After 17 years, truce nears in US-Europe jet subsidy war

After 17 years, truce nears in US-Europe jet subsidy war
An Airbus A350 flies over a Boeing flag while landing after a flying display during the 51st Paris Air Show at Le Bourget airport near Paris. (Reuters)
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Updated 15 June 2021

After 17 years, truce nears in US-Europe jet subsidy war

After 17 years, truce nears in US-Europe jet subsidy war
  • A deal to pause the world’s largest corporate trade dispute would help US planemaker Boeing and Europe’s Airbus , while granting relief to dozens of other industries affected by tit-for-tat tariffs that were suspended in March

PARIS: The United States and Europe are expected to announce a five-year suspension of tariffs in their 17-year-old dispute over aircraft subsidies on Tuesday, allowing them to focus on the threat posed by China’s nascent commercial aircraft industry, people familiar with the matter said.
A deal to pause the world’s largest corporate trade dispute would help US planemaker Boeing and Europe’s Airbus , while granting relief to dozens of other industries affected by tit-for-tat tariffs that were suspended in March. They face a renewed trade war within weeks if there is no progress.
US Trade Representative Katherine Tai discussed the dispute in her first face-to-face meeting with EU counterpart Valdis Dombrovskis on Monday ahead of Tuesday’s US-EU summit, where China will also be a key topic. Tai travels to Britain on Wednesday.
The European Commission, which oversees EU trade policy, and the United States had vowed to find a solution by July 11 when the currently suspended transatlantic tariffs are due to resume.
Officials had targeted a permanent solution through a pair of treaties — one between the United States and European Union, the original parties, and another between Washington and London following Britain’s exit from the EU — on new ground rules for aerospace.
But reaching a detailed accord has proven complex, given nearly two decades of legal wrangling and thousands of pages of documents, said one source briefed on the talks.
A standstill agreement would push back the resumption of tariffs by years at a time when US President Joe Biden has vowed to reset relations with European partners after four tumultuous years under former President Donald Trump.
Freezing the conflict over jet subsides, some of which have been rescinded or wound down, would give both sides more time to focus on broader agendas such as concerns over China’s state-driven economic model, several of the sources said.
The tariffs on $11.5 billion of goods were progressively imposed from 2019 after the United States and EU both won partial victories at the World Trade Organization over claims of unfair aid for Boeing and Airbus.
The dispute has dragged on since 2004 when the United States withdrew from a 1992 aircraft subsidy pact and took the EU to the WTO, claiming Airbus had managed to equal Boeing’s share of the jet market thanks in part to subsidized government loans.
The EU counter-sued over what it termed unfair R&D support and subsidized tax incentives for Boeing.
In recent months, top European, British and US officials have engaged in intense discussions to settle the dispute and focus on other challenges, including China.
Tai told Reuters in May she was optimistic about reaching a deal with Brussels, adding that the two sides needed to look at “the bigger question” of China’s ambitions to become a global player in the commercial aircraft industry.
The US has floated a joint review of aerospace funding in non-market economies like China, two of the people said.
One of the sources said the two sides had agreed to increase information-sharing, but gave no further details.
“There’s no question that the rise of China’s aircraft industry is ... on everybody’s proverbial radar,” US Chamber of Commerce Senior Vice President Marjorie Chorlins told reporters on Monday, noting what she described as China’s “heavy subsidization” of its industries.
She said settling the dispute would provide “a tremendous boost of goodwill” for broader US-European ties.
Brussels and Washington remain at odds over steel and aluminum tariffs, but are expected at Tuesday’s summit to set a Dec. 1 deadline to end punitive tariffs related to the dispute, according to a draft communique seen by Reuters.
Like the United States, the EU has sparred with Beijing on trade and security this year. But its 27 nations could struggle to agree a common front on topics like aerospace.
In April, for example, Hungary blocked an EU statement criticizing China’s new Hong Kong security law, sparking a row over the right of member states to veto EU foreign policy.
The Chinese embassy in Washington had no immediate comment.
None of the parties agreed to comment on the talks.
In a potentially key breakthrough, the United States had watered down opposition to the principle of future public loans for Airbus and removed its demand for compensation.
But its insistence on advance notice of any future public loans had triggered concerns among EU officials, who rejected giving Washington any veto power, people familiar with the talks said.
Even more critical is the benchmark to be used when deciding whether the interest on any future loans is market-compatible.
Under the 1992 subsidy pact, one third of a project could be financed by direct government support such as loans and cleared indirect R&D support up to 4 percent of a company’s revenue.
One option is to revisit that framework with market rules replacing subsidy quotas and a new cap on indirect R&D support.
Brexit has also complicated negotiations.
Britain and the United States came close to striking an aerospace agreement in December that could have forced the hand of Brussels in its own talks with Washington.
Britain’s ability to negotiate trade deals independently of the EU is central to its new “global Britain” stance. But its flexibility on Airbus is cramped by its role as one of four core nations involved in the planemaker, pre-dating its EU accession.
Airbus, which has 14,000 staff in Britain, has made plain work could shift abroad if the UK turns its back on aerospace.


