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Austria to bolster ties with Qatar

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Monday 28 November 2016

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Qatar's GDP expected to grow by 3.9%: MinisterMohammad Shoeb The Peninsula

The Qatari economy will continue to remain vibrant due to its strong macroeco-nomic fundamentals.

Despite lower oil & gas prices, and global economic downturn, the economy grew by 3.3 per-cent in 2015, faster than the global everage of 3.3 percent.

This became possible as a result of the overall expansion of the non-monetary economy,and Qatar’s GDP is expected to grow by 3.9 percent this year,said the Minister of Economy and Commerce, Sheikh

Ahmed bin Jassim bin Moham-med Al Thani, in his opening address at an international con-ference on ‘Economic C o m p e t i t i v e n e s s ’ h e r e yesterday.

Addressing at the 16th edi-tion of the annual conference titled: ‘Competitiveness: Oppor-tunities and Challenges Facing the Arab States in the Next Dec-ade’, organized by Arab Administrative Development Organization (ARADO), a League of Arab States entity, in collabo-ration with the Ministry of Economy and Commerce, the Minister noted that Qatar’s has emerged as one of the most com-petitive economies in the world

which has helped strengthening its macroeconomic indicators.

The government, as part of its long-term strategy, has been

focusing to improve several key pillars for achieving the objective of a diversified and sustainable society. As a result the economy has performed exceptionally well over the last few years in several global studies measuring the ease of doing business and competi-tive environment, legal system and access to finance.

“In 2015, despite global eco-nomic challenges and falling energy prices, Qatar registered a GDP growth of 3.7 percent, exceeding the global average of 3.3 percent. Our macroeconomic fundamen-tals are strong, therefore, we are expecting the economy would grow by 3.9 percent in the current fiscal year,” said the Minister.

Sheikh Ahmed also expressed confidence that the two-day conference will be a platform to exchange views and constructive dialogue on the reality of economic competitive-ness in the Arab countries and means of its development.

The Minister reiterated that the progress in competitiveness indicators is an important evi-dence of the country’s economic power, stressing that the strength of the economy and its sustain-ability stems from its ability to compete with other economies.Sheikh Ahmed also called for paying special attention to com-petitiveness at the economic policy level .

HE Sheikh Ahmed bin Jassim bin Mohammed Al Thani, Minister of Economy an Commerce speaking at the openinging session of the 16th Annual Conference on 'Competitiveness: Opportunities and Challenges Facing the Arab States in the Next Decade', which kicked-off here yesterday . Pic Baher Amin/The Peninsula

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22 MONDAY 28 NOVEMBER 2016 BUSINESS

Austria to bolster ties with QatarThe Peninsula

Austria is looking to further bolster its ties with Qatar. After wit-nessing a jump in Austria’s exports to

Qatar in 2015, the country wants to attract Qatari investments.

Talking to Dar Al Sharq Group’s Lusail Daily, Dr Willy Kempel , Austria’s first Resident Ambassador to Qatar said Aus-trian exports to Qatar have doubled in 2015 and a large vari-ety of Austrian activities and products can be found in Qatar. Austrian companies are actively present in the construction and infrastructure areas, including in the Green Metro Line and the Al Wakra Stadium. Visible Aus-trian products include the Airport People Transporter, fire-brigade vehicles, energy drinks and many more. Austrians are involved in diverse activities in Qatar such as restaurant and

hotel management, sport man-agement, arts such as musicians and film-makers, corporate social responsibility, event man-agement, Halal produces and many more, he said.

Austrian company PORR is in the lead of the construction consortium and thus heavily engaged in completing the works in time. If I am not mistaken the street level should be reached by the end of November this year

and I am invited back to witness progress on the ground. I have also visited a site near Al Rayan Stadium housing workers and I was positively impressed by the range of services offered to them. Services and standards regard-ing hygiene, communications, water, food and housing in gen-eral seem more than satisfactory. Visits to other camps and instal-lations will follow also together with Ambassadors of European Union Member States.

A growing number of Aus-trian companies are engaged in lightening works and other infra-structure activities such as clean water management. As men-tioned an Austrian company has provided the People Transporter at the Doha Airport. “Thus I am very happy to see Austrian activ-ities and brands everywhere in Qatar. Looking at this personal engagement of Austrians and Austrian companies here in Qatar, I express my hope that

more and more Qataris will dis-cover Austria for a place of vacation, investment and dia-logue”, Dr Willy said.

On Austria’s visa regulations, he said Austria has not tightened visa regulations for Qataris, but, Austria has in fact tightened its border controls in order to cope with the large influx of refugees and immigrants. As all other

countries in Europe and beyond, Austria is certainly vigilant about the security issues. In 2015 Aus-tria was faced with a situation of more than 1.2 million refugees and immigrants crossing its bor-ders. The borders were opened for humanitarian reasons. Man-aging the arrival of such a large number of people is a challenge and thus we are undertaking controlling their access and also organizing their stay.

The EU and GCC have a framework of cooperation, con-sultations, meetings and ongoing dialogue. A free trade agreement still has to be finalized. Thus comparing notes, meeting in person and exchanging informa-tion where necessary are important tools for fostering peace and security. On enhanc-ing relations between Austria and Arab countries the Austrian envoy said his country has been always open to strengthening the ties with the Arab region

QNB to sponsor Doha Book FairQNB, the leading financial institution in the Middle East and Africa, has announced its Platinum sponsorship of the 27th Doha International Book Fair organized by the Minis-try of Culture and Sports and Dar Al Kutub and to be held at the Qatar National Convention Center (QNCC) from November 30 until December 10.

