Sudan’s economy tumbles in post-coup deadlock

Sudan’s economy tumbles in post-coup deadlock
A boy carries a bag of bread in Khartoum, Sudan. (Reuters)
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Updated 02 March 2022

Sudan’s economy tumbles in post-coup deadlock

Sudan’s economy tumbles in post-coup deadlock
  • Sudan's long-running economic crisis had shown signs of abating before the coup
  • Military leaders have yet to name a prime minister and protests have raged for months

KHARTOUM: Sudan is once again lurching toward economic collapse in the aftermath of a coup in October, with exports plummeting more than 85 percent in January according to central bank data and the currency sliding on the black market.
Cut off from billions in foreign assistance, a military-led government is raising prices and taxes on everything from health care to cooking gas, but the increases have angered struggling citizens.
Sudan’s long-running economic crisis — a legacy of decades of war, isolation, and sanctions — had shown signs of abating before the coup, but now poses a fresh humanitarian risk as its population faces renewed violence and rising levels of hunger.
Military leaders have yet to name a prime minister and protests have raged for months. The political deadlock is paralysing business, said Amin Shibeika, a Khartoum banker.
“No one is making future plans, it’s all suspended. There’s a lack of transparency, with no light at the end of the tunnel,” he said.
The Oct. 25 coup ended a power-sharing agreement between the military and civilians struck after the overthrow of former leader Omar Al-Bashir in a 2019 uprising. Designed to lead to democratic elections, it had seen a civilian government implement painful economic reforms and secure foreign assistance and debt relief. That is now frozen.
In the latest effort by the leadership to rally scarce international support, Mohamed Hamdan Dagalo, deputy leader of Sudan’s ruling council and commander of the paramilitary Rapid Support Forces, traveled to Moscow last week accompanied by finance minister and armed group leader Jibril Ibrahim.
While the delegation met senior figures including Foreign Minister Sergei Lavrov, no major deals have been announced and Russia itself is now facing sweeping Western sanctions over the invasion of Ukraine.
A senior Sudanese official said the government saw no foreign bailout on the horizon, and Ibrahim has said Sudan would rely on its own resources for this year’s budget.
According to a copy of the draft budget seen by Reuters, it is aiming for a 145 percent increase in tax revenues and a 140 percent increase in revenue from the sale of commodities and services.
Among the tax measures to achieve that is what traders say is a four- or five-fold increase on annual business license fees. But businesses are so used to not paying taxes that increases would be hard to impose, said Shibeika, the banker.
“Business has basically stopped in the last few months, so these are additional burdens in difficult circumstances,” said a business owner in central Khartoum. “This is the worst it’s been since I started trading 20 years ago.”
Revenues and spending are forecast to rise by more than a third, with a deficit of 363 billion Sudanese pounds ($820 million).
Though the government has ratified the budget, a senior finance ministry official said it was not realistic and not being applied on the ground.
Analysts say it would not be possible to pay salaries and meet other expenditures without resorting to inflationary printing of money, which Ibrahim last week denied doing.
The finance ministry did not respond to a request for comment.
A weeks-long blockade of Port Sudan prior to the coup and barricades along a trade route with Egypt by anti-military protesters have restricted exports of goods such as sesame seeds, peanuts, cotton and gum Arabic that bring in badly needed dollars.
In January, Sudan exported only $43.5 million worth of goods, down sharply from $293 million in December, according to central bank data seen by Reuters, although this is a peak agricultural export season.
Following the devaluation of Sudan’s currency a year ago, the exchange rate had stabilized at about 450 pounds to the dollar. But in recent weeks the black market has resurfaced and the pound was changing hands at 530 against the dollar on Wednesday, compared with an official rate of 443.50.
Dollar auction results show the central bank has been selling lower quantities, hinting at depleted reserves. Inflation has eased slightly, but remains at one of the highest rates globally at 260 percent in January.
Prices for petrol and electricity have risen following global trends after subsidy reforms, as has the cost of government-issued paperwork and subsidised cooking gas.
In a move that was subsequently suspended, the cost of patient admissions at state health care facilities went from 250 pounds to 4,200 overnight last month, said Ali Shakir, head of one of the country’s largest public hospitals.
He said that while he had requested an increased budget, “we were surprised that they wanted us to take it from citizens’ pockets.”
Sudan’s ruling council said in a statement that prices would be reviewed and that the government did not consider health care a revenue earner.
But the rising costs could fuel further resentment over the kind of economic hardships that triggered the uprising against Bashir, including increasingly scarce subsidized bread.
“Life has become really, really terrible,” said Khartoum resident Amna of the time since the coup. “The bakery sells a piece of bread as big as a marble and say it’s 30 Sudanese pounds ($0.07). We don’t have the money for it.”