PayPal in $45bn bid for Pinterest: Reuters

PayPal in $45bn bid for Pinterest: Reuters
Updated 20 October 2021

PayPal in $45bn bid for Pinterest: Reuters

PayPal in $45bn bid for Pinterest: Reuters

NEW YORK: PayPal Holdings Inc. has offered to buy digital pinboard site Pinterest Inc. for $45 billion, people familiar with the matter said on Wednesday, a combination that could herald more tie-ups between financial technology and social media companies in e-commerce.

The deal talks come as internet shoppers increasingly buy items they see on social media, often following “influencers” on platforms such as Instagram and TikTok. Buying Pinterest would allow PayPal to capture more of that e-commerce growth and diversify its income though advertising revenue.

PayPal has offered $70 per share, mostly in stock, for Pinterest, one of the sources said. 

The online payments provider hopes to successfully negotiate and announce a deal by the time it reports quarterly earnings on Nov. 8, the source added.

The sources cautioned that no deal was certain and terms could change. They asked not to be identified because the matter is confidential.

PayPal and Pinterest did not respond to requests for comment. Bloomberg News first reported on the PayPal-Pinterest talks on Wednesday.

PayPal’s offer represents a 26 percent premium to Pinterest’s closing price of $55.58 on Tuesday. PayPal’s shares fell over 4 percent on the news, while Pinterest rose more than 14 percent to $63.51.


Oil rallies as US crude stocks decline in tight market: Energy market wrap

Oil rallies as US crude stocks decline in tight market: Energy market wrap
Updated 20 October 2021

Oil rallies as US crude stocks decline in tight market: Energy market wrap

Oil rallies as US crude stocks decline in tight market: Energy market wrap

RIYADH: Oil prices rose on Wednesday after US crude inventories at the nation’s largest storage site hit their lowest level in three years and nationwide fuel stocks fell sharply, a signal of rising demand.

Brent crude futures settled at $85.82 a barrel, a gain of 0.9 percent or 74 cents and the highest since October 2018.

November US West Texas Intermediate crude, which expires on Wednesday, settled at $83.87, up 91 cents, or 1.1 percent. The more active WTI contract for December settled up 98 cents to $83.42 a barrel.

Crude prices have risen as supply has tightened, with the Organization of the Petroleum Exporting Countries maintaining a slow increase in supply rather than intervening to add more barrels to the market, and as US demand has ramped up.

Globally, refiners have been boosting output thanks to high margins, one that can only be restrained by maintenance. US refining capacity use dropped in the most recent week, but analysts noted that supply may continue to tighten if US refiners also pick up processing again.

Emissions cut

Anglo-Australian miner Rio Tinto announced a $7.5 billion plan to reduce carbon emissions by 50 percent by 2030 and forward its target of 2025 for a 15 percent reduction in emissions from 2018 levels.

LNG deals

China has agreed to three huge liquefied natural gas deals with US exporter Venture Global LNG.

According to documents posted on the US department of energy website, the agreements with China’s state oil giant Sinopec include two 20-year deals for a combined 4 million tons of LNG per year.

Germany’s oil imports

German crude oil import volumes fell 7.1 percent from January to August and related lockdowns hit the industry, official data showed on Wednesday.

Oil volumes in Jan-Aug fell to 51.9 million tons from 55.8 million in the same months of 2020, statistics from the BAFA foreign trade office showed.

Forecast 

Crude oil prices could reach $100 per barrel in the first or second quarter of next year as global inventories are at their lowest level, the Iraqi oil minister said.


