BUSINESSBUSINESSMonday 30 October 2017

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Turkey’s Q3 growth

seen at 9.6%

Capitalisation key to lift Gulf banks ratings: S&P

Dow & Brent before going to press

Ooredoo Group’s 9-month revenue at QR24bnThe Peninsula

The telecom giant Oore-doo’s nine-month revenue stood at QR 24.5bn, driven by strong contributions

from Indonesia, Oman, Kuwait, Iraq, and the Maldives. Exclud-ing Foreign Exchange translation impact, revenues would have increased by 2 per-cent compared to the reported 1 percent revenue increase.

Group EBITDA is stable at QR10.5bn with an increase in EBITDA margin now at 43 per-cent, indicating an improvement in operational performance from 9M 2016 (42 percent). Excluding Foreign Exchange translation impact, Group EBITDA would have increased by 4 percent year-on-year.

Group net profit to Ooredoo shareholders decreased by 15 percent to QR1.6bn. Excluding foreign exchange impact, net profit attributable to Ooredoo shareholders would have decreased by 8 percent.

Additional government lev-ies in Oman, challenging market conditions in Qatar and unfa-vourable foreign exchanges rates in Tunisia impacted the Group net profit. Net profit at

9M 2016 benefitted from signif-icant Foreign Exchange gains of QR200m in 2016. However, these temporary gains were reversed in Q4 2016.

Strong data growth from consumer and enterprise cus-tomers: data revenue increased to 45 percent of Group revenue. Revenue from data contributed QR11.1bn in 9M 2017.

Customer base reached a milestone of 150 million, repre-senting an increase of 13 percent driven by strong growth in Indonesia,Iraq, Algeria,Tunisia, Oman,Qatar and the Maldives.

Ooredoo continues to be a data leader in its markets with 4G networks now available in 8 of Ooredoo’s 10 markets.

Ooredoo has completed the de-listing process of Ooredoo GDR (Global Depositary Receipt) from the London Stock Exchange, effective from August 31,2017. The primary reason for the delisting is the fact that international investors can now easily trade Ooredoo securities on the Qatar Stock Exchange.

Ooredoo Maldives com-pleted the listing of its shares on the Maldives Stock Exchange on 9 August, 2017. Selling approx-imately 10 percent of the company shares resulted in IPO

proceeds of MVR 421mn (QR100m), making the Ooredoo Maldives IPO the most success-ful listing in the country.

Commenting on the results, Sheikh Abdulla bin Mohammed bin Saud Al Thani, Chairman of Ooredoo, said: “Ooredoo Group reported good results for the nine months of 2017, with growth in Revenues, EBITDA and customer numbers.”

“We are delighted and very excited to have launched our services in Gaza in October 2017, as part of our efforts to become the leading integrated ICT pro-vider in Palestine. We have worked tirelessly for a long time to launch our servicesin Gaza, and now we have succeeded. We maintain our leadership position and commitment to connecting and developing the citizens of emerging economies where we operate and are very proud to be making good

progress in this area,” he added.

Sheikh Saud bin Nasser Al Thani, Group Chief Executive Officer of Ooredoo said: “Our financial performance has been stable over the course of the past nine months, with a group Rev-enue of QR24bn and a Group net profit attributable to sharehold-ers of QR1.6bnn. Our strategy to optimize efficiencies across our operations resulted in a 3 per-cent growth in Group EBITDA to QR10.5bn, and an improved Group EBITDA Margin of 43 per-cent at 9M 2017.

“We delivered good cus-tomer growth across the board,

with increases in our customer base in Indonesia and most other markets.

“In our home market in Qatar we continued to grow our customer base and data reve-nues. In our biggest international operation in Indonesia, we reported positive Revenue and EBITDA as a result of growth in customers and the benefits of our cost efficiencyprogramme. Ooredoo Kuwait and Ooredoo Oman reported higher revenues. Asiacellgained more business in liberated areas, enhancing its market leading position. Oore-doo Algeria’s financial results demonstrated an improved

operational performance, while Ooredoo Tunisia grew the busi-ness in local currency terms. Ooredoo Myanmar reported its third consecutive quarter of pos-itive EBITDA.”

Ooredoo Qatar continued to maintain clear market leader-ship through 9M 2017, with customer numbers increasing by 3 percent year-on-year, reach-ing 3.5 million. Revenue decreased by 2 percent to QR5.9bn and EBITDA stood at QR3.0bn, 3 percent below 9M 2016.

Revenue was impacted by lower revenue from mobile voice services and mega projects, and a drop in roaming revenue during the Eid holiday month. This was partially offset by increased revenue from Ooredoo TV digital entertain-ment services. Ooredoo Qatar’s Fibre rollout programme passed more than 500,000 homes and has now connected more than 347,000 homes.

The company participated in a number of initiatives designed to show solidarity with the country’s people and lead-ership during the period, further reinforcing its strong connec-tion with the communities of Qatar.

Tunisian firms to set up food processing units in QatarMohammad ShoebThe Peninsula

Several Tunisian companies are in the process of estab-lishing food processing

units in Qatar. Some of them have even signed agreements with local partners to form joint ventures in this regard.

This was revealed yesterday by a senior official of Qatar Chamber (QC), the country’s largest private industry repre-sentative body, which hosted a B2B meeting of Qatari business-men with the visiting Tunisian trade delegation.

Government authorities and business leaders from Qatar and Tunisia have been working closely to expanding and deep-ening bilateral cooperation for several years but the pace of growth have accelerated over the last few months, especially after the abrupt imposition of siege against Qatar imposed by Saudi-led Arab quartet.

“Tunisian companies have signed some agreements with local partners to establish some food producing facilities in Qatar. At the same time they are also studying and exploring investment opportunities in some other promising sectors of

the Qatari economy,” said Mohammed bin Ahmed bin Towar Al Kuwari, Vice-Chair-man of QC.

Al Kuwari added: “Tunisian side have many things to add. For instance they have expertise in management and other fields, which can add value to the local market.”

He noted that Tunisian side is very serious in expanding cooperation with Qatar. “We have received several trade del-egations before this from Tunisia, which is evident about the level of cooperation.”

He also said that Qatari com-panies, both from the public and private sector, have many big investments in many sectors, which include hospitality and tourism. And Tunisia can be a gateway to North Africa and Europe for Qatari exports and re-exports.

“The Qatari-Tunisian trade relations have witnessed a remarkable development in recent years and the private sec-tor of the two countries is keen to increase trade exchange and strengthen partnerships between the two sides”, said Al Kuwari.

The Vice-Chairman of QC stressed that the Chamber is

keen to enhance communication with the business community in sisterly Tunisia. He called on business owners in both coun-tries to identify the investment opportunities available in the sectors that characterise the Qatari and Tunisian sides.

The volume of bilateral trade exchange reached QR146m last year, but both sides admit that it remains below the desired level. Qatari investments in Tunisia exceeded QR4bn by the end of

2015, including direct invest-ments in five basic projects, which provide more than 120,000 jobs and represent 13 percent of the total foreign direct investment in Tunisia, accord-ing to available data.

The visiting trade delegation from Tunisia, representing a number of stakeholders in the development of investment and business in the North African country, with the broad partici-pation of Qatari businessmen.

Abdelmoneim Toukabari, Director of the Agency for the Promotion of Agricultural Investments and head of the Tunisian delegation at the meet-ing, said that Doha is considered an important destination for Tunisian investments and that the visit follows the participa-tion in the international exhibition of food and consumer industries.

Sheikh Abdulla bin Mohammed bin Saud Al Thani (left), Chairman of Ooredoo; and Sheikh Saud bin Nasser Al Thani, Group Chief Executive Officer of Ooredoo.

Abdelmoneim Toukabari (second left), Director of the Agency for the Promotion of Agricultural Investments, Tunisia, holding a memento presented to him by Mohammed bin Ahmed bin Towar Al Kuwari (sixth right), Vice-Chairman of QC along with other QC officials and members of the Turkish delegation, at QC headquarters, yesterday. Pic: Kammutty VP / The Peninsula

Data leader

Ooredoo continues to be a data leader in its markets with 4G networks now available in 8 of Ooredoo’s 10 markets.

