LEGACY SELL TRADE WAR Major WTO look to boot dated …

[Pages:10]LEGACY SELL | Page 3

Food firms look to boot dated brands

Monday, October 22, 2018 Safar 13, 1440 AH

GULF

TIMES

BUSINESS

TRADE WAR | Page 14

Major WTO showdown on the cards

NEW HORIZONS : Page 16

QPMC to support `Made in Qatar' as Golden Sponsor

`Mulhemeen' platform aims to boost entrepreneurship among SMEs

Qatar is launching an ambitious development platform `Mulhemeen', which is aimed at inculcating entrepreneurship, especially in the small and medium enterprises (SME) segment, in the country. The novel initiative, which comes from Nama (formerly Social Development Center), will be launched on October 31 at the Intercontinental Hotel. It is a platform for the successful entrepreneurs to share their stories and for promising ventures to network with investors and pitch for their business ideas to secure a deal, said Radi Ajlan al-Anzi, communication and media office manager, Nama, in the presence of Saoud al-Mohannadi entrepreneurship manager. The platform is also aimed at supporting

the National Development Strategy 2018-2022 with a range of programmes that contribute to strengthening the entrepreneurial ecosystem in Qatar and the promotion of a culture of innovation and a spirit of competition among entrepreneurs, especially Qataris. There will be also be opportunities for entrepreneurs to secure investment deals and showcase their projects to a select group of investors interested in small and micro businesses. The Nama Center seeks to empower young people with new and innovative programmes and ideas that matches its mission and objectives connected with those of Qatar Social Work Foundation aimed at enabling youth and developing their personal capacities

for a brighter future of the country. The move by Nama comes in the backdrop of Qatar striving to make its youth an integral part of the implementation of 2030 developmental plan, by providing them with a more responsible role to play. Qatar's National Vision 2030 has emphasised the importance of empowering young people as a key focus. The country's third national human development report focused on understanding the context, challenges and opportunities facing Qatari youth and overcoming obstacles to be able to contribute to Qatar's knowledge economy, which requires addressing the problems, issues, aspirations and challenges facing young people.

Al-Mohannadi and al-Anzi announcing the launch of the `Mulhemeen' development platform.

QDB initiative to help

Qatari products reach

broader markets

By Peter Alagos Business Reporter

Home-based businesses in Qatar now have the opportunity to further promote and sell their products locally and even abroad following the launch of a rebranding and marketing initiative by Qatar Development Bank (QDB).

The initiative called `Derwazaa' ? a traditional Arabic word for "door" ? aims to provide Qatari homebased businesses access to the local market, according to QDB executive director of Intelligence and Localisation Saleh Majid al-Khulaifi.

The service, which made its debut at the inaugural `Made at Home' expo held recently in Doha, was an offshoot of the first exhibition and involved 10 pilot micro businesses, al-Khulaifi told Gulf Times.

"After Ramadan, we worked with these home-based businesses and it took us three months to work

on and develop their products. As one of the lessons we had from the first `Made at Home' exhibition, we want to help micro businesses in the rebranding, packaging, and marketing of their products, as well as to provide them access to the local and international market," he said.

Al-Khulaifi said QDB has laid out certain criteria for its selection process to streamline the homebased business accepted into the `Derwazaa' service.

"All 185 participants of this year's `Made at Home' exhibition are welcome to register their businesses so they can avail of this latest service by QDB, al-Khulaifi said, adding that QDB subsidises 50% of the cost to rebrand and market the products.

He noted that QDB is committed towards the continuous support its offers to home-based businesses that play a key role in accelerating Qatar's economic growth, and contribute effectively to the sustainable development of the country.

To further help develop and promote home-based businesses in Qatar, QDB initiated in 2015 the Home-based Businesses National Programme (HBBNP), in collaboration with the Ministry of Labour and Social Affairs, the Social Development Centre, and the Qatar Chamber.

`Made at Home' is also part of the HBBNP and aims to support homebased businesses, which are seen as contributors to the development of Qatar's economy. The exhibition aims to encourage and support Qatari home-based entrepreneurs in developing their products by offering them a platform to showcase their products and services.

The exhibition also helps create new marketing windows that are expected to contribute to the diversification of the national economy, and support Qatar's small and medium-sized enterprise industry, encourage new entrepreneurial pursuits, and empower micro businesses.

Al-Khulaifi: Continuous support for home-based businesses. PICTURE: Noushad Thekkayil

Qatar accounts for 18% of announced M&A transactions in GCC in Q3: Markaz

By Pratap John Chief Business Reporter

Qatar accounted for 18% of the announced mergers and acquisitions (M&A) transactions in the GCC region in the third quarter (Q3) of this year, shows a report by Kuwait Financial Centre (Markaz).

Markaz said Qatar, Kuwait and another GCC country accounted for 82% of the announced mergers and acquisitions (M&A) transactions in Q3.

According to Markaz's report, the number of closed M&A transactions in the GCC in Q3 was the same compared to previous-year period, and 26% lower compared to second quarter of this year.

According to the report, GCC acquirers accounted for 69% of the total closed transactions while foreign acquirers accounted for 24% of the total number of transactions during Q3, 2018.

Buyer information was not available for 7% of the transactions during the same period.

Markaz noted that each of the GCC acquirers seemed to have a different appetite with regards to M&A transactions during the third quarter of the year.

Qatari acquirers preferred investing outside the GCC, while Kuwaiti acquirers preferred investing in their home country. Omani acquirers didn't engage in any transactions either within or outside the GCC during the third quarter of this year.

The third quarter witnessed a 13% decline in the number of completed transactions by foreign buyers compared to Q3, 2017. In comparison to the second quarter, the number of such transactions decreased by 36%.

The financials and information technology sectors witnessed the highest number of transactions, accounting for 42% of the total transactions.

The healthcare, media, and utilities sectors each accounted for 3% of the total number of transactions during the third quarter of the year.

CEO of Japan's biggest bank joins exodus from Saudi business forum

Bloomberg Tokyo

The chief executive of Japan's biggest bank has pulled out of Saudi Arabia's financial conference dubbed "Davos in the Desert," joining a growing list of withdrawals following the killing of a government critic at the kingdom's consulate in Turkey. MUFG Bank Ltd CEO Kanetsugu Mike (pictured) won't attend the Future Investment Initiative conference that begins tomorrow, spokesman Kazunobu Takahara said yesterday by phone, without giving a reason for his withdrawal. Eiichi Yoshikawa, deputy president of the unit of Mitsubishi UFJ Financial Group Inc, will go instead, Takahara said. Mike, who was scheduled to speak

at the event, becomes the latest top official to cancel after Saudi journalist Jamal Khashoggi, a critic of the country's leadership, was killed inside its Istanbul consulate. Others including US Treasury Secretary Steven Mnuchin had withdrawn even before the kingdom over the weekend acknowledged the Washington Post contributor's killing, while characterising it as accidental. MUFG has been growing its presence in the oil-rich nation, having last year obtained approval to open a branch there. The bank plans to hire as many as 60 people in the country over three to five years, Elyas Algaseer, the bank's cohead in the Middle East and North Africa, said in an interview in August 2017. Pages 2, 16

Siemens boss under pressure to skip conference

Siemens boss Joe Kaeser came under pressure from senior German politicians yesterday to pull out of an investment conference in Saudi Arabia next week following Saudi journalist Jamal Khashoggi's death, Reuters reported. Many business executives including the heads of Deutsche Bank, Uber Technologies and Siemens rival ABB have dropped out of Riyadh's Future Investment Initiative conference amid outrage about Khashoggi's fate. The leader of the Social Democrats (SPD), Andrea Nahles, called on Kaeser to follow the example of other executives and cancel his plans to attend the conference. "I hope that Joe Kaeser will rethink this," she told the Bild am Sonntag newspaper. Foreign Minister Heiko Maas, also from the SPD, told German public television on

Saturday evening that cancellations sent the right signal. "I certainly wouldn't participate in an event in Riyadh at the moment," he said. "And I have great understanding for those who have cancelled." Norbert Roettgen, a member of Chancellor Angela Merkel's Christian Democratic Union who chairs the German parliamentary foreign affairs committee, also urged Kaeser to skip the event. "This applies in my view, for example, to the Siemens CEO who has confirmed his attendance," he told the Welt am Sonntag newspaper. A spokesman for Siemens said Kaeser had not yet decided whether to attend the conference. He said he expected Kaeser to make a decision later yesterday.

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Gulf Times Monday, October 22, 2018

BUSINESS

Global outcry over killing of Khashoggi overshadows Saudi investment summit

AFP Riyadh

Saudi Arabia will host a key investment summit tomorrow, overshadowed by the killing of critic Jamal Khashoggi that has prompted a wave of policymakers and corporate giants to withdraw. Just ahead of the three-day Future Investment Initiative (FII), dubbed "Davos in the Desert", the kingdom sought to defuse the crisis with an about-face admission on Saturday that the journalist died in its consulate in Istanbul. But that has failed to stem an exodus from the summit, whose organisers have taken down a list of speakers from its website. Dozens of executives -- from bankers JP Morgan to carmaker Ford and ridehailing app Uber -- scrapped plans to attend. Media powerhouses like Bloomberg, CNN and the Financial Times have also pulled out and on Saturday, Australia withdrew its representatives, saying it was "no longer appropriate" to attend, due to the Khashoggi affair. On Saturday, organisers said more than 120 speakers and moderators will participate. Last Monday, they had listed more than 150 speakers. The event seeks to project the historically insular kingdom as a lucrative business destination, in a bid to diversify its oil-reliant economy and set the stage for new ventures and multi-billion dollar contracts. At last year's inaugural FII, Crown Prince Mohammed bin Salman was lionised as a visionary as he wowed investors with talking robots and plans for a futuristic mega-city called NEOM. Billed last year as an economic coming-out party for the conservative petro-state, the FII has now come to symbolise global outrage over the silencing of critics. The prince, widely known as MBS,

In this file photo taken on October 24, 2017, people attend the Future Investment Initiative (FII) conference in Riyadh. Saudi Arabia hosts tomorrow this year's edition of the FII, as the killing of Saudi journalist Jamal Khashoggi, who went missing after entering the kingdom's Istanbul consulate on October 2, unleashes an international crisis.

faces what the risk consultancy Eurasia Group calls "an acute public relations crisis". Khashoggi, who had criticised Prince Mohammed, was last seen walking into the Saudi consulate in Istanbul on October 2. After weeks of vehement denials, the kingdom's assertion on Saturday that the journalist was killed in a "brawl

and fist fight" inside the consulate -- without revealing the whereabouts of his body -- was met with scepticism around the world. "The Ubers and JP Morgans of the world have calculated that the cost of being currently associated with brand MBS is higher than the cost of losing out on taking a slice of Saudi Arabia's economy," said Michael Stephens, a

Middle East expert at the Royal United Services Institute. Many Western firms have too much at stake to abandon the Arab world's biggest economy, and many are preparing to send lower-level executives to the summit. Senior investment bankers from HSBC and Credit Suisse are planning to attend the conference even though

their chief executives have cancelled their attendance, Bloomberg News reported. Companies from China and Russia have shown little interest in withdrawing from the event, an organiser said. Although several Western leaders like International Monetary Fund chief Christine Lagarde have pulled out, Pakistan's Prime Minister Imran Khan

will attend the forum as Islamabad continues to seek funding to plug its deteriorating finances. But a wider Western boycott of the conference suggests rising political risks in Saudi Arabia that could cast a shadow over foreign direct investment, which a UN body said plunged last year to a 14-year low. "Despite talk of reform, FDI inflows into Saudi have stayed low and the (Khashoggi) scandal will only increase investor uncertainty," said research firm Capital Economics. For now, the kingdom's finances appear cushioned by a recent spike in oil prices, now over $80 per barrel, which analysts say has reduced the urgency for outside funding. "More speculative projects, like NEOM, will find it harder to attract investors, but `meat and potatoes' diversification through heavy industry will probably continue unabated," said Steffen Hertog, an associate professor at the London School of Economics. Khashoggi's killing fits a pattern of a recent crackdown on dissent in the kingdom, with Prince Mohammed, King Salman's son and the de facto ruler, arresting clerics, business high-fliers and women activists. Further stoking investor anxiety, the kingdom is embroiled in an expensive war in Yemen and is leading a blockade on Qatar. Riyadh has also engaged in diplomatic disputes with Germany and Canada that threatened business ties. "Cancellations at `Davos in the Desert' by the likes of Goldman Sachs, JP Morgan and BlackRock go beyond reputational issues," said Cinzia Bianco, a Middle East analyst at Gulf State Analytics. "Big businesses are telling MBS `enough with the adventurism, instability and uncertainty -- our big foes.'" But the apparent arm twisting has not stopped the outcry over Khashoggi. "Business as usual?" said Gregory Gause, Saudi specialist at Texas A&M University. "Not in the short-term."

