Bahrain’s non-oil GDP to keep growing as it defies global challenges: CEO of Economic Development Board

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Updated 31 October 2022

Bahrain’s non-oil GDP to keep growing as it defies global challenges: CEO of Economic Development Board

Bahrain’s non-oil GDP to keep growing as it defies global challenges: CEO of Economic Development Board

RIYADH: Bahrain’s non-oil gross domestic product is expected to grow by another 5 percent this year, as it bucks global trends with low inflation and high growth, according to the CEO of the country’s Economic Development Board.

Speaking to Arab News on the sidelines of the Future Investment Initiative in Riyadh, Khalid Humaidan also said that while the country had already seen growth in the sector of 9 percent in the second quarter of the year, a further rise was expected.

He said Bahrain was benefiting from a high level of foreign direct investment, securing $921 million in the first nine months of 2022, and the development board has identified six priority sectors; manufacturing, logistics, tourism, information and communications technology, financial services, and oil and gas.

“We want to focus on attracting investments into those sectors, with the help of everybody. This is something that we think we should be able to maintain. We're lucky. In Bahrain today we're experiencing high growth, low inflation, relatively speaking,” Humaidan told Arab News.

“Real GDP growth is significantly higher than most parts of the world, most of the world is experiencing the exact opposite: high inflation, low growth rates. With us, this is something that we've seen this year, non-oil GDP grew at 9 percent in the second quarter, we had a very healthy growth rate. This is something that we think we should be able to continue, as long as we continue to develop and work on our priority projects,” he added.

Humaidan went on to explain how Bahrain’s economic recovery plan launched last year has now been adapted into an economic development plan, and $30 billion worth of priority projects that have started will continue to develop in order to achieve their objectives. 

“We think if we focus on our priority projects, our priority sectors will be achieved, and we will be able to achieve other goals that we have in the economic recovery plan. Fiscal balance by the end of 2024 — we've committed to that target as a government, and that will happen by growing the non-oil GDP in the country. We expect non-oil GDP to grow more than 5 percent this year,” he said.

The executive added that his board expects to create at least 20,000 jobs for Bahrain every year.


Global Markets: Stocks, bonds tumble as stellar US jobs report may force Fed rethink

Global Markets: Stocks, bonds tumble as stellar US jobs report may force Fed rethink
Updated 03 February 2023

Global Markets: Stocks, bonds tumble as stellar US jobs report may force Fed rethink

Global Markets: Stocks, bonds tumble as stellar US jobs report may force Fed rethink

LONDON: Global stocks and Treasury prices tumbled on Friday after an unexpectedly strong US jobs report indicated the Federal Reserve may need to keep interest rates elevated to control inflation, according to Reuters.

This placed another roadblock in the way of a weeks-long markets rally that stumbled in US after hours trading on Thursday over disappointing earnings from Google, Apple, and Amazon.

S&P 500 futures slid 1.1 percent, contracts on the tech-heavy Nasdaq 100 dropped 1.8 percent.

The MSCI index of global shares fell 0.3 percent, having hit its highest level since August on Thursday in a rebound buoyed by optimism that central banks are close to the end of their aggressive rate hiking cycles.

The keenly-watched US nonfarm payrolls report showed US employers added 517,000 new workers in January, vastly overshooting expectations of economists polled by Reuters for a 185,000 gain.

Average hourly wages, which analysts and investors focus on for clues about whether a tight labour market may continue to fan the flames of inflation, rose 0.3%, matching economists' forecasts.

The yield on the 10-year Treasury, which underpins borrowing costs worldwide, added 11 basis points to 3.51 percent after the jobs data. The two-year Treasury yield, which follows traders' expectations of Fed fund rates, rose by 12 bps to 4.24 percent.

The Fed hiked its main interest rate by 25 bps to a range of 4.5 percent to 4.75 percent on Wednesday, taking benchmark borrowing costs to their highest since late 2007, and signalled more hikes to come. The European Central Bank and the Bank of England also raised rates on Thursday to contain inflation.

"In a year when the economic data is more important than the Fed, the January employment report clearly justified the Fed having tightened by 425 bps over the past 10 months," said Jack McIntyre, portfolio manager at Brandywine Global.

Ahead of the nonfarm payrolls data, markets had priced two US rate cuts by year-end on hopes the US economy was cooling enough to quell inflation but not on course for a downturn that could reduce companies’ earnings more than markets were already counting on.

US tech shares took a beating in after-hours trading on Thursday after Apple projected another revenue decline in the start of the year, Amazon warned that its operating profit could fall to zero in the current quarter, and Google parent Alphabet missed fourth-quarter profit and revenue expectations.