→ Continued on page 22

QFC warns; ‘Alraya’ not part of QFCQFC Regulatory Authority yes-terday warned investors and consumers about a purported investment fund claiming to operate in Qatar.

The Regulatory Authority strongly advised people to avoid any dealings with a pur-ported Financial Services Company located in Qatar called “Alraya”, and any per-son connected with the company. On its website, Alraya makes two false claims: that it is authorised by the QFC Regulatory Authority and that it was licensed by the Qatar Financial Centre Authority in 2007. Alraya is not part of the QFC and is not regulated by the QFC Regulatory Authority. This means customers of Alraya are not protected by QFC customer protection legislation.

“This company has made false claims about being authorised and licensed to con-duct financial services in the Qatar Financial Centre. These misrepresentations are a clear warning sign that the company should be avoided”, said the QFC Regulatory Authority CEO, Michael Ryan.

$53.90 $53.90 +0.02+0.02

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8,134.46+6.21 PTS

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0.25%DOWQE FTSE100

22 MONDAY 30 OCTOBER 2017BUSINESS

People watch the last planes of Fokker before departure to England, at Schiphol Airport, Amsterdam, in Netherlands yesterday. KLM, the Dutch flag carrier, is preparing to bid a fond farewell to its last Fokker aircraft, marking the final chapter in a partnership that has lasted 97 years. Fokkers own demise came in 1996 when the company formally went bankrupt. KLM is replacing the type with modern Embraer 175 jets.

Farewell to Fokker aircrafts

QIB to sponsor information security conference for financial institutionsThe Peninsula

Qatar Islamic Bank (QIB), Qatar’s leading Islamic Bank, will sponsor the 4th

Annual Conference for Informa-tion Security in Financial Institutions (ISFS).

The conference, which is held under the patronage of HE Sheikh Abdullah bin Nasser bin Khalifa Al Thani, Prime Minis-ter and Minister of Interior, is organised by the Qatar Central Bank (QCB) and will take place on November 5 and 6, 2017 at Sheraton Grand Doha Resort and Convention Hotel .

The conference, being held this year under the title “Cyber-hacking and its Impact on the Economy”, will host keynote speakers including HE Jassim bin Saif Al Sulaiti, Minister of Transport and Communication; Lord Stevens, Former Metropol-itan Police Commissioner – UK, and Daniel L Glaser, Principal at the Financial Integrity Net-work, among many other prominent figures in the field.

It will be attended by key decision makers from the finan-cial sector and leading information security profession-als and researchers.

QIB’s sponsorship is part of its commitment to support Qatar’s economy, the country’s financial sector and the devel-opment of a strong information security field. QIB is a leader in information security concern-ing payment systems and processes, adding 3D secure

technology to safeguard online purchases made using a Debit or Credit card.

Additionally, QIB imple-mented an Anti-Skimming Protection Solution that reduces the risk against thieves obtain-ing customer credit or debit card information. The bank has suc-cessfully implemented a full-fledged customized mobile device management (MDM) solution to facilitate a highly secured connection of critical staff to QIB.

Also, QIB’s critical incident response capabilities has signif-icantly improved after establishing a strategic partner-ship with a leading Cyber Forensic organization.

“We firmly believe that the ISFS conference is driving the conversation towards the right direction by focusing on signif-icant information security issues and solutions within the finan-cial industry.... Through the interaction of governmental bodies, information security specialists, academics and bank-ers, it is an educational forum addressing the latest cyberse-curity challenges and their impact on the world’s econo-mies,” said Bassel Gamal, Group CEO at QIB.

“QIB believes in the impor-tance of educating both its employees and customers about the information security threats and how to avoid them. Last year, QIB launched a 16-mod-ule mandatory information security training programme for all its employees campaigned with testing of effectiveness of the training. At the same time, ongoing authorised phishing campaigns are running to assess the readiness of the staff and training programs are tailored based on the results along with ongoing awareness advisories, alerts and newsletters.

“We are committed to gen-erate awareness about online safety, data security and digital privacy to build cyber-literate people of all ages in Qatar,” con-tinued, Gamal.

“As we provide more dig-ital services for the convenience of our customers, cybersecurity becomes of paramount impor-tance,” he added.

Capitalisation key to lift Gulf banks ratings: S&PThe Peninsula

Capitalisation contin-ues to be a positive rating factor for banks in the Gulf Cooperation Council

countries, S&P Global Ratings said yesterday.

After completing S&P’s lat-est tally of GCC banks’ risk-adjusted capital (RAC) ratios, based on their year-end 2016 financial disclosures and our own parameters as of Octo-ber. 16, 2017, the ratings agency calculate an unweighted aver-age ratio of 11.5 percent for the Gulf banks. Looking ahead, S&P expects their RAC ratios to remain relatively stable in the next 12-24 months.

“This result underpins our strong or very strong assess-ments of capital and earnings for 72 percent of the Gulf banks we rate,” said S&P Global Rat-ings credit analyst Mohamed Damak in the report published yesterday, “Capitalization At Gulf Banks Is One Of The Main S t r e n g t h s S u p p o r t i n g

Their Ratings.” Their quality of capital remains strong, even though we have observed higher recourse to hybrid instruments over the past few years.”

At year-end 2016, eligible hybrid instruments represented on average 9 percent of the banks’ total adjusted capital, TAC, S&P’s base measure of cap-ital. Credit risk and particularly exposure to corporates domi-nates the ratings agency’s calculation of their risk-weighted assets. Finally, its adjusted RAC ratio highlights single-name and geographic concentration as additional risk

factors. “It is important to men-tion that the 11.5 percent average RAC ratio as of year-end 2016 masks significant disparities among rated banks, ranging from 5.3 percent to 17.0 per-cent,” said Damak.

According to S&P, the rated banks based in Qatar, the United Arab Emirates and Saudi Arabia enjoy the highest capitalisation while the weakest capitalization, but still adequate, is for rated Bahraini banks. The average capitalization for Bahraini banks and some Kuwaiti banks is weighed down by their expo-sures to riskier countries such as Turkey and others in the Mid-dle East.

“Compared with local reg-ulatory requirements, our RAC ratios are lower primarily because we apply more con-servative risk weights on most asset classes, including sover-eign exposures,” Damak said. The average Tier 1 capital ratio for rated banks according to local regulatory measures reached 16.3 percent at year-end 2016.

QFC to host women empowerment eventThe Peninsula

The Qatar Financial Centre (QFC) Authority in part-nership with the Women’s

Entrepreneurship Day will host the inaugural ladies breakfast event, under the theme “Empowering Women in Busi-ness,” tomorrow.

A panel, consisting of top female business minds in Qatar will present thought-leading discussions surrounding busi-ness matters, including how to be an entrepreneur and the importance of reputation management.

Speakers at the event will include Sheikha Alanoud bint Hamad Al Thani, Managing Director, Business Develop-ment, QFC Authority; Dr Hessa Al Jaber, former Minister of Information and Communica-tions Technology and current

Chairperson, Trio Investment; Aysha aA Mudahka, CEO, Qatar Business Incubation Centre; and Fatma Al Nuaimi, Communica-tions Director, Supreme Committee for Delivery and Legacy.

“The QFC continues to sup-port the growing role of women in the workplace as an avenue for corporate excellence and diversity. We are proud to be hosting and leading our own event in recognition of Wom-en’s Entrepreneurship Day and I look forward to hearing the discussions by our panel and guests on the day,” said Sheikha Alanoud.

Women’s Entrepreneurship Day is internationally recog-nised and celebrated every year on 19 November. Global ambas-sadors and educational institutions represent the day by hosting in the lead up to the day.

RAC ratio

After completing S&P’s latest tally of GCC banks’ risk-adjusted capital (RAC) ratios the ratings agency calculate an unweighted average ratio of 11.5% for the Gulf banks.

The event will host keynote speakers including HE Jassim bin Saif Al Sulaiti, Minister of Transport and Communication; Lord Stevens, Former Metropolitan Police Commissioner – UK, and Daniel L Glaser, Principal at the Financial Integrity Network, among many other prominent figures in the field.