Gulf Times Monday, October 22, 2018

3

BUSINESS

Selling a legacy! Food companies

seek to boot their dated brands

Smucker, Mondelez tracking Millennial, Gen Z shopping habits; latest examples of M&A is to find foods `without the guilt'

Bloomberg Chicago

Not a big fan of the Pillsbury Doughboy's bouncy paunch? You're not alone, and Big Food is taking note. As consumers increasingly lean toward fruits, vegetables, grains and meats unsullied by preservatives and sweeteners, food makers including JM Smucker Co, General Mills Inc and Conagra Brands Inc are looking to reshape portfolios to shed slow- or nogrowth units. Instead, they're looking to refocus on foods that can boost revenue in a world where Millennials ? with roughly $4tn in spending power ? and Gen Z buyers rule. In July, Smucker said it was selling its US baking unit, including Pillsbury, to Brynwood Partners to focus on innovation in segments such as coffee, peanut butter and snacks, many of which can be marketed as healthful. Other companies are working on similar moves, analysts say. "A lot of consumers see big, giant companies as providers of highly processed and preserved foods," said Pinar Hosafci, a food industry analyst for market researcher Euromonitor International Plc in London. "Divestitures have to do with the fact that Big Food really wants to change their image." Many large food sellers built up product portfolios over the last 25 years, either by developing their own processed foods or by acquiring brands, according to Brian Callaci, a managing director for the New York-based investment bank Moelis & Co. While some remain profitable, sales have slowed as food consumption patterns have changed, he said. General Mills, which also uses the Pillsbury brand for frozen biscuits and refrigerated cookie dough, has said it wants to divest 5% of its portfolio to pursue growth elsewhere, including in cereals and yogurt with less sugar. Meanwhile, an emerging wave of relatively new leaders at companies including Mondelez International Inc and Hershey Co have been aggressively targeting a younger demographic that has shown little loyalty to long established brands. Mondelez chief executive officer Dirk Van de Put, who took the helm in November 2017, has led a "comprehensive review" of the company's markets and business, which has included connecting with consumers. The company is trying to figure out how to fuel new growth by providing the right snacks to on-the- go consumers working longer hours. "In order to fund future acquisitions, we will continue to evaluate our portfolio, so we are deploying capital in the most

A jar of JM Smucker Co's Smucker's Simple Delight brand salted caramel topping is arranged for a photograph in Tiskilwa, Illinois (file). In July, Smucker said it was selling its US baking unit, including Pillsbury, to Brynwood Partners to focus on innovation in segments such as coffee, peanut butter and snacks, many of which can be marketed as healthful. Other companies are working on similar moves, analysts say.

effective way possible," he said. "This means we may divest certain non-core assets." For chocolate maker Hershey, the trends have meant selling off a potato chips product and buying a brand called Smart Puffs, among other items, from B&G Foods Inc. Smart Puffs advertises itself as a gluten, preservative and trans fat-free snack, baked using Wisconsin cheese and US corn. "Snacking goodness without the guilt," is how it's described on line. Hershey has said it will operate within the company's "better-for-you" hub in Austin, Texas, which has been focused

on driving growth in the warehouse snacking aisle with Skinny Pop and Oatmega. The bet among analysts is that other industry stalwarts are also looking to refigure portfolios to keep up with the times. Conagra Brands agreed to buy Pinnacle Foods Inc in June, seeking to bolster its footprint in the freezer-aisle with brands such as Birds Eye, and the Gardein line of vegetarian products. Even Millennials, known for their foodie tastes, are embracing frozen meals, which are convenient and less expensive than takeout. The pressure on packaged-food

makers to get more efficient has intensified in the aftermath of Whole Foods Market Inc's sale last year to Inc. Frozen food is relatively resistant to Amazon's push to get shoppers to buy online because they're tricky to deliver. In a September interview, Conagra CEO Sean Connolly said future divestitures could include part of the Pinnacle Foods portfolio. Among those products is a baking segment that includes Duncan Hines cake mixes, which Pinnacle said in its August earnings call has come under pressure. The challenge is to find willing buyers that will pay up. To do so can mean

selling assets for relatively low gain. In Smucker's case, the baking business was sold for $375mn, just barely above the unit's annual revenue. Smucker "received serious interest from several potential buyers for the US baking business and are confident we received fair market value for it," Tina Floyd, senior vice president and general manager of consumer foods, said in an e-mailed statement. Part of the issue is that food manufacturers that might be potential buyers are searching for ways to reduce their own costs, increase distribution efficiency and open up international markets as they face pricing pressure

from the likes of Inc and Walmart Inc. Who's left? Private equity firms that have the focus and financing to undertake a turnaround. Smuckers believes the baking business will have "a better opportunity to thrive" under Brynwood Partners because the private equity firm intends to focus on the baking category and given its history of buying and growing consumer brands, Floyd said. "Several private equity firms that focus on carve outs believe that with a renewed focus and capital and a new lens on these businesses they can get them growing or at least harvest them for cash," Callaci said.

Bloomberg QuickTake

Why that sugary soda is worse than that sweet orange

By Mary Duenwald New York

Humanity has a love-hate relationship with sugar: It's a treat reserved for the end of a good meal, a focal point for holidays, even a term of endearment. But sugar is an enemy, too, long disparaged as empty calories that cause tooth decay and weight gain. In recent decades, sugar's bad image has grown much worse. For many, it's displaced fat and starch at the top of the list of dietary bogeymen. Public health experts have stepped in with advice that we distinguish between the naturally occurring sugars -- what's found in milk and oranges, for example -- and "added" sugars that sweeten soft drinks and other packaged foods. Increasingly, governments are treating sugary sodas like cigarettes and alcohol and taxing them to discourage consumption.

The Situation

With obesity and its attendant health problems -- diabetes, heart disease and cancer -- on the rise, and added sugar fingered as a major culprit, advocacy groups are working to persuade people to cut back. (Among them are Bloomberg Philanthropies, the charity of Michael Bloomberg, founder and majority owner of Bloomberg News parent Bloomberg LP.) In the US, where four in 10 adults are obese, the average person gets more than 13% of total calories from added sugar. The World Health Organisation recommends a maximum of 10%, or about 12 teaspoons a day: the amount in 15 ounces of Coca-Cola. To make the advice stick, more than 30 countries and a handful of US cities have begun to tax

sugary beverages, which studies suggest are the biggest problem. Another strategy is to strengthen labelling requirements for packaged foods. Chile, where people take in more calories from sugary drinks than anywhere else in the world, now requires conspicuous front-of-package stop-signs on foods high in sugar (or sodium, saturated fats or calories) and forbids advertising such products to children. In the US, products must carry a notice of their added sugar content by 2020.

The Background

Molecule for molecule, added sugars are no less wholesome than natural ones. Whether it's honey, molasses, refined cane sugar or the sweet stuff in an apple, it's glucose, fructose or a combination of the two. But natural sugars come in limited amounts as part of a package that contains nutrients and fibre, which slows sugar digestion, giving the liver more time to metabolise it and preventing unhealthful spikes in blood sugar. By contrast, added sugars typically come in abundance, and, in the case of soda, unaccompanied by nutrients. That extra sugar prompts bacteria in the mouth to produce acids that erode tooth enamel. Drinking sugary beverages exacerbates anyone's tendency to become obese, because people can drink a lot of soda without feeling full. Suspicions that sugar may be habit-forming are supported by evidence that laboratory rats demonstrate the classic addiction symptoms of craving, bingeing and withdrawal. Low-calorie foods and drinks containing artificial sweeteners obviously cut back on calories, but some evidence indicates that they may increase appetite and, because

they are so sweet, keep people craving the taste of sugar.

The Argument

The way to prevent added sugar from causing problems, soda companies have argued, is to see that people get plenty of exercise. Physical activity indeed helps keep weight off, but limiting the calories going in, studies show, make a bigger

difference. Critics of soda taxes argue that they are a burden on the poor and threaten job loss in the food industry. Mexico's experience, however, suggests that wealthier people end up paying the taxes, while poorer people cut out sugary drinks. The evidence so far in Mexico and Philadelphia also finds no employment backlash from soda taxes. Overall, the taxes appear to be working. For example, a peso-a-litre soda tax in Mexico

imposed four years ago ushered in a 7.6% drop in consumption. (This research was funded by Bloomberg Philanthropies.) Philadelphians dialled back their urge for a daily soda by 40% almost immediately after a 2017 city tax went into effect. In the UK, a soda tax levied not simply by the litre but according to the amount of sugar per litre has pushed beverage makers to reduce the sugar content in their products.

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Gulf Times Monday, October 22, 2018

BUSINESS

Carney

says Brexit

stress tests

for banks

`severe but

plausible'

Bloomberg London

UK banks are prepared to withstand more than just Brexit, according to Bank of England governor Mark Carney. Stress tests conducted by the central bank show Britain's financial system would still have more than adequate capital to maintain lending in the face of multiple headwinds, Carney said in a speech in New York on Friday. The bank has been "preparing for the worst" outcome to the UK's negotiations, including improving liquidity, building capital buffers and planning for disruption to cross-border derivative contracts. "We judge that the UK banking system has the capacity to absorb not only the consequences of a no-deal, no-transition Brexit, but also the losses that could be associated with intensifying trade tensions, a further sharp tightening of financing conditions for emerging markets, and substantial additional misconduct costs," he said. Carney also reiterated his call for European Union officials to address financial risks related to Brexit. Echoing warnings made by the BoE's Financial Policy Committee last week, he said that the bloc has only made "limited progress" thus far, and "timely action by EU authorities is needed to mitigate risks to financial stability, particularly those associated with derivative contracts and the transfer of personal data." Stress tests conducted last year required banks to withstand, among other things, a 4.5% drop in gross domestic product, house prices plunging by a third and unemployment at 9.5%. The scenarios involved in the tests are "severe but plausible," Carney said on Friday. Carney laid out a similar scenario to the UK Cabinet last month as part of ministers' preparations for a no-deal Brexit. In a letter on Wednesday to Nicky Morgan, chair of the Treasury Committee, Carney said he was discussing hypothetical situations in the meeting, and they were "not predictions of what is most likely to happen, but rather estimates of worst-case scenarios however unlikely they may be." In a speech that mostly focused on regulation since the financial crisis a decade ago, he added his voice to those of the Federal Reserve, rating firms and commentators in underlining the concern caused by the rapid expansion of the leveraged loan market. "Global leveraged lending is growing at rates ? and has reached a scale ? comparable to the subprime on the eve of the crisis," he said. He also warned that "the ethical drift which periodically undermines market integrity and impairs finance's ability to function effectively" is a danger unless authorities act to prevent it.

Sweden's central bank seen zeroing in on rate increase

Bloomberg Stockholm

Sweden's central bank could this week give a clearer signal that it's ready to tighten already in December as policymakers are growing eager to end almost four years of negative interest rates.

Governor Stefan Ingves and his colleagues are on Wednesday expected to keep their benchmark unchanged at minus 0.5%, but could signal a greater probability that they will move before the end of year rather than wait until February.

The bank is plotting an exit from an era of extreme monetary policy as inflation is now showing signs of stabilising around its 2% target after years of anaemic price growth. It's joining other banks, such as the US Federal Reserve and the European Central Bank, in withdrawing stimulus even as doubts grow over the global economic outlook.

Helped by a massive dose of stimulus over the past four years, Sweden's economy is in its longest expansion since the early 1980s and policymakers are now finally seeing price growth tick up. Inflation reached the highest level since 2008 in September, leading several prognosticators to revise their forecasts to expect a December increase.

"December is alive as long as inflation is in line with the Riksbank's expectations," Anna Breman, chief economist at Swedbank, said in a phone interview. "When the board announces its rate decision in October they may try to prepare the market more for that a rate hike is coming in December."

But they are unlikely to go too far out on a limb, with core inflation still below target and amid signs the economy is cooling. Despite the krona being the worst performer in the Group-of-10 this year, policy makers are still worried that any tightening signals could trigger a fast turnaround in its fortunes, and again drive inflation lower.

Breman said that could lead the bank to pull off a so-called dovish increase in December, meaning it raises rates while at the same time lowers its outlook for rates ahead. A clearer indication of a tightening in December could go some way in healing a split on the bank's

The headquarters of Sweden's central bank in Stockholm. The Riksbank could this week give a clearer signal that it's ready to tighten already in December as policymaker are growing eager to end almost four years of negative interest rates.

board. Two of its members, Martin Floden and Henry Ohlsson, have been advocating for faster increases and could argue for one next week, while a majority have called for more caution.

Here's what the biggest Nordic banks say:

Swedbank, Knut Hallberg, senior economist: The Riksbank will probably make it clearer in October that an increase is approaching, "perhaps even raise the probability in the rate path for a rate hike in December compared to February."

Danske Bank chief economist Michael Grahn: The Riksbank will deliver a December hike and then tighten again in July, which is in line with the central bank's repo rate path, according to Danske Bank.

The message in October may be a copy paste from the previous meeting, but there could be a "slightly more confident tone."

SEB economist Olle Holmgren: SEB also sees a tightening in December, but expects the Riksbank to leave its signalling unchanged next week, con-

tinuing to indicate the same probability of a hike in December or February. But in its "risk" scenario, it sees a 20% probability that the bank will signal a greater probability for a December hike.

Nordea chief analyst Torbjorn Isaksson: "Short term, the path should indicate that a rate hike at the end of this year is almost as likely as one early next year. However, we expect the Riksbank to signal that December is the main alternative.

