Middle East Business Telegraph Monitor – April 9

Middle East Business Telegraph Monitor – April 9

The top business/economic stories from the MENA region as reported in the regional press – April 9

Oil/OPEC+ – “Top oil producers meeting later Thursday intend to cut production by between 10 and 15 million barrels per day, Kuwait’s Oil Minister Khaled al-Fadhel reportedly said. The talks between OPEC and other major producers come as oil languishes at near-two decade lows, with Russia and Saudi Arabia’s price war compounding slack demand caused by the coronavirus pandemic,” Arabian Business reports.

Lebanon/Debt – “Lebanon requires net external financing of $10 billion-$15 billion over the next five years to help it through its financial crisis, according to a draft government plan seen by Reuters. The draft plan, which is being discussed by the cabinet, marks the most comprehensive blueprint yet on tackling the crisis. In it, the plan is described as a “good basis” in case of negotiations with the IMF,” Reuters/Al-Bawaba reports.

Saudi/PIF – “Saudi Arabia’s sovereign wealth fund has built up stakes in European oil firms, including about $200 million in Equinor ASA, as the kingdom navigates the coronavirus pandemic and plummeting crude prices. The Public Investment Fund amassed shares in Norway’s largest producer mostly through the open market last week. But it’s unclear exactly when the fund bought the holding or if it’s still buying.,” Bloomberg/Gulf News reports.

UAE/NMC – “The executive chairman of NMC Health, Faisal Belhoul, called for the administration process of the UAE’s biggest healthcare company to be conducted in an expedited manner with the goal of stabilising the company. NMC Health was placed into administration at a High Court ruling in London on Thursday following an application from Abu Dhabi Commercial Bank, the company’s biggest creditor which is owed $981m (Dh3.6bn) from the company. Joint administrators from Alvarez & Marsal were appointed to handle the company’s affairs,” The National reports.

Egypt/Reserves – “The Central Bank of Egypt (CBE) said that it has used US$5.4 billion from its foreign currency reserves during March due to the coronavirus crisis. The funds went to partially cover foreign portfolio investment outflows through the CBE’s foreign exchange repatriation mechanism, to accommodate for the domestic market’s foreign currency needs to import strategic goods, and for the repayment of external debt service obligations,” Egypt Independent reports.

Iran/Aviation – “Iranian airlines are estimated to have sustained 30,000 billion rials ($187 million) in losses by April 3, as coronavirus has halted flights within the country and abroad. Secretary of the Association of Iranian Airlines Maqsoud Asadi-Samani also said three airlines have grounded their entire fleet, Fars News Agency reported,” Financial Tribune reports.

Iraq/Politics – “Iraq’s president named intelligence chief Mustafa al-Kadhimi as prime minister-designate on Thursday, the third person tapped to lead the country in just 10 weeks as it struggles to replace a government that fell last year after months of deadly protests. Kadhimi was nominated by President Barham Salih, state television reported, shortly after the previous designated prime minister, Adnan al-Zurfi, announced he was withdrawing having failed to secure enough support to pass a government. Iraq, exhausted by decades of sanctions, war and political corruption now faces economic ruin, social unrest and a growing outbreak of the new coronavirus, all of which it must face with only a caretaker cabinet,” Baghdad Post reports.

Turkey/Growth – “The World Bank has projected Turkey’s economy to expand by 0.5% this year, 3 percentage points lower than the pre-coronavirus estimate. The uptick in the country’s gross domestic product (GDP) is expected to be supported by “strong” government stimulus, the bank said in its Spring 2020 Economic Update for Europe and Central Asia late Wednesday,” Daily Sabah reports.

Morocco – “The European Investment Bank Group announced its financial support for the private sector in Morocco, notably through its credit lines with Moroccan financial institutions amounting to €440 million. The loan is intended to assist Morocco in addressing the impact of Covid-19 on the economy,” Morocco World News reports.

Tunisia/Covid-19 – “Tunisia’s parliament on Saturday ceded some powers to the North African country’s government for two months to help it handle the coronavirus crisis and the expected economic fallout, reported Reuters. The decision, backed by all political parties, will allow Prime Minister Elyes Fakhfakh’s government to issue decrees, strike purchasing agreements and seek finance without consulting parliament. Tunisia has 495 confirmed cases of the coronavirus, including 18 deaths, and has imposed a national lockdown until April 19 to slow its spread,” Middle East Monitor/Reuters reports.

