Markets bullish on continuing uncertainty surrounding omicron

Markets bullish on continuing uncertainty surrounding omicron
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Updated 07 December 2021

Markets bullish on continuing uncertainty surrounding omicron

Markets bullish on continuing uncertainty surrounding omicron


LONDON: Is everyone buying the dip? Global equity markets have bounced back, recovering last week’s omicron-driven losses, as fears about the impact of the latest coronavirus variant on economic growth ease.

Oil prices joined the party after plunging last week on omicron fears. Gas prices also pushed higher though that is more linked to Washington’s warning of “nuclear” sanctions against Russia if it decides to invade Ukraine.

But whatever the markets are saying right now, it is clear the number of omicron cases is rising quickly and governments are worried enough to have imposed fresh restrictions on at least some — mostly leisure related — economic activity to combat the increase.

Financial markets have perhaps bullishly interpreted the WHO declaration that it is too early to determine whether omicron causes more serious illness, or whether it is immune to current vaccines. The WHO also pointed out that no one has so far died with the variant despite its existence in 38 countries.

Against that, a study from South Africa, published on Friday, found omicron is 2.4 times more likely than previous variants to reinfect someone who has already had COVID-19. Jeremy Farrar, director of the medical research group Wellcome Trust, commented recently that the “variant reminds us all that we remain closer to the start of the pandemic than the end.”

This is why, unlike financial markets, governments are currently hedging their bets.

Speaking last week, US Treasury Secretary Janet Yellen, warned the variant could slow global economic growth by exacerbating existing pandemic induced supply chain problems and choking consumer demand.

Her view was echoed by International Monetary Fund chief Kristalina Georgieva.

Further disruption to supply chains will intensify existing record inflationary pressures in the global economy amid the still tentative vaccine induced recovery.

Thus, along with the risk omicron poses, there are concerns about central bank tightening, primarily from the US Federal Reserve.

Mark Haefele at UBS Global Wealth Management is optimistic about growth but cautioned: “We see two bear cases: First, that omicron has sufficiently severe symptoms and transmissibility that governments turn to lockdowns to control the outbreak. The second bear case is that government restrictions delay a normalization of supply chains and drive fears of stagflation and monetary tightening.”

Commenting on omicron impact on the oil market, JP Morgan analyst Natasha Kaneva said she expected a 650 kbd (1,000 barrels per day) impact to oil demand, with reduction almost evenly split in percentage terms among jet fuel, diesel and gasoline. “However, our models suggest that, once potential omicron-related lockdown measures ease heading into summer 2022, there will be a bounce-back effect, likely indicative of pent-up demand,” she said.

Based on the current omicron infection rates the best case scenario at the moment is that while the variant is highly transmissible, those infected will continue to show only mild symptoms.

So far, the response from governments in Europe and the US has been largely limited to restricting travel from abroad — including arrivals from some countries being forced to quarantine in hotels —  and increased testing for travelers, to try and stop the spread.

This week, energy ministers from oil producing countries, including Saudi Arabia and Qatar, decided not to travel to the US for the delayed World Petroleum Congress in Houston due to omicron concerns.

However, the omicron variant is now increasingly found in people who haven’t traveled anywhere, or in many cases, had any connections with travelers.

Governments, reluctant to embark on another round of fresh domestic restrictions, have focused on ratcheting up vaccination programs encouraging people to get booster jabs.

But restrictions are being slowly reintroduced.

All international travelers to the US are now required to test within one day of their departure.

In Germany, Europe’s biggest economy, the government has banned unvaccinated people from most public spaces, prohibiting them from entering  all premises apart from grocery stores and pharmacies. It is also plans to make vaccination compulsory next year.

Belgium’s government has told people to work from home and will close its schools a week earlier for Christmas. In Italy unvaccinated people are prohibited from certain leisure activities. France and Ireland have closed night clubs and restricted gatherings.

Austria is back in lockdown and unvaccinated people who breach lockdown rules face fines of up to €500 ($562). Anyone refusing to comply with vaccination status checks could be fined up to €1,450.

The new crackdown, though in most cases mild compared to earlier lockdowns, has resulted in a number of protests over the last two weeks in some countries.