QNB’s sponsorship of this important cultural event comes as an important part of its Corporate Social Responsibility (CSR) program and part of the Bank’sefforts to support cultural events both in Qatar and abroad across its international foot-print. The 10-day fair, which is held this year under the theme “Read” and the vision of the Ministry of Culture and Sports will showcase over 100,000 books in Arabic and other foreign languages as well as hosting daily seminars

George Magnus to speak at Euromoney Qatar 2016The Peninsula

George Magnus (pictured), the leading economist and the man credited

with predicting that the US sub-prime crisis would lead to the 2008 recession, will speak at The Euromoney Qatar Confer-ence 2016 in December, as one of the keynote presenters.

In his international keynote, he will examine the global eco-nomic outlook, especially in the aftermath of the Brexit refer-endum and the Trump presidency that will begin early in 2017.

As well as addressing recent events and their potential eco-nomic impact, the keynote presentation will also look at longer-term factors that will shape economic development, such as global debt, the chang-ing position of China, and the long-term demographic chal-lenges caused by an aging population.

Magnus sees this year’s sur-prising political developments in the UK and US as liable to roll-back into Europe, causing a major change in economic policies and in financial markets.

Victoria Behn, Director, Middle East and Africa, Eurom-oney Conferences, said: “One of the major benefits of attend-ing our Euromoney Conferences is the blend of

local intelligence and global insight available, and we’re very excited to welcome George Magnus to speak at our Qatar conference for the first time. His comments will provide valua-ble insight into the international trends likely to impact Qatar, and we will also welcome sen-ior Qatari leaders to provide local perspective.”

George Magnus is an inde-pendent economist and commentator, who is currently an Associate at the China Cen-tre, Oxford University; an external senior adviser to UBS and to other financial institu-tions; and sits on the advisory board of the Montreal-based Bank Credit Analyst. From 1995-2012, Magnus was the Chief Economist, and then Sen-ior Economic Adviser at UBS Investment Bank. He has writ-ten extensively about the global economy.

Masraf Al Rayan opens new branch

The Peninsula

Masraf Al Rayan, a lead-ing bank in Qatar and the region, announced

the official opening of its new branch in Rawdat Ekdeem in Bani Hajar (inside Al- Meera) yesterday.

The new branch will provide all Masraf Al Rayan’s products and services including deposit accounts, personal finance and auto finance in addition to debit and credit cards services, money transfer services and small and medium corporate accounts, in addition to many other innova-tive banking solutions to meet the many needs of its customers.

Hamad Aljamali, AGM of Retail & Private Banking, con-firmed that the new branch opening in this new area, comes

as a deliberate move to get closer to the customers in line with the Bank's strategy and business plan, and to meet the needs of existing as well as future cus-tomers by providing them with innovative products and serv-ices within easy reach and convenience.

Aljamali also stressed that, the Bank’s branch network throughout Qatar is successfully offering Masraf Al Rayan’s prod-ucts and service to a wide range

customers, and also successfully helping placing the Bank in a leading position in terms of innovation and uniqueness of products and services compat-ible with Islamic Sharia law in Qatar and abroad, thereby con-tributing to enhancing business growth and f inancial performance.

Currently, Masraf Al Rayan operates 13 branches in Qatar, including this new branch, supported by a network of 78

ATMs. Like other branches of the Bank, the new branch is operated by highly qualified staff, supported by several innovative technologies, like the intelligent ATM with the feature of cash deposit around the clock for the convenience of customers. Masraf Al Rayan recently announced y a net profit totaled QR1.56bn for the first nine months of 2016, compared to QR1.51bn posted during the same period in 2015.

The Peninsula

KLJ Organic Qatar and Gulf Chlorine have signed an agreement for setting up

of a Calcium Chloride plant in Mesaieed Industrial City under the name United Chemicals W.L.L.

The new proposed plant will produce 60,000 tonnes per year of calcium chloride. Newly formed JV shall also market hydrochloric acid and calcium chloride. Further, JV is also dis-cussing other business synergies.

KLJ Organic Qatar is a JV between Qatar Industrial Man-ufacturing Company (QIMC) (60 percent shareholding) and KLJ Organic Limited, India (40 per-cent shareholding). Located in Mesaieed industrial area, KLJ Organic Qatar will manufacture chlorinated paraffin wax, caus-tic soda prills, hydrochloric acid and sodium hypo chlorite.

Gulf Chlorine WLL is a JV between Oman Chlorine and Al

Mirqab Capital. The plant is located in Mesaieed Industrial City (MIC) situated at a proxim-ity to the world-class export Port terminal. Gulf Chlorine will be producing Chlor-Alkali deriva-tives, employing the latest state-of-the-art membrane technology and Distributed Con-trol system, while catering for the Oil & Gas sector demand.

The agreement was signed by Abdul Rahman A. Al-Ansari the CEO of QIMC & board member of KLJ Qatar and Fouad El Bacha the CEO of Gulf Chlorine. The signing ceremony was also attended by a number of officials from both organisations.

On the occasion, Sheikh AbdulRahman Bin Mohamed bin Jabor Al-Thani, the Chairman of QIMC and KLJ Qatar said “This agreement will go a long way in providing a long-term partnership between us and is a strong sign of the confidence on the strong economy of Qatar. We are focused on playing our

part in the development of this great country and we would like to be one of the recognized players in supporting Qatar’s National Vision 2030”.