Africa Commercial Telegraph Weekly – April 8

Africa Commercial Telegraph Weekly – April 8

Top business stories from Sub-Saharan Africa from the pages of the regional press – April 8

Nigeria/Shell – “International oil major, Royal Dutch Shell, and its subsidiaries paid the Federal Government of Nigeria over $5.6 billion which, at the exchange rate of N307/$1, comes to N1.7 trillion, the company disclosed in its sustainability report for 2019. This amount, which represents about 20 percent of the 2019 budget, comprises payments for fees, royalties, production entitlements and taxes. It is also the highest payment to any government in the 28 countries Shell disclosed,” Business Day reports.

Nigeria/IMF – “Nigeria’s Finance Minister disclosed yesterday that the country will seek as much as $3.4 billion from the IMF to shore up its finances at a time the coronavirus pandemic is taking a toll on economies globally, especially oil producers,” Business Day reports.

Ethiopia/Liberia – “Ethiopia, Africa’s second most populous nation, and Liberia declared states of emergency on Wednesday to help curb the spread of the new coronavirus, a day after cases on the continent surged past 10,000,” Reuters reports.

Ethiopia – “The desert locust, which has been damaging crops in some east African countries, is now moving from Somali to Ethiopia to hit the country once gain. ‘Currently hopper bands and a new generation of immature swarms are forming in the Oromia and Southern Nations, Nationalities, and Peoples’ (SNNP) regions, including the Rift Valley – the nation’s breadbasket. Desert locusts are currently active in 161 woredas (districts), down from 172 in February 2020,’ stated desert locust situation report of FAO for the month of April 2020,” New Business Ethiopia reports

S. Africa/Eskom – “Debt-stricken power company Eskom told investors it does not need to approach the government for more support, even as a Covid-19-related national shutdown slashes revenue. The company needs to raise R89bn this year and R56bn of that will come from an existing state bailout, CEO Andre de Ruyter and CFO Calib Cassim said on the call, according to investors who listened to it,” South Africa’s Business Day reports.

Ghana Economy – “As the coronavirus pandemic bites countries around the globe by grinding trade and other productive activities to a halt, Ghana’s economy is expected to experience its slowest growth in about four decades – making it the worst year since the historic 1983 economic retrogression,” Business and Financial Times reports.

Zambia/Glencore – “The Zambian government yesterday said mining giant Glencore’s move to shut its copper mines will not go ahead. The government says the company has declared ‘force majeure’ to shut its copper mines, which if allowed to go ahead, would leave at least 11 000 people jobless. Mines minister Richard Musukwa said the government would block this move,” The Namibian reports.

E. Africa/Logistics – “The logistics sector is reeling from the coronavirus pandemic as 31 countries in Africa have imposed full border closures, with the others allowing only cargo and basic goods into their countries. In East Africa, transporters are experiencing increased delays in ferrying cargo from the port of Mombasa due to delays in clearing after Customs officials, Kenya Ports Authority and Kenya Trade Network Agency (KenTrade)—the only state agencies mandated to facilitate cross-border movement of goods—reduced their workforce as a precautionary measure against contracting the virus,” The East African reports.

Kenya/Safaricom – “Peter Ndegwa has started his tenure as Safaricom chief executive officer with a vote of confidence from investors after the company’s stock gained 1.7 per cent on his first day in office. A day after the telco closed its financial year that ends on March 31, Mr Ndegwa heads a company that is the heartbeat of trading at the Nairobi Securities Exchange (NSE) and which must keep re-inventing to maintain its position as East Africa’s most profitable company,” The East African reports.

Liberia/Gas – “The Capital Vessel carrying 10MT ( 3,500,000 gals) of gasoline berth at the LPRC jetty Saturday, in what is seen as a major step toward easing consumers worries about an apparent gasoline shortage in Liberia. Mrs. Marie Urey-Coleman, Managing Director of the Liberia Petroleum Refining Company(LPRC) told FrontPageAfrica Saturday that additional vessels are scheduled to berth tomorrow and mid next week,” FrontPage Africa reports.

Middle East Business Telegraph Monitor – April 8

Middle East Business Telegraph Monitor – April 8

Leading business stories from the MENA region from the pages of the regional press

Oil/OPEC+ – “Oil producers will find it challenging to reach an agreement at a virtual meeting of Opec+ producers as deeper cuts for oil-revenue dependent economies could come at a high economic cost, analysts say. The Opec+ alliance headed by Saudi Arabia and Russia is set to meet on Thursday after US President Donald Trump lobbied them to consider cutting back 10 to 15 million barrels per day of output,” The National reports.