Against that backdrop, the current bull market in the midst of uncertainty that omicron is causing to governments is surprising.

Despite fears about tighter monetary policy, Barclays Capital’s managing director Emmanuel Cau summed up the current confidence in financial markets. He said: “We remain of the view that overall macro and liquidity conditions are supportive of equities, and advise to add on weakness, looking for the bull market to carry on.”

For once financial institutions appear to have confidence in uncertainty. 


HSBC weighs IPO of Indonesia business: Bloomberg News

HSBC weighs IPO of Indonesia business: Bloomberg News
Updated 11 sec ago

HSBC weighs IPO of Indonesia business: Bloomberg News

HSBC weighs IPO of Indonesia business: Bloomberg News
  • The IPO news comes a month after HSBC’s largest shareholder, Chinese insurance giant Ping An, called for a spin off of the bank’s Asian operations in a move to boost returns

HSBC Holdings PLC is considering an initial public offering of its Indonesian business, as the bank aims to target the growing investment demand in the country, Bloomberg news reported on Thursday, citing people familiar with the matter.

The London-based bank is yet to file a formal IPO application in Jakarta but the talks for a share sale are at an advanced stage, according to the report.

Indonesia’s Financial Services Authority declined to comment on the report, while HSBC did not immediately respond to Reuters’ request for a comment.

The IPO news comes a month after HSBC’s largest shareholder, Chinese insurance giant Ping An, called for a spin off of the bank’s Asian operations in a move to boost returns.


TASI gains on optimism among investors: Opening bell

TASI gains on optimism among investors: Opening bell
Updated 26 May 2022

TASI gains on optimism among investors: Opening bell

TASI gains on optimism among investors: Opening bell

RIYADH: Saudi stocks extended their gains on Thursday as investor optimism increased following a strong earnings season.

The main index, TASI, gained 0.53 percent to reach 12,656, while the parallel market, Nomu, started flat at 22,020, as of 10:08 a.m. Saudi time.

Buruj Cooperative Insurance Co. gained 2.39 percent, leading the market gainers; Wataniya Insurance Co. fell 4.23 percent, leading the fallers.

Ataa Educational Co. gained 1.98 percent, after it received Capital Market Authority approval to increase capital to $112m for the acquisition of Naba'a.

Among the gainers on the list, the Saudi Industrial Export Co. rose 1 percent, and Elm Co. edged up by 0.41 percent.

In the financial sector, the Kingdom’s largest valued bank Al Rajhi edged up 0.85 percent, while Alinma Bank climbed 0.79 percent.

Among the telecom giants, stc added 0.38 percent and Zain KSA was down 0.15 percent

In the pharmaceutical sector, Aldawaa Medical Services Co. and Nahdi Medical Co. both opened flat.

Saudi Aramco, the largest player on the Saudi oil market, opened today’s trading up 0.37 percent.

The energy market saw Brent crude trading at $114.46 a barrel and US West Texas Intermediate crude reached $110.85 a barrel, as of 10:10 a.m. Saudi time.


Commodities Update — Gold dips; Wheat, corn fall; Copper extends losses on global recession worries

Commodities Update — Gold dips; Wheat, corn fall; Copper extends losses on global recession worries
Updated 26 May 2022

Commodities Update — Gold dips; Wheat, corn fall; Copper extends losses on global recession worries

Commodities Update — Gold dips; Wheat, corn fall; Copper extends losses on global recession worries

RIYADH: Gold prices edged lower on Thursday as Treasury yields gained after the appeal of bullion was somewhat restored by minutes of a US Federal Reserve policy meeting that showed the central bank was unlikely to get more aggressive on interest rate hikes.

Spot gold dipped 0.2 percent to $1,849.75 per ounce, as of 0220 GMT. 

US gold futures gained 0.1 percent to $1,848.20. 

Silver down

Spot silver dipped 0.5 percent to $21.86 per ounce, while platinum eased 0.1 percent to $943.15. 

Palladium was little changed at $2,006.61.

Grains ease

US corn and wheat futures fell on Thursday on hopes that stuck grain supplies from the Black Sea region could start moving, while soybean eased on concerns over demand from top consumer China.