QFBA organises law course for admin officialsThe Peninsula

Qatar Finance and Business Academy (QFBA), in coop-eration with the Qatar

International Court and Dispute Resolution Centre (QICDRC), organised a free legal course for all administrative officials in Qatar entitled “Legal for non-legal professionals.”

The course introduced laws and their importance in regulat-ing the various relations in society, with the aim of helping the participants understand and protect their rights.

Dr Zain Al Abdin Sharar, Sen-ior Legal Counsel at QICDRC was the course director.

The objective of the course is to familiarize participants with legal terminology, the science of law, as well as its sources and functions, in addition to helping them understand the nature and characteristics of the law, differ-ent types of laws, and

empowering them to understand the different types of contracts and contractual responsibility.

Commenting on the occasion, Dr Mohammed Abdullah Al Emadi, Acting CEO of QFBA, said: “QFBA and the Qatar Interna-tional Court and Dispute Resolution Centre are adopting an innovative approach to intro-ducing the law in terms of its

types, sources and principles through the launch of a special-ized legal course, with the aim of spreading this culture among members of the community, so that they can understand and protect their rights. In order to activate the role of law in society, it is important to study it, under-stand its objectives as well as its role in protecting individuals,

instilling the stability of society and the achievement of its eco-nomic objectives, which is the goal we sought to achieve through the ‘Legal for non-legal profes-sionals’ course.”

Faisal Rashid Al Sahouti, Chief Executive Officer of QICDRC, said: “One of the most important foundations of the prosperity and progress of soci-ety is stability and security, and this can only be achieved through an effective law system that pro-vides justice and protect the interests of individuals from infringement. Hence the need to educate individuals about the law so that they can know their rights, in order to protect them and safely conduct their legal affairs. The ‘Legal for non-legal profes-sionals’ course came within this context, as it highlighted laws and their functions, as well as alter-natives to dispute settlement, in addition to a number of related topics.”

Dr Zain Al Abdin Sharar, Senior Legal Counsel at QICDRC delivering a presentation as part of the course.

Toukabari considered that Tunisian products in the fresh food sector are of high quality and conform to inter-national standards and standards, calling on the Qatari private sector to learn about Tunisian products.

A representative of the Tunisian Ministry of Agricul-ture, Water Resources and Fisheries said that the visi-tors at the Food and Consumer Industries Exhi-bition, which concluded yesterday at Doha Exhibition and Convention Center, have shown great response to the Tunisian pavilion at the expo, noting that the role of the Ministry includes devel-oping trade relations with brotherly and friendly countries.

A representative of Tuni-sia’s Namaa Association revealed that there will be joint Tunisian-Qatari invest-ments which will soon be launched, especially in the field of plastics and raw materials.

The Peninsula

Mesaieed Petrochem-i c a l H o l d i n g Company (MPHC), a

subsidiary of Qatar Petro-leum and one of the region’s premier diversified petro-chemical conglomerates, posted a net profit of QR805.9m for the nine months period ended Sep-tember 30, 2017 with earnings per share of QR0.64, surging by 13 percent on previous year.

Improved sell-ing prices coupled with one-off claims received were the main contributors towards improved perform-ance. The financial performance significantly exceeded the group’s budget expectations.

The group’s profit for the period was also aided by rec-ognition of a tax refund of approximately QR74.3m for the period. The group con-tinued to benefit from the supply of competitively

priced ethane feedstock and fuel gas under long-term supply agreements. This con-tracting arrangement is an important value driver for the group’s profitability in a chal-lenging market condition.

The closing cash position after the first nine months of operations and after distri-bution of previous years’ dividends of QR724.2m, was a robust QR1.1bn as at Sep-

tember 30, 2017. The total assets at September 30, 2017 was QR14.5bn, compared to QR14.4bn as at 31 December 2016.

Reflecting MPHC’s robust liquidity position, the closing cash stood at QR1.1bn, after the distribution of previous years’ dividends of QR724m, at the end of September 2017. Tax refund of QR74m booked for the period.

Tunisian firms to set up food processing units in Qatar→ Continued from page 21

MPHC records QR805.9m net profit for 9 months

23MONDAY 30 OCTOBER 2017 BUSINESS

Fed to stand pat as inflation conundrum persistsWashington AFP

The moribund inflation seen in the world’s largest economy over the last year is a “mys-tery,” a “surprise” and

a “concern” all at once, in the words of US central bank chief Janet Yellen.

And the dilemma—why price pressures have not picked up despite nearly a decade’s worth of falling unemployment and growth—will be squarely at the fore when Federal Reserve pol-icymakers gather Tuesday for a t w o - d a y m e e t i n g i n Washington.

If futures markets are to be believed, the Fed will take no action on benchmark interest rates at the meeting, leaving the target range unchanged at between one percent and 1.25 percent.

But it expects to adopt a rate hike in December, its third of the year, to ward off inflation that perpetually seems to be just around the corner.

Hovering over the Fed’s deliberations will be President Donald Trump’s decision, also due next week, on whether to replace Yellen, whose term as chair expires in February. But on Wednesday all eyes will be look-ing for clues about what the Fed will do next.

And the camp that favors a rate increase likely got a boost

on Friday when official figures showed the US economy beat expectations, growing at a three percent clip in the third quarter despite the pounding taken by the commercial and industrial hubs battered by Hurricanes Irma and Harvey.

But after the Fed’s most recent meeting, Yellen acknowl-edged that growth and job creation had not produced the inflation that long-prized eco-nomic models say it should, leaving central bankers in an increasingly uncomfortable quandary.

“It was pretty understanda-ble until this year,” Yellen told reporters. “But this year, it’s been a surprise.”

According to Yellen, she and most of her colleagues on the Federal Open Market Commit-tee, which sets US monetary policy, now “guess” that infla-tion will begin rising next year

and hit their two percent target by 2019. But an increasingly vocal minority on the commit-tee say this expectation looks less like sound forecasting based on hard numbers and more like an untested article of faith.

The Commerce Department on Monday is due to release a new batch of closely watched inflation figures but whatever the outcome it is unlikely to change the overall picture so far.

The “core” measure of the Fed’s preferred gauge of infla-tion, which strips out volatile food and energy prices from the Personal Consumption Expen-ditures price index, has been below the central bank’s two percent target for more than five years.

As of Friday, it was at a rock-bottom 1.3 percent. Meanwhile, the core Consumer Price Index fell below the same target ear-lier this year to 1.7 percent and

has not budged for five months in a row.

The Fed’s “Beige Book” sur-vey said this month that wage pressures were scant despite a “widespread” labor shortage.

Joseph Gagnon, a former Fed official now at the Peterson Insti-tute for International Economics, told AFP the circumstances did not point to a rate hike. “I do wonder what they’re thinking,” he said.

“If they rely too much on their models and not enough on their data, it could be a mistake.” The Fed has dismissed this year’s low inflation as the result of one-off factors like falling drug prices and mobile telephone costs. But advanced economies across the world are in a similar state, sug-gesting the Fed’s “transitory” factors may be beside the point.

The so-called “doves,” who favor waiting to raise rates, say inflation is low in large part

because jobs markets are not as healthy as they seem.

Research from the Interna-tional Monetary Fund published recently shows part-time and temporary employment, other-wise known as the “gig economy,” accounted for much of the recovery in job creation since the 2008 Great Recession—holding down wages and inflation as a result.

Traditional measures of “slack,” or the level of unused labor on the market, may not accurately measure the amount of under-employment—allow-ing unemployment data to fall while inflation remains tame.

“The low wage inflation to us is just the proof in the pudding that there’s a lot of labor market slack,” said Josh Bivens, research director at the left-leaning Eco-nomic Policy Institute. “To me, you just have to believe the data. We’re not there.”

Inflation target

The ‘core’ measure of the Fed’s preferred gauge of inflation has been below the central bank’s 2% target for more than 5 years.