Saudi Arabia/Covid-19 – “Saudi Arabia’s health minister on Tuesday warned of a huge spike in coronavirus cases of up to 200,000 within weeks, state media reported. The warning comes a day after the kingdom extended the duration of daily curfews in multiple cities, including the capital Riyadh, to 24 hours in a bid to limit the spread of the deadly virus,” Arabian Business reports.

Private Equity/Tim Horton’s – “Dubai-based private equity firm Gateway Partners has acquired a 40 percent stake in the Gulf franchise of coffee and breakfast chain Tim Hortons, two sources familiar with the matter told Reuters. Gateway Partners, which is led by former Standard Chartered banker Viswanathan Shankar, paid about $50 million for the holding, the sources, who declined to be named, said,” Reuters/Arab News reports.

Iran/Equities – “The benchmark Tehran Stock Exchange index managed to break above its all-time highs just before the Iranian fiscal year ended March 19. The annual total return reached a whopping 187%, registering the highest annual growth in the exchange’s existence. Interestingly, the equal-weighted index, the barometer applied to measure the performance of micro-size listed companies, rocketed up during the same period by 437%. This all occurred at the same time that the activity of firms faced macroeconomic risks due to major setbacks facing the overall Iranian economy,” Al-Monitor reports.

Iran/IMF Loan – “President Hassan Rouhani pressed harder on Wednesday for a $5 billion emergency IMF loan Iranhas sought to fight the Middle East’s worst coronavirus outbreak, saying the Fund would be guilty of discrimination if it withholds the money. Rouhani also said some businesses will remain closed until further notice, after the authorities announced last week that they will begin to ease a shut-down order from April 11,” The Baghdad Post/Reuters reports.

Morocco/IMF – “Morocco is about to tap into a $3 billion precautionary liquidity line, offered by the IMF in 2018 to help the country face external shocks, Moroccan media reported,” The North Africa Post reports.

Kuwait – “Credit rating agency Fitch has affirmed Kuwait’s long-term foreign-currency Issuer Default Rating (IDR) at ‘AA’ with a stable outlook. ‘Kuwait’s key credit strengths are its exceptionally strong fiscal and external balance sheets. These are increasingly offset by Kuwait’s institutional paralysis and slow pace in addressing growing public finance challenges stemming from heavy oil dependence,’ it said in its report. Fitch estimated the foreign assets of the Kuwait Investment Authority (KIA) at around $529 billion at the end of the fiscal year ending March 2020 (FY19/20), accounting for the bulk of Kuwait’s sovereign net foreign asset position of 472% of GDP which is the highest of any Fitch-rated sovereign,” Al-Bawaba reports.

Egypt/Reserves – “Egypt’s net international reserves (NIR) dropped to $40,108 billion as of end of March, down from $45,510 billion at the end of February, according to Central Bank of Egypt (CBE) data released late Tuesday. The CBE attributed to decline to the unprecedented blow to global financial markets arising from the COVID-19 pandemic, which caused the sharpest portfolio flow reversal on record from emerging markets, including the Egyptian market,” ahramonline reports.

UAE/NMC – “NMC Health getting placed in administration by a UK court order would be the ‘worst-case scenario’ for the company’s future, according to the hospital operator’s Executive Chairman,” Gulf News reports.

Middle East Business Telegraph Monitor – April 7

Middle East Business Telegraph Monitor – April 7

MENA Business Telegraph Monitor – April 7

Oil/Jobs – “The jobs and livelihoods of some 300 million people are at risk in the current crisis in the global oil business, according to Fatih Birol, executive director of the International Energy Agency (IEA). Speaking exclusively to Arab News, Birol said the oil industry is going through ‘perhaps the worst time in its history, and this could have major implications for the global economy, financial markets, and even more for employment,'” Arab News reports.

Qatar/Gas – “Qatar Petroleum (QP) will postpone the start of production from its new gas facilities until 2025 following a delay in the bidding process, Minister of State for Energy Affairs H E Eng. Saad bin Sherida Al Kaabi, the President and CEO of QP, said. In an interview with Reuters, HE Al Kaabi underlined that Qatar Petroleum is pressing ahead with foreign as well as domestic expansion despite the global market turmoil caused by the coronavirus pandemic,” The Peninsula reports.

Egypt/Infrastructure – “North Sinai Governor Mohamed Shousha announced on Tuesday that construction of the largest desalination plant in Africa and the Middle East has started. The capacity of the first phase is 100,000 cubic meters daily, and that of the second and third phases is 300,000 cubic meters per day,” Egypt Today reports.