This could be announced either verbally in conjunction with the report or in

its minutes published on November 2." Handelsbanken senior economist

Johan Lof: "Our main scenario is that the rate increase will come in February, but the latest inflation outcome increased the probability of a December hike. It's likely that the Riksbank will keep the repo rate as well as its communication unchanged in October to have a bit of a wait-and-see period." Still, it can't be excluded that the board in October chooses to signal which month is more likely for a rate hike - December or February.

White House backed Big Oil over EPA on finding methane leaks

Bloomberg Washington

White House officials pushed the EPA to maximise savings for the oil industry despite the agency's concern that weakening regulations would allow more methane to escape into the atmosphere, according to newly released documents.

The White House pressure campaign came as the Environmental Protection Agency honed a proposal to relax Obama-era requirements governing how frequently oil companies have to check for and repair leaks of methane, an intense greenhouse gas that warms the atmosphere 84 times more than carbon dioxide.

Every move to dial back required inspections and reduce industry costs triggered a corresponding climb in projected methane emissions, a jump that appeared to trouble-some EPA officials, according to internal documents filed in a government docket.

The documents show EPA officials also repeatedly resisted White House pressure to dramatically decrease the frequency of required inspections at oil wells and compressor stations in the name of saving money. In one case, officials with the White House Office of Information and Regulatory Affairs argued that less-frequent inspections would provide "the highest net benefits."

But the EPA rejected that argument in May, countering that less-frequent inspections also would allow more methane to escape.

The behind-the-scenes debate, revealed in hundreds of pages of correspondence, analysis and drafts from a White House-led review of the plan, offers a rare look at how the Trump administration is pursuing a deregulatory agenda it says is saving the US $1.6bn annually.

The episode "encapsulates the Trump administration's environmental deregulation strategy," said David Hayes, a former deputy Interior secretary who now is the executive director of New York University School of Law's State Energy and Environmental Impact Center.

First the Trump administration overstates the costs to industry of environmental safeguards, then it ignores the costs to society of dismantling them, Hayes said. The result is "one- sided," with claims of deregulatory cost savings from not requiring industry to protect human health and the environment ? while ignoring the cost to everybody else. The entire process was driven by an attempt to maximise corporate profits at the expense of public health and the environment, said Amit Narang, a regulatory policy expert with Public Citizen. "The further OIRA tried to force EPA to maximise net benefits, the more it forced a weakening of the rule, and the more emissions went up."

OIRA's edits boosted projected cost savings from $246mn over six years to $484mn - and re-

sulted in a plan that is projected to more than double the release of methane. Representatives of OIRA did not respond to an email seeking comment on the documents.

The correspondence reveals how President Donald Trump's zeal to cut regulatory costs has sometimes run into resistance from government officials worried the efforts go too far. The EPA has been a willing partner in fulfilling Trump's pledge to roll back environmental regulations he blames for stifling the US economy. But under Trump, the agency has at least twice advocated taking a more moderate course and cautioned against deeper weakening of Obama-era environmental rules. Earlier this year, EPA officials disputed the safety and economic assertions underpinning a Trump administration plan to ease vehicle efficiency and emission standards.

The Trump administration had already decided to relax a 2016 methane rule in response to oil industry complaints the inspections were too frequent and costly. Under the Obama-era mandates, wells had to be inspected twice a year and compressor stations on a quarterly basis.

The question was how far to go in easing them. In the end, the EPA's replacement plan proposed dialling back the frequency of those inspections to as little as annually for wells and compressor stations and once every other year for low-producing wells. But that wasn't what Trump's EPA originally had in mind. For leak-prone compressor sta-

tions, the agency initially insisted that quarterly inspections were necessary to keep fugitive emissions at bay.

"The EPA is not proposing changes to the quarterly monitoring frequency requirement for the collection of fugitive emissions components located at compressor stations," said one early draft of the proposal. The EPA defended that approach by asserting that "quarterly monitoring is cost effective." But analysts at OIRA didn't agree, and that EPA language was axed as a result.

OIRA's insistence on less-frequent inspections dovetailed with the wishes of many oil companies that lobbied the Trump administration to relax the timetable. The issue was at the top of the agenda during a May 10 meeting Trump administration officials held with representatives from the American Petroleum Institute, BP Plc, Chevron Corp, Anadarko Petroleum Corp, Royal Dutch Shell and other oil companies. EPA defended its dogged insistence on quarterly inspections again in June, arguing that the more-frequent timetable reflects "what can be supported by the currently available data."

But OIRA didn't give up. After pressing for yearly compressor station inspections again in a phone call, OIRA's Chad Whiteman e-mailed an EPA official to emphasise the point in July. "We still feel that annual monitoring for compressors" is "the best option," Whiteman told told EPA's David Cozzie, a Durham, North Carolina-based group leader in the agency.

Deja vu for pound traders as focus stays on UK politics

Bloomberg London

Pound traders can't catch a break. Domestic politics is set to come back into focus for markets as the UK fights over how to break the deadlock in Brexit talks.

With the European Union proposing an extension to the transition period following Britain's March exit from the bloc, Prime Minister Theresa May faces opposition to that prospect from her own party.

Given reports that her rivals are manoeuvring against her, the pound could be vulnerable to headlines.

"Theresa May has actually managed to unify the Conservative Party, unfortunately it's in opposition to her plans," said Jeremy Stretch, head of Group-of-10 currency strategy at Canadian Imperial Bank of Commerce, in an interview with Bloomberg Television.

"It's going to be a scenario where there is inherent political risk, accordingly that's probably going to keep sterling on the defensive."

With little on the data front this week, politics will again set the tone. Yet Brexit fatigue is setting in for markets, especially after the lack of progress from an EU summit last

Wednesday that was meant to mark a key step forward. Pro-Brexit lawmakers have rallied against any extension of the transition, as they don't want the UK to stay tied to the bloc's rules. May has faced the threat of a leadership challenge before, and she lacks a parliamentary majority. However, proBrexit rebels acknowledge they don't

have the numbers to oust her. Until something definitive happens around Brexit or May's leadership, the pound may just tread water, analysts said. Although the currency weakened around 1% versus the dollar last week, some of that was down to dollar strength, and it was little changed versus the euro for the second week.

"We can only expect larger moves in sterling if we really get an end of the negotiations, and I mean really the end, which is either a signed deal or not," said Thu Lan Nguyen, a currency strategist at Commerzbank AG. "Even with some kind of agreement on the domestic policy level, the UK government then still needs to reach an agreement with the EU27."

Another reason for smaller moves is positioning. The market is already heavily short the pound, and many investors are opting to bet through options rather than which way the pound goes.

Gulf Times Monday, October 22, 2018

5

BUSINESS

Indonesia bond traders are eyeing central bank decision to fuel rebound

Bloomberg Singapore

Indonesian bond investors suffering through a third straight month of losses are zeroing-in on this week's central bank decision and government debt auctions to sustain a nascent turnaround.

The Finance Ministry is selling 10tn rupiah ($658mn) of securities on Tuesday, the same day policymakers announce their interest-rate decision amid ongoing efforts to safeguard against capital flight.

The country's bonds and currency have been among the world's worst performers as rising oil prices threaten to exacerbate Indonesia's trade deficit just as US policy tightening spurs outflows from emerging markets.

Yet, the selloffs have masked a surprising resilience at the country's debt auctions. Demand for bills and bonds has averaged more than double the amount sold in 2018, and the 2.19 bid-to-cover ratio is up from 2.12 over the previous two years.

With 10-year yields posting their biggest three-day decline since July last week, the auction demand may be a sign of investor confidence in Bank Indonesia's aggressive policy measures, and a positive signal for the nation's assets going forward.

"Most of the demand is coming from onshore," Rohit Garg, an emerging Asia fixed-income and foreignexchange strategist at Bank of America Merrill Lynch in Singapore, said of the auction results. High real yields are "one of the biggest factors why onshore is still very much interested in Indonesian bonds.''

Bank Indonesia has raised borrowing costs twice as fast as its US counterpart this year, in addition to intervening in the currency and secondary

A general view of Bank Indonesia's headquarters in Jakarta. Indonesian bond investors suffering through a third straight month of losses are zeroing-in on this week's central bank decision and government debt auctions to sustain a nascent turnaround.

bond markets to stem slides. The government has also raised import taxes on consumer goods to help rein in the trade deficit, which actually swung to a surplus in September for the first time in three months.

Coupled with a slide in inflation to near the lowest since 2009, rate hikes have boosted Indonesia's real yields to levels unmatched in Southeast Asia.

Indonesia's bonds have lost 3.9% so far in October following a similar

slide over the previous two months, according to iBoxx ABF data. Emerging-market government securities globally have dipped 0.1% this month, Bloomberg Barclays index figures show.

The Ministry of Finance is selling three- and nine-month bills on Tuesday, as well as bonds due in 2024, 2029, 2033, 2038 and 2048. And while BI is forecast to keep its benchmark rate unchanged at 5.75%, traders will be on the lookout for confirmation

policy makers remain committed to defending the rupiah and combating capital outflows. Economists predict about 70 basis points of further tightening through the end of 2019, after 150 basis points of hikes so far this year.

"In general, investors ? whether onshore or offshore ? think that Indonesian policymakers so far have done a very good job," said Bank of America Merrill Lynch's Garg. "I am cautiously optimistic.''

HK investor who exposed `Enigma Network' sees another

Bloomberg Hong Kong

H is last big warning to investors, about a shadowy group of companies he dubbed the Enigma Network, preceded a $6.1bn collapse in the stocks and Hong Kong's biggestever financial raid.

Now David Webb, the activist investor and resident gadfly of Hong Kong's capital markets, is at it again. His new, if less provocatively named, target: the Huarong-CMB Network.

In a post on his website Friday morning, Webb published a list of 26 stocks "not to own" due to links with China Huarong Asset Management Co, the bad-debt management firm whose former chairman is under in-

vestigation by Chinese authorities. The list centres around China

Huarong and China Minsheng Banking Corp, two companies that helped finance a "complex web of dealings" in 24 other publicly traded firms, Webb wrote. Huarong's former chairman Lai Xiaomin was expelled from China's Communist Party for violations including bribery and squandering state assets.

"My clients sold all these stocks this morning," said Banny Lam, head of research at CEB International Investment Corp Many of the firms Webb named have stakes in and lend to each other, and there's concern the list will draw more regulatory attention to these companies, he said by phone.

Almost all the stocks identified as being part of the network fell in Hong Kong trading after the report was

published. China Huarong dropped as much as 4.1% before paring losses to close down 0.7%.

China Minsheng ended 0.2% lower, construction firm Huarong Investment Stock Corp plunged 12% and China Soft Power Technology Holdings slid 10%. Chong Sing Holdings FinTech Group lost 9.2%.

A spokeswoman for money lending firm Chong Sing, which was targeted in September by short-seller Bonitas Research, declined to comment.

Other companies Webb identified included casino operator Landing International Development, whose chairman was arrested in August in Cambodia in relation to a corruption investigation, Chinese media reported at the time.

Its shares were little changed on Friday. None of the firms immediately replied to requests for comment.

Webb's earlier sleuthing led him to write in May 2017 about links between some 50 companies that he dubbed the Enigma Network.

Shares in many of the firms named in that report fell in the ensuing days, and tumbled further in the following month, some by more than 90%. Several stocks remain suspended amid an investigation by Hong Kong authorities.

All of the 26 companies named in the latest report are listed in Hong Kong, where the market for smaller companies has long been marked by extreme volatility.

Tightly controlled and easily manipulated shares remain a concern for the Securities and Futures Commission and Hong Kong Exchanges & Clearing, which have made a series of rule changes to curb bad behaviour.

Pakistan may continue to breach its debt limit for the next decade

Internews Islamabad

Pakistan may continue to breach its own Fiscal Responsibility and Debt Limitation (FRDL) Act even for the next decade due to higher expenditures and low revenues, says the World Bank, while urging Islamabad to prudently manage fiscal operations to limit the debt servicing cost.

The FRDL Act of 2005, which binds the federal government to keep its budget deficit to a prudent level, has also remained a headache for the past two governments ? Pakistan People's Party of Bilawal Bhutto and Pakistan Muslim League-N of Shahbaz Sharif.

Former finance minister Ishaq Dar amended the FRDL Act twice to paint a rosy picture amid deteriorating debt indicators.

"The country has been in breach of the Act since 2010. If the current trajectory persists, Pakistan is unlikely to be able to comply with this law over the next decade," said Pakistan Development Update report that the World Bank released early this month.

The country's debt has already crossed sustainable levels and debt servicing is eating up more than onethird of the budget. However, the World Bank has underlined a critical issue borrowing by the finance ministry without purpose.

The report noted that in the last fiscal year 2017-18, the then federal government paid Rs300bn in interest only on incremental treasury bills with maturities of less than 12 months.

"However, the federal government alone had cash deposits worth 2.8% of GDP (roughly Rs1tn), sitting with commercial banks at the start of fiscal year." Almost one-third of these deposits pertained to core government ministries, departments and agencies, it added.