Turkey’s Q3 growth seen at 9.6% & may be double digit

Istanbul Reuters

Turkey’s Economy Minis-try expects the country’s third-quarter growth at

9.6 percent but a double-digit figure would not come as a sur-prise, state-run Anadolu Agency yesterday cited Economy Min-ister Nihat Zeybekci (pictured) as saying. “We expect a good outcome in the fourth-quarter as well. We expect growth of over 6 percent at year-end,” he was quoted as saying during a news conference in the eastern Turkish city of Igdir. Turkish President Tayyip Erdogan on Saturday said “no one should be surprised” if Turkey’s year-end economic growth hits 7 percent.

Disappearing bank jobs won’t return: Nordea CEOBloomberg London

The 6,000 job cuts announced last week at Nordea Bank AB are just a

down payment for an industry facing radical overhaul, says Chief Executive Officer Casper von Koskull.

“If somebody says, where are we, or where are banks, 10 years from now, banks could easily have half what they have today,” in terms of personnel, von Koskull said in an interview in London on Friday.

Nordea last week stunned unions, analysts and investors

when it revealed the staff reduc-tions, which amount to well over a tenth of the work force of the Swedish bank. Unions called the step “shocking” and “brutal.”

The industry is already a lot leaner than it was before the financial crisis.

The European Banking Fed-eration estimates there are about 14 percent fewer people in finance in the region than before 2008. There are now about 2.8 million people in Europe work-ing at banks. Nordea had about 31,500 employees in the third quarter.

Von Koskull says what Nor-dea is doing represents the

future of banking. While speak-ing to analysts in London last week, he described a universe in which only the leanest, most digitally advanced and efficient banks will thrive. Firms living in the banking dark ages are already failing, he said.

“The fact that some banks—not this bank—have been technically insolvent every 15 years, that really does not mean that they are resilient,” he said. “Resilience is something that this industry, and any bank, needs. And that is something that we have been building. And resil-ience is not only about capital, resilience is your operations,

your systems, and everything you do.” While the upfront expense of such a transforma-tion isn’t small, von Koskull says the bank will soon be using a lot less of its income to cover costs. The ratio of Nordea’s costs to its income was 51 in the third quar-ter. Von Koskull says that number will be in the “lower 40s” when the bank has trans-formed itself.

The Nordea CEO said that he views his bank as a pioneer in how it’s looking at the funda-mental shifts now gripping the industry.

“We are maybe one of the first ones,” he said.

24 MONDAY 30 OCTOBER 2017BUSINESS

British pound may need more to reboundBloomberg London

The Bank of England may raise interest rates this week for the first time

in more than a decade, but that won’t be enough to buoy the pound, strategists say.

Markets are almost fully pricing in a 25-basis-point increase in the bank rate on Thursday, and that means investors are ill-prepared for a disappointment.

Should Governor Mark Carney (pictured) and fellow policy makers keep policy on hold or deliver a one-off hike that merely reverses the emergency cut after the Brexit vote, sterling could add to the last two weeks’ declines, according to NatWest Mar-kets’ head UK economist Ross Walker.

The UK currency slumped 2.1 percent against the dollar in October as of 4pm in Lon-don on Friday as concerns about the lack of progress in Brexit negotiations weighed on investor sentiment.

“Sterling needs a hawkish

hike in order to rally,” said Walker. “The pound could come under pressure” other-wise, he said.

Money-market pricing suggests an 89 percent prob-ability that the central bank will tighten policy on Thurs-day but banks including Credit Suisse Group AG and Barclays Plc expect a “one-and-done” move. Investors will focus on the language of the BOE’s statement as well as the central bank’s quarterly inflation report to gauge the policy outlook further ahead.

“I’d prefer to go into the meeting” with a short posi-tion on sterling, said Steven Barrow, head of currency strategy in London at Stand-ard Bank.

“There is a reasonable enough chance they don’t raise rates, we’ll have to see what comes out from the statement the bank puts out.”

Former Dutch Finance Minister Jeroen Dijsselbloem (right) hands a symbolic key during the transfer of his ministry to his successor, new Finance Minister Wopke Hoekstra in The Hague.

Change of guard

Telekom CEO argues for strong No. 3 player in US wireless marketFrankfurt Reuters

A strong No. 3 player in the US wireless market would enhance competi-

tion, the chief of Deutsche Telekom told a German news-paper, as T-Mobile US Inc seeks to merge with Sprint Corp. Chief executive officer Timotheus Hoettges also urged the new German government to think twice before selling down its large stake in Deutsche Tele-kom, according to an interview in Welt am Sonntag.

T-Mobile US, majority-owned by Deutsche Telekom, is close to agreeing tentative terms on a deal to merge with Sprint Corp, people familiar with the matter have said, a break-through in efforts to merge the

third and fourth largest US wire-less carriers.

Hoettges, in the interview published yesterday, declined to comment directly on talks between the companies.

“In the US there is a duopoly between two very big players, and then there are two smaller players well behind,” he said. “A third strong player would be good for competition.”

Verizon Communications Inc and AT&T Inc are the two largest wireless carriers.

Competition regulators have in the past quashed consolida-tion efforts by T-Mobile, but Hoettges said chances are now better under US President Don-ald Trump.

“History has taught us that governments led by Republicans are more hands-off than

Democratic administrations,” he said.

On the German state’s nearly 32 percent stake in Deut-sche Telekom, Hoettges acknowledged it would be the new government’s decision whether to sell or keep.

But he said those who argued for a sale “should per-haps ask themselves who will buy the stake”.

“What interest would the owner have in infrastructure security? Would the owner want to invest in Germany, and if so, where and in particular, how much?”

The FDP and Green parties, which are in talks to form a coa-lition government with Chancellor Angela Merkel’s con-servatives, have both advocated a sale or partial sale of the stake.

Iraq boosts ports export capacity of oil to 4.6mb/dBaghdad Reuters

Iraq has increased oil export capacity from its southern ports by

900,000 barrels per day (b/d) to 4.6mb/d after adding a new floating terminal in the Gulf, Oil Minister Jabar al-Luaibi (pictured) said in a ministry statement.

“Oil export capacity have reached unprecedented lev-els after adding a new single point mooring with an addi-tional export capacity of 900,000 bpd”, the statement said yesterday.

Iraq now has four opera-tional single point moorings (SPMs) for loading oil tankers.

Last week Opec member Iraq increased oil exports from the southern Basra region by 200,000 b/d to make up for a shortfall from the northern Kirkuk fields.

The country reluctantly agreed in November to an Opec deal to cut production in a collective effort aimed at boosting oil prices.

It had argued that it should be allowed to produce at will to make up for three and a half decades of disrup-tion due to wars and sanctions.

Bond traders face their fears this weekNew York Bloomberg

This week is fraught with peril for Treasuries trad-ers, no matter if they’re

bulls or bears.The next five trading days

will bring a torrent of market-moving information: President Donald Trump is poised to finally announce his nominee to lead the Federal Reserve; US central bankers have an inter-est-rate decision to make; a House committee is set to release a tax bill; and Treasury will unveil plans to issue more debt to make up for lost funding from the Fed. And investors will also get the latest reading on the nation’s job market and the cen-tral bank’s preferred inflation gauge.

What’s more, it all comes at a pivotal time, with 10-year yields breaking above the cru-cial 2.4 percent level and touching a seven-month high of 2.48 percent. With yields enter-ing a new, elevated range, traders are bracing for turbu-lence as they ponder the direction of the world’s biggest bond market for the remainder of 2017.

Signs are emerging that vol-atility is returning to fixed income, after it fell to a record low in August. Bank of America Corp.’s MOVE Index, which tracks swings in Treasury options, jumped last week to the highest in five months.

Commentary around higher yields may have added to the volatility.

DoubleLine Capital LP’s

Jeffrey Gundlach called it “the moment of truth” for the bond market’s three-decade bull run after yields broke through 2.4 percent. Bill Gross at Janus Henderson Group said this month that a sustained move through that level would signal the end of the 30-year rally.

The full slate of events ahead and the prospect of market tur-moil could scare away buyers until the dust settles, Lorizio said. Even investors who consider Treasuries oversold might pre-fer to wait, either for confirmation that yields will drop or for an even more attrac-tive entry point.