Oil stable as market awaits signs of China demand recovery

Oil stable as market awaits signs of China demand recovery
Updated 9 sec ago

Oil stable as market awaits signs of China demand recovery

Oil stable as market awaits signs of China demand recovery

SINGAPORE: Oil prices were little changed on Friday, with major benchmarks headed for their second straight week of losses, as the market awaited further signs of fuel demand recovery in China to offset looming slumps in other major economies.

Brent crude futures dipped 16 cents, or 0.2 percent, to $82.01 a barrel by 0445 GMT, while US West Texas Intermediate crude futures slid 17 cents, or 0.2 percent, to $75.71.

So far this week, Brent has dropped more than 5 percent, extending a 1 percent loss from the previous week. WTI has also fallen by nearly 5 percent, after sliding 2 percent in the prior week.

Mixed signals on fuel demand recovery in China, the world’s top oil importer, have kept a lid prices.

ANZ analysts pointed to a sharp jump in traffic in China’s 15 largest cities following the Lunar New Year holiday, but also noted that Chinese traders had been “relatively absent.”

The prospect of an economic rebound in China after COVID-19 curbs eased has buoyed the oil market so far this year, along with a weaker dollar that makes the commodity cheaper for those holding other currencies.

The dollar has fallen because aggressive interest rate hikes by the US Federal Reserve are no longer expected. Central banks for other major economies, though, are continuing with bigger rate increases even as inflation has eased.

While supported by a weaker greenback, oil’s gains have been limited by the prospect of slow growth in the US, the world’s biggest oil consumer, and recessions in places including Britain, Europe, Japan and Canada.

“The crude demand outlook needs a clear sign that China’s reopening will be smooth, and that the US economic growth momentum does not deteriorate quickly,” OANDA analyst Edward Moya said in a note.

The US central bank scaled back to a milder rate increase after a year of larger hikes, but policymakers also projected that “ongoing increases” in borrowing costs would be needed.

Upcoming interest rate hikes in 2023 are likely to weigh on the US and European economies, boosting fears of an economic slowdown highly likely to dent global crude oil demand, said Priyanka Sachdeva, market analyst at Phillip Nova.

Investors are also eyeing developments on the Feb. 5 European Union ban on Russian refined products as the EU countries will seek a deal on Friday to set price caps for Russian oil products. 

Who is Hindenburg, the firm targeting India’s Adani?

Who is Hindenburg, the firm targeting India’s Adani?
Updated 03 February 2023

Who is Hindenburg, the firm targeting India’s Adani?

Who is Hindenburg, the firm targeting India’s Adani?
  • Hindenburg is an investment research firm with a focus on activist short-selling. It looks for corruption or fraud in the business world, such as accounting irregularities and bad actors in management, and It can make money out of its work

NEW YORK: Hindenburg Research, the financial research firm with an explosive name and a track record of sending the stock prices of its targets tumbling, is taking on one of the world’s richest men.
Hindenburg is back in the headlines after last week accusing Indian conglomerate Adani Group of “a brazen stock manipulation and accounting fraud scheme.” It cited two years of research, including talks with former Adani senior executives and reviews of thousands of documents.
The Adani Group has blasted the accusations, calling them “a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts.”
Nevertheless, Hindenburg’s scorching allegations have caused the fortune of Adani Group’s founder, Gautam Adani, to slide by nearly $47 billion in just over a week, according to the Bloomberg Billionaires index. Here’s a look at the firm behind all the movement:
What is it?
Hindenburg says it specializes in “forensic financial research.” In layman’s terms, it looks for corruption or fraud in the business world, such as accounting irregularities and bad actors in management.
Hindenburg has even come to be known as Ponzi hunters in some circles, according to the Washington Post, which detailed how it helped bring down an alleged $500 million scheme that targeted Mormons.
Where did its name come from?
The firm says it sees the Hindenburg, the airship that famously caught fire in the 1930s to the cry of “Oh, the humanity,” as the “epitome of a totally man-made, totally avoidable disaster.” It says it looks for similar disasters in financial markets “before they lure in more unsuspecting victims.”
Who else has Hindenburg gone after?
It’s perhaps most famous for a 2020 report on Nikola, a company in the electric-vehicle industry whose founder Hindenburg said made misleading claims to ink partnerships with top auto companies hungry to catch up to Tesla.
Among its allegations, Hindenburg accused Nikola of staging a video to calm skepticism about its truck, one that showed the vehicle cruising on a road. Hindenburg said the video was actually just showing the truck rolling down a hill after getting towed to the top.
What has come of such accusations?
For Nikola, quick scrutiny from the government and investors.
The company and its founder, Trevor Milton, received grand jury subpoenas from the US Attorney’s office for the Southern District of New York and the N.Y. County District Attorney’s Office shortly after Hindenburg released its report.
The Securities and Exchange Commission also soon issued subpoenas to Nikola’s directors.
Milton was convicted this past October of charges he deceived investors with exaggerated claims about his company’s progress in producing zero-emission 18-wheel trucks fueled by electricity or hydrogen.
And Nikola in late 2021 agreed to pay $125 million to settle SEC charges that it defrauded investors by misleading them about its products, technical advancements, and commercial prospects.
What does Hindenburg get out of this?
It can make money. In its Adani report, it said that it had taken a “short position in Adani Group Companies” through bonds that trade in the US and other investments that trade outside India.
It has made similar “short” bets against other companies it published unflattering reports on. A “short” trade is a way for someone to make money if an investment’s price falls. Afterward, if the price of a company’s stock or bonds falls because of the negative attention from the report, Hindenburg can profit.
Such short sellers have been criticized for unfairly pushing down prices of stocks with potentially unfounded allegations. But proponents also call them a healthy part of a stock market, keeping stock prices in check and preventing them from running too high.