The bank suggested that the federal

government could have tapped into this cash at a time when the market was unwilling to invest in long-term bonds.

The conflict of interest and vested interests in the Q Block were the reasons for not withdrawing these deposits placed with commercial banks at nominal rates, said sources in the Ministry of Finance.

The international lender noted that one of the reasons for breaching the FRDL ceiling could be ambitious fiscal targets. The law requires the federal fiscal deficit to be 4% of GDP from fiscal year 2018 to 2020 and at 3.5% from fiscal year 2021 onwards.

Similarly, the total public debt should be 60% of GDP by FY18 and the debt should be reduced by 0.5% annually from 2019 to 2023 and by 0.75% from 2024 onwards to 50% of GDP by FY33.

As of end-June 2018, the total public debt stood at 73.5% of GDP and a report by the International Monetary Fund (IMF) suggests it will remain above this level in the next three years. Pakistan is scheduled to begin talks with the IMF for another bailout package, which will further increase the debt burden.

A projected Rs2tn budget deficit in the current fiscal year and economic slowdown over the next two to three years at least will also push the debtto-GDP ratio further up, keeping the Pakistan Tehreek-e-Insaf (PTI) government under pressure.

The World Bank said in the last fiscal year there was an increase of 5.6% of GDP in the public debt and almost one-third of the increase came from the depreciation of the rupee against the US dollar.

Commenting on the debt dynamics, the World Bank noted that the share of Chinese debt in the total external debt was also on the rise.

Pakistan received a gross $11.4bn in the last fiscal year and one-third of that debt came from China. Half of these loans were disbursed by Chinese banks on commercial terms.

Pakistan bourse seeks aligning capital gains tax for stocks and real estate

Internews Karachi

The chairman of Pakistan Stock Exchange (PSX) has presented proposals to Federal Finance Minister Asad Umar to align the capital gains tax between stocks and real estate sector to ensure a level playing field.

PSX chairman Sulaiman Mehdi, during a meeting with the federal minister over the weekend, also proposed to allow carry-over of capital losses for up to three years, reintroduce the concept of holding companies tax structure for inter corporate dividends to avoid double taxation, and reduce the advance tax rate from 0.02% to 0.01% on stock exchange transactions.

Meeting participants also proposed to remove the embargo on foreign holdings of PSX shares. Other proposals put forth included setting up a fund to divest government holdings in state owned enterprises, which would be available to the Pakistani diaspora and foreign investors.

On the debt side the concept of issuing US dollar linked rupee bonds for domestic investors was also appreciated. Minister Asad Umar agreed to sympathetically consider the proposals. He said the stock

market had witnessed an incredible growth in the recent years, and a performing equity market had a very positive impact on the economy.

He said the listing process would be made easy and government would consider rationalising capital gains tax, while an automated system like PSX would be formed to manage capital gains tax on the real estate sector.

Umar expressed his optimism and offered praise to PSX Board and Management, and Securities and Exchange Commission of Pakistan (SECP) for introducing reforms in line with best international practices that have ensured that the market could now withstand significant volatility - as seen since May to December 2017 - without any disruption.

The SECP agreed to consider several initiatives proposed during the meeting, including a review of current restrictions on Negotiated Deals Market between clients of the same broker, increasing the number of scrips eligible as well as position limits for futures market, reviewing buy back regulations to make it easier for companies and introducing more flexibility for Employee Contributory Funds to invest in the stock market.

China's top bond arranger sees tough funding for weaker firms

Bloomberg Beijing

China may be in an easing mode to combat slower growth, but financing conditions aren't improving for lower rated firms and they face a "chilly winter" ahead, according to China Securities Co. Government liquidity injections haven't found its way to weaker firms as investors are still risk averse amid record defaults, said Huang Ling, managing director of China Securities, the top corporate bond underwriter in China since 2015. The tough environment will persist for at least one to two quarters amid the trade war and sluggish economy, he said in an interview in Beijing. Spooked by a slew of debt delinquencies, China's credit market is seeing a divergence this year with investors demanding higher yields to hold lower rated notes while requiring much lower levels on top rated securities. That's triggered a vicious cycle of more failures among weaker companies. Bond defaults this year have hit a historical high of 63.8bn yuan ($9.2bn) involving 61 notes. "People can't buy enough of AAA bonds but it has been a tough sale for their AA peers this year," said Huang. "As a result of market preference, we see a higher proportion of issuance from firms

rated AA+ and above, and weaker companies have to tap into all funding options to survive." Notes rated AA and below are considered junk bonds in China's domestic market. In the first half of this year, issuers rated AA+ or above accounted for 59.2% of the corporate bond borrowers, about 4 percentage points higher than the year-earlier period, according to data from National Association of Financial Market Institutional Investors, a unit under the central bank. Huang expects defaults to remain steady in 2019 and the likelihood of a regional financial crisis to stay low due to the stimulus policies from authorities recently. The People's Bank of China lowered the required reserve ratio for some lenders by 1 percentage point, effective from October 15, releasing 1.2tn yuan. China's broadest measure of new credit jumped in September after regulators encouraged lenders to support businesses. Yet China's economic growth continues to slow, with the third quarter expansion coming in lower than expected, driven by weak industrial output data. "Investors' preference for safer notes will keep driving the polarisation of performance for China's corporate bonds," Huang said. "Defaults are likely to stay at a high level but chances are there won't be a sudden jump in failures, which will cause financial market panic."

Won traders to seek redemption from Bank of Korea next month

Bloomberg Seoul

Bank of Korea's latest rate decision was a washout for currency traders betting on a hike. But, Governor Lee Ju-yeol may give them another chance soon.

After tantalising investors with the prospect of the nation's first rate increase in almost a year, the board led by Lee kept policy on hold, citing the threat from a slowing global outlook.

The won quickly surrendered gains from the past two days as the central bank flagged risks stemming from the trade war, skidding almost 1% to reach a one-week low.

While stressing the need to preserve economic growth, Lee also cautioned that policy makers will soon have to address the nation's record household debt and soaring house prices.

The warning - coupled with two board members voting for a hike on Thursday - led some analysts to predict that rates could rise as early as the next review on November 30.

"My expectations for November lean towards a hike," said Maximillian Lin, an emerging-markets Asia strategist at NatWest Markets in Singapore.

"Although the governor noted that `monetary policy alone can't fix financial imbal-

The headquarters of Bank of Korea in Seoul. Analysts predicted that interest rates could rise as early as the next review of the central bank on November 30.

ances,' it sounds like he still thinks monetary policy is one of the tools to be used."

The won was down 0.8% to 1,135.25 per dollar at the close in Seoul last week. It earlier reached a one-week low of 1,135.45.

For Daishin Securities, Bank of Korea's policy outlook lays the groundwork for a likely rate

increase in November, followed by possible further tightening in the second half of next year. "Bank of Korea rather clearly implied that it will raise benchmark rates next month," Kong Dongrak, a fixed-income strategist at Daishin Securities in Seoul, wrote in a note after the decision.

6

Gulf Times Monday, October 22, 2018

BUSINESS

Behind stock market's ordeal are cracks in the profit foundation

Bloomberg New York

Package maker Sealed Air Corp fell the most in six months on Thursday after saying higher raw material costs would crimp the bottom line. A few days earlier it was rising freight outlays at Fastenal Co, where $1.1bn of market value was erased. On October 9, paint maker PPG Industries Inc mentioned rising expenses. The shares cratered.

From railroads to retailers, signs of price pressures are starting to show at US industrial companies, contributing to the worst October start for the S&P 500 since 2008. Equities have had their three worst sessions since April in the space of eight days, narrowly escaping a fourth straight down week thanks to a Thursday rally.

An earnings season everyone hoped would restore order has instead sent

signals that the future is murkier than bulls realised, particularly on the inflation front, where many of their nightmare scenarios reside.

"That doesn't necessarily mean that we fall into a recession, but it should slow growth," said Matt Maley, equity strategist at Miller Tabak & Co. "That is not good for a stock market that had been priced for perfection just a few weeks ago."

It's not that earnings are weak. S&P 500 companies are on pace to expand profit by 20.7% in the June-September period and are headed for the biggest annual increase in eight years. The problem is the high hopes built into stock prices. Any sign rising costs are eroding the bottom line are ringing alarm bells for investors who have pushed stocks up 50% over 30 months.

"This leaves little room for a hiccup in the economy," said Chad Morganlander, portfolio manager at Washington Crossing Advisors. "The environment

is changing and yields are at the highest level they've been in a decade. This confluence of factors isn't a good one."

Concerns like these may seem overstated in an economy where unemployment is at a 48-year low and consumer confidence a two- decade high. But investors with a sense of history are aware readings like these are more common at the end of rallies than the beginning.

Throw in President Donald Trump's trade war, currency weakness in emerging markets and a still-hawkish Fed, and it's a recipe for turbulence. The Cboe Volatility Index has averaged 17.2 in October, up 33% from the previous month.

Among the casualties: Sealed Air fell more than 8% on Thursday. The Charlotte, North Carolina-based maker of Bubble Wrap cited higher-than-expected raw material and freight costs, along with currency headwinds, in guiding earnings lower. Fastenal slid

7% on October 10. The Winona, Minnesota-based industrial supplier has been investing to ward off an incursion by and mentioned higher freight and wage costs in missing gross margin forecasts.

PPG Industries tumbled 10% on October 9. The Pittsburgh-based coatings maker said rising expenses and soft demand from China cut thirdquarter earnings.

In a flat week for the S&P 500, old economy stocks bore most of the losses. Energy shares slid 1.9%, commodity producers lost 1.4%, and industrial companies fell 1%.

The S&P 500 Industrials Index is down 3.6% in 2018, compared with a 3.5% gain in the full index. Active manager ownership of in the group was at the lowest level since 2008 in August, Bank of America's data show.

Tighter margins go hand in hand with a market villain already on bulls' radar, rising interest rates, themselves

a consequence of a strengthening economy and eight Federal Reserve interest rate hikes since 2015. While not a margin story per se, nowhere is the spectre of rising borrowing costs more pronounced than in homebuilder stocks. The largest exchange-traded fund tracking the sector has spent 22 out of the past 25 sessions in the red, losing almost 20% of its market value in just a month.

Bank of America strategists including Ronan Carr say weakness is a buying opportunity. They're telling clients to go long industrials versus the broader US market amid bets the headwinds are priced in and the sector will benefit from the bull market broadening out.

"While the trade clearly also has some correlation to the evolution of the global cycle and trade war risks, the sector exhibits strong fundamentals but has de-rated versus the US market," Carr said in a note on Friday. "The sector is a beneficiary of the capex upcycle

we are seeing in the US, something our economists expect to continue."

Margin pressure has been one of many sagas in the industrial space of late. Earnings-related concerns going beyond rising costs have been leading to intermittent blowups around the industry for weeks, in companies from United Rentals to Textron Inc and Snap-On. Outside of the US, shares of Daimler AG fell on Friday after the automaker issued its second profit warning in four months.

"It doesn't mean the economy is going through a recession, but it's reality when the supply of labour tightens, labour is emboldened to seek higher wages, and business have to pay more," said Marshall Front, chief executive officer and chairman of Front Barnett Associates. "And the same time, demand is tight for raw materials, fees go up and prices go up. It's not the end of the world, it's something businesses have to contend with it."

Italy's banks seen at risk from widening bond yield spread

Bloomberg Milan

A n increase in Italy's bond yield spread is a risk for domestic banks and is adding to tensions in the financial system, according to Cabinet Undersecretary Giancarlo Giorgetti.

"The spread is a risk for banks, which we can't ignore," the top official of coalition partner the League said in an interview with daily Il Messaggero published yesterday. The situation requires "a serious and responsible approach from the government."

The bond spread, the stock of public debt held by banks and the new European Union banking rules put tension on the Italian financial system, which "may generate the need to recapitalise some institutions that already have capital fragility," Giorgetti said.

He added that the country's targeted budget deficit of 2.4% for next year is a "ceiling" and may not need to be used completely.

Italy's banks are reeling from the impact on their capital levels of soaring government bond yields, which touched a five-year high on Friday.

They're also sitting on a 260bn ($299bn) pile of non-performing loans ? the biggest in the EU ? left over from the last financial crisis and recession.

The 10-year yield spread over Germany, a key barometer of risk in the nation, dropped from the highest level in more than five years after European Commissioner for economic affairs, Pierre Moscovici, said Friday that the bloc wouldn't interfere in the new government's economic policies.

Moody's Investors Service cut Italy's credit rank by one step to Baa3, its lowest investment-grade rating, on concern the government's budget will erode its fiscal strength and stall plans for structural reform.

"One notch downgrade was expected but not so early," Credit Suisse Group AG analyst Carlo Tommaselli said in a note. A decision by Standard & Poor's "is expected in one week. We would expect further pressure on banks."

Still, Italian government bonds, stocks and debt from Europe's other peripheral nations may rally today after the ratings decision removed the immediate threat of a downgrade to junk and the outlook was shifted to stable.

"It's important to start a frank and constructive dialogue with the European Union," Giorgetti said in the interview. "We're responsible people and we'll do things in a responsible way."