The latest read on position-ing in futures markets indicates that restraint.

Hedge funds and other large speculators cut back on bets

against two- and five-year Treasury maturities in the week through October 24, after their net shorts reached record highs, Commodity Futures Trading Commission data show. On the flip side, asset managers’ net duration across the Treasury curve dropped.

It’s a frightening week to take a big bet one way or the other.

Trump is poised to announce his nominee for Fed chair by November 3, before he departs for AsiaNOTE: Treasuries rallied as betting website PredictIt showed traders jumping on bets in favor of Fed Governor Jerome Powell

In Congress, the House Ways and Means Committee is expected to release on Novem-ber 1 legislation for tax cuts.

Chevron drops decision to leave BangladeshDhaka Reuters

The US oil company Chev-ron will not sell three subsidiaries and leave

Bangladesh as planned, Chev-ron said yesterday. Chevron had said in April it would sell to Chi-na’s Himalaya Energy Co. the wholly owned subsidiaries that operate three gas fields, which together account for 58 percent of Bangladesh’s gas production.

Chevron “will not be pro-ceeding with an agreement to sell the shares of its wholly owned indirect subsidiaries,” Cameron Van Ast, Chevron’s external affairs advisor for Asia

and the Pacific, said in a state-ment sent to Reuters yesterday. “Chevron has decided to retain these assets and will continue to work with our partners Petrobangla and the government of Bangladesh to provide relia-ble and affordable energy to the nation,” the statement said.

Rather than leaving, Chev-ron will invest $400m at Bibiyana, the country’s largest gas field, said Nasrul Hamid, Bangladesh’s junior minister for power, energy and mineral resources. Bibiyana produces 1,250 million cubic feet of gas a day. Chevron formally conveyed its intention to stay in Bangla-desh in a letter last week, Hamid said.

Business leaders bow to Xi as Communist Party pushes inBeijing AFP

Chinese billionaires are boasting about their Marx-ist bonafides. The

Communist Party is tightening its grip on state-owned compa-nies. And foreign companies are being asked to invite party cells into their offices.

Under President Xi Jinping, the country’s ruling party is mus-cling back into business, expanding its reach in private enterprise and even laying out a plan for the government to take stakes in high-profile tech and media companies.

With a stronger mandate

after receiving a second term as head of the party on Wednesday, Xi plans to deepen its control in “all areas of endeavour in every part of the country”, as he told leaders in a three-and-a-half hour speech last week.

In September, the Chinese Communist Party released a new document on entrepreneurship calling in part to strengthen teaching of “socialist core val-ues” to the new generation of entrepreneurs.

It is a significant change for the CCP, which has long had a fraught relationship with the business world.

Since kicking off economic reforms in the late 1970s, Beijing

has allowed private enterprises a free rein in many sectors, while slowly loosening its grip on the state-owned sector, which com-prises “strategic” industries such a s s t e e l a n d telecommunications.

China’s capitalists are getting on board as the state has taken a bigger role in picking winners and a harder line against those perceived to be defying the par-ty’s aims.

This year, a few business icons have disappeared, and oth-ers like Wang Jianlin, chairman of entertainment conglomerate Dalian Wanda, have faced immense pressure from regula-tors over the build up of debt at

their companies. The sentiment was echoed by other titans of industry like Jack Ma of Alibaba, Zhang Jindong of Suning, and Liu Chuanzhi of Lenovo, who told Beijing News the party will unite the people to “realise grand dreams”.

To celebrate Xi’s address Tencent, China’s largest tech company, created an online game for the masses to applaud the nation’s president which has racked up 1.4 billion claps.

The app’s release followed a report in the Wall Street Journal that the Chinese state is looking to take a one percent stake and gain a board seat at the company, along with other major internet

companies. The party has already moved to strengthen control at state-owned enter-prises, with dozens of publicly traded companies in Hong Kong rewriting their business charters this year to formalise the shift.

From plants in southern China, Guangzhou Automobile Group pumps out Honda Odys-seys, Toyota Camrys and Jeep Renegades in partnership with foreign automakers. In July, the carmaker revised its business charter.

The CCP constitution was written into the document, according to filings. Major board decisions are now made after first consulting the company’s

party committee. Investment fund Blackrock, which holds a 7 percent stake in the company, declined to comment on how it voted on these changes.

A spokeswoman for Guangzhou Automobile Group said the changes were made to “meet party building require-ments” and in accordance with business regulations.

The party has also expanded its presence in foreign firms.

Of the more than one hun-dred thousand foreign-funded companies in China, 70 percent had set up party organisations by the end of 2016, according to Qi Yu, deputy head of the CCP’s Organization Department.

Should the policy makers keep policy on hold, the sterling could add to the last two weeks’ declines.

Currency slump

The UK currency slumped 2.1% against the dollar in October as of 4pm in London on Friday as concerns about the lack of progress in Brexit negotiations weighed on investor sentiment.

25MONDAY 30 OCTOBER 2017 BUSINESS

French Finance Minister Bruno Le Maire stands next to a high-speed train TGV as he visits the Alstom factory in Belfort, France. French government supported a deal combining the rail operations of Germany’s Siemens AG with Alstom aiming to preserve “strategic interests” amid fears over job cuts.

Big investors betting on ride-sharing startupsSan Francisco AFP

Investors including Japan’s SoftBank and Google-par-ent Alphabet are fueling a drive to a ride-sharing future, betting on startups

such as industry giants Uber and Lyft which have so far failed to deliver profits.

The frenzied pace of invest-ment suggests optimism over a new model that has disrupted local taxi and transport opera-tions around the globe.

A recent Goldman Sachs study projected that the world-wide ride-sharing market could grow eight-fold by the year 2030, reaching $285bn annually.

Lyft, which is Uber’s main rival in the United States, raised a billion dollars in a recent investment round led by an investment arm of Alphabet. That means the Google parent now has investments in both Uber and Lyft.

Meanwhile Uber’s board of directors has approved a plan that opens the door to a colos-sal investment by Japanese telecommunications giant SoftBank.

Another major player in the sector, Didi Chuxing in China, bought Uber’s operations in that country last year and has invested in Lyft and India’s Ola as well.

Didi has become Asia’s most valuable startup, worth some $50bn based on a recent fund-ing round.

Uber’s new chief executive has vowed to take the company, valued privately at nearly $70bn, public with a stock mar-ket debut by the year 2019. Lyft, with a valuation near $11bn, is reported to be mulling a strat-egy to also go public.

Despite the staggering pri-v a t e v a l u a t i o n s , smartphone-summoned ride services have yet to prove they

can turn profits, and have repeatedly run into roadblocks from regulators and traditional taxi operators in several countries.

Aside from clashes with entrenched industry powers, proudly disruptive Uber has earned a sulfurous reputation with a litany of scandals, law-suits and investigations.

Uber lost about $600m in the second quarter of this year, after losing $2.8bn in all of 2016. Ridership nevertheless is soaring.

Such red ink on balance sheets has not deterred inves-tors with the resources of Alphabet or SoftBank, with amounts they have sunk into ride-sharing startups considered “pretty modest,” Jack Gold of J Gold Associates told AFP.

Gold said that high-powered investors may be less interested in quick returns from the day-to-day business of on-demand rides, and keener on getting their hands on data gathered by the operations.

“There is a major amount of data to be had for analysis from all of the Lyft and Uber drivers,” Gold said.

“So investments in these companies are about finding ways to leverage the installed base of drivers, and less about any financial reward from existing operations.”

Ride-sharing services get to know about travel habits, schedules, and profiles of pas-sengers and drivers, typically analysing information with

software to anticipate demand and improve service.

Such data can also be a treasure trove to mine in the development of self-driving cars, which have been touted as the future of urban transport.

Ride-sharing services are seen as promising early users of the technology, letting peo-ple shun vehicle ownership in favor of simply summoning rides whenever they wish with the machines doing all the work.

With cars navigating them-selves, passengers will likely spend more time immersed in on-board entertainment or services, likely streamed via wireless internet connections. Google and other online titans would profit from going along for the ride.