Abdul Rahman A. Al-Ansari the CEO of QIMC said “the new JV shall contribute to country’s non-oil sector growth. This collaboration between our two companies will strengthen our relationship and will grow further in the years to come. This project will also positively contribute in our expansion plans which are based on our strategy for development of the industrial sector in Qatar with emphasis on utilizing locally available raw materials, improving ski l ls and employment among the Qataris.” Fouad El Bacha said “this project will open up avenues to the downstream industries and create opportunity for new employment. " New JV shall also jointly study and oversee otherninvestment opportunitynin Qatar.

Masraf Al Rayan officials at the newly-opened branch, yesterday

Strong presence

A growing number of Austrian companies are engaged in infrastructure activities including clean water management.

Austria has been very open to the Arab region in enhancing mutal relations.

Expansion

Masraf Al Rayan currently operates 13 branches in Qatar, supported by a network of 78 ATMs.

The bank recently annoucned a net profit of QR1.56bn.

KLJ Organic & Gulf Chlorine in deal

23MONDAY 28 NOVEMBER 2016 BUSINESS

Growth ahead

In 2015-16, GDP growth in the Euro Area has averaged 1.8 percent, well above post-crisis potential growth which is estimated to be around 1.0 percent.

QNB has forecast oil prices will rise around 22 percent in 2017 on strong demand growth and production cuts particularly in US shale oil.

The Peninsula

Some large Euro Area economies are expected to increase fiscal stim-ulus, which should offset some of the slow-

down and help strengthen growth, said a QNB Economic C o m m e n t a r y r e l e a s e d yesterday.

In 2015-16, GDP growth in the Euro Area has averaged 1.8 percent, well above post-crisis potential growth which is esti-mated to be around 1.0 percent. The strongest tailwinds have been falling oil prices, a weaker euro and accommodative mon-etary policy. However, the winds are now turning and support from these forces is fading, lead-ing to slower expected growth.

We examine the three main tailwinds in turn. First, falling oil prices boosted Euro Area con-sumption in 2015-16 as the region is a net oil importer. Aver-age oil prices fell 46 percent in 2015 and are expected to fall another 16 percent in 2016.

Tokyo

Bloomberg

While Governor Haruhiko Kuroda’s vow to overshoot

the Bank of Japan’s 2 percent inflation target caused a stir among monetary policy watchers in September, it’s yet to have an impact among retailers.

Stores as diverse as supermarket operator Aeon, Mister Donut and Wal-Mart have all announced price cuts since Kuroda’s pledge, under-scoring the weakness in Japanese consumer spending and the difficulty of overcom-ing the “deflationary mindset” that the BOJ set out to eradi-cate. Consumer prices fell for an eighth straight month in October, a government report showed on Friday.

“Companies are just being practical,” said Masamichi Adachi, a senior economist at JPMorgan Chase & Co.

Falling prices and expec-tations for more of the same could also drag on annual wage talks, which start soon. Kuroda said last week that he’s “paying close attention” to these, as weak growth in pay has been hampering efforts to generate inflation. It’s essential for Japanese companies to set salaries based on the premise of 2 percent inflation, he said.

Base salaries, which exclude bonuses and overtime, will rise this year by less than last year, Dai-ichi Life Research Institute forecast in a report this month. This reinforces fru-gality among shoppers and encourages retailers to com-pete by discounting.

Some recent examples:Mister Donut announced

prices cuts for 35 types of donuts and other products, with reductions of 10-30 yen ($0.27). Supermarket opera-tor Aeon Co. began lowering prices of the main private brand products it sells from this month, according to a company spokesperson.

Wal-mart announced it will cut the prices for 556 items it sells at its Seiyu supermarkets, with the larg-est reductions being 34 percent. Muji stores owner Ryohin Keikaku Co is consid-ering reducing prices as part of an overall pricing rethink, according to the company.

Beijing

AFP

Chinese household debt has risen at an “alarming” pace as property values have

soared, analysts say, raising the risk that a real estate downturn could send shockwaves through the world’s second largest economy.

Loose credit and changing habits have rapidly transformed the country’s famously loan-averse consumers into enthusiastic borrowers. Skyrock-eting real estate prices in major Chinese cities in recent years have seen families’ wealth surge.

But at the same time they have fuelled a historic boom in mortgage lending, as buyers race to get on the property ladder, or invest to profit from the phenomenon.

Now the debt owed by households in the world’s sec-ond largest economy has surged from 28 percent of GDP to more than 40 percent in the past five years. “The notion that Chinese people do not like to borrow is clearly outdated,” said Chen Long of Gavekal Dragonomics.

The share of household loans to overall lending hit 67.5 per-cent in the third quarter of 2016, more than twice the share of the year before.

But this surge has raised fears that a sharp drop in property prices would cause many new loans to go bad, causing a dom-ino effect on interest rates, exchange rates and commodity prices that “could turn out to be a global macro event”, ANZ ana-lysts said in a recent note.

While China’s household debt ratio is still lower than advanced countries such as the US (nearly 80 percent of GDP) and Japan (more than 60 per-cent), it has already exceeded that of emerging markets Brazil and India, and if it keeps grow-ing at its current pace will hit 70 percent of GDP in a few years.

The ruling Communist party has set a target of 6.5 to 7 per-cent economic growth for 2017, and the country is on track to hit it thanks to a property frenzy in major cities and a flood of easy credit. But keeping loans flow-ing at such a pace creates such “substantial risks” that it could be a “self-defeating strategy”, Chen said.

China’s total debt — includ-ing housing, financial and government sector debt — hit 168.48 trillion yuan ($25 trillion) at the end of last year, equiva-lent to 249 percent of national GDP, according to estimates by the Chinese Academy of Social Sciences, a top government think

tank. China is seeking to restruc-ture its economy to make the spending power of its nearly 1.4 billion people a key driver for growth, instead of massive gov-ernment investment and cheap exports.