Dubai/Covid-19 – “The closure of all commercial activities in Dubai will continue until the end of the national disinfection programme on April 18, it was announced today. In a tweet, Dubai Economy said that exempted sectors will operate as usual,” Al Bawaba reports.

UAE/Taqa – “The board of Abu Dhabi National Energy Company (Taqa) gave the nod to a sale and purchase agreement for its asset swap deal with Abu Dhabi Power Corporation (ADPower) that will create a regional utilities champion. Taqa’s board also approved the issuance of a mandatory convertible bond to ADPower for the planned deal, it said in a statement to the Abu Dhabi Securities Exchange, where its shares trade. The energy firm has also recommended its shareholders to approve the deal at the annual general assembly due to be held on April 29,” The National reports.

UAE/Emaar – “Emaar chairman Mohamed Alabbar has hit back at claims that Emaar has suspended work on all major projects due to Covid-19, describing them as ‘nonsense being peddled by people in the media who have no sense.’ It follows a report by Reuters earlier today that Emaar had suspended work on all major projects including Dubai Creek Harbour due to the spread of the Covid-19 virus.Speaking to Arabian Business, Alabbar said: ‘This is not even speculation or rumour, it is total lies and nonsense. And I am astonished that in this time, when the whole world is on lockdown, people can come up with this kind of thing to damage us. I won’t allow it. Let’s be clear. There is no virus on any of our sites. There are no cases of Covid-19. None of our sites have stopped operating,'” Arabian Business reports.

Israel/Reserves – “Israel’s foreign exchange reserves at the end of March 2020 stood at $126.043 billion, down $5.215 billion from their record level at the end of February, the Bank of Israel reports. The reserves represent 31.9% of GDP, down from 33.2% at the end of February,” Globes reports

Lebanon/Wheat – “Lebanon’s government is considering importing wheat for the first time since 2014, weighing its dwindling supply of dollars against concerns that the coronavirus may threaten the nation’s food security. The Economy Ministry is studying a possible purchase of 80,000 tons of the grain, it said, without specifying the timing. A tender seeking offers from suppliers would require the cabinet’s approval,” Bloomberg/Daily Star of Lebanon report.


Charlie Lay: Demand Shocks and the Death of the Bull Market

Charlie Lay: Demand Shocks and the Death of the Bull Market

I recently met Charlie Lay in November of 2019 at the CommerzBank Emerging Markets Macro Conference held in Dubai. Charlie is a Singapore-based senior economist and FX strategist at CommerzBank, one of Germany’s largest banks and its biggest player in trade finance globally (and that’s saying a lot given Germany’s export machine). As Charlie took the stage, a fellow attendee nudged me and said: “you’ll like this guy.” He was right.

Charlie regaled the attendees with a sharp and humorous presentation on China, broader Asia, and the global economy peppered with pop culture references from music and the movies. Beyond the laughs, it was obvious that Charlie knew Asian markets and their intersection with the global economy very well. I gave Charlie a call in Singapore on March 21 to talk through this Covid-19 moment, and trade thoughts on what it all means for Asia, world markets and the broader global economy (and we had an email exchange with minor updates on April 6). Here are some excerpts of his thoughts, edited for brevity.

Supply Shocks vs Demand Shocks

Let’s go back to 2018 – the start of the trade war. That was the beginning of the supply shock which caused people to rethink the global supply chain. Firms began to think: maybe it’s not such a wise idea to put all the production in one location. We saw a glimpse of this in 2011 with Fukushima, but that earthquake did not cause supply disruptions in the US. Rather, flooding in Thailand did. For example, Honda reduced production in the US and Europe because of a shortage of parts from Thailand. So, back then, we had a supply side shock.

Now, with coronavirus, we are seeing a huge demand side shock. In the last 12 months, the world has been in a manufacturing recession. We saw early signs of this in the US while the services sector was still holding up well. Employment growth in the US has been good. We’ve seen 2.2 million jobs per year since the financial crisis, since 2010. Now, we have a demand side shock that exactly hits the services sector. So, the very leg that has been holding up the US economy is in trouble. Financial markets are pricing in the risk of a full blown financial sector shock. That’s why you see a rush to dollars. There is a big scare now in the financial sector that there will be a shortage of dollars. The credit market is seizing up. There is no liquidity. Gold is being sold off. Bonds are being sold off. The world’s deepest and largest market, the Treasury market, has been swinging 50 basis points (we spoke on March 21, 2020).

