File)
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Updated 15 February 2021

City of London pays early price of hard Brexit

City of London pays early price of hard Brexit
  • We’ve always known that some EU-facing business would have to leave the City of London following Brexit, whatever the shape of the deal

LONDON: Europe’s financial capital is feeling the cold of Brexit but UK officials insist the City of London is suffering a temporary blip and is well-positioned to profit from new trading horizons.

For the first time last month, as Britain’s withdrawal from the EU took full effect, London’s financial district lost its European share-trading crown to Amsterdam.

Researchers at IHS Markit attributed the decline to a “relatively hard Brexit,” and the UK government’s failure so far to persuade Brussels to grant full trading rights to City based firms under a regime known as “equivalence.”

London’s daily trading volumes in other areas such as derivatives and foreign exchange still vastly outweigh its European neighbors, and Catherine McGuinness, policy chair at the City of London Corp., played down the development.

“We’ve always known that some EU-facing business would have to leave the City of London following Brexit, whatever the shape of the deal,” she said. “However, significantly fewer jobs have shifted from the City because of Brexit than was expected, and we remain very confident about the fundamental strengths of the City for the future,” McGuinness said.

London “continues to go from strength to strength” in emerging financial technology (fintech) and tech investment, as well as green finance, she added.

In January, according to the Financial Times, an average of €9.2 billion ($11.2 billion) of shares were traded each day on Euronext Amsterdam together with two other Dutch share markets.

That was more than four times their December figure, and overtook London’s daily average of 8.6 billion euros, the newspaper said.

A spokesman for the Dutch Financial Markets Authority told AFP it was not a surprise.

“We think it’s a logical consequence because we already had a strong trading standing with the Euronext Amsterdam,” he added.

Financial services — a key driver of the British economy — were largely omitted from the last-minute Brexit trade deal agreed between London and Brussels in late December.

So from Jan. 1, Britain’s financial sector lost access to the EU’s single market and its European “passport,” a means for UK financial products and services to be sold in the EU.

Both sides are instead working to carve out an “equivalence” regime under which each would recognize the other’s financial regulation, and so far Brussels has approved only two areas of trading out of dozens that the City needs.

Anish Puaar, an analyst at Rosenblatt Securities, said London’s relative decline was “symbolic in the post-Brexit era.”

“But beyond that the impact is pretty minimal,” he said on Twitter.


‘solutions by stc’ raises $966.4m in IPO

‘solutions by stc’ raises $966.4m in IPO
Updated 28 min 17 sec ago

‘solutions by stc’ raises $966.4m in IPO

‘solutions by stc’ raises $966.4m in IPO
  • The financial impact of the IPO will reflect on the company’s Q3 2021 financials

DUBAI: Solutions by STC has completed the institutional and retail subscription for its initial public offering, where it raised SR3.624 billion ($966.4 million). 

The Saudi Telecoms Company unit is offering 20 percent of its share capital, or 24 million shares out of 120 million. 

Final allocations of offer shares, as well as the refund of excess subscription amounts will be based on the prospectus, the company said in a Tadawul filing. 

The financial impact of the IPO will reflect on the company’s Q3 2021 financials. 


ADNOC boosts size of drilling unit IPO to $1.1bn

ADNOC boosts size of drilling unit IPO to $1.1bn
Updated 45 min 4 sec ago

ADNOC boosts size of drilling unit IPO to $1.1bn

ADNOC boosts size of drilling unit IPO to $1.1bn

DUBAI: State oil giant Abu Dhabi National Oil Co. (ADNOC) has increased to 11 percent of share capital the size of the initial public offering (IPO) of its drilling unit, ADNOC Drilling, because of oversubscription, the firm said on Wednesday.

ADNOC had previously targeted a minimum stake of 7.5 percent in the IPO of ADNOC Drilling, at 2.3 dirhams ($0.6262) per share.

In a statement it said the price had not changed but the number of ordinary shares offered was raised to 1.76 billion from 1.2 billion, which would correspond to a $1.1 billion transaction, according to Reuters calculations.

“The new offering size was determined by ADNOC, as the selling shareholder, based on significant investor demand and the considerable oversubscription across all tranches,” it said.

“The enlarged offering will enable a broader investor base to obtain exposure to ADNOC Drilling’s highly attractive value proposition.”

ADNOC will continue to own an 84 percent majority stake in the unit, while Baker Hughes will retain its 5 percent shareholding.

The IPO subcription period will end on Thursday for United Arab Emirates retail investors and on Sunday for domestic and international institutional investors.

Listing is expected on or around Oct. 3, ADNOC said.


Rise in gas prices add to near-term inflation: Capital Economics

Rise in gas prices add to near-term inflation: Capital Economics
Updated 22 September 2021

Rise in gas prices add to near-term inflation: Capital Economics

Rise in gas prices add to near-term inflation: Capital Economics
  • European countries likely to be most affected

RIYADH: A surge in natural gas prices is expected to jack up inflation worldwide with Europe likely to be most affected, said a Capital Economics report.