“Once we get to self-driv-ing cars the need to own one for most will evaporate, which means firms like Lyft and Uber will effectively own the car market,” said independent tech analyst Rob Enderle.

“Google and SoftBank want a part of that action.”

Human drivers are consid-ered a prime expense for ride-sharing firms, which Gold-man Sachs research found to be a “significant contributor” to the lack of operating profit. Fully autonomous vehicles could eliminate about 6.2 mil-lion drivers in the workforce, according to Goldman Sachs.

The self-driving car is expected to be “the trigger to transform” ride-sharing oper-ations, according to Goldman Sachs. A Lyft unit devoted to the technology collaborates with US car maker Ford, as well as with Alphabet’s self-driving car subsidiary Waymo.

Uber has also been invest-ing in autonomous cars, its collaborations including one with General Motors, which is among Lyft investors.

Huge market size

A recent Goldman Sachs study projected that the worldwide ride-sharing market could grow eight-fold by the year 2030, reaching $285bn annually.

New York Reuters

The proposed merger between US pharmacy operator CVS Health Corp

and No 3 health insurer Aetna Inc represents a $66bn bet that insurers can drive down high US drug prices by cutting out the middleman.

The move is the most expensive effort to date that would enable a national health insurer to take back full con-trol of prescription medicines for their customers by negoti-a t i n g p r i c e s w i t h pharmaceutical manufactur-ers and setting customer out-of-pocket costs for each drug.

CVS, one of the largest US pharmacy benefits managers, has offered to buy No 3 health insurer Aetna for more than $200 per share, sources said on Thursday. It could take at least several weeks for any deal to materialize. If the deal hap-pens, it would likely pressure rival insurers, drugmakers, pharmaceutical benefits man-agers, and retail pharmacies to also consider mergers or switching partners to try to

keep up with the potential healthcare cost savings or increase in profit margins.

“It’s an alternate model at this point. It’s not clear that it’s definitely a better one,” BMO Capital Markets analyst Matt Borsch said. “More consolida-tion could lead to pressure on some of the brand-name drug prices and a better counter-weight to the big pharma companies.”

For years, insurers paid drug benefits managers like CVS and Express Scripts Hold-ings Co to negotiate down drug prices, with both parties tak-ing a share of any discount by the time a medicine was paid for by consumers.

But outrage over the high costs of drugs has grown as consumers have picked up a larger portion of the tab for drug costs and it is threatening profit margins all along the drug supply chain, from man-ufacturers to distributors, insurers and pharmacies. Unit-edHealth Group Inc and Humana Inc currently have in-house pharmacy benefits businesses, and say that it has helped them keep medical costs down.

Kuwait City AFP

Kuwaiti telecoms giant Zain yesterday reported a drop in its third quar-

ter net profits due to currency exchange losses in Sudan and conflict in Iraq.

The company’s net profit in the third quarter fell seven percent to KD40m ($132m) from KD43m ($142m)in the same period last year, Zain said in a statement.

Net profit for the first nine months of 2017 was KD122m ($402.6m), down 1.6 percent from KD124m ($409.2m) in the same period last year.

The fall in profits was mainly attributed to negative developments in its Zain units in Iraq and Sudan.Zain said some $20m of its net profit losses in the third quarter stemmed from its unit in Sudan, which has seen a steep devaluation of the local cur-rency. Conflict in Iraq, where Zain operates one of the most active units, also had a nega-tive impact with profits lower than expected. Its Saudi Ara-bian arm, Zain Saudi, however posted a net profit for the third quarter in a row, after more than 10 years in the red.

CVS & Aetna merger can drive down high US drug prices

Kuwait telecoms giant Zain’s profits fall over Sudan and Iraq

New iPhone brings face recognition as well as fears to peopleWashington AFP

Apple will let you unlock the iPhone X with your face -- a move likely to bring

facial recognition to the masses, along with concerns over how the technology may be used for nefarious purposes.

Apple’s newest device, set to go on sale on November 3, is designed to be unlocked with a facial scan with a number of pri-vacy safeguards -- as the data will only be stored on the phone and not in any databases. Unlocking

one’s phone with a face scan may offer added convenience and security for iPhone users, accord-ing to Apple, which claims its “neural engine” for FaceID can-not be tricked by a photo or hacker.

While other devices have offered facial recognition, Apple is the first to pack the technology allowing for a three-dimensional scan into a hand-held phone.

But despite Apple’s safe-guards, privacy activists fear the widespread use of facial recog-nition would “normalize” the technology and open the door to

broader use by law enforcement, marketers or others of a largely unregulated tool.

“Apple has done a number of things well for privacy but it’s not always going to be about the iPhone X,” said Jay Stanley, a pol-icy analyst with the American Civil Liberties Union.

“There are real reasons to worry that facial recognition will work its way into our culture and become a surveillance technol-ogy that is abused.”

A study last year by George-town University researchers found nearly half of all Americans

in a law enforcement database that includes facial recognition, without their consent.

Civil liberties groups have sued over the FBI’s use of its “next generation” biometric database, which includes facial profiles, claiming it has a high error rate and the potential for tracking innocent people.

“We don’t want police offic-ers having a watch list embedded in their body cameras scanning faces on the sidewalk,” said Stanley.

Clare Garvie -- the Georget-own University Law School

associate who led the 2016 study on facial recognition databases -- agreed that Apple is taking a responsible approach but others might not. “My concern is that the public is going to become inured or complacent about this,” Gar-vie said.

Widespread use of facial rec-ognition “could make our lives more trackable by advertisers, by law enforcement and maybe someday by private individuals,” she said. Garvie said her research found significant errors in law enforcement facial recognition databases, opening up the

possibility someone could be wrongly identified as a criminal suspect. Another worry, she said, is that police could track individ-uals who have committed no crime simply for participating in demonstrations.

Shanghai and other Chinese cities have recently started deploying facial recognition to catch those who flout the rules of the road, including jaywalkers.

Facial recognition and related technologies can also be used by retail stores to identify potential shoplifters, and by casinos to pin-point undesirable gamblers.

Supporting “strategic interests”

26 MONDAY 30 OCTOBER 2017BUSINESS

QATAR STOCK EXCHANGE

QE Index 8,124.73 0.18 %

QE Total Return Index 13,624.70 0.18 %

QE Al Rayan Islamic Index 3,188.35 0.23 %

QE All Share Index 2,277.17 0.13 %

QE All Share Banks &

Financial Services 2,556.17 0.03 %

QE All Share Industrials 2,508.43 0.54 %

QE All Share Transportation 1,682.95 1.22 %

QE All Share Real Estate 1,596.12 0.69 %

QE All Share Insurance 2,980.45 1.31 %

QE All Share Telecoms 1,025.92 0.23 %

QE All Share Consumer

Goods & Services 4,784.07 1.54 %

QE INDICES SUMMARY QE MARKET SUMMARY COMPARISON WORLD STOCK INDICES

GOLD AND SILVER

29-10-2017Index 8,134.46

Change 6.21

% 0.08

YTD% 22.06

Volume 9,308,067

Value (QAR) 169,548,013.20

Trades 1,782

Up 21 | Down19 | Unchanged 026-10-2017Index 8,128.25

Change 3.52

% 0.04

YTD% 22.12

Volume 3,750,603

Value (QAR) 150,566,795.32

Trades 2,059

EXCHANGE RATE

GOLD QR149.5033 per grammeSILVER QR1.9830 per gramme

Index Day’s Close Pt Chg % Chg Year High Year Low

All Ordinaries 5972.686 10.177 0.17 5987.3 5635.1

Cac 40 Index/D 5411.34 16.54 0.31 5442.1 4733.82

Dj Indu Average 23441.76 167.8 0.72 23485.25 17883.56

Hang Seng Inde/D 28302.89 147.92 0.53 28798.78 21883.82

Iseq Overall/D 6755.11 -24.39 -0.36 7157.43 6369.05

Kse 100 Inx/D 41564.71 273.03 0.66 53127.24 39478.05

S&P 500 Index/D 2569.13 4.15 0.161795 2578.29 2245.13

Currency Buying SellingUS$ QR 3.6305 QR 3.6500

UK QR 4.7385 QR 4.8631

Euro QR 4.2626 QR 4.3222

CA$ QR 2.8166 QR 2.8951

Swiss Fr QR 3.6133 QR 3.7230

Yen QR 0.03163 QR 0.03267

Aus$ QR 2.7638 QR 2.8480

Ind Re QR 0.0556 QR 0.0567

Pak Re QR 0.03499 QR 0.0348

Peso QR 0.07221 QR 0.07141

SL Re QR 0.0235 QR 0.0240

Taka QR 0.0435 QR 0.0452

Nep Re QR 0.0348 QR 0.0354

SA Rand QR 0.2550 QR 0.2704

Qatari market edges up; Nakilat surges by 3.2%Dubai Reuters

Qatar’s index edged up 0.1 percent as Mesaieed Petrochem-ical gained 1.0 percent on the back of

stronger oil prices. Qatar Gas Transport (Nakilat), which would also benefit from higher prices in the oil and gas industry, surged 3.2 percent.