In the bond market, you cannot find a bid. Fed restarted QE again. This is QE5. QE4 was the Repo market last September. The Fed is trying to desperately avoid a financial sector shock.

“The 11 year bull market is finally dead.”

Now, let’s go back 12 years. The Fed pumped liquidity into the system and there was a massive rally in financial assets. The rich got richer. Hence, the big theme about income inequality that accelerated and the rise of populism. So, in terms of markets: Is Covid 19 the last straw that broke the camel’s back? Are all of the excesses in the market coming to the fore? We have seen a huge build-up in credit and financial assets. Prices were overvalued. Bull markets can stay overvalued for some time, so they need something to recalibrate. Bull markets die from recessions or Federal Reserve interest rate hikes or geopolitical shocks. This time, it’s undone by a health crisis. The 11 year bull market is finally dead.

Main Street will get hit harder. The corporate sector will be hit, and SMEs will be hit most. What we are seeing now is a supply side shock, a demand shock, andthe Fed is desperately trying to avert a full blown financial crisis. However, there is also a health crisis hitting the economy. People are likely to be reluctant to go out and spend even when the all clear comes.

The Legacies and Scars of Covid-19

Every crisis leaves legacies and scars. In the case of Civid-19, the obvious scars are the human tragedy. What about markets? Let’s go back to the 2008 crisis. What happened?, Well, regulation on banks increased and banks pose less of a systemic risk now. For banks, their ability to leverage was restricted. Banks are basically not an issue going into this crisis. They are well-capitalized and not as levered because they are not allowed to do so.

What are the market/economic scars and legacies that will result from this crisis? First, I think we will see a continuation of the rethink of global supply chains. We will see more onshoring and near shoring. This may lead to higher costs of production and higher prices for the consumer. Second, perhaps governments will spend more on research and development, especially in the field of infectious diseases. Third, governments will spend more on healthcare. There will be many more legacies of this global pandemic when it’s all over.

China Economy and Fall-Out

Q1 growth will most likely be negative and even if we get a sharp rebound in the second half, we are unlikely to see more than 4% growth for the full year. The risks are clearly to the downside given that global demand is also hit. China’s major trading partners will in turn be hurt. Unlike 2008, China doesn’t have the luxury of a big bazooka stimulus. It will provide support, of course, by way of lower rates, cuts in RRR (reserve requirement ratios), speed-up infrastructure projects and the like, but it is likely to tread more cautiously this time, cognizant of containing leverage in the system.

Middle East Business Telegraph Monitor – April 4-6

Middle East Business Telegraph Monitor – April 4-6

Middle East Business Telegraph Monitor – April 4-6

A round-up of business stories from the regional press

Iran/Business – “Iran plans to scale back restrictive measures adopted to minimize exposure to the novel coronavirus in business outlets under its new initiative dubbed Smart Distancing. As per the plan, low-risk businesses are scheduled to resume activities starting April 11 in all provinces, except Tehran that can follow suit on April 18, President.ir reported. High-risk workplaces, including swimming pools, sports centers or any place of gathering, will remain closed until further notice,” Financial Tribune reports.

Oil Price – “Gulf states backed Saudi Arabia’s proposal for an emergency Opec+ meeting that could include the US, the world’s largest producer, for the first time as oil prices continued to fall. The UAE, Opec’s third-largest producer, said it fully backed Riyadh’s calls for a meeting of the producers, which was tentatively set for Thursday,” The National reports.

Algeria/Oil – “Algeria, which chairs the presidency of the OPEC Conference, urged Sunday oil producing countries to seize the opportunity of the meeting scheduled on 9 April in order to agree on “an global, massive and immediate” production cut,” Algeria Press Service reports.

Dubai/Emirates – “Emirates airline is in talks to raise billions of dollars in loans, on top of Dubai’s state bailout for the world’s largest long-haul airline carrier, as the coronavirus pandemic grounds flights. The carrier is reaching out to local and international banks about the funding that will be in addition to the undisclosed amount of financial aid from the government, according to people with knowledge of the matter, who asked not to be identified because the information is private,” Bloomberg/Arabian Business reports.

Iraq/Halliburton Attacked – At least three rockets are reported to have hit near Halliburton‘s site in the Burjesia area of Basra early on Monday morning. It is understood that the incident caused no casualties or damage. It is the first attack to target US energy interests in Iraq in recent months,” Iraq Business News reports.