Adani’s market losses top $100 billion as crisis shockwaves spread

Adani’s market losses top $100 billion as crisis shockwaves spread
Updated 03 February 2023

Adani’s market losses top $100 billion as crisis shockwaves spread

Adani’s market losses top $100 billion as crisis shockwaves spread
  • Mukesh Ambani of Reliance Industries is now Asia’s richest person as Adani Group chairman's net worth plunges
  • S&P Dow Jones Indices said it would remove Adani Enterprises from widely used sustainability indices

NEW DELHI/MUMBAI: Adani’s market losses swelled above $100 billion on Thursday, sparking worries about a potential systemic impact a day after the Indian group’s flagship firm abandoned its $2.5 billion stock offering.
Another challenge for Adani on Thursday came when S&P Dow Jones Indices said it would remove Adani Enterprises from widely used sustainability indices, effective Feb. 7, which would make the shares less appealing to sustainability-minded funds.
In addition, India’s National Stock Exchange said it has placed on additional surveillance shares of Adani Enterprises , Adani Ports and Ambuja Cements .
However, Adani Group Chairman Gautam Adani is in talks with lenders to prepay and release pledged shares as he seeks to restore confidence in the financial health of his conglomerate, Bloomberg News reported on Thursday.
The shock withdrawal of Adani Enterprises’ share sale marks a dramatic setback for founder Adani, the school dropout-turned-billionaire whose fortunes rose rapidly in recent years but have plunged in just a week after a critical research report by US-based short-seller Hindenburg Research.

ALSO READ: Who is Hindenburg, the firm targeting India’s Adani?

Aborting the share sale sent shockwaves across markets, politics and business. Adani stocks plunged, opposition lawmakers called for a wider probe and India’s central bank sprang into action to check on the exposure of banks to the group. Meanwhile, Citigroup’s wealth unit stopped making margin loans to clients against Adani Group securities.

The crisis marks an dramatic turn of fortune for Adani, who has in recent years forged partnerships with foreign giants such as France’s TotalEnergies and attracted investors such as Abu Dhabi’s International Holding Company as he pursues a global expansion stretching from ports to the power sector.
In a shock move late on Wednesday, Adani called off the share sale as a stocks rout sparked by Hindenburg’s criticisms intensified, despite it being fully subscribed a day earlier.
“Adani may have started a confidence crisis in Indian shares and that could have broader market implications,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.
Adani Enterprises shares tumbled 27 percent on Thursday, closing at their lowest level since March 2022.

Other group companies also lost further ground, with 10 percent losses at Adani Total Gas, Adani Green Energy and Adani Transmission, while Adani Ports and Special Economic Zone shed nearly 7 percent.
Since Hindenburg’s report on Jan. 24, group companies have lost nearly half their combined market value. Adani Enterprises — described as an incubator of Adani’s businesses — has lost $26 billion in market capitalization.
Adani is also no longer Asia’s richest person, having slid to 16th in the Forbes rankings of the world’s wealthiest people, with his net worth almost halved to $64.6 billion in a week.
The 60-year-old had been third on the list, behind billionaires Elon Musk and Bernard Arnault.
His rival Mukesh Ambani of Reliance Industries is now Asia’s richest person.