The report said unreasonable and extreme weather conditions led to longer periods of cooling and heating and China’s rebound from the pandemic also boosted gas demand. On the other hand, extreme weather and the pandemic-related price collapse in 2020 hit US production and exports. Outages at several liquefied natural gas plants and Russia limiting exports via Ukraine for political reasons caused an imbalance in the supply and demand, which raised gas prices globally.

The most pronounced impact has been in the euro zone, where the rise in gas and electricity inflation has added 0.5ppts to headline CPI inflation since the start of the year.

“Since the start of Q2, the European (TTF) gas price has surged by 290 percent, Asia LNG spot prices are up 260 percent and US natural gas (Henry Hub) has nearly doubled,” the report said.

In the US, higher gas and electricity inflation has added just 0.2ppts to CPI inflation this year given the less pronounced rise in US gas prices and the lower weight of gas and electricity in the CPI basket. Japan has experienced a boost of 0.4ppts, as its gas imports are tied to long-term contracts indexed to oil prices. It’s a similar story in many emerging markets where gas prices tend to be tied to long-term contracts and/or indexed.

“We think natural gas prices will remain elevated for some time yet. Globally, but particularly in Europe, stocks are at historic lows and will take some time to rebuild even if we are right and supply picks up,” wrote  Jennifer McKeown, head of Global Economics Service.

The analyst, however, predicted that by Q2 2022 prices will be under sustained downward pressure.

Current prices will incentivize supply, particularly in the US where shale operations can ramp up relatively quickly. The situation will probably also hasten the approval of the Nord Stream II pipeline from Russia to Germany. Prevailing prices are likely to curb demand, the report said.

The passthrough is likely to be far smaller since governments are already acting to limit the effect on consumers.

According to McKeown, gas and electricity inflation is likely to surge by 16 percent to add an average of 0.3ppts to headline inflation in major advanced economies in the rest of this year, on top of the 0.3ppt boost which they have experienced already. “This should reverse next year, particularly given our expectation that gas prices will recede. But there are risks in both directions, and gas prices are notably volatile,” she said.

The report said there will be a drag on activity in most economies as higher utilities prices eat into the income available for discretionary spending. There could also be adverse consequences for the energy industry, particularly in countries where prices are regulated – most notably the UK, it added.


Almarai cuts emissions, increases use of solar power by 119%

Almarai cuts emissions, increases use of solar power by 119%
Updated 22 September 2021

Almarai cuts emissions, increases use of solar power by 119%

Almarai cuts emissions, increases use of solar power by 119%

JEDDAH: Saudi Arabia leading multinational dairy company Almarai has taken several steps to reduce emissions and increased the use of solar energy by 119 percent, according to its annual Sustainability Report 2020.

The Tadawul-listed company has reduced car fuel consumption in its sales, distribution and logistics department by 4 percent as compared to 2019. According to the report, clean energy accounted for 2.5 percent of the total power consumption, which is 4.4 percent within the sustainability strategy’s limits.

“Climate change can pose risks to agricultural production,” said Abdullah Al-Otaibi, head of corporate communication and public relations at Almarai. He said in order to fight climate change the company is taking measures to ensure sustainable growth.

Al-Otaibi said their energy strategy is based on solar power generation, increasing operational efficiency and energy monitoring efficiency, and improving the energy culture in pastures.


Saudi group wins Subway master franchise deal in UAE

Saudi group wins Subway master franchise deal in UAE
Updated 58 min 27 sec ago

Saudi group wins Subway master franchise deal in UAE

Saudi group wins Subway master franchise deal in UAE
  • In Europe, Middle East, and Africa, Subway plans to double its number of restaurants across the region in the coming years

DUBAI: Saudi Arabia’s Kamal Osman Jamjoom Group on Tuesday signed a master franchise agreement with Subway in the UAE as the restaurant brand seeks to expand its footprint in the region.

The deal marked the start of a new chapter for Subway in the UAE as it seeks to expand its footprint and remain competitive in the market.

“Subway is making bold and impressive changes to continue to grow its presence in markets around the world,” said Hisham Al-Amoudi, Group CEO of Kamal Osman Jamjoom Group.

“As Subway continues to expand internationally, we are focused on attracting well-established, large-scale operators in regions where they can leverage market expertise to help our brand thrive,” said CEO John Chidsey.

Established in 1987, Kamal Osman Jamjoom Group is a major franchise industry player in the Middle East with 675 stores across seven countries, making it one of the largest franchise networks in the region. They are a valued partner to some of the world’s most iconic brands, such as The Body Shop, LEGO, and Early Learning Center.

The group’s “deep knowledge of the Middle East and experience strengthening and expanding other global franchisee brands makes them the ideal partner in the UAE,” Mike Kehoe, EMEA president at Subway.

In Europe, Middle East, and Africa, Subway plans to double its number of restaurants across the region in the coming years and will continue to seek strong partners to support the brand on its journey.

The agreement will enable significant growth in the UAE in the coming years  including accelerated deployment of restaurant remodels — featuring a new, modern “Fresh Forward” design — as well as improved, consistent guest experiences, both on- and off-premise.