But the transition is proving painful as growth rates sit at 25-year lows and key indicators continue to come in below par, weighing on the global outlook. Authorities “desperate” to keep GDP growth steady have turned to consumers as a source of finance because “many of the sources of capital through the banks and corporations are essentially used up”, Andrew Collier of Orient Capital Research said.

Individuals have turned to pawn shops, peer-to-peer net-works and other informal lenders to borrow cash against assets such as cars, art or hous-ing, he said, to spend it on consumption. Banks are also driving the phenomenon, Andrew Polk of Medley Global Advisors said.

“Banks have been pushing people to buy houses because they need to make loans,” he said, as corporate borrowing has dried up.

Combined with a rise in peer-to-peer lending, with over 550bn yuan borrowed in the

Euro economies may grow on fiscal stimulus: QNB

However, we forecast oil prices will rise around 22 percent in 2017 on strong demand growth and production cuts, particularly in US shale oil, in response to lower prices. As a result, rising oil prices are likely to become a drag on Euro Area growth from

next year. Second, monetary pol-icy was supportive of growth in 2015-16 as the European Central Bank (ECB) cut interest rates and expanded quantitative easing (QE).

However, the ECB may now be running out of firepower: its policy rates are close to their floor with the deposit rate cut to -0.4 percent in March 2016; there

are mounting concerns about the effect of negative interest rates on banks’ profitability; and QE aims to lower long-term bond yields, but they do not have much further to go with the 10-year German Bunds currently yielding 0.2 percent and Italian 10-years yielding 2.0 percent.

Third, a weaker euro in 2015 made Euro Area companies more

competitive, helping to drive up growth.

Not only did the euro depre-ciate significantly against the US dollar in 2015, it also weakened against its trading partners. The real effective exchange rate (REER), which measures the value of the euro against trading partners and also adjusts for inflation differentials, weakened 14.4 percent from March 2014 to April 2015, supporting net exports.

But, the REER has appreci-ated 5.5 percent since then and is, therefore, now part of the Euro Area’s slowing growth story. Although the euro has weakened significantly against the US dollar amidst the finan-cial market frenzy that followed the US election, it has remained broadly neutral against a trade weighted cur-rency basket.

With the Euro Area’s tail-winds fading, the region is likely to become increasingly reliant on fiscal policy to prop up growth. We expect a fiscal

stimulus in 2017 for three main reasons.

First, fiscal space has opened up as the ratio of government debt to GDP in the Euro Area has fallen from a peak of 94.3 per-cent in 2014 to an estimated 91.7 percent in 2016 and is expected to continue falling. Lower inter-est rates and stronger growth have helped reduce the debt burden.

Second, 2017 is a big election year in the Euro Area with pres-idential and parliamentary elections in France and Germany and a general election in the Netherlands.

Governments usually use election year budgets to raise fis-cal stimulus in order improve economic conditions for the electorate and increase chances of re-election.

As a result, we expect growth to come in at around 1.5 percent in the Euro Area in 2017 as the fading tailwinds are only partly offset by a pivot towards more supportive fis-cal policy.

Surging homeowner loans in China raise alarms over debt

People walking past a billboard advertising a new housing complex outside a construction site in Beijing.

third quarter of 2016, the risks of speculative investment have risen, S&P Global Ratings said.

Some analysts argue that China is well positioned to man-age these risks, and has plenty of room to take on more lever-age as families still save twice as much as they borrow, with some 58 trillion yuan in household deposits, according to Oxford Economics.

“From an overall perspec-tive, household debt remains in a safe range,” Li Feng, assistant director of the Survey and Research Center for China

Household Finance in Chengdu, said, adding that risks over the next three to five years were modest.

But Collier said that credit-fuelled spending was a “risky game”, because when capital flows slow, property prices are likely to collapse, particularly in China’s smaller cities. That could lead to defaults among property developers, small banks, and even some townships. “That will be the beginning of a crisis,” he said. “How big this becomes is unclear but it’s going to be a dif-ficult time for China.”

Japan retailers turn deaf ear to Kuroda’s inflation pledge

Moscow

AFP

With its oil output at record levels and state coffers running low, Russia has

little to lose and much to gain from agreeing a deal with the Opec car-tel on limiting production.

Ahead of an Opec meeting set for November 30 in Vienna, Moscow — which is not a mem-ber of the Organization of the Petroleum Exporting Countries — is pushing for an agreement to be finally reached after simi-lar talks in Doha collapsed acrimoniously in the spring.

Russia is one of the biggest oil producers in the world, along with Saudi Arabia and the United States, and has paid dearly for the collapse in prices over two years of recession, exacerbated by Western sanctions over Ukraine.

While Opec plans to reduce production quotas for its

members, President Vladimir Putin (pictured) said last week that Russia was ready to “freeze production at the level it is at currently”. “For us to freeze pro-duction is no effort at all,” Putin said.

Energy Minister Alexander Novak said on Thursday that Opec had asked oil-producing countries that are not members of the cartel to cut production by 500,000 barrels a day.

Russian oil production in recent months has not stopped growing and now exceeds 11 million barrel per day, the highest since the col-lapse of the Soviet Union. The potential for further growth is “lim-ited”, said Emily Stromquist, an analyst at Eurasia Group.

A freeze “requires little to no effort on the part of Russian oil companies” while Russia “would benefit immensely from... any deal, however vague, that can help bump oil prices up a few dollars,” Stromquist said.

The relative rebound in oil prices since winter shows the market is extremely sensitive to any step — even without a con-crete result — taken in conjunction by the exporter countries that up to now have competed for market shares and produced more and more oil.

