A rise in annual US industrial output; Canada's debt fears: Economic wrap

A rise in annual US industrial output; Canada's debt fears: Economic wrap
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Updated 18 October 2021

A rise in annual US industrial output; Canada's debt fears: Economic wrap

A rise in annual US industrial output; Canada's debt fears: Economic wrap

US industrial production increased by a yearly rate of 4.6 percent in September, data from the Federal Reserve showed. 

This is the fifth consecutive month in which industrial output growth slowed after growing 17.8 percent in April due to last year's lower base effects.

On a monthly basis, industrial output declined by 1.3 percent in September. This is a larger decline than the one experienced in the previous month when industrial production fell by 0.1 percent.

This was driven by a 3.6 percent drop in utilities production and a 2.3 percent fall in mining output. Moreover, manufacturing production decreased by 0.7 percent in September as motor vehicles output slumped by 7.2 percent.

Canada’s debt fears

The Canadian government intends to impose new taxes which will help in financing some campaign promises. However, the new stream of revenues will prove to be insufficient to pay off the country’s mounting debts. According to analysts, this will leave Canadians at risk of a potential economic crisis in the near future.

Notably, the country accumulated debt at a faster rate than any other member of the G7. Piling debts could hamper efforts that require sizable finances such as the transition to a green economy.

Central banks and governments clash in Eastern Europe

Rising inflation in Eastern Europe has prompted central banks to raise their interest rates despite a backlash from governments that want to defend strong output growth.

The situation is most visible in Hungary and the Czech Republic as their central banks raised interest rates by more than 1 percent since June.

Capital Economics expects that the Eastern Europe will be one of the regions where inflation will have far-reaching effects in the next year.


Kuwait’s credit rating downgraded to ‘AA-’ by Fitch

Kuwait’s credit rating downgraded to ‘AA-’ by Fitch
Updated 16 sec ago

Kuwait’s credit rating downgraded to ‘AA-’ by Fitch

Kuwait’s credit rating downgraded to ‘AA-’ by Fitch

RIYADH: Kuwait has had their long-term foreign-currency issuer default ratings, or IDR, downgraded from 'AA' to ‘AA-' by Fitch Ratings.

The downgrade comes as a result of the ongoing political constraints on decision-making that is contributing to structural challenges in the Gulf state. 

 


Deutsche Bank sees biggest annual profit in a decade

Deutsche Bank sees biggest annual profit in a decade
Image: Shutterstock
Updated 16 min 15 sec ago

Deutsche Bank sees biggest annual profit in a decade

Deutsche Bank sees biggest annual profit in a decade
  • Sewing’s 2019 plan involved shedding billions in risky investments

Deutsche Bank said Thursday it reaped its best annual profit in a decade in 2021 and had put most of the costs of its wrenching, years-long restructuring behind it.

The bank underlined its recovery by announcing a dividend for 2021 and a 300 million-euro ($338 million) share buyback to return money to shareholders.


CEO Christian Sewing said Thursday the bank had created “positive momentum” in a “negative environment” during the pandemic and that “the downward spiral turned into an upward spiral” as the bank made progress toward the goals laid out more than three years ago in an extensive plan to revamp its business.


Last year, Germany’s largest bank saw stronger earnings from its investment bank, which made 3.7 billion euros ($4.1 billion) in before-tax profits, a gain of 17 percent.

And it had lower losses for loans that aren’t being paid back, which fell 71 percent during the year against a background of low interest rates and an economic recovery from the worst of the pandemic lockdowns.


The bank said it had already accounted for 97 percent of its restructuring costs anticipated through the end of 2022.


In July 2019, Sewing announced a 7.4 billion-euro ($8.3 billion) restructuring that involved cutting overhead costs and thousands of jobs in an attempt to end years of uneven profits and large losses from repeated run-ins with regulatory authorities.

The bank had just under 83,000 employees at year-end 2021, down from 91,737 at the end of 2018.


Progress in cutting costs slowed during the year but in some cases for positive reason such as higher business volumes and spending on computer systems and financial controls.

Sewing said that such spending helped ensure the bank’s compliance with anti-money laundering regulations and promoted more profitable business going forward.
“Our determination to reduce costs further has not changed,” he said.


The bank also said it would be paying higher bonuses because of the bank’s stronger performance.


Sewing’s 2019 plan involved shedding billions in risky investments, leaving less profitable lines of business where the bank wasn’t a dominant competitor.

In 2021, the unit charged with running down holdings no longer seen as parts of the bank’s core activities shrank to 28 billion euros, down from 34 billion in 2020 and remained ahead of its 2022 goal.


Remaining costs for restructuring such as severance for employees being let go continued to weigh on earnings into the last months of the year, hitting fourth-quarter earnings with charges of $456 million.


Full-year net profit rose fourfold from the year before to 2.5 billion euros, the highest since 2011.

Revenues rose 6 percent to 25.4 billion euros. For the fourth quarter, the bank managed to turn in a net quarterly profit of 82 million euros despite higher remaining restructuring expenses including employee severance.

The bank proposed a dividend of 20 euro cents per share for 2021, its first since the 11-cent dividend for 2018.


Saudi Arabia to host the 14th edition of global oil and gas conference 

Saudi Arabia to host the 14th edition of global oil and gas conference 
Updated 32 min 50 sec ago

Saudi Arabia to host the 14th edition of global oil and gas conference 

Saudi Arabia to host the 14th edition of global oil and gas conference 

RIYADH: Saudi Arabia will host the 14th edition of the International Petroleum Technology Conference, known as IPTC, in Riyadh from Feb. 21 to 23, it has been announced.