The populists are under fire from all sides, with EU leaders attacking their budget plans at a summit meeting in Brussels last week. The EU Commission has given Italy until noon on Monday to provide an explanation for the "obvious significant deviation" from the budget rules. Italian Deputy Premiers Matteo Salvini and Luigi Di Maio said on Saturday they reached an accord over a dispute that has strained their five-monthold alliance, and intend to respond to a EU letter criticising their budget by better explaining its rationale.

"The government reiterated that Italy's position is and will remain firmly anchored within the European Union and the euro," according to a statement from the government Saturday night.

Italian bourses set

for relief as threat of

junk rating retreats

Bloomberg London

Italian government bonds, stocks and debt from Europe's other peripheral nations may rally today after a ratings decision by Moody's Investors Service removed the immediate threat of a downgrade to junk.

Moody's cut Italy's credit rank by one step to Baa3, its lowest investment-grade rating, on concern the government's budget will erode its fiscal strength and stall plans for structural reform. But its decision to set the outlook for the assessment at "stable" may be enough to reassure investors after a selloff pushed yields on the nation's 10-year bonds to the highest since 2014.

"This was the softest move possible and should be a relief for investors," Ciaran O'Hagan, the head of euro-area rates strategy at Societe Generale, said in emailed comments. He recommended investors buy Italian government bonds after the decision. "Uncertainty has been removed. This deserves to be rewarded with a good rally."

Italy's financial markets have been under pressure since the coalition government pushed for a higher-than-expected deficit in its budget, damaging investor confidence in its ability to reduce its 2.3tn ($2.7tn) debt load and setting it on a collision course with European authorities. It also raised concern ratings firms would cut the nation

Italy's stock exchange, the Borsa Italiana which is part of the London Stock Exchange, stands in Milan. Italian government bonds, stocks and debt from Europe's other peripheral nations may rally today after a ratings decision by Moody's Investors Service removed the immediate threat of a downgrade to junk.

below investment grade, triggering forced selling of government bonds.

While it leaves Italy with its lowest credit rating since the euro was formed, the downgrade fell short of investors' worst expectations, paving the way for a relief rally. The 10-year yield touched 3.81% on Friday, a level last seen in 2014 when the nation was still recovering from Europe's sovereign debt crisis. And while the securities did stage a late-day bounce to close

at 3.48%, that's still more than double this year's lows and represents a premium of more than 300 basis points over benchmark German bunds.

By some measures, Italian bonds had already been trading in line with junk-rated nations.

SocGen wasn't alone in expecting Moody's to stick at a "stable" outlook. A one-step downgrade may see the 10-year yield spread narrow toward 250 basis points, Banco Bilbao Vizcaya Argentaria SA said be-

fore the decision. Strategists at Citigroup Inc said the yield gap would drop below 300 basis points in their base-case scenario of a one-notch downgrade and the removal of the negative outlook.

S&P Global Ratings, which rates Italy two notches above junk, is due to review the country on October 26. Having upgraded Italy this time last year, that company "is not going to want to yoyo around," SocGen's O'Hagan wrote. Once its de-

cision is out of the way, it will "eliminate one more uncertainty in the lead ? up to year-end," and that will translate into higher prices for Italian government bonds, he said.

Still, there are plenty of question marks hanging over Italy. Its swollen debt relative to its gross domestic product gives the government little financial wiggle room, while it remains under pressure due to internal disputes within the volatile coalition at home and European Union criticism of the budget.

The country's biggest newspapers have already been running front-page stories about the bond spread as investors balk at the budget targets unveiled by the populist government. It may take further reassurances before "lo spread" ? which entered Italian vernacular when the country was struggling to survive the European debt crisis ? moves back out of the spotlight.

The prospect of turmoil within the ruling coalition is likely to become the dominant theme for bond investors from now on, according to Raffaele Bertoni, head of debt-capital markets at Gulf Investment Corp in Kuwait City.

There's a continued "risk of tension within the coalition over the budget," Bertoni said in a Bloomberg TV interview. "Going forward, the market will focus more on the internal issues of the Italian government rather than the rating."

The spread will tighten no more than 20 basis points today, Bertoni added.

FOCUS

Emerging or sub-merging markets

By Steen Jakobsen

It's been a tough year for emergingmarket (EM) investors, who have suffered poor returns on headwinds from the Federal Reserve's tightening of monetary policy and as the rising global uncertainty from the US-China showdown on trade takes global prisoners. EMs trade at an unprecedentedly deep discount to developed-economy assets. In statistical terms, EM equity market valuations are three standard deviations cheaper than the US stock market. With such dramatic divergences in performance heading into the fourth quarter, it raises the question of whether this is a "valuation trap" or one of the biggest buy signals for EM in a long, long time. Whether to buy EM outright is a more difficult question as it will depend on how close we are to the end of the Fed's hiking cycle, and likewise whether the US dollar has peaked. But perhaps most importantly, EM could be driven by the timing of the relative recovery in China's

asset markets. We know that when the US growth outlook over the next six to 12 months is expected to outperform China, this could supposedly drive a stronger US dollar on additional policy tightening from the Powell Fed, thus increasing funding costs for EM, which are heavily dependent on US dollar availability to drive their credit impulse. This source of stress and reduced growth in EM represents the dynamic for the last 18 months. However, when there is cyclical change in growth leadership from the US to China, it will lead to a weaker USD, which will support commodities and emerging economies again as the strong engines of EM restart and make EM competitive. For now, we estimate that the US economy has peaked ? the powerful expansionary cocktail of unfinanced tax cuts, repatriation of capital, and fiscal spending ramped up growth in the US, but these one-off effects will peter out as the year ends. Already the US housing market is showing signs of strain as the higher marginal cost of capital (the higher yield on mortgages, more specifically)

is starting to have a material impact on future growth. As certain as we are about the US having peaked, we are less certain as to how soon China will reach the bottom of its deleveraging process and begin to expand more forcefully again. We have long said that the declining credit impulse ? a shrinking rate of credit injection into the economy ? forewarned a slowdown which has now materialised. Despite three moves by China to reduce its reserve requirement ratio (RRR) for banks and boost liquidity

and lending, the Chinese banking system remains defensive. The overall plan for China was to reduce the shadow economy by transferring risks from the patchwork shadow lending market to the major banks, a plan that for now has yet to ignite further lending. While US and Chinese growth is becoming more asynchronous, the trade war severely aggravates the risks for the global economy. Pitting the Trump administration's America First strategy against China's 2025 plan, both strategies seek further independence from their rival, which means less globalisation, less trade flow, and less sharing of ideas and best practices. The globalisation trend has not only stopped but reversed over the course of this year, and with the US midterm elections looming, we see no slowdown in this war of words for now or even after the November election. The fact that anti-China rhetoric resonates with both President Trump's base and Democratic voters is a scary testament to the risks of a new cold war over trade and technology breaking out. It's almost as if the US needs a new

enemy to replace the old one, and a sign of insecurity more than strength. To round things off, before the year is over we could see new elections being called in the UK (effectively a second Brexit vote), Italy (anti-EU/budget), Sweden (lack of political solutions), and a further widening of the divide in US politics. We are clearly at a crossroads on many fronts: globalisation, geopolitics and economics. The next quarter will either see dampening of volatility by a less aggressive Fed, more active easing in China, and a compromise on the European Union budget... or a further

escalation in the tension seen in all three areas. I would not bet against the latter into Q4, but I remain confident that we stand only a few months away from the beginning of a new easing cycle based on ugly realities, not the hope expressed by politicians and often market consensus. I am the most optimistic I have been in years about the future, but only because things can hardly get any worse. Let's be careful out there.

Steen Jakobsen is chief economist and CIO at Saxo Bank.

7 Gulf Times

Monday, October 22, 2018

BUSINESS

QATAR

Company Name

Qatar National Bank Industries Qatar Masraf Al Rayan Ooredoo Qpsc

Ezdan Holding Group Qatar Islamic Bank

Qatar Electricity & Water Co Mesaieed Petrochemical Holdi

Barwa Real Estate Co Qatar Insurance Co Qatar Fuel Qsc

Commercial Bank Pqsc Doha Bank Qpsc

Qatar Gas Transport(Nakilat) Qatar International Islamic Qatar Navigation Al Ahli Bank Vodafone Qatar Aamal Co United Development Co Al Khalij Commercial Bank

Qatar General Insurance & Re Qatari Investors Group

Qatar National Cement Co Gulf International Services Al Meera Consumer Goods Co

Mannai Corporation Qsc Gulf Warehousing Company

Medicare Group Qatar Industrial Manufactur

Qatar First Bank Zad Holding Co Widam Food Co

Mazaya Qatar Real Estate Dev Qatar Islamic Insurance Doha Insurance Co

Salam International Investme Investment Holding Group National Leasing Dlala Holding Al Khaleej Takaful Group

Qatar & Oman Investment Co Islamic Holding Group

Qatar Cinema & Film Distrib Qatar Exchange Index Etf

Qatar German Co For Medical

Lt Price % Chg

183.00 143.00 37.30 69.00 10.31 141.61 187.11 16.90 37.40 36.91 177.10 40.20 21.62 17.61 59.50 71.41 31.00 8.69 9.60 14.00 11.26 48.00 29.70 58.00 20.49 153.70 59.90 40.62 64.88 41.61 4.70 100.00 73.05 7.93 53.73 12.50 5.03 5.39 8.84 11.00 9.50 6.05 24.50 16.53 100.20 4.84

-0.22 0.00 -0.53 -0.42 -1.62 -1.10 -1.52 0.00 0.03 -0.59 -0.45 -0.25 -1.19 -0.56 0.47 0.01 0.00 0.12 -0.72 0.07 0.09 0.00 0.00 0.00 -0.53 -0.51 -0.15 0.15 0.76 0.24 -1.26 0.00 -1.28 5.73 2.15 -3.85 0.60 0.19 -0.67 -1.79 1.71 -3.04 -1.33 0.00 -0.05 0.00

Volume

18,788 52,223 325,948 42,285 41,366 1,870 50,576 71,838 54,816 35,584 15,054 28,240 88,736 222,103 37,706 39,953 216,636 45,487 95,744 102,956 26,037 26,785 108,619 3,434 1,314 3,844 49,671 5,822 699,595 15,744 1,670,192 4,122 150 6,114 12,624 82,273 57,714 60,885 10,455 16,279 2,134 802

SAUDI ARABIA

Company Name

United Wire Factories Compan Etihad Etisalat Co

Dar Al Arkan Real Estate Dev Saudi Hollandi Bank

Rabigh Refining And Petroche Banque Saudi Fransi

Saudi Enaya Cooperative Insu Mediterranean & Gulf Insuran

Saudi British Bank Mohammad Al Mojil Group Co

Red Sea International Co Takween Advanced Industries

Sabb Takaful Saudi Arabian Fertilizer Co

National Gypsum Saudi Ceramic Co National Gas & Industrializa Saudi Pharmaceutical Industr

Thimar National Industrialization C Saudi Transport And Investme

Saudi Electricity Co Saudi Arabia Refineries Co Arriyadh Development Company Al-Baha Development & Invest Saudi Research And Marketing Aldrees Petroleum And Transp Saudi Vitrified Clay Pipe Co

Jarir Marketing Co Arab National Bank Yanbu National Petrochemical

Arabian Cement Middle East Specialized Cabl Al Khaleej Training And Educ Al Sagr Co-Operative Insuran Trade Union Cooperative Insu Arabia Insurance Cooperative

Saudi Chemical Company Fawaz Abdulaziz Alhokair & C Bupa Arabia For Cooperative

Wafa Insurance Jabal Omar Development Co

Saudi Basic Industries Corp Saudi Kayan Petrochemical Co Etihad Atheeb Telecommunicat Co For Cooperative Insurance

National Petrochemical Co Gulf Union Cooperative Insur Gulf General Cooperative Ins

Basic Chemical Industries Saudi Steel Pipe Co

Buruj Cooperative Insurance Mouwasat Medical Services Co Southern Province Cement Co

Maadaniyah Yamama Cement Co Jazan Energy And Development Zamil Industrial Investment Alujain Corporation (Alco) Tabuk Agricultural Developme United Co-Operative Assuranc Qassim Cement/The Saudi Advanced Industries Kingdom Holding Co Saudi Arabian Amiantit Co Al Jouf Agriculture Developm Saudi Industrial Development