Russia’s production has grown by around 50 percent since 2000 thanks to the relaunch of Soviet-era oilfields. In recent years this growth has been sustained by new horizontal drilling methods that prolonged the life of certain

oilfields, particularly in western Siberia, as well as by the launch of new projects that were approved when the oil price was higher.

The ruble’s plunge in 2014 has partially offset the effect of the falling oil prices once the sales revenue is converted from dollars into rubles. Despite West-ern sanctions on certain types of technology transfers and busi-ness partnerships, Russian companies have managed to maintain comfortable sales and are drilling actively.

After Russia and Saudi Ara-bia in February began to discuss limiting production, “this factor encouraged companies to work on drilling and producing more”, said Valery Nesterov, an analyst at Sberbank CIB.

Companies want to ensure that “if Russia signs up to a freeze, their obligations will be set at a higher, more comforta-ble level that will not burden oil c o m p a n i e s o r t h e

budget,” Nesterov said. Oil and gas earnings made up half of the government’s budget revenues during the years of high prices.

The fall in prices forced the government to tighten its belt and pushed the budget deficit to almost four percent of GDP this year. It also dangerously drained reserves built up when the price topped $100 per barrel.

The 2017 budget, which is now being debated by lawmak-ers, includes new spending cuts on education and even defence. The Communists have con-demned it as “anti-social” while business circles criticised it as derailing hopes for an economic recovery next year. The draft budget was based on a barrel costing $40 and each extra dol-lar in the oil price will represent 130bn roubles of budget reve-nues ($2bn), said Natalia Orlova, an economist at Alfa banking group. In recent days, oil has come close to $50 per barrel on

Russia poised to gain from oil output freeze

24 MONDAY 28 NOVEMBER 2016 BUSINESS

Economic crisis

Greek markets have rallied this month on expectations creditors may finally ease the country’s debt at a December 5 meeting of euro-area finance ministers.

The country’s economy has contracted by about a quarter since the start of the global financial crisis in 2008.

Mumbai

IANS

The Indian rupee is expected to remain under pressure in the coming week due to

heightened chances of a US rate, along with massive flight of foreign funds from the capital markets.

Besides, political bickering over the demonetisation drive and a stalemate on the contours of the Goods and Services Tax (GST) framework might lead to further erosion in the rupee's value. "The rupee is expected to remain under pressure over the next week," Anindya Banerjee, Associate Vice President for Currency Derivatives with Kotak Securities, said.

"The rally in US bond yields are expected to continue further, which means the dollar would gain more ground against an emerging market (EM) currency like the rupee."

Banerjee predicted the rupee would touch 68.80-69 levels during the short-term.

"Technically, the trend is upward for USD/INR as long as the pair holds above 68.00 levels on spot," Banerjee said.

"Indian equity markets can face further selling pressure, but Indian bonds would continue to stay resilient on the back of demand from banks."

According to Hiren Sharma, Senior Vice President and Head-Forex Advisory at Anand Rathi Financial Services, upcoming events like the OPEC (Organisation of the Petroleum Exporting Countries) meet, Italy's referendum and the FOMC (Federal Open Market Committee) meeting will have a major impact on the rupee's movement.

"The level of 68.85 is too important to break which RBI (Reserve Bank of India) is defending, and a comeback level for the rupee will be a support break of 68.25/67.75. So a broader range of 68.25 to 69.10 seems to be a likely range for next week," Sharma said.

On last Thursday, the Indian

rupee plunged to its new intra-day record low of 68.86 to a US dollar. On a weekly basis, the rupee depreciated by 33 paise to 68.47 against a US dollar from last week's close of 68.14.

"Last week, the rupee tracked other EM currencies which fell against the US dollar. Strong US data and FOMC minutes had strengthened the rate hike scenario in December," Sharma explained.

"The off-loading of debt and equity by FPIs (foreign portfolio investors) has also been a major reason for the decline in rupee. But, the RBI has entered to sell US dollars at key levels and its involvement will perhaps limit a deeper decline in the rupee."

Experts blamed the massive decline in the rupee's value on the interest rate differential between India and the US.

Currently, India's interest rates are higher than that of the US. A surge in rupee liquidity and some US dollar shortage last week had pushed the forward premium below the levels

warranted by the rate differentials.

A similar collapse in forward premia had occurred during 2011 and 2013. During both those years, rupee had depreciated against the dollar.

Another key reason has been the FPI pull-out from the Indian equities and bond markets.

In terms of investments, provisional figures from the stock exchanges showed a massive outflow of Rs 5,409.82 crore in foreign funds during the just-concluded week. Figures from the National Securities Depository (NSDL) disclosed that FPIs were net sellers of equities worth Rs 5,22.12 crore, or $865.72 million from November 21-25.

Since November 8, when the government demonetised high denomination currency notes and the surprise victory of Republican Donald Trump in the US Presidential election, the Indian equity markets have seen foreign fund outflows worth Rs 15,952.69 crore

(November 9-25). "FPIs are least interested to chase long bonds at these yields and they are not showing much enthusiasm on the equity front too. All in all, rupee is drifting lower, only countered by spirited intervention from the central bank, which is using exchange traded derivatives and inter-bank market to sell US dollar," Banerjee added.

As per Devendra Nevgi, Chief Executive of Zyfin Advisors, the rupee's weakness could trigger a negative sentiment for foreign investors.

"The INR weakness though will benefit some of the sectors but could be negative for general sentiment of foreign investors. The yuan's weakness is also adding fuel to the fire of INR weakness," Nevgi said.