Sipchem records highest profits in its history, shares skyrocket

Sipchem records highest profits in its history, shares skyrocket
Updated 20 October 2021

Sipchem records highest profits in its history, shares skyrocket

Sipchem records highest profits in its history, shares skyrocket
  • The company posted a net profit of SR1.029 billion for the third quarter of 2021.
  • It also achieved a net profit after zakat and tax of about SR1.24 billion in the first half of 2021.

RIYADH: Shares of Sahara International Petrochemical Co. “Sipchem” on Wednesday hit the highest level since debut on the Saudi stock market. Share of the petrochemical company closed at SR46.95 ($12.2). 

Nearly 15.4 million shares were traded during the market session. The company posted a net profit of SR1.029 billion for the third quarter of 2021, the highest profit since its establishment. 

In a statement, the company attributed the reason for the rise in shares price to high selling prices of all the company’s products, which it said contributed to the increase in profit margins despite pressures from the rise in the prices of raw materials such as butane, ethanol, ethylene and propane.

On a quarterly basis, the company’s profits rose by about 24 percent, compared to the profits of the previous quarter, which amounted to SR829.9 million.

The company also achieved a net profit after zakat and tax of about SR1.24 billion in the first half of 2021, compared to losses of about SR151.8 million in the same period of 2020.

Sipchem CEO Abdullah Al-Saadoon told CNBC Arabia that he expected demand for the company’s products to remain strong in the fourth quarter of the year and the first three months of 2022.

Sipchem’s strong marketing plan helped buoy its third quarter earnings, he said. 

The company has  strong presence in the European and Asian markets, through Sipchem Europe and Sipchem Asia. It markets more than 70 percent of its products to end consumers.

Al-Saadoon said the company seeks to reduce its debt since the beginning of the year. It reduced its leverage by almost 12 percent to reach 40 percent of capital, he added.

 

 


Oil prices, government spending see TASI hit highest level since 2006: Market Wrap

Oil prices, government spending see TASI hit highest level since 2006: Market Wrap
Updated 20 October 2021

Oil prices, government spending see TASI hit highest level since 2006: Market Wrap

Oil prices, government spending see TASI hit highest level since 2006: Market Wrap

RIYADH: The Tadawul All Share Index increased on Wednesday by 0.94 percent, or 111.2 points.

Oil prices and the announcement of $2 trillion in government spending contributed to the rise in stocks.

TASI liquidity today amounted to about SR7.2 billion, while 189.8 million shares were traded, in 313,000 deals. 

National Gypsum Co. (NGC) topped the list of companies trading above three month average at 344, followed by Sahara International Petrochemical Co. (Sepchem) at 295.

The petrochemical producer posted a net profit of SR1.029 billion for the third quarter of 2021, the highest profit since inception.

Saudi Arabia’s parallel stock market index, Nomu, gained 81.7 points, or 0.34 percent, closing at 24,449.96 points. 

The biggest risers today were, Al-Rajhi Bank which records the highest level since 2006 to close at SR141.2, up 1.6 percent, and SABIC shares by 2 percent at SR133.6.

Among other shares that rose were NCB by 0.6 percent, and Riyad Bank by 4.4 percent.


Saudi markets surge as M&A activity set to continue until mid-2022: General Authority for Competition

Saudi markets surge as M&A activity set to continue until mid-2022: General Authority for Competition
Updated 20 October 2021

Saudi markets surge as M&A activity set to continue until mid-2022: General Authority for Competition

Saudi markets surge as M&A activity set to continue until mid-2022: General Authority for Competition

RIYADH: The Saudi market saw mergers and acquisitions jump 68 percent to 237 applications in the first nine months of 2021 — led by the IT, healthcare and petrochemical sectors according to a Saudi expert.

Talal Alhogail, head of mergers and acquisitions at the General Authority for Competition,  said the year-on-year comparison shows that it has been an exceptional period for business as it recovers from the pandemic, reported Asharq.

He added he expects the high rate to continue into the middle of 2022.

In August, the authority approved the merger of 32 companies and local exchange institutions (purchasing and selling foreign currencies).

It was one of the largest merger operations in terms of the number of establishments involved in a single deal in its history.

The year also saw the merger of National Commercial Bank and Samba Financial Group under the name of Saudi National Bank. 

With SR837 billion ($223 billion) in assets, SNB will be Saudi Arabia’s largest bank, accounting for a market share of 25 percent across all metrics. It will be well capitalized with a combined equity of SR120 billion.

The combination of the country’s largest with its fourth-largest lender creates a national champion across the board.