Bishah Agriculture Riyad Bank

The National Agriculture Dev Halwani Bros Co Arabian Pipes Co

Eastern Province Cement Co Al Gassim Investment Holding

Filing & Packing Materials M Saudi Cable Co

Tihama Advertising & Public Saudi Investment Bank/The

Astra Industrial Group Saudi Public Transport Co

Taiba Holding Co Saudi Industrial Export Co

Saudi Real Estate Co Saudia Dairy & Foodstuff Co National Shipping Co Of/The

Methanol Chemicals Co Chubb Arabia Cooperative Ins Mobile Telecommunications Co

Saudi Arabian Coop Ins Co Axa Cooperative Insurance

Alsorayai Group Weqaya For Takaful Insurance

Bank Albilad Al-Hassan G.I. Shaker Co

Wataniya Insurance Co

Lt Price % Chg

13.42 16.60 9.13 0.00 20.22 34.30 15.64 13.40 33.20 0.00 13.30 9.14 16.92 85.80 12.20 22.10 29.00 28.65 22.64 17.00 0.00 15.00 35.60 16.90 14.48 83.60 27.85 49.70 174.80 33.50 64.50 17.80 7.07 10.82 10.60 19.92 18.70 28.95 18.70 102.00 9.90 34.75 124.60 15.02 5.35 52.00 24.80 11.44 12.02 24.52 18.10 18.78 67.70 32.25 16.70 12.50 13.30 16.30 21.92 9.25 10.58 35.10 10.78 7.83 5.34 19.50 7.80 0.00 17.18 25.90 44.50 9.08 17.46 0.00 32.30 32.25 33.70 17.78 15.92 12.54 27.30 101.20 12.20 75.20 31.50 11.04 15.70 5.99 10.32 18.28 10.10 0.00 23.00 7.77 20.50

-2.04 1.22 -0.98 0.00 -1.65 0.88 -4.28 -5.10 0.76 0.00 -1.92 -2.77 -3.64 1.54 1.84 7.49 -1.69 -1.38 -3.82 -2.07 0.00 -3.97 -2.73 0.96 -4.86 -4.13 -3.80 1.43 -1.58 2.29 1.26 -2.09 0.00 -2.52 -3.99 -4.69 -2.09 -1.53 -4.30 -1.92 -3.32 -1.14 -0.16 -3.10 0.00 -1.52 -3.31 -3.21 -3.38 0.08 -0.88 -5.25 -1.60 -2.27 -2.11 -1.57 -2.06 -0.61 -3.01 -2.73 -3.11 0.72 -4.09 -2.00 -0.56 -3.37 -1.76 0.00 1.30 -1.89 0.68 -3.09 -4.28 0.00 -0.62 6.09 -3.16 0.68 -2.21 -2.49 -2.50 9.88 -4.84 -1.05 -3.23 -0.72 -4.27 -1.80 -4.44 -1.40 -3.81 0.00 -0.43 -2.39 -2.38

Volume

257,847 3,101,227 22,649,992 2,184,961 548,379 178,789 1,483,215 625,210 173,410 428,851 108,733 1,224,053 310,001 1,498,494 86,714 64,645 242,104 3,876,626 1,697,310 247,776 1,243,219 576,874 180,643 327,734 169,478 94,831 1,097,552 668,909 110,521 641,560 386,202 462,171 391,027 276,027 250,162 841,230 83,119 410,165 854,742 5,730,050 17,952,236 234,242 470,293 83,761 100,047 526,175 205,727 281,438 273,648 137,435 68,498 302,048 228,511 347,818 1,328,717 111,455 375,145 187,571 339,602 115,573 1,046,376 60,162 125,121 2,751,086 158,809 13,640 1,095,063 333,812 27,783 2,012,979 212,780 105,591 134,991 612,858 49,126 223,254 934,939 50,028 3,047,949 4,245,940 84,032 2,092,223 374,519 284,327 716,359 472,812 276,608 54,990

SAUDI ARABIA

Company Name

Abdullah Al Othaim Markets Hail Cement

Saudi Re For Cooperative Rei Solidarity Saudi Takaful Co

Amana Cooperative Insurance Alabdullatif Industrial Inv

Saudi Printing & Packaging C Sanad Cooperative Insurance Saudi Paper Manufacturing Co

Alinma Bank Almarai Co

Falcom Saudi Equity Etf United International Transpo

Hsbc Amanah Saudi 20 Etf Saudi International Petroche

Falcom Petrochemical Etf Walaa Cooperative Insurance

Bank Al-Jazira Al Rajhi Bank

Samba Financial Group United Electronics Co

Allied Cooperative Insurance Malath Insurance

Alinma Tokio Marine Arabian Shield Cooperative

Savola Wafrah For Industry And Deve

Fitaihi Holding Group Tourism Enterprise Co/ Shams

Sahara Petrochemical Co Herfy Food Services Co

Saudi Ind Investment Group Salama Cooperative Insurance

Emaar Economic City Alahli Takaful Co

Anaam International Holding Saudi Telecom Co

Al Alamiya Cooperative Insur Saudi Industrial Services Co Al-Ahsa Development Co. National Co For Glass In/The Dur Hospitality Co Tabuk Cement Co Sasco Saudi Cement

Aseer Trading Tourism & Manu Nama Chemicals Co

Saudi Arabian Mining Co Yanbu Cement Co Saudi Fisheries

Ash-Sharqiyah Development Co Makkah Construction & Devepl

Al Jouf Cement Alkhodar Ab Equity

Kec Ab Equity Alahlia Ab Equity

Arcci Ab Equity Appc Ab Equity Albabtai Ab Equity

Lt Price % Chg

63.30 7.28 6.27 14.00 13.58 10.52 13.98 0.00 12.96 20.34 46.75 29.50 26.25 30.20 20.18 34.10 20.44 13.34 86.50 30.50 54.90 17.38 10.46 15.94 17.14 30.45 13.90 10.30 29.10 15.80 39.95 23.62 13.76 8.08 23.38 8.98 83.70 32.90 11.44 9.33 17.40 20.40 10.60 14.86 37.50 8.64 24.56 43.80 19.60 14.38 40.55 78.00 7.43 7.24 10.08 9.10 50.00 46.00 18.74

-1.56 -1.62 -2.03 -2.64 -4.23 -3.13 -3.98 0.00 2.21 -1.74 1.63 -1.99 -0.19 -1.95 -3.35 0.00 -2.20 -3.19 0.58 -1.29 -0.54 2.24 -3.68 -0.99 -1.15 3.40 -2.11 -0.96 -1.02 -3.42 -2.56 -2.80 -3.64 -2.06 -3.79 -4.57 0.84 -1.05 -6.08 -2.81 -2.03 -0.97 -3.81 -2.49 -1.57 -2.92 -2.54 -2.67 -3.92 -4.52 -2.87 -1.02 -3.13 0.00 -2.33 -3.81 -1.77 -3.97 -2.29

Volume

104,728 154,479 613,454 358,589 361,867 127,011 441,559 2,059,021 25,236,351 542,511 212,438 401,221 2,779 2,512,024 148,148 6,786,002 5,841,998 3,043,978 215,429 58,142 722,413 233,194 460,557 1,373,697 91,677 109,140 71,460 3,884,654 70,802 664,413 1,056,463 1,388,564 146,881 457,330 1,139,057 362,589 1,191,022 255,215 120,131 124,386 260,539 296,568 85,161 320,466 303,749 582,774 177,372 400,249 83,440 27,162 573,171 227,979 203,431 181,503 511,505 268,897

KUWAIT

Company Name

Securities Group Co Sultan Center Food Products

Kuwait Foundry Co Sak Kuwait Financial Centre Sak

Ajial Real Estate Entmt Gulf Glass Manuf Co -Kscc Kuwait Finance & Investment National Industries Co Ksc Kuwait Real Estate Holding C

Securities House/The Boubyan Petrochemicals Co

Al Ahli Bank Of Kuwait Ahli United Bank (Almutahed)

National Bank Of Kuwait Commercial Bank Of Kuwait

Kuwait International Bank Gulf Bank

Al-Massaleh Real Estate Co Al Arabiya Real Estate Co

Kuwait Remal Real Estate Co Alkout Industrial Projects C

A'ayan Real Estate Co Sak Investors Holding Group Co.K

Al-Mazaya Holding Co Al-Madar Finance & Invt Co Gulf Petroleum Investment

Mabanee Co Sakc City Group

Inovest Co Bsc Kuwait Gypsum Manufacturing

Al-Deera Holding Co Alshamel International Hold

Mena Real Estate Co National Slaughter House Amar Finance & Leasing Co United Projects For Aviation National Consumer Holding Co Amwal International Investme

Jeeran Holdings Equipment Holding Co K.S.C.C

Nafais Holding Safwan Trading & Contracting

Arkan Al Kuwait Real Estate Gfh Financial Group Bsc

Energy House Holding Co Kscp Kuwait Slaughter House Co Kuwait Co For Process Plant Al Maidan Dental Clinic Co K National Shooting Company

Al-Themar Real International Al-Ahleia Insurance Co Sakp Wethaq Takaful Insurance Co

Salbookh Trading Co Kscp Aqar Real Estate Investments

Hayat Communications Kuwait Packing Materials Mfg

Soor Fuel Marketing Co Ksc Alargan International Real Burgan Co For Well Drilling

Kuwait Resorts Co Kscc Oula Fuel Marketing Co Palms Agro Production Co Ikarus Petroleum Industries Mubarrad Holding Co Ksc Al Mowasat Health Care Co

Shuaiba Industrial Co Aan Digital Services Co First Takaful Insurance Co Kuwaiti Syrian Holding Co National Cleaning Company Eyas For High & Technical Ed United Real Estate Company

Agility Kuwait & Middle East Fin Inv Fujairah Cement Industries Livestock Transport & Tradng

International Resorts Co National Industries Grp Hold

Marine Services Co Ksc Warba Insurance Co

Kuwait United Poultry Co First Dubai Real Estate Deve

Al Arabi Group Holding Co Kuwait Hotels Sak

Mobile Telecommunications Co Al Safat Real Estate Co

Tamdeen Real Estate Co Ksc Al Mudon Intl Real Estate Co

Kuwait Cement Co Ksc Sharjah Cement & Indus Devel

Kuwait Portland Cement Co Educational Holding Group

Bahrain Kuwait Insurance Asiya Capital Investments Co

Kuwait Investment Co Burgan Bank

Lt Price % Chg

0.00 54.50 191.00 89.00 140.00 0.00 48.20 168.00 26.00 48.40 1,065.00 285.00 289.00 813.00 510.00 230.00 247.00 39.90 28.20 32.00 770.00 63.00 12.20 73.00 147.00 25.40 611.00 0.00 82.00 0.00 17.30 0.00 29.00 0.00 32.40 658.00 0.00 60.00 0.00 28.20 0.00 0.00 80.00 93.00 36.40 0.00 228.00 1,220.00 0.00 0.00 427.00 24.00 40.00 61.70 77.00 0.00 115.00 0.00 100.00 55.60 115.00 60.00 0.00 58.90 0.00 198.00 0.00 53.00 36.90 59.40 0.00 61.90 810.00 29.60 64.40 201.00 19.60 156.00 0.00 70.00 0.00 38.00 67.00 100.00 439.00 0.00 332.00 26.70 365.00 72.10 1,052.00 310.00 0.00 31.50 119.00 275.00

0.00 -4.22 -0.52 -1.11 0.00 0.00 0.00 -4.00 -3.70 -1.02 0.95 0.00 -1.03 -0.25 0.00 0.00 0.00 0.00 -2.76 0.00 0.00 0.00 -2.40 -0.68 -0.68 -0.78 0.49 0.00 -2.96 0.00 2.98 0.00 1.05 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -3.13 1.11 0.00 2.24 0.00 0.00 0.00 0.00 0.00 3.63 0.00 0.00 0.00 0.00 0.00 0.00 -1.42 0.00 0.00 0.00 2.97 0.00 0.00 0.00 0.00 -0.27 0.00 0.00 0.00 -0.12 0.34 0.00 0.50 2.08 0.00 0.00 1.45 0.00 0.00 0.00 0.00 -0.23 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -9.74 0.00 0.00

Volume

18,010 115,102 10,000 77,941 5,000 2,041 25,000 8,966 315,903 66,260 83,916 861,255 2,935 417,785 665,861 9,600 78,050 1 5,000 110,100 4,248,103 882,280 647,421 321,693 103,860 186,000 10 101,500 273,000 10 13,020 27,057 7,500 140,703 58,800 133,000 500 43,000 1,100 200 36,000 150 42,379 51,712 334,400 7,963 4,890 100 2,663 16,600 69,551 1 162,000 918,656 512,651 6,719 20,000 271,027 392,008 4,049 99,267 1,650 170 1,795,580 19,214 47,290 535 54,856 5,000 110,000 76,955 3,170 1,087,344

KUWAIT

Company Name

Kuwait Projects Co Holdings Al Madina For Finance And In

Kuwait Insurance Co Al Masaken Intl Real Estate

Intl Financial Advisors First Investment Co Kscc Al Mal Investment Company Bayan Investment Co Kscc Egypt Kuwait Holding Co Sae Coast Investment Development Privatization Holding Compan Kuwait Medical Services Co Injazzat Real State Company Kuwait Cable Vision Sak Sanam Real Estate Co Kscc

Ithmaar Holding Bsc Aviation Lease And Finance C Arzan Financial Group For Fi

Ajwan Gulf Real Estate Co Kuwait Business Town Real Es Future Kid Entertainment And

Specialities Group Holding C Abyaar Real Eastate Developm

Dar Al Thuraya Real Estate C Al-Dar National Real Estate Kgl Logistics Company Kscc

Combined Group Contracting Jiyad Holding Co Ksc Qurain Holding Co

Boubyan Intl Industries Hold Gulf Investment House Ksc Boubyan Bank K.S.C Ahli United Bank B.S.C Osos Holding Group Co Al-Eid Food Ksc