"The fall in bond yeilds too will narrow down the rate difference in US and Indian yeilds which is likely to keep INR on the weaker side, though RBI continues to intervene in FX markets."

Athens

Bloomberg

The time has come for the International Monetary Fund to make up its mind on Greece, according to the coun-

try’s economy minister.The path to recovery runs

sequentially through completion of Greece’s bailout review, debt relief and then admission to the European Central Bank’s quan-titative easing program, said Dimitri Papadimitriou (pic-tured), an economist who joined the government this month after a career championing alterna-tives to the macroeconomics espoused by the IMF. Now, the Washington-based fund must decide whether the Greek recov-ery will happen with or without it, he said in an interview.

“The IMF has changed its opinion many times,” said Papadimitriou, 70, who spent almost five decades in the US, where he is on leave from his post as president of Bard Col-lege’s Levy Economics Institute. “It’s very hard to know whether

Greek minister flays IMF indecision on bailout

in fact they want to be in or they want to be out. I think they do want in, and we want them to be in.”

Greek markets have rallied this month on expectations cred-itors may finally ease the country’s debt at a December 5 meeting of euro-area finance ministers. For the International

Monetary Fund to stay on board — a key demand of countries such as Germany and the Neth-erlands—such a deal must assuage the fund’s doubts about the viability of Greece’s medium-term fiscal targets. The country’s economy has contracted by about a quarter since the start of the global financial crisis in 2008.

Officials representing Greece’s European creditor insti-tutions and the IMF left Athens on Tuesday without concluding the country’s bailout review. Greek government spokesman Dimitris Tzanakopoulos implied

that the IMF was setting obsta-cles to completing the bailout review. The government and the IMF remain apart on labor mar-kets, which the fund wants to liberalize further while the gov-ernment wants to restore some collective bargaining.

“We are standing firm because at the end, those reforms don’t really account for any growth,” said Papadimitriou, arguing that the IMF’s insistence on them has become a matter of dogma for the fund. “If you look at the projections that they have made, they have always been wrong. And we’re talking about being really wrong. However, if you have followed this procedure for so many countries, it is very hard to change it.”

Dutch Finance Minister Jer-oen Dijsselbloem, who chairs the Eurogroup of euro-area finance ministers, told Bloomberg on Thursday that officials repre-senting the European creditor institutions and IMF have made much progress in talks with Ath-ens, but that further reforms are being looked at in labor markets and privatization. The Eurogroup

has additional debt-easing meas-ures ready “if needed” for when the Greek program comes to an end in 2018, he said.

“At the end there’s always an agreement,” Papadimitriou said in the interview on Thurs-day. “It’s not an agreement that everybody likes, but I think it’s an agreement which each party can live with, given their own particular needs.” At Bard Col-lege, Papadimitriou turned the Levy Institute into an intellec-tual refuge for economists from the heterodox, post-Keynesian school of thought, such as Wynne Godley, who predicted the euro crisis in 1992, and Hyman Min-sky, known for his financial instability hypothesis.

Papadimitriou helped those ideas gain traction after the financial crisis rocked the ortho-doxy in macroeconomics, according Stephen Kinsella, an economics lecturer at the Uni-versity of Limerick. Used copies of Minsky’s 1986 book, “Stabiliz-ing an Unstable Economy,” would sell for more than $300 on Amazon before Papadimitriou got it back in print.

“He’s a great example of an intellectual entrepreneur,” said Kinsella. “He’s the kind of guy who can get things done and put groups of smart people together, and a lot of people do credit him with giving much more currency to Minksy’s ideas than they would have had otherwise.”

Papadimitriou said Prime Minister Alexis Tsipras brought him into the government to map out a strategy for the country to achieve “sustainable and inclu-sive growth.” That means growth which doesn’t increase inequal-ity, and it also means creating a business-friendly environment, something that Papadimitriou says the left-wing Syriza govern-ment is doing despite its reputation to the contrary.

“I’m not a member of the party and therefore I can say ‘pro-business’ without having to worry or apologize for it,” he said. “Everyone recognizes that investment is the most impor-tant issue, given the fact that we are in the euro zone and we can not do anything else but to respect the rules of the eurozone and the European Union.”

Foreign fund outflows to mount pressure on Indian rupee

New Delhi/Mumbai Reuters

The Reserve Bank of India (RBI) on Saturday unex-pectedly ordered banks

to deposit their extra cash with it, in a bid to absorb excess liquidity generated by a government ban on larger banknotes.

Many Indians deposited their old notes with their banks after the ban on 500 and 1,000 rupee notes on November 8, which is aimed at tax evaders and counter-feiting. Banks had put some of this cash into government bonds, sparking a rally that saw the benchmark 10-year bond yield fall more than 50 basis points to its lowest in more than 7-1/2 years.

The central bank said banks would need to transfer 100 percent of their cash under the RBI's cash reserve ratio from deposits generated between September 16 and November 11, saying it was a temporary measure that would be reviewed on or before December 9.

Traders called it a drastic move intended to dent the rally in bond markets, adding that the RBI could have opted for more modest measures such as sucking out some of the liquidity through sales of market stabilisation bonds or telling banks to park funds under reverse repos.

The action could also tem-per market expectations that the central bank would cut interest rates by 25 basis points at its next policy review sched-uled for December 7, after already easing them by the same amount at its last review in October. "The move is more of a ham-handed one than the finesse expected from the RBI," said Shaktie Shukla, founder of boutique investment advisory firm Kaithora Capital.

"The liquidity sweep will definitely halt the down move in (bond) yields," he added. "It will also temper the euphoria pre- RBI policy." The move is likely to drain over Rs3.24 tril-lion from the banks, according to Reuters estimates. Traders said bond market yields could rise 8-10 bps today , given that the RBI move would deprive the key source of funding seen in the past two weeks.