Mukesh Ambani, chairman oil-to-telecom conglomerate Reliance Industries, is now Asia''s richest person. (AFP) file)

Broader concerns
Adani’s plummeting stock and bond prices have raised concerns about the likelihood of a wider impact on India’s financial system.
India’s central bank has asked local banks for details of their exposure to the Adani Group, government and banking sources told Reuters on Thursday.
CLSA estimates that Indian banks were exposed to about 40 percent of the $24.5 billion of Adani Group debt in the fiscal year to March 2022.
Dollar bonds issued by entities of Adani Group extended losses on Thursday, with notes of Adani Green Energy crashing to a record low. Adani Group entities made scheduled coupon payments on outstanding US dollar-denominated bonds on Thursday, Reuters reported citing sources.
“We see the market is losing confidence on how to gauge where the bottom can be and although there will be short-covering rebounds, we expect more fundamental downside risks given more private banks (are) likely to cut or reduce margin,” said Monica Hsiao, chief investment officer of Hong Kong-based credit fund Triada Capital.
In New Delhi, opposition lawmakers submitted notices in parliament demanding discussion of the short-seller’s report.
The Congress Party called for a Joint Parliamentary Committee be set up or a Supreme Court monitored investigation, while some lawmakers shouted anti-Adani slogans inside parliament, which was adjourned for the day.
Adani vs Hindenburg
Adani made acquisitions worth $13.8 billion in 2022, Dealogic data showed, its highest ever and more than double the previous year.
The canceled fundraising was critical for Adani, which had said it would use $1.33 billion to fund green hydrogen projects, airports facilities and greenfield expressways, and $508 million to repay debt at some units.
Hindenburg’s report alleged an improper use of offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about high debt and the valuations of seven listed Adani companies.
The Adani Group has denied the accusations, saying the allegation of stock manipulation had “no basis” and stemmed from an ignorance of Indian law. It said it has always made the necessary regulatory disclosures.
Adani had managed to secure share sale subscriptions on Tuesday even though the stock’s market price was below the issue’s offer price. Maybank Securities and Abu Dhabi Investment Authority had bid for the anchor portion of the issue, investments which will now be reimbursed by Adani.
Late on Wednesday, the group’s founder said he was withdrawing the sale given the share price fall, adding his board felt going ahead with it “will not be morally correct.”

Oil steady as Russian crude products ban looms

Oil steady as Russian crude products ban looms
Updated 02 February 2023

Oil steady as Russian crude products ban looms

Oil steady as Russian crude products ban looms
  • A EU ban on Russian refined products is set to take effect on Feb. 5, potentially dealing a blow to global supply

LONDON: Oil prices were steady on Thursday as looming sanctions on Russian oil products added uncertainty over supply but the dollar lost value in a boost to the oil trade.

Brent crude futures fell 18 cents, or 0.2 percent, to $82.66 a barrel by 1415 GMT while West Texas Intermediate US crude futures lost 3 cents to $76.38.

Both benchmarks plunged more than 3 percent overnight after US government data showed a large build in oil stocks. A EU ban on Russian refined products is set to take effect on Feb. 5, potentially dealing a blow to global supply.

EU countries will seek a deal on Friday on a European Commission proposal to set price caps on Russian oil products after postponing a decision on Wednesday because of divisions among member states, diplomats said. The European Commission proposed last week that from Feb. 5 the EU apply a price cap of $100 a barrel on premium Russian oil products such as diesel and a $45 per barrel cap on discounted products such as fuel oil.

Meanwhile an OPEC+ panel endorsed the producer group’s current output policy at a meeting on Wednesday, leaving production cuts agreed last year unchanged amid hopes of higher Chinese demand and uncertain prospects for Russian supply.

OPEC+ agreed to cut its production target by 2 million barrels per day — about 2 percent of global demand — from November last year until the end of 2023 to support the market.

Saudi Arabia and France sign cooperation MoU in the field of energy

Saudi Arabia and France sign cooperation MoU in the field of energy
Updated 02 February 2023

Saudi Arabia and France sign cooperation MoU in the field of energy

Saudi Arabia and France sign cooperation MoU in the field of energy
  • Agreement calls for increased focus on technologies which mitigate effects of climate change

RIYADH: Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman signed a memorandum of understanding on Thursday with Catherine Colonna, French minister of Europe and foreign affairs, to establish a framework for cooperation in the energy sector, the Saudi Press Agency reported.

The memorandum, which was signed in Riyadh, outlined cooperation between the countries in the fields of electricity, renewables, energy efficiency, storage, smart grids, oil and gas and their derivatives, refining, petrochemicals, and the distribution and marketing sector.

The agreement also calls for increased cooperation in technologies which mitigate the effects of climate change, such as carbon capture and hydrogen production.

The deal addresses areas of collaboration in digital transformation, localization of materials, products, and services related to the energy sectors, joint research, skill training, and cooperation between specialized companies.

Prince Abdulaziz and Colonna also discussed future opportunities in various fields of energy, as well as the prospects for cooperation in the peaceful uses of atomic energy.