Qurain Petrochemical Industr Advanced Technology Co Ekttitab Holding Co Sak Kout Food Group Ksc

Real Estate Trade Centers Co Acico Industries Co Kscc

Kipco Asset Management Co National Petroleum Services

Alimtiaz Investment Group Ras Al Khaimah White Cement

Kuwait Reinsurance Co Ksc Kuwait & Gulf Link Transport

Humansoft Holding Co Ksc Automated Systems Co Kscc

Metal & Recycling Co Gulf Franchising Holding Co

Al-Enma'a Real Estate Co National Mobile Telecommuni

Al Bareeq Holding Co Kscc Housing Finance Co Sak

Al Salam Group Holding Co United Foodstuff Industries Al Aman Investment Company

Mashaer Holding Co Ksc Manazel Holding

Mushrif Trading & Contractin Tijara And Real Estate Inves Kuwait Building Materials Jazeera Airways Co Ksc Commercial Real Estate Co Future Communications Co National International Co

Lt Price % Chg

208.00 23.00 330.00 41.80 21.70 38.20 20.70 44.80 342.00 30.00 50.00 0.00 82.50 30.00 43.20 28.90 337.00 26.90 21.00 47.50 100.00 69.00 16.00 0.00 0.00 41.00 354.00 0.00 0.00 28.90 14.90 534.00 200.00 93.00 65.00 386.00 0.00 21.60 0.00 23.50 200.00 67.50 825.00 127.00 74.20 0.00 93.00 3,150.00 115.00 68.00 90.00 30.20 760.00 0.00 0.00 30.50 0.00 50.00 44.40 29.50 0.00 51.00 0.00 740.00 81.00 0.00 59.00

0.97 -0.86 6.45 15.47 -2.69 -2.80 1.47 -6.28 0.29 0.00 -4.58 0.00 0.00 0.00 51.58 -2.03 2.12 0.00 -0.94 2.15 0.00 -2.68 -3.03 0.00 0.00 -0.73 0.85 0.00 0.00 0.00 0.00 0.95 0.00 0.00 0.00 0.26 0.00 0.00 0.00 0.00 -3.38 0.00 0.00 0.79 6.00 0.00 -2.62 -1.56 0.00 0.00 0.00 -5.03 0.00 0.00 0.00 -2.87 0.00 0.00 4.96 0.00 0.00 -8.11 0.00 0.68 0.12 0.00 -1.50

Volume

624,793 46,100 26,920 7,150 1,242,250 4,200 1,788,017 147,534 34,000 37,000 9,600 120,515 21 287 724,500 10,000 50 65,007 868,232 50 30,000 5,102,429 561,532 2,345 19,960 25 179,896 1,070,691 5,048 7,920 114,109 10,000 100 587,955 25,001 4,494 419,675 12,000 45,000 41,466 10,000 37 1,771 157 1,125 109,000 13,700 1 54,550 297,520 80,638 311,810 40,900

OMAN

Company Name

Voltamp Energy Saog United Power/Energy Co- Pref

United Power Co Saog United Finance Co

Ubar Hotels & Resorts Takaful Oman

Taageer Finance Sweets Of Oman Sohar Power Co

Sohar Poultry Smn Power Holding Saog Shell Oman Marketing - Pref

Shell Oman Marketing Sharqiyah Desalination Co Sa Sembcorp Salalah Power & Wat

Salalah Port Services Salalah Mills Co

Salalah Beach Resort Saog Sahara Hospitality

Renaissance Services Saog Raysut Cement Co

Port Service Corporation Phoenix Power Co Saoc Packaging Co Ltd Ooredoo Ominvest

Oman United Insurance Co Oman Textile Holding Co Saog Oman Telecommunications Co

Oman Refreshment Co Oman Packaging

Oman Orix Leasing Co. Oman Oil Marketing Company Oman National Engineering An

Oman Investment & Finance Oman Intl Marketing

Oman Hotels & Tourism Co Oman Foods International

Oman Flour Mills Oman Fisheries Co Oman Fiber Optics Oman Europe Foods Industries Oman Education & Training In

Oman Chromite Oman Chlorine Oman Ceramic Company Oman Cement Co Oman Cables Industry Oman Agricultural Dev Oman & Emirates Inv(Om)50% Natl Aluminium Products Celebrity National Financial National Real Estate Develop National Pharmaceutical National Mineral Water National Hospitality Institu National Gas Co National Finance Co National Detergent Co Saog National Biscuit Industries National Bank Of Oman Saog Muscat Thread Mills Co Muscat National Holding Muscat Gases Company Saog Muscat Finance Majan Glass Company Majan College Hsbc Bank Oman Hotels Management Co Interna

Gulf Stone Gulf Plastic Industries Co Gulf Mushroom Company Gulf Investments Services Gulf Invest. Serv. Pref-Shar Gulf International Chemicals Gulf Hotels (Oman) Co Ltd

Global Fin Investment Galfar Engineering&Contract

Galfar Engineering -Prefer Financial Services Co. Financial Corp/The Dhofar University Dhofar Tourism Dhofar Poultry

Dhofar Intl Development Dhofar Insurance

Dhofar Fisheries & Food Indu Dhofar Cattlefeed

Dhofar Beverages Co

Lt Price

0.29 1.00 3.44 0.09 0.13 0.13 0.10 0.55 0.12 0.21 0.54 1.05 1.49 3.10 0.21 0.60 0.77 1.38 2.38 0.40 0.40 0.00 0.11 2.21 0.55 0.36 0.31 0.00 0.82 1.75 0.28 0.00 1.13 0.18 0.09 0.52 0.00 0.00 0.71 0.08 0.00 1.00 0.22 3.64 0.30 0.42 0.33 1.03 0.00 0.13 0.38 0.04 5.00 0.12 0.10 0.00 0.33 0.14 0.70 3.80 0.18 0.08 0.00 0.25 0.09 0.18 0.45 0.12 1.25 0.12 0.00 0.31 0.09 0.11 0.20 9.50 0.09 0.10 0.39 0.18 0.10 0.00 0.49 0.18 0.28 0.16 1.28 0.17 0.26

% Chg

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.83 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -1.47 0.00 0.00 0.00 0.00 1.85 0.00 0.00 0.00 0.99 0.00 0.00 0.00 0.00 0.00 1.11 0.00 0.00 0.00 -0.56 1.27 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.80 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.55 0.00 0.00 0.00 0.00 0.00 0.00 -0.84 0.00 0.00 0.00 0.00 -1.16 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.63 0.00 0.00 0.00

Volume

9,180 31,000 10,000 1,000 38,952 2,184,124 65,076 1,892 41,463 5,875 101,030 24,518 352,000 1,321 2,000 269,000 406,444 344,381 5,300 -

OMAN

Company Name

Construction Materials Ind Computer Stationery Inds

Bankmuscat Saog Bank Sohar Bank Nizwa

Bank Dhofar Saog Areej Vegetable Oils Saoc

Aloula Co Al-Omaniya Financial Service

Al-Hassan Engineering Co Al-Fajar Al-Alamia Co

Al-Anwar Ceramic Tiles Co Al Suwadi Power

Al Shurooq Inv Ser Al Sharqiya Invest Holding Al Maha Petroleum Products M Al Maha Ceramics Co Saoc Al Madina Takaful Co Saoc

Al Madina Investment Co Al Kamil Power Co

Al Jazerah Services -Pfd Al Jazeera Steel Products Co

Al Jazeera Services Al Izz Islamic Bank

Al Buraimi Hotel Al Batinah Power Al Batinah Hotels Al Batinah Dev & Inv Al Anwar Holdings Saog

Ahli Bank Acwa Power Barka Saog Abrasives Manufacturing Co S

A'saffa Foods Saog 0Man Oil Marketing Co-Pref

Lt Price % Chg

0.03 0.26 0.42 0.13 0.09 0.16 0.00 0.53 0.28 0.03 0.75 0.08 0.11 0.00 0.09 0.91 0.21 0.09 0.04 0.38 0.55 0.28 0.11 0.09 0.88 0.12 1.13 0.09 0.10 0.16 0.72 0.05 0.60 0.25

0.00 0.00 1.46 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -1.72 0.00 0.00 0.00 0.00 1.08 0.00 0.00 0.00 0.00 1.94 -1.12 0.00 0.87 0.00 0.00 -0.97 0.00 0.00 0.00 0.00 0.00

Volume

437,751 165,500 36,760 260,430 224,000 12,000 65,000 10,000 35,800 -

UAE

Company Name

Waha Capital Pjsc United Insurance Company

United Arab Bank Pjsc Union National Bank/Abu Dhab

Union Insurance Co Union Cement Co

Umm Al Qaiwain Cement Indust Sharjah Islamic Bank

Sharjah Insurance Company Sharjah Group

Sharjah Cement & Indus Devel Ras Al-Khaimah National Insu Ras Al Khaimah White Cement

Ras Al Khaimah Ceramics Ras Al Khaimah Cement Co Psc

Ras Al Khaima Poultry Rak Properties Ooredoo Qpsc

Oman & Emirates Inv(Emir)50% Nbad Oneshare Msci Uae Ucits National Takaful Company National Marine Dredging Co National Investor Co/The National Corp Tourism & Hote National Bank Of Umm Al Qaiw National Bank Of Ras Al-Khai National Bank Of Fujairah First Abu Dhabi Bank Pjsc Methaq Takaful Insurance Manazel Real Estate Pjsc Invest Bank Intl Fish Farming Co Pjsc Insurance House Gulf Pharmaceutical Ind Psc Gulf Medical Projects Gulf Cement Co Fujairah Cement Industries Fujairah Building Industries Foodco Holding Pjsc First Gulf Bank Finance House Eshraq Properties Co Pjsc Emirates Telecom Group Co Emirates Insurance Co. (Psc) Emirates Driving Company Dana Gas Commercial Bank Internationa Bank Of Sharjah Axa Green Crescent Insurance Arkan Building Materials Co Alkhaleej Investment Aldar Properties Pjsc Al Wathba National Insurance Al Khazna Insurance Co Al Fujairah National Insuran Al Dhafra Insurance Co. P.S. Al Buhaira National Insuranc Al Ain Ahlia Ins. Co. Agthia Group Pjsc Abu Dhabi Ship Building Co Abu Dhabi Natl Co For Buildi Abu Dhabi National Takaful C Abu Dhabi National Insurance Abu Dhabi National Hotels Abu Dhabi National Energy Co Abu Dhabi Islamic Bank

Lt Price % Chg

1.86 2.00 1.20 4.55 1.33 0.00 1.00 1.20 2.84 1.20 0.93 3.20 0.90 2.18 0.72 1.89 0.61 61.50 0.50 0.00 0.54 2.85 0.58 1.92 2.60 4.02 3.40 0.00 0.77 0.44 2.25 1.18 0.85 2.20 1.98 0.92 1.20 1.56 3.35 0.00 1.68 0.61 16.70 6.50 5.92 1.15 0.57 1.08 0.50 0.50 1.90 1.68 12.76 0.25 300.00 3.60 2.21 38.00 3.78 1.13 0.49 4.40 3.50 3.55 1.11 3.54

0.00 0.00 0.00 -0.44 0.00 0.00 0.00 4.35 0.00 -7.69 0.00 0.00 0.00 -0.91 -0.14 0.00 -1.61 0.00 0.00 0.00 0.93 0.00 0.00 0.00 0.00 -0.25 0.00 0.00 -1.28 0.69 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.16 -0.60 0.00 0.00 0.00 0.00 0.00 0.00 -1.76 0.00 -2.89 0.00 0.00 0.00 0.00 0.00 0.00 -5.03 0.00 0.00 0.00 0.00 0.00 -2.63 -0.28

Volume

3,711 919,124 863,334 261 2,049 122,000 849,981 17,000 209,320 349,885 23,005 6,934,143 755,372 11,532,024 85,500 4,825 3,318,935 6,005 37,415 941,782

BAHRAIN

Company Name

Zain Bahrain Bscc United Paper Industries Bsc United Gulf Investment Corp

United Gulf Bank Trafco Group Bsc Takaful International Co

Taib Bank -$Us Seef Properties

Sico Bsc National Hotels Co National Bank Of Bahrain Bsc

Nass Corp Bsc Khaleeji Commercial Bank

Ithmaar Holding Bsc Investcorp Bank -$Us

Inovest Co Bsc Gulf Monetary Group Gulf Hotel Group B.S.C Gfh Financial Group Bsc Esterad Investment Co B.S.C.