San Francisco

Reuters

Wall Street expects con-sumers to open their wallets a little wider

this holiday shopping season but bargains among red-hot retail stocks could be hard to find, especially as profit growth proves elusive for many big names.

Retailers, including Best Buy, Kohls Corp and Macy's, that were pummelled in last year's disap-pointing holiday quarter have seen their shares surge recently on expectations that the worst is over, and that an improved econ-omy will send more shoppers into their stores.

Those gains in recent days have helped push the S&P 500 to a record high. With US con-sumers bolstered by wage gains and higher employment, holiday sales will grow 3.6 percent, National Retail Federation pre-dicts. Last year's growth was a modest 3.2 percent, short of the federation's 3.7-percent growth forecast.

But some investors believe a healthy holiday shopping sea-son and higher sales are already

built into share prices, with some surging in the past few weeks. In November alone, shares of Best Buy and Macy's have each jumped more than 20 percent, while Kohls' stock is having its best month in more than 16 years with a 25 percent rise.

"We do not necessarily expect these sales gains to trans-late into outperformance for the consumer sectors, but we sus-pect they may be good enough to not spook markets," wrote LPL Financial Chief Investment Officer Burt White in a recent research note.

Not helping matters for stores, mall crowds were rela-tively thin on Friday in an underwhelming start to the hol-iday shopping season.

A selection of 15 large retail-ers that are big Black Friday players, including traditional brick-and-mortar chains and online heavyweight Amazon, averaged a total return of 12 per-cent this year, including dividends, according to Thom-son Reuters data. Best Buy's stock has jumped 55 percent in 2016 and Macy's surged 26 percent.

Expectations that tax cuts under President-elect Donald

Trump could leave consumers with more disposable income have also fuelled gains in the retail sector, with the SPDR S&P Retail exchange traded fund ral-lying 10 percent in November.

Since the election, that fund has been a big outperformer, outpacing most other industry-tracking funds with a 12.2-percent gain. The wider S&P 500 is up just over 3 percent in the same period.

That's made it more difficult to find bargains, said Telsey Advisory Group analyst Joseph Feldman. He recommends Home Depot, which is benefiting from a resilient housing market, and Dick's Sporting Goods, which stands to gain market share fol-lowing the recent bankruptcy of rival Sports Authority.

Macy's, Nordstrom and other mall retailers have suffered heavily in recent years due to relentless competition from Amazon.com, a trend expected to continue even as retailers refine their own online sales strategies. A consumer shift away from expensive apparel and toward vacations, home improvement and electronics has also crippled many retailers.

Retail stock rally leaves few bargains for investors on Wall Street

RBI takes action to soak up liquidity

Traders work on the floor of the New York Stock Exchange.

25MONDAY 28 NOVEMBER 2016 BUSINESS

QATAR STOCK EXCHANGE

26 MONDAY 28 NOVEMBER 2016 BUSINESS

QE Index 9,734.18 0.20 %

QE Total Return Index 15,749.25 0.20 %

QE Al Rayan Islamic Index 3,583.15 0.00 %

QE All Share Index 2,684.54 0.05 %

QE All Share Banks & 2,738.53 0.20 %

Financial Services

QE All Share Industrials 3,029.13 0.40 %

QE All Share Transportation 2,386.63 0.08 %

QE All Share Real Estate 2,135.07 0.92 %

QE All Share Insurance 4,199.29 1.12 %

QE All Share Telecoms 1,094.49 0.39 %

QE All Share Consumer 5,549.2 0.64 %

Goods & Services

QE INDICES SUMMARY QE MARKET SUMMARY COMPARISON WORLD STOCK INDICES

GOLD AND SILVER

27-11-2016 Index 9,714.93

Change 19.25

% 0.20

YTD% 6.67

Volume 4,925,879

Value (QAR) 139,809,245.32

Trades 1,688

Up 16 | Down 17 | Unchanged 724-11-2016 ndex 9,734.18

Change 23.84

% 0.24

YTD% 6.85

Volume 4,344,309

Value (QAR) 152,486,799.77

Trades 2,586

GOLD QR142.2913 per grammeSILVER QR1.9559 per gramme

Index Day’s Close Pt Chg % Chg Year High Year LowAll Ordinaries 5549.89 69.291 1.26 5691.8 4762.1

Cac 40 Index/D 4524.68 -23.67 -0.52 4607.69 3892.46

Dj Indu Average 19023.87 67.18 0.35 19043.9 15450.6

Hang Seng Inde/D 22676.69 -1.38 -0.01 24364 18278.8

Iseq Overall/D 6233.61 -40.61 -0.65 6791.68 5286.65

Karachi 100 In/D 42901.02 269.44 0.63 43084.67 29785

Nikkei 225 Ind/D 18162.94 56.92 0.31 18951.12 14864.01

S&P 500 Index/D 2202.94 4.76 0.22 2204.8 1810.1

EXCHANGE RATECurrency Buying SellingUS$ QR 3.6305 QR 3.6500

UK QR 4.4855 QR 4.5479

Euro QR 3.8491 QR 3.9038

CA$ QR 2.6848 QR 2.7377

Swiss Fr QR 3.5863 QR 3.6362

Yen QR 0.0325 QR 0.0331

Aus$ QR 2.6801 QR 2.7335

Ind Re QR 0.0526 QR 0.0537

Pak Re QR 0.0344 QR 0.0351

Peso QR 0.0723 QR 0.0738

SL Re QR 0.0243 QR 0.0249

Taka QR 0.0454 QR 0.0465

Nep Re QR 0.0329 QR 0.0335

SA Rand QR 0.2551 QR 0.2603

Cairo/Abu Dhabi

Reuters

Huddled in the Radisson Blu hotel on the outskirts of Cairo last week, some

of Egypt’s top wheat traders talked damage control: They had lost more than $1bn since the country floated its currency and now they wanted to be bailed out.