Held under the patronage of Crown Prince Mohammed Bin Salman, the 14th edition of the oil and gas conference will have Saudi Aramco serving as the exclusive host. 

The conference will involve regional energy ministers, industry leaders, and governmental representatives to discuss their views on timely industry topics and trends.

“IPTC 2022 will demonstrate the energy sector’s resilience, ecosystem evolution and technological advancement during one of the most challenging times of our industry,” the event’s executive committee chair, Nasir Al Naimi, said. 

“The conference will highlight how innovation and technology can lead the industry to develop sustainable solutions to achieve growth within the boundaries of a circular economy,” he added.

The event shall attract over 18,000 attendees from more than 70 countries, to tackle over 530 diverse topics. 

It is a collaborative effort among the American Association of Petroleum Geologists, the European Association of Geoscientists and Engineers, the Society of Exploration Geophysicists and the Society of Petroleum Engineers.


Global crypto owners are expected to exceed 1 billion this year: Crypto Moves

Global crypto owners are expected to exceed 1 billion this year: Crypto Moves
Image: Shutterstock
Updated 40 min 59 sec ago

Global crypto owners are expected to exceed 1 billion this year: Crypto Moves

Global crypto owners are expected to exceed 1 billion this year: Crypto Moves

RIYADH: Bitcoin, the leading cryptocurrency internationally, traded lower on Thursday, falling by 3.38 percent to $36,519 at 1:34 p.m. Riyadh time.

Ether, the second most traded cryptocurrency, was priced at $2,435, down by 2.45 percent, according to data from Coindesk.

Other News:

The number of global crypto owners is expected to exceed 1 billion by the end of the year, according to a report by Crypto.com.

Crypto.com released its “Crypto Market Sizing” report last week which shows an analysis of cryptocurrency adoption worldwide.

The global crypto population increased by 178 percent in 2021, rising from 106 million in January to 295 million by December.

“Nations can no longer afford to ignore the growing push to crypto by the public. We may in many cases expect a friendlier stance towards the crypto industry,” the company said.

The report shows that the adoption of cryptocurrency in the first half of 2021 was impressive, adding that the main driver of growth was bitcoin.

“We expect developed nations to devise clear legal and taxation frameworks for crypto assets,” Crypto.com said.

More countries facing economies with high inflation and devaluation may adopt cryptocurrency as legal tender, similar to El Salvador.

Despite the IMF’s bitcoin stance, several people have predicted that more countries will make the cryptocurrency legal tender this year, including Salvadoran President Nayib Bukele.

Financial giant Fidelity recently said it expects other sovereign nation-states to acquire bitcoin this year as a form of insurance.

Regulating crypto industry

The leader of the Nigerian blockchain association, Senator Ihenyen, has implored the country’s lawmakers currently pushing for the securities law to be revamped to consider crafting laws that regulate the crypto industry.

As Nigerian lawmakers debate a bill that proposes a ten-year jail term for operators of Ponzi schemes, a leader of a Nigerian blockchain lobby group, Senator Ihenyen, has urged the country’s lawmakers to consider crafting a law to govern the cryptocurrency industry.

He argued that the unregulated crypto space is not in anyone's interest, Bitcoin.com reported.

Ihenyen, who heads the Stakeholders in Blockchain Technology Association of Nigeria, known as SIBAN, concedes that while the proposed bill does not expressly mention or refer to digital currencies, crypto Ponzi schemes are included in what the lawmakers call prohibited schemes.

The remarks by the leader of SIBAN follow reports that Nigerian lawmakers had passed a bill to repeal and re-enact the country’s Capital Markets, Investment and Securities Act for a second reading.

“The bill prohibits Ponzi/Pyramid Schemes as well as other illegal investment schemes and prescribes a jail term of not less than 10 years for promoters of such schemes, ” Ibrahim Babangida, one of the lawmakers who led the campaign to change the law, said.

In addition to seeking a custodial sentence, lawmakers also want the new law to grant the Nigeria Securities and Exchange Commission the power to shut down Ponzi schemes.

The lawmakers also insist the current law is not compatible with present trends in capital markets regulation, hence the need to revamp the act.


Norway wealth fund earns second-highest return in 2021

Norway wealth fund earns second-highest return in 2021
Image: Shutterstock
Updated 47 min 54 sec ago

Norway wealth fund earns second-highest return in 2021

Norway wealth fund earns second-highest return in 2021
  • Last year's return was the second highest in the fund's history

Norway's sovereign wealth fund, the world's largest, earned a return on investment of 1.58 trillion Norwegian crowns ($177 billion) last year, the second highest on record, with the biggest boost coming from tech stocks, it said on Thursday.


The $1.3 trillion fund's return on investment stood at 14.5 percent for the year, which was 0.74 percentage point higher than the return on the fund's benchmark index.


"The good results are mainly due to very strong developments in the equity market throughout the year," Chief Executive Nicolai Tangen said in a statement.


"There was good return in all sectors, but the investments in technology and financials performed particularly well," he said.


Tech stocks made a return of 30.2 percent, making it the best-performing sector.


Founded in 1996, the fund invests revenue from Norway's oil and gas sector and holds stakes in some 9,100 companies globally, owning 1.4 percent of all listed stocks. It also invests in bonds, unlisted real estate and renewable energy infrastructure.


Last year's return was the second highest in the fund's history, exceeded only by the 1.69 trillion crowns earned in 2019.


The biggest individual contributors to the fund's returns were Microsoft Corp, Alphabet Inc and Apple Inc, presentation material showed.


On a country basis, investments in the United States contributed the most, with 960 billion crowns in returns, followed by Britain with 112 billion crowns.


The fund holds the equivalent of $244,000 for every Norwegian man, woman and child.