Delmon Poultry Co Bmmi Bsc

Bmb Investment Bank Bbk Bsc

Bankmuscat Saog Banader Hotels Co Bahrain Tourism Co Bahrain Telecom Co Bahrain Ship Repair & Engin Bahrain National Holding Bahrain Kuwait Insurance Bahrain Islamic Bank Bahrain Flour Mills Co Bahrain Family Leisure Co Bahrain Duty Free Complex Bahrain Commercial Facilitie Bahrain Cinema Co Bahrain Car Park Co Arab Insurance Group(Bsc)-$ Arab Banking Corp Bsc-$Us Aluminium Bahrain Bsc Albaraka Banking Group

Al-Salam Bank Solidarity Bahrain Bsc Ahli United Bank B.S.C

Lt Price % Chg

0.09 0.00 0.00 0.00 0.00 0.00 0.00 0.22 0.00 0.00 0.62 0.10 0.08 0.10 9.60 0.00 0.00 0.44 0.36 0.11 0.00 0.73 0.00 0.44 0.00 0.00 ` 0.25 0.00 0.36 0.32 0.13 0.00 0.00 0.71 0.76 0.00 0.00 0.00 0.40 0.60 0.29 0.10 0.00 0.67

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -3.03 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.83 0.00 0.00 0.00 0.00

Volume

88,830 45,500 202,146 28,340 50,000 66,000 34,150 4,860 50,198 32,094 7,500 343,190 192,500 4,722 14,680 141,435 37,500 60,000 61,000 18,450 160,000 112,000 1,069,876

LATEST MARKET CLOSING FIGURES

14

Gulf Times Monday, October 22, 2018

BUSINESS

Trump's European Union trade talks quickly become contentious

Bloomberg Brussels

The European Union and US are reviewing their trade ties, spurred by US accusations that the bloc is duping American businesses. But don't expect a complete overhaul of their more than $1tn commercial relationship anytime soon. Even though President Donald Trump notified Congress October 16 that the US intends to begin official trade talks with the 28-nation EU, formal negotiations are yet to get underway and quarrelling between the two sides signals an arduous process lays ahead. The Trump administration in June hit the EU with steel and aluminium tariffs, prompting rapid retaliation from Brussels against iconic American products like bourbon whiskey and Harley-Davidson motorcycles. A descent into an all-out trade war was averted in July when European Commission President Jean-Claude Juncker and

Trump agreed to a Rose Garden truce and an outline for limited talks. The resulting discussions between the historic allies remain tense, however. And limited, with the EU insisting the sensitive subject of agriculture be left out and Washington excluding any discussions on the trans-Atlantic trade in cars. Hanging heavily over the talks is Trump's threat to impose a tariff of up to 25% on imports of cars and parts into the US aimed largely at Germany, the EU's largest economy, and companies like BMW AG and Daimler AG. Trump has agreed not to go ahead with the new auto import taxes as long as negotiations are underway. European officials remain wary, however. And the US's heavy-handed approach signals how hard it will be for the two sides to come to terms on delicate trade issues, according to Peter Chase, a senior fellow at the German Marshall Fund. "There's not a lot of goodwill there and goodwill is a necessary part of any trade negotiation," Chase said by phone.

Rufus Yerxa, president of the Washingtonbased National Foreign Trade Council and a former senior US trade official, said a comprehensive transatlantic deal would require "some painful concessions on both sides" that it was not clear either side was willing to make. "We have our sacred cows and they have their sacred cows," Yerxa said, citing as examples the US's 25% tariff on light trucks and European protections on the financial services sector. "Obviously business wants a big deal with Europe, but a big deal with Europe is a hard thing to achieve." While the Trump administration on Oct. 16 notified Congress, Cecilia Malmstrom, the EU's chief trade negotiator, has not yet sought the mandate from EU member states she needs to begin formal talks. Lower-level officials from both sides are due to meet in Washington this week to prepare for a meeting between US Trade Representative Robert Lighthizer and Malmstrom for late November. The lack of an EU mandate represents a

potential departure from the July agreement, when the EU and US pledged to work "toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods." France and other member states remain divided over the scope of the negotiations, according to two European officials who spoke on the condition of anonymity. Instead, the EU is focusing on better regulatory cooperation with the US for industries including autos, pharmaceuticals and medical devices. While the path wouldn't require a formal negotiating mandate from EU countries and both sides spent years discussing it during the Obama administration's push for a broad Transatlantic Trade and Investment Partnership, or TTIP, it's still a complicated process that will take time. "The administration wants quick wins," Chase said. "They're not going to get any quick wins on the regulatory front." An EU official, who declined to be identified discussing private matters, said that the two sides were looking at a rapid

resolution on some regulatory matters by repackaging a number of TTIP annexes that were close to completion when those talks ended. The goal: A quick win to present to Trump to secure a further delay in the imposition of auto tariffs. In an EU document seen by Bloomberg News, the bloc appears interested in discussing stronger standards for new technologies including cars. Lighthizer has declined to discuss auto standards or the lowering of auto tariffs, according to two people familiar with the talks. Malmstrom last week complained the US had yet to come up with proposals to lower tariffs on industrial goods, declaring "the ball is in their court." A day later, US Commerce Secretary Wilbur Ross lashed out at Malmstrom and accused the EU of dragging its feet. "We really need tangible progress," Ross said on October 17 during a visit to Brussels. "The president's patience is not unlimited." European officials, meanwhile, insist they are not willing to bend to what they see

as Trump's worrisome demands in other trade negotiations. Among those are quotas on steel imports extracted from South Korea and the strict auto content rules and bar on future trade deals with China that Trump secured in a revised Nafta with Canada and MexiCo Yerxa said Brussels is also unlikely to bend if US negotiators don't agree to withdraw the Section 232 tariffs on steel and aluminium, which invoke national security concerns and are being threatened for car imports. "I don't think the negotiations would go very far if the US is not very clear about being willing to back off of 232 completely," Yerxa said. That appears unlikely. Trump and his negotiators believe firmly in the power of tariffs as leverage. Yet in the case of the EU that may be a miscalculation. "The people in Washington think that playing hardball gets them something without giving something," Chase said. "That could work with a lot smaller economies, but the US and the EU are basically the same size."

Major WTO showdown looks harder to avoid as US, China and EU spar

Bloomberg Geneva

The US, China and the European Union moved a few steps closer to a major clash at the World Trade Organisation that risks testing the global trade referee's neutrality and President Donald Trump's patience for an institution he already hates.

In a volley of filings, the EU, China and the US last week escalated disputes over new US metals tariffs, the European response to those levies, and Chinese intellectual property practices.

The moves show how major powers like the EU and China are standing up to Trump's "America First" trade manoeuvres, and challenging his willingness to go outside global trade rules. They set the stage for a major showdown over sensitive and largely untested areas of global trade rules, such as when a country is allowed to invoke national security in imposing tariffs.

"These are the most contentious disputes the WTO has heard," said Chad Bown, an expert on WTO disputes at the Peterson Institute for International Economics in Washington. "2019 is going to be an important year for the WTO."

Trump has threatened to withdraw from the WTO and has repeatedly characterised the Geneva-based organisation as being biased against US interests. The US, he said in an August interview with Bloomberg, has been treated "very badly."

The US president is also slowly strangling the WTO's dispute settlement system by blocking the appointment of new judges to its appellate body. That's left the de facto Supreme Court of global trade, which mediates disputes affecting some of the world's largest companies, with just three of its usual seven judges in place.

Given Trump's animosity, the hob-

Gantry cranes stand as bundles of aluminum ingots sit stacked at a China National Materials Storage and Transportation Corp stockyard in Wuxi, China. In a volley of filings, the EU, China and the US last week escalated disputes over new US metals tariffs, the European response to those levies, and Chinese intellectual property practices.

bled dispute settlement mechanism faces a lose-lose situation when it rules on whether and how a country can defend its trade behaviours in order to preserve its national security.

Under WTO rules, countries can act to restrict trade in times of war. But the exception has rarely been invoked for fear that doing so would open a Pandora's box of protectionist measures and tit-for-tat tariffs.

By invoking national security and declaring that a country's economic health

is a building block for national defence, the Trump administration has been stretching the rules, most trade experts agree.

But the US has argued that for the WTO to even rule on if or when a country can invoke national security would violate its members' sovereignty.

If the WTO goes along with the US national security argument, though, it could encourage Trump to implement new tariffs on cars, and spur a proliferation of other new trade restrictions

authorised under the guise of national security. The US Commerce Department is conducting an investigation to determine if foreign imports of autos and auto parts are having a detrimental impact on national security. The inquiry is identical to the process the US pursued earlier this year, after which it implemented 25% tariffs on steel and 10% tariffs on aluminium.

WTO director-general Roberto Azevedo, fearful of what such a national security ruling could lead to, has

urged members to avoid taking that fight to the trade body.

"National security is something that is not technical," Azevedo said in a 2017 interview. "It is not something that will be solved by a dispute in the WTO. That requires conversation at the highest political level."

Yet by pressing on with their disputes at the WTO, the EU, China and other countries challenging the US are ignoring that advice.

It's possible that the disputes never reach the appellate stage if the Trump administration maintains its block on new appellate body nominees for another year or more. The three judges remaining are the bare minimum required to adjudicate appellate cases. The terms of two of the three expire in December 2019, which would leave the body paralysed.

Meanwhile, there are already other cases in the system that could draw US objections.

An initial ruling is expected in December in a fight over Moscow's moves to restrict the movement of Ukrainian freight, in what's seen as the first real test of the national security issue. A decision is also likely as soon as early 2019 on a Chinese challenge to the EU's refusal to grant Beijing market economy status at the WTO -- something the US has also refused to do.

Some experts see reasons to be encouraged, though.

It's a good thing the US and others are even pressing their cases at the WTO, said Bown of the Peterson Institute. That's particularly true, he said, as many of the US's actions so far -- including its metals tariffs and the ones Washington's imposed on $250bn in annual trade with China - are arguably illegal, as has been the retaliation by Brussels and Beijing.

"The fact that it is actually happening is at some level a positive sign," Bown said.

Wind farm

developers

are backing

away from

new work

in Germany

Bloomberg Berlin

Wind farm developers grew colder on bidding for new work in Germany last month as friction with local groups and government bureaucracy drove up the costs of producing green electricity.

The Bnetza power regulator said an auction for new capacity in September was undersubscribed, receiving bids for just 400 megawatts of wind farms, short of the 670 megawatts on offer. Developers who won the contest bid to supply power at an average of 6.26 euro cents per kilowatt-hour (7 US cents), which marked the fourth consecutive increase in similar contests.

The rising cost of generating electricity from wind farms on land is worrying Chancellor Angela Merkel's administration, which is depending on a surge in green power to replace coal plants that Germany is seeking to close. The government has set a target for those technologies to supply 65% of the nation's electricity by 2030, almost double the 36% they provided last year.

Tighter environmental rules and legal battles between developers and local residents are driving up the cost of wind farms and holding up projects, reducing the ambitions of companies to bid for more work, Karin Freier, the Economy and Energy Ministry's head of renewable energy, said in a speech in Berlin on Tuesday.

"The technology has an acceptability problem," she said.

Industry officials amplify those concerns, suggesting it's up to the government to clear away hurdles that are springing up in the path of developers seeking to build more capacity.

After taking Berlin, Germany's Uber for buses targets Manhattan

Bloomberg Munich

FlixMobility GmbH, a German startup that's shaken up bus travel in Europe, will expand to New York City next year to test the adage: If you can make it there, you can make it anywhere.

After an initial US launch earlier this year connecting California college campuses with destinations like Las Vegas and Disneyland, the Munich-based company will start routes to the Big Apple and Texas in 2019.

Next comes expansion to Chicago, Florida and the Pacific Northwest. The plan is to have the company's bright green and orange coaches crisscross America next year to take on Greyhound Lines Inc

"Our goal is now to duplicate the success we had in the West Coast across the country," chief executive officer Andre Schwaemmlein said in an interview. "I've got 50 competitors in Europe, and 10 of those are state-owned with unlimited resources.

Competition is something we're not afraid of."

After starting with a handful of routes in Bavaria five years ago when Germany opened up intercity bus travel, Flix has become a dominant force in Europe, serving 2,000 destinations in 28 countries. The company's rapid expansion, which includes train services in Germany, was facilitated by staying out of the messy and capital-intensive business of owning and operating buses.

Like Uber Technologies Inc, Flix contracts out the services it offers. Bus companies -- which maintain the coaches and hire the drivers -- keep roughly 70% of ticket receipts, while Flix handles sales, scheduling, customer service and marketing. The company says that makes it more flexible than traditional bus companies in adapting to demand.

Tickets from downtown Los Angeles to the Las Vegas Strip are available on the company's website for as little as $4.99. While low fares are clearly a draw, Flix says its strength is in appealing to new customers with its app-based booking system and

amenities such as Wi-Fi and electrical outlets.

After five months on the West Coast, "we're seeing extremely good passenger numbers -- better than some markets that we started in in Europe," said Schwaemmlein. "We're very happy" with developments so far, he said, adding that the company is ahead of rivals like Stagecoach Group Plc's Megabus on the West Coast. Its Los Angeles to Las Vegas route is on average 75% full, while services in southern California and San Francisco Bay area have an average occupancy of 60%.

New York represents a bigger test for the German startup, which is backed by General Atlantic LLC, Silver Lake Capital Management LLC and Holtzbrinck Ventures Adviser GmbH. In addition to Greyhound, travellers can choose from regional bus companies, train lines and low-cost airlines.

"The West Coast was about testing a hypothesis," said Schwaemmlein. "Now we want to go pedal to the metal toward number two, and hopefully number one someday."

After an initial US launch earlier this year connecting California college campuses with destinations like Las Vegas and Disneyland, the Munich-based company will start routes to the Big Apple and Texas in 2019.

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