Saudi Arabia/Carnival Cruise – “The Public Investment Fund, Saudi Arabia’s sovereign-wealth fund, recently purchased a large stake in the embattled cruise lineCarnival. Public Investment disclosed that it owns 43.5 million Carnival shares (ticker: CCL) as of Monday in a form filed with the Securities and Exchange Commission. The fund’s investment amounts to an 8.2% stake in the cruise line. It is now Carnival’s third-largest shareholder, according to S&P Capital IQ,” Barron’s reports.

UAE Economy – “The Central Bank of the United Arab Emirates (CBUAE) said on Sunday it has doubled to $70 billion a stimulus package to support the Gulf state’s economy amid the coronavirus pandemic. ‘The aggregate value of all capital and liquidity measures adopted by the CBUAE since 14 March 2020 has reached 256 billion dirhams ($70 billion),’ the central bank said in a statement,” AFP/Jordan Times reports.

GCC Banks – “The GCC conventional and Islamic banks will see significantly reduced revenue and credit growth in 2020 mainly due to the sharp decline in oil prices, accelerated real-estate price corrections in some markets and drop in vital nonoil economic sectors, said a report. The sharp drop in oil prices and measures implemented by regional governments to contain transmission of the coronavirus (Covid-19) will take a toll on important sectors such as real estate, hospitality, and consumer-related, stated S&P Global Ratings in its report,” Gulf Daily News reports.

Turkey/Hazelnuts – “Turkey, the world’s biggest hazelnut supplier, yielded revenues of $1.65 billion from the nuts exports between September 2019 and this March, according to a regional trade group on April 2. The Black Sea Hazelnut and Products Exporters’ Association data showed that the seven months figure jumped 52 percent from the same period last year,” Hurriyet Daily News reports.

Egypt – “A number of Egyptian businessmen have submitted to the finance ministry several proposals on how to lessen the negative impact of the coronavirus outbreak on the economy, Finance Minister Mohamed Maait said. Maait said in a statement on Monday that the proposals are under consideration, adding that some of these proposals would require legislative amendments, and so the ministry will submit them to the Prime Minister Mustafa Madbouly,” AhramOnline reports.

New Books in Our Humble Reading Room

New Books in Our Humble Reading Room

New Silk Road Monitor Memo

To: The good people of our humble Caravanserai

Re: Library Update

Dear Fellow Travelers,

On this day of 5 April, in the Gregorian Calendar of the Year 2020, we are enriched by the addition of seven new books to our humble, unworthy library. These luminaries bring light to our shelves.

The Wine of Wisdom: The Life, Poetry and Philosophy of Omar Khayyam, by Mehdi Aminrazavi

Syria’s Uprising and the Fracturing of the Levant, by Emile Hokayem

Indonesia, Etc: Exploring the Improbable Nation, by Elizabeth Pisani

The Dawn of Eurasia, by Bruno Macaes

Super Continent: The Logic of Eurasian Integration, by Kent Calder

A Modern Contagion: Imperialism and Public Health in Iran’s Age of Cholera, by Amir Afkhami

China’s Western Horizon: Beijing and the New Geopolitics of Eurasia, by Daniel Markey

Zahra’s Paradise, by Amir and Khalil


East Asia Business Telegraph Weekly – April 5

East Asia Business Telegraph Weekly – April 5

A weekly round-up of leading business/economic stories shaping East Asia from the pages of the regional press

CHINA/Finance – “Alibaba affiliate Ant Financial has launched an asset management service in collaboration with US-based asset management firm Vanguard Group to meet investment demands from retail consumers. The service was officially rolled out yesterday through Ant Financial’s smartphone financial service application Alipay, which has some 900 million users,” Shanghai Daily reports

CHINA/Equities – “Luckin Coffee Inc’s shares crashed more than 75 percent after the company revealed an internal investigation that alleged its COO was involved in 2.2 billion yuan ($310 million) in fabricated transactions over the past year. he company, a so-called rival to Starbucks Corp in China, said on April 2 the internal probe revealed the aggregate sales amount associated with the fabricated transactions from the second quarter of 2019 to the fourth quarter of 2019 amounted to around 2.2 billion yuan,” China Daily reports.

REGIONAL/ADB Report – “Regional economic growth in developing Asia will decline sharply in 2020 due to the effects of the novel coronavirus (COVID-19) pandemic, before recovering in 2021, according to the Asian Development Outlook 2020, the Asian Development Bank’s (ADB) annual flagship economic publication. Excluding Asia’s high-income newly industrialized economies, growth will drop from 5.7% to 2.4% this year before recovering to 6.7% next year, says ADB. Nine Asian economies that rely on tourism and commodities are likely to shrink, the ADB said, and the hardest hit would be Thailand,” Thailand Business News reports.