"We will see headwinds from further earnings downgrades, but we have incorporated quite a lot (of this) already so I think markets can hold here if we are indeed right on the Fed,” said Willem Sels, global chief investment officer at HSBC's private bank, who expects the US central bank to raise rates just one more time in 2023.

An index measuring the dollar against major currencies stood at 102.53, rising further from recent nine-month lows of 100.80.

In Europe, the Stoxx 600 share benchmark fell 0.4 percent. Germany's benchmark 10-year bond yield rose 13 bps to 2.14 percent, having on Thursday dropped by the most since 2011 as prices shot higher.

The euro traded at $1.0841, down 0.65 percent and pulling further away from Thursday's 10-month top of $1.1033.

 


World food prices decline for 10th month running in January, says UN Food Agency

World food prices decline for 10th month running in January, says UN Food Agency
Updated 03 February 2023

World food prices decline for 10th month running in January, says UN Food Agency

World food prices decline for 10th month running in January, says UN Food Agency

ROME: World food prices fell in January for a 10th consecutive month, and are now down some 18 percent from a record high hit last March following Russia’s invasion of Ukraine, the UN's food agency said on Friday.

The Food and Agriculture Organization’s price index, which tracks the most globally traded food commodities, averaged 131.2 points last month against 132.2 for December, the agency said on Friday. It was the lowest reading since September 2021.

The December figure was revised down from an original estimate of 132.4.

Falls in the prices of vegetable oils, dairy and sugar helped pull down the index, while cereals and meat remained largely stable, the FAO said.

In separate cereal supply and demand estimates on Friday, the FAO raised its forecast for global cereal production in 2022 to 2.77 billion tons from a previous estimate of 2.76 billion tons.

The FAO cereal price index rose just 0.1 percent month-on-month in January to give a 4.8 percent increase on the year.

International wheat prices declined 2.5 percent as production in Australia and Russia outpaced expectations. Rice, by contrast, jumped 6.2 percent, driven in part by strong local demand in some Asian exporting countries.

Vegetable oil prices fell 2.9 percent in January, the dairy index dipped 1.4 percent and sugar declined 1.1 percent. Meat slipped a mere 0.1 percent.

Looking at supply and demand for cereals, FAO said it expected a record global output of wheat in 2022 thanks to revised crop forecasts from Australia and Russia.

The forecast for world rice production was revised down on the back of lower-than-expected output in China, and is now predicted to decline 2.6 percent from its all-time high in 2021.

Looking ahead to 2023, FAO said early indications pointed to a likely expansion of winter wheat cropping in the northern hemisphere. However, it warned that high fertilizer costs may impact yields.

World cereal utilization in 2022/23 was forecast to dip 0.7 percent from the previous year to 2.78 billion tons. The estimate for world cereal stocks was pegged at 844 million tons, pushing down the world stock-to-use ratio for 2022/23 to 29.5 percent from 30.8 percent in 2021/22


Oil steadies with spotlight on EU embargo, US jobs data

Oil steadies with spotlight on EU embargo, US jobs data
Updated 03 February 2023

Oil steadies with spotlight on EU embargo, US jobs data

Oil steadies with spotlight on EU embargo, US jobs data

LONDON: Oil prices steadied on Friday as investors sought more clarity on the imminent EU embargo on Russian refined fuels, with prices set for a second weekly loss in the absence of clear signs of demand recovery in top consumer China.

Brent crude LCOc1 futures gained 15 cents, or 0.2 percent, to $82.32 a barrel by 1301 GMT, having dropped by about 1 percent in the previous session. US West Texas Intermediate crude CLc1 futures were up 12 cents, or 0.2 percent, at $76.00.

Brent is poised to register close to a 5 percent decline this week while WTI is on course for a 3.6 percent drop.

Investors are eyeing developments on the Feb. 5 EU ban on Russian refined products, with EU countries seeking a deal on Friday to set price caps for Russian oil products.

The Kremlin said on Friday that the EU embargo on Russia's refined oil products would lead to further imbalance in global energy markets.

"The exact details around what the cap will be and how they will implement it are still unclear," Capital Economics commodities economist Bill Weatherburn said, adding that the uncertainty is keeping a lid on prices.

"There hasn't been any data out of China to indicate the extent of the recovery in China's crude demand."

ANZ analysts noted a sharp jump in traffic in China's 15 largest cities after the Lunar New Year holiday but said that Chinese traders had been "relatively absent".

Markets now await US payrolls data due at 1330 GMT. US job growth in January is likely to have remained strong thanks to a resilient labour market, but expectations of a continued slowdown in wage gains offer the Federal Reserve some comfort in its fight against inflation, a Reuters survey showed.

The US central bank scaled back to a milder rate increase than those over the past year, but policymakers also projected that "ongoing increases" in borrowing costs would be needed.

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

 


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.”