But Qatar First Bank sank 3.3 percent after reporting that its nine-month net loss widened to 139.6 million riyals ($28.4 mmil-lion) from a loss of 76.7 million riyals in the first half of this year.

Petrochemical stocks and an earnings beat by Saudi Telecom Co lifted Riyadh’s stock market on Sunday while other Gulf bourses were sluggish, once more ignoring a strong perform-ance by Wall Street on the previous trading day.

The Saudi stock index climbed 0.7 percent. Unusually, four of the 10 most active stocks were petrochemical producers after oil prices rose sharply at the end of last week, with Brent crude hitting $60 a barrel for the first time since 2015; industry leader Saudi Basic Industries gained 0.8 percent.

Saudi Telecom climbed 3.6 percent after reporting an 18.2 percent rise in third-quarter net

profit to SR2.62bn ($698.7m), topping the SR2.28bn forecast of four analysts polled by Reu-ters. But the increase was mostly due to cost-cutting; revenue from services fell 8.5 percent to SR12.84 bn.

Another piece of positive news was an announcement by global equity index compiler FTSE Russell that it had launched stand-alone Saudi Arabia indexes, in anticipation of Riyadh meeting requirements in early 2018 to join FTSE’s

secondary emerging market index.

National Commercial Bank, the biggest listed lender and one which would attract sizeable fund inflows due to inclusion in the emerging market index, rose 1.8 percent.

The Dubai index fell 0.3 per-cent in a broad-based decline, with eight of the 10 most active stocks dropping and none rising.

In Kuwait, telecommunica-tions firm Zain fell 3.3 percent

after it reported net income fell 7 percent from a year ago in the third quarter, in line with ana-lysts’ forecasts. The Kuwaiti stock index fell 0.2 percent.

Egypt’s index added 0.5 per-cent as blue chip Global Telecom surged 4.1 percent. Egypt Aluminum rose 0.7 per-cent after the company reported a leap in quarterly net profit to 712.4 million Egyptian pounds ($40.5m) from 28.8 million pounds a year earlier, as sales more than doubled.

Traders seen scanning the market movements at Qatar Stock Exchange (QSE) in this file picture

Small growth bump can offset lost tax revenues: RepublicansWashington Bloomberg

The Republican tax plan, expected to feature sharp reductions to c o r p o r a t e a n d

individual tax rates, won’t raise the US budget deficit over the long term as many economists have forecast, said two Republican lawmakers.

“At the end of the day, this is going to be reducing the deficit because it’s going to get the economy moving,” Senator Rob Portman, an Ohio Republican who serves on the Senate Finance Committee, said on NBC’s “Meet the Press” yesterday.

Portman, director of the White House Office of Management and Budget for about a year under President George W. Bush, said that raising annual US economic growth to 2.3 percent from 1.9 percent would be enough to start lowering the deficit. “This is going to change behavior,” he said of the tax plan. “The question is, by how much.”

Wrangling over the details

of the sweeping Republican plan, which is expected to include a deficit-busting $1.5 trillion in tax cuts, is in full swing before the House is expected to release its version on Wednesday.

O n S a t u r d a y , Representative Kevin Brady, the top tax writer in the House of Representatives, said he’ll preserve a popular federal break for property taxes, while a major home builders’ group pulled support after being told that the plan won’t include a tax credit for mortgage interest.

The latest flare-ups show the difficult path ahead for legislation that Congress and Trump have pledged to deliver by year’s end -- including pushback from Republican lawmakers in high-tax states such as New York, New Jersey and California, where some middle-income voters may pay more, not less, in income taxes.

“This involves the future of my district for years,” said Representative Peter King, a New York Republican whose district covers part of Long Island.

Manhattan office leasing is on the rise -- thanks in large part to deal sweeteners offered by landlords.

With big companies reducing space and new towers rising across New York, office owners are trying to attract tenants by lowering asking rents and shelling out cash to fix up properties. Such moves helped prop up demand in the third quarter, according to a new report by Savills Studley. Manhattan leasing soared 32 percent from the previous three months to 9.1 million square feet (845,000 square meters), well above the historical average of 7.5 million, the brokerage said.

“In order to entice tenants to make lease commit-ments at high face rents, landlords are having to provide very large concession packages,” said Bill Montana, a Savills Studley senior managing director. Even landlords under less pressure to achieve high rents, such as fami-lies who own real estate, “are having to do this to compete for tenants.”

Asking rents fell 2.2 percent in the third quarter to $73.21 a square foot, Savills Studley said. Landlords are also increasingly covering the cost of finishing out spaces, known as tenant improvement allowances. Fifty-six leases so far this year had such allowances valued at $100 a square foot or more, compared with 24 in all of 2016. In the past, triple-digit allowances were an anomaly, the brokerage said.

Almost a decade after the credit crisis pummeled New York office demand, the typical boom-bust cycle of the city’s commercial real estate market has given way to something less reliable. The traditional largest occupants of Manhattan space -- banks, law firms and professional-service companies such as accountants and consultants -- are more careful when leasing space, Montana said.

“When a 150,000-square-foot law firm relocates, they will often consolidate into 100,000 square feet,” he said. “There is a clear trend for firms to do more with less.”

Landlords are also grappling with added supply from a building boom on Manhattan’s far west side, where sky-scrapers are rising in Hudson Yards. That area has been home to some of 2017’s biggest office leases, such as Ama-zon.com Inc. taking 365,000 square feet at 5 Manhattan West, a Brookfield Property Partners LP building. Ernst & Young LLP and Pfizer Inc. are considering moving to the west side from their Midtown homes.

In a study released today, the New York Building Con-gress said office construction in Manhattan is at its highest level in three decades, with 15 million square feet to be added between this year and 2019. An additional 2 mil-lion square feet of offices are to be completed in Brooklyn and Queens.

While the office market’s availability rate fell to 10.7 percent in the third quarter from 11.1 percent in the prior three months, Savills Studley expects it to resume rising as planned moves and unleased construction enter its database.

“There is no evidence to suggest that rents will increase significantly or that concessions will decrease signifi-cantly,” Montana said. “Economic expansions only go on for so long, and this is the longest one in anyone’s memory.”

Falling rents are primarily a phenomenon in Midtown, the priciest office district, according to Savills Studley data. Asking rents there dropped 5.3 percent from a year earlier to $77.13 a square foot. In Midtown South, the area generally between Canal and 30th streets, rents rose 2.5 percent from the third quarter of 2016 to $72.42 a square foot. They climbed 5.1% percent downtown, to $64.14.

US energy and commodities firms will make up a major part of a business delegation visiting Bei-jing at the same time as US President Donald Trump goes

to China in November, according to an ini-tial list seen by Reuters.

Prominent technology and financial companies are mostly absent from the list, reflecting the slow progress Washington has made in opening up China in those sectors.

Commerce Secretary Wilbur Ross, who will lead the 29 companies that have been approved to travel on the trade mission start-ing on November 8, said they will be looking for “immediate results” and “tangible agreements”.

But, speaking at the Paley International Council Summit in New York on Wednes-day, he acknowledged that market access, intellectual property rights, and tariffs are more complex and will take a longer time to negotiate.