REGIONAL – “The World Bank is estimating that the coronavirus outbreak will cause economic growth to slow significantly this year in China and other East Asian-Pacific countries, throwing millions into poverty. Under a worse-case scenario, the region could suffer its sharpest downturn since a devastating currency crisis more than two decades ago, the bank said in an updated forecast,” Japan Today reports.

S. KOREA/Korean Air – “Korean Air Lines issued a desperate plea for government support Thursday, arguing shared interest and alluding to economic catastrophe if no direct funding is provided. ‘The airline industry is a basic industry that supports a country’s fundamental,’ the company said in a statement. ‘Considering that Korea relies highly on imports and exports, Korean industries could collapse if the airline industry falls,'” Korea JoongAng Daily reports.

HONG KONG/HSBC – “HSBC chief executive Noel Quinn sent a letter to each of the bank’s shareholders in Hong Kong on Friday to explain the lender’s decision to cancel its dividend this week and reassure investors of its strong capital position. The unusual step of writing directly to the bank’s shareholder base in the city came after a torrid three-day stretch that saw about US$15 billion shaved off the company’s market capitalisation after the bank cancelled its final interim dividend for 2019 and said it would not pay a dividend for at least the first three quarters of the year,” South China Morning Post reports.

JAPANA/ANA – “Japanese airline group ANA Holdings Inc. has asked the government-affiliated Development Bank of Japan and private financial institutions to set up credit lines totaling ¥1.3 trillion, it was learned late Friday. With its revenue from passenger flight services tumbling due to a plunge in demand blamed on the coronavirus pandemic, the company aims to make sure that it can secure loans whenever a need arises through the credit lines as the fight against the new virus could take time, according to sources familiar with the matter,” Japan Times reports.

INDONESIA – “Indonesia’s response to contain the COVID-19 outbreak has been slower compared with some other countries in the region despite policies to limit the economic and financial shock being introduced in a relatively coordinated manner, a credit rating agency has said. ‘Indonesia’s response to contain the coronavirus outbreak has lagged some other countries in the region. But its policies to limit the related economic and financial shock have been introduced in a relatively coordinated manner,’ Moody’s Investor Service wrote in a research note published on Friday,” The Jakarta Post reports.

SINGAPORE – “Manufacturing in Singapore fell to its lowest level since 2009 last month. With factories trying to limit their losses from a recession caused by the coronavirus pandemic, a spike in job cuts is a real risk. The Singapore Purchasing Managers’ Index (PMI) declined 3.3 points to 45.4 in March, said the Singapore Institute of Purchasing and Materials Management (SIPMM). It was the second contraction in a row and the lowest reading since February 2009 when the index was at 45 points, SIPMM said in a statement on Friday (April 3),” Singapore Straits Times reports.

THAILAND – “The Thai economy is forecast to shrink by 4.8% by Asian Development Bank (ADB), 5.6% by Siam Commercial Bank’s Economic Intelligence Center (EIC) and 5% by Standard Chartered Bank (Thai), heading for its deepest contraction since the financial meltdown of 1998. ADB predicts GDP to contract by 4.8% in 2020 before recovering to 2.5% in 2021, the bank said in a recent report,” The Bangkok Post reports.

MALAYSIA/Palm Oil – “Malaysia’s palm oil inventories for March likely slipped below February’s end-stocks to 1.65 million tonnes, as better than expected exports offset a small rise in output likely disrupted by the coronavirus pandemic, a Reuters survey showed. March stockpiles likely fell 1.9% from the previous month, its lowest since June 2017, according to the median estimate of nine planters, traders and analysts polled by Reuters,” Reuters/Edge Markets reports.

PHILIPPINES – “The Asian Development Bank (ADB) downgraded its growth forecast for the Philippine economy this year because of the effects of the coronavirus disease 2019 (Covid-19) pandemic on the country. ‘Economic growth is projected to fall to 2 percent in 2020 before a strong recovery to 6.5 percent in 2021, assuming the Covid-19 outbreak is contained by June of this year,’ the Manila-based multilateral lender said in its Asian Development Outlook 2020 report on Friday,” Manila Times reports.

VIETNAM –  Market research firm Fitch Solutions estimates Vietnam’s GDP will grow at its lowest paces in 34 years at 2.8% this year. The growth rate forecast by Fitch Solutions, a unit of credit rating firm Fitch Group, is the lowest since 1986 when the country opened its economy to the world after decades of war,” VNExpress reports.