The most-active corn contract on the Chicago Board of Trade fell 1.39 percent to $7.61-half a bushel as of 0445 GMT, after falling to the lowest level in seven weeks on Wednesday.

Wheat was down 2.07 percent at $11.24- half a bushel and soybeans edged 0.28 percent lower to $16.76- quarter a bushel.

Copper falls

Copper extended losses to a third session on Thursday as concerns grew that the global economy might plunge into a recession and dampen demand for industrial metals.

Three-month copper on the London Metal Exchange was down 0.5 percent at $9,328.50 a ton, as of 0536 GMT. The most-traded July contract on the Shanghai Futures Exchange fell 0.2 percent to $10,581.78 a ton.

(With input from Reuters)


Insurance firm Saudi Re gets central bank’s approval to raise capital to $356m through rights issue 

Insurance firm Saudi Re gets central bank’s approval to raise capital to $356m through rights issue 
Updated 26 May 2022

Insurance firm Saudi Re gets central bank’s approval to raise capital to $356m through rights issue 

Insurance firm Saudi Re gets central bank’s approval to raise capital to $356m through rights issue 

RIYADH: Saudi Reinsurance Co. has received the necessary approval from the Kingdom’s central bank to increase its capital to SR1.34 billion ($356 million), it said in a bourse filing.

Saudi Re, as the company is known, is looking to boost its capital, which currently stands at SR891 million, in a bid to support future expansion activities and strengthen its capital base.

The process will be carried out by offering a rights issue valued at nearly SR445 million, which will increase the company’s shares from 89.1 million to 134 million.

Saudi Re is among the first companies in Saudi Arabia to offer both life and non-life reinsurance products.


Here’s what you need to know as Tadawul wraps up the trading week

Here’s what you need to know as Tadawul wraps up the trading week
Updated 26 May 2022

Here’s what you need to know as Tadawul wraps up the trading week

Here’s what you need to know as Tadawul wraps up the trading week

RIYADH: Saudi Arabia’s main stock market notched its second day of gains on Wednesday, after listed companies concluded a strong earnings season.

TASI surged 2.3 percent to close at 12,588, whereas the parallel market Nomu slipped 1 percent to 22,020.

TASI led the gains in the Gulf, followed by Abu Dhabi’s stock market with a 0.9 percent gain and Kuwait’s BKP, up 0.6 percent.

Stock exchanges of Qatar and Bahrain edged 0.1 percent lower, while those of Dubai and Oman ended almost flat.

Elsewhere in the Middle East, the Egyptian blue-chip index EGX30 dropped 1.6 percent.

Oil prices rose on Thursday, with Brent crude trading at $114.29 a barrel and US West Texas Intermediate reaching $110.69 a barrel as of 9:14 a.m. Saudi time.

Stock news

Saudi Reinsurance Co. obtained approval from the Saudi central bank to raise capital from SR891 million ($238 million) to SR1.34 billion

Maharah Human Resources’ unit Growth Avenue Investment Co. closed a deal to acquire 40 percent of the shares in Salis for Trading & Marketing

Naqi Water Co. got the Capital Market Authority’s approval for an initial public offering of a 30 percent stake on the Saudi Exchange

Saudia Dairy and Foodstuff Co.’s board recommended a dividend payout of SR3 per share for the second half of the fiscal year ended March 31, 2022

Academy of Learning Co. and Keir International Co. received the CMA’s approval for direct listing on the parallel Nomu market

Batic Real Estate Co., a unit of Batic Investments and Logistics Co., obtained a loan valued at SR200 million to finance potential investments

Ataa Educational Co. got CMA’s nod to increase capital to SR421 million in order to fully acquire Naba’a Educational Co.’s shares

Salama Cooperative Insurance Co. submitted a filing to the CMA, seeking to reduce capital by 60 percent to SR100 million

Calendar

May 26, 2022

National Environmental Recycling Co., better known as Tadweeer, will start trading on the parallel market Nomu

End of Ladun Investment Co.’s IPO book-building

May 30, 2022

Close of Anaam International Holding Group’s rights trading

May 31, 2022

End of Retal Urban Development Co.’s IPO book-building

June 2, 2022

Close of Anaam International Holding Group’s new shares subscription