Egypt took markets by sur-prise on November 3 when it abandoned its peg to the US dol-lar in a move aimed at attracting capital inflows and ending a cur-rency black market that had all-but displaced the banks.

The flotation helped the cash-strapped government clinch a $12bn IMF loan pro-gramme it hopes will revive growth hampered by political uncertainty since a 2011 upris-ing ended Hosni Mubarak’s 30-year rule.

But it also created huge losses for some importers of sta-ples like wheat and medicine who opened credit lines when the pound was pegged but did not settle before the float. The pound has halved in value against the dollar since Novem-ber 3, to trade at about 17.60 to the dollar on Thursday.

Importers of essential goods like wheat - Egypt is the world’s biggest wheat importer - and medicine were on a priority list

that gave them access to scarce dollars at the official rate before the float. Alaa Ezz, (pictured) secretary-general of the Feder-ation of Egyptian Chambers of Commerce, estimates that these critical industries now owe $6-7bn as a result of foreign exchange losses.

“The banks in the past few months were not making foreign currency available except for strategic commodities, so this is the majority of the backlog,” he said. Pharmaceutical companies said the losses and frozen credit lines had exacerbated a grow-ing shortage of medicines since the sudden plunge in the pound’s value rendered price-control-led medicines unprofitable to make or import.

“This is a very big problem

and is being looked at as it does not only involve food products,” said a source at the company that organised the crisis meet-ing of wheat traders.

Representatives of about 50 grains companies that attended last week’s meeting at the Radis-son said they were drafting a letter to Prime Minister Sherif Ismail, a plea to help cover losses they say are tied to dollar requests they made months before the float but that were held up by banks. “We have to ask high to see what they will do,” said Hesham Soliman, pres-ident of Med Star for Trading, which made losses due to the flotation. Soliman did not attend the crisis meeting but is in close contact with traders who did.

“This should be solved before Dec. 31 because the banks have to do their balance sheets... they have to decide how they record this on the balance sheet and they are running out of time.” Facing dwindling foreign reserves and a gaping trade def-icit, Egypt had rationed its dollar supplies in the past few years. As banks prioritised essential goods, importers of non-essen-tial items were forced to resort to the black market for dollars, where they paid much higher rates.

Many importers of essentials had executed deals on credit in the months before the float,

receiving shipments while dol-lar transactions were in process at banks at the old official rate.

This exposed them to risks in the event of a currency deval-uation. But many were willing to shoulder the risks, believing the central bank would provide dollars to cover import backlogs if it adjusted the exchange rate, just as it did when it last deval-ued the pound in March.

When the central bank announced it was liberalising the exchange rate altogether, how-ever, it auctioned just $100m at about 14 to the dollar. The multi-billion-dollar injection many expected has yet to materialise. The central bank did not respond to requests for comment. Bank-ing sources confirmed that some importers were facing major for-eign exchange losses but declined to give details. Import-ers said that some banks had frozen their credit lines until the backlogs were covered, creat-ing a cashflow crisis.

Some traders are still hold-ing out hope of a central bank dollar injection at a rate between the old peg of 8.8 pounds to the dollar and the new market price, to cover some of their losses.

Ezz said this was unlikely at a time of sweeping government austerity, including tax increases and subsidy cuts, though his trade group was pushing for banks to unfreeze credit lines.

Egypt's traders suffer losses after currency floatGulf bourses edge up as emerging markets rise Dubai

Reuters

Gulf stock markets edged up in quiet trade yester-day, encouraged by

strength in emerging markets generally, but Egypt’s index reversed the trend higher it had enjoyed since the float of the Egyptian pound three weeks ago.

The Saudi stock index rose 0.7 percent to 6,844 points, though it stopped short of technical resist-ance on its April peak of 6,876 points, which it had tested and failed to break on Thursday. Trad-ing volume fell sharply. The petrochemical index underper-formed, edging down 0.1 percent, after oil prices fell sharply at the end of last week. Saudi Kayan fell back 1.8 percent.

But Alawwal Bank jumped 1.6 percent after changing its name to Alawwal from Saudi Hollandi Bank in a rebranding exercise that coincides with Royal Bank of Scotland seeking a buyer for its 40 percent stake.

Much activity focused on sec-ond- and third-tier stocks favoured by local retail

speculators, such as Saudi Fish-eries , which surged 3.9 percent.

In Dubai, the index climbed 0.4 percent on the back of an 11.4 percent leap to 0.93 dirham by Union Properties, the most active stock, in its heaviest trade since June 2015. It rose above this year’s previous high of 0.91 dirham, which had been hit in March.

Abu Dhabi’s index gained 0.6 percent, aided by a 2.0 per-cent rise in telecommunications blue chip Etisalat. Qatar’s index edged up 0.2 percent on the back of a 2.4 percent surge by Barwa Real Estate.

The Egyptian index dropped 1.8 percent to 11,146 points, con-firming a bearish engulfing pattern on the daily candlestick chart - a classic technical sign of the reversal of an uptrend.

The pull-back suggested the market’s dramatic bounce in response to the Nov. 3 currency float, which boosted the index by as much as 37 percent to last week’s peak, might now be ending as investors took prof-its and focused on Egypt’s still-difficult economic environment.