Middle East Business Telegraph Monitor – April 3

Middle East Business Telegraph Monitor – April 3

Middle East and North Africa Top Business Stories – April 3

Oil Markets – “The OPEC+ coalition is rushing to pull together a meeting of its members – and possibly other oil producing nations – after President Donald Trump called for a coordinated production cut to stem the historic rout in crude prices,” Bloomberg/Gulf News reports.

Aviation – “The International Air Transport Association (Iata) urged governments to “act faster” to provide financial relief for airlines in the Middle East and Africa, as their collective passenger revenue losses increase to $23 billion (Dh84.48bn) due to the Covid-19 outbreak,” The National reports.

Egypt/Aviation – “Egypt’s airline industry faces a potential loss in revenue of $1.6 billion and 9.5 million fewer passengers due to the coronavirus crisis, the International Air Transport Association (IATA) said,” Ahram Online reports.

Kuwait/Agility – “Kuwait’s Agility, one of the biggest Middle East logistics companies, is taking measures to cut costs and preserve cash as the novel coronavirus pandemic slashes global air freight demand and capacity,” The National reports.

Aviation/Emirates – “Emirates has announced that the airline has received approvals to carry passengers on certain flights, which will start from April 6. The initial flights will commence from Dubai to London Heathrow, Frankfurt, Paris, Brussels and Zurich, with four flights a week to London Heathrow, and three flights a week to the other cities, the airline said,” Gulf Daily News reports.

Libya/Central Bank – “The Head of the Libyan Presidential Council Fayez Al-Sarraj has called on the administration of the Central Bank of Libya (CBL) to attend an emergency meeting to take necessary and urging measures to unite the CBL,” Libya Observer reports.

UAE/Mubadala – “The venture capital arm of Abu Dhabi state investor Mubadala plans to launch a healthcare fund next year to tap into increased demand for investment in life sciences and digital health technology following the coronavirus outbreak,” Reuters/Al-Arabiya Business reports.

Morocco – “‘Give us our money,’ demands a group of home buyers, standing on land that should by now be finished condos — one of many fictitious projects that together comprise what is described as Morocco’s biggest-ever property scam,” AFP/Arab News reports.

Iraq/Coronavirus –  “Iraq has thousands of confirmed COVID-19 cases, many times more than the 772 it is has publicly reported, according to three doctors closely involved in the testing process, a health ministry official and a senior political official,” The Baghdad Post reports.

Iran/Coronavirus – “Iran’s death toll from the new coronavirus rose on Friday to 3,294 as it claimed 134 lives in the past 24 hours, according to Health Ministry Spokesman Kianoush Jahanpur,” Reuters reports.

Egypt/Suez Canal – “Traffic in Egypt’s Suez Canal has not been affected so far by the spread of the new coronavirus, the chief of its authority, Osama Rabie, said on Wednesday,” Albawaba reports.

Qatar – “Qatar, the world’s biggest exporter of liquefied natural gas, hired banks to raise more than $5 billion in bonds as early as next week to shore up its finances against the global coronavirus pandemic and oil-price war,” Bloomberg/Daily Star of Lebanon reports.


Whither Belt and Road Amid the Covid-19 Pandemic?

Whither Belt and Road Amid the Covid-19 Pandemic?

Nikkei Asian Review has a good piece on the fate of China’s Belt and Road Initiative (BRI) amid the global Covid-19 pandemic.

Some excerpts from the piece below:

Some think a weakened China will have little choice but to step back and reassess its foreign investments in the post-pandemic world. But a Belt and Road 2.0 could also present new opportunities to wield influence — especially in Southeast Asia — as the European Union and other investors nurse their own wounds…



Even before the virus panic, the Chinese economy grew just 6.1% last year, the slowest pace in decades. The effects showed up in its investment figures: Foreign direct investment declined by 9.8% from 2018, with nonfinancial outbound direct investment falling 8.2%, according to the Ministry of Commerce.


A closer look, however, shows that while investment in Europe and North America plunged, China’s outlays in Asian countries — particularly Southeast Asia — fell only slightly or even increased. This suggests the region could remain a priority even if Beijing cuts back other investments further.


“The BRI will not end here. It is too important to Xi’s image,” said Jeremy Garlick, assistant professor of international relations at the University of Economics in Prague. “But it may be transformed and streamlined … as the economy contracts.”


The days when China seemingly threw money at everything may be ending, but it still has Xi’s reputation to protect. Overseas projects also remain critical for supporting Chinese corporate earnings and employment while gaining global clout.

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