Some major industrial companies - Gen-eral Electric Co, Honeywell International Inc and Boeing Co- are among the companies on the current list.

Whether executives from all the named companies end up attending could be sub-ject to agreements or deals being negotiated in time for the visit, according to multiple sources whose companies are involved.

One of the few tech companies going with Trump is Qualcomm , which earns about half of its global revenue in China and faces a series of tricky legal issues there, including a lawsuit with Apple and the Chi-nese government’s review of its pending $38 bn merger with NXP Semiconductors . Qual-comm said its CEO, Steve Mollenkopf, planned to attend.

An industry source told Reuters tech firms were reluctant to go, given China mar-ket access issues, the unpredictability of the Trump administration, and a “Section 301” US trade investigation alleging Chinese abuses of intellectual property.

Trump, a real estate magnate who had never before held public office, has had a sometimes testy relationship with corporate America since taking office in January.

US industry sources say it has been years since a major business delegation has gone to China during a US presidential visit.

Calls for such a delegation during Trump’s visit originated in the China-based US business community, according to sev-eral sources, who saw a need to match growing efforts by Germany, France and Britain to promote their nation’s firms in China.

Beijing agreed in May to grant limited US access in financial services in bilateral talks aimed at reducing China’s trade sur-plus with the United States which reached $347bn last year, but business groups com-plained it was too little, too late.

William Zarit, the chairman of the Amer-ican Chamber of Commerce in China, told Reuters he didn’t expect Trump to push hard on market access issues on this trip.

“Unfortunately, I think the Chinese aren’t going to start to respond until they feel some pain,” Zarit said. “We’re all wondering what that is going to mean.”

Agribusiness and energy firms dominate the delegation list. They include Archer Dan-iels Midland Co (ADM), one of the world’s largest grain companies, and chemicals and agribusiness giant DowDuPont.

Ten of the companies are involved in gas or other energy fields, including Cheniere Energy Inc, which operates the only US liq-uefied natural gas (LNG) export terminal, three that are building new projects, and Freepoint Commodities, founded and run by David Messer, who led power utility Sem-

pra’s vaunted commodities division.Their presence underscores the US ambi-

tion to sell more of its excess gas abroad as its shale revolution contributes to a global LNG glut.

Others on the list who confirmed plans to attend include GE, Houston-based LNG company Delfin Midstream, SolarReserve, Stine Seed Company, biotech firm Drylet, wastewater-processing firm Viroment and the US Soybean Export Council.

Bell Helicopter and crane-maker Terex Corp are also on the delegation list. Honey-well, DowDuPont and ADM did not respond immediately to a request for comment and Freepoint, Cheniere, Sempra Energy, and Texas LNG Brownsville LLC said they had no comment. Boeing told Reuters it does not yet have plans to send anyone but that may change. Alaska Gasline Development Corp said it had no information to release.

The US Commerce Department, which is leading the delegation, has not yet issued its own list. At least one of the companies on the list tried to distance itself from Trump. SolarReserve told Reuters in a statement that it had been selected to participate in the commerce department’s delegation but stressed that “we are not part of the busi-

ness delegation travelling to China with President Trump.”

Molly Smith and Richard Clough Bloomberg

General Electric Co. once prided itself on its gilt-edged credit rating. Then came the global financial crisis, which

tarnished the industrial giant’s standing.

Now, as the company faces one of the deepest slumps in its 125-year history, its grade is on the verge of falling again.

S&P Global Ratings put GE on notice that it might lower its grade after the company acknowledged

a raft of challenges: cash-flow shortfalls, falling earnings and weak power markets that have undercut its biggest business. With a new chief executive officer and an activist investor sitting on the company’s board, S&P is examin-ing how the company will spend its money as it looks to shore up its beaten-down stock price.

If GE gets downgraded again, it would join a growing list of com-panies that let their stellar credit grades slide to please sharehold-ers. A decade of cheap borrowing costs have made it an easy decision.

Bond markets have been willing to lend to average-Joe borrowers for just a few basis points more than what compa-nies with top-notch grades can command. When there’s little reward for being among the most financially prudent companies, few will embrace it. There are only two companies -- Microsoft Corp. and Johnson & Johnson

-- with top AAA ratings. In 1980, there were 32. “There’s really no value for a company to have the highest ratings,” said Jesse Fog-arty, a senior portfolio manager at Insight Investment, which oversees more than $727bn glo-bally. “It’s more of a status symbol than anything else.”

GE has ramped its borrow-ings before. In 2015, then-CEO Jeffrey Immelt said he was will-ing to add as much as $20bn of additional debt to support expansion efforts, even if it meant lower bond grades. The company was shrinking its finance unit, a key beneficiary of higher credit scores. At the time, GE was rated AA+, the sec-ond highest level.

Currently S&P has GE at AA-, its fourth-highest level. The com-pany, which had $136.4bn of debt as of the end of September, lost its AAA ratings in March 2009.

A representative for GE declined to comment.

Now new CEO John Flannery faces extra pressure. Power-gen-eration markets are slumping, and demand for oilfield equipment and locomotives is weak. The company last week slashed its expected adjusted earnings for the year to $1.05 to a $1.10 a share, from a previous range of $1.60 to $1.70 a share.

With that reduction, several analysts said GE may have to cut its dividend, a step the company has only taken one other time since 1938 -- in 2009 amid the financial crisis. GE paid about $8.5 billion in dividends in 2016, and bought back $22bn of shares.

Money managers are con-cerned about the progress of the company whose shares have been by far the worst performer in the Dow Jones Industrial Average this year. GE agreed earlier this year to cut costs through 2018 after dis-cussions with activist shareholder Trian Fund Management, the firm

co-founded by Nelson Peltz. GE’s directors named a Trian repre-sentative to its board this month, a step that S&P said could “intro-duce some uncertainty around the company’s credit quality.”

Flannery is weighing poten-tially dramatic changes to GE’s strategy and structure. He is due to detail more of his plans at an investor meeting Nov. 13. Last week he pledged to unload $20 billion of GE’s businesses, and called the company’s quar-terly earnings “completely unacceptable.”

While he hasn’t specified everything he plans to do to turn around the business, he has said “everything is on the table.” If that includes a more dramatic step such as a breakup into mul-tiple units, those could each be assigned their own credit ratings -- a risk that bondholders are not currently being paid to take, said Bloomberg Intelligence analyst Joel Levington.

Manhattan office leasing picks up on lower asking pricesDavid M. Levitt Bloomberg

Trump’s China visit: Energy, not tech, in CEO line-up

Commerce Secretary Wilbur Ross speaks to the Economic Club of New York in New York City, US, last week.

Michael Martina Reuters

Agribusiness and energy firms dominate the delegation list. They include Archer Daniels Midland Co (ADM), one of the world’s largest grain companies, and chemicals and agribusiness giant DowDuPont.

If GE gets downgraded again, it would join a growing list of companies that let their stellar credit grades slide to please shareholders.

Once bond-market royalty, GE risks average Joe issuer status

BUSINESS VIEWS 27MONDAY 30 OCTOBER 2017

28 MONDAY 30 OCTOBER 2017BUSINESS

BACK TO BUSINESS

Buyout firms crave Buffett-like long game

sight

Reuters

A few years ago, private equity managers were growing tired of sitting on the

sidelines, watching Warren Buffett’s Berkshire Hathaway make landmark investments in Kraft Heinz and BNSF Railway. They wanted to get in the game.

To play, they would need to give themselves lots of time—decades, in fact—and as near-to-permanent cap-ital as they could muster. Ambitious buyout firms bet that by raising long- duration funds, they would finally have the patient capital to do those eye-water ing megadeals they’d been coveting.

So a few of the biggest names in the industry, Car-lyle Group, Blackstone Group, and KKR, set about building their long- duration private equity businesses, hiring teams and raising multibillion- dollar funds (or forming long-life partner-ships) to buy companies that are projected to perform well over a longer time frame than the short hold period of a standard buyout fund.

“Having a longer dura-tion—let’s say a 10-year investment hold—is a much more natural investment horizon to have” in some cases, says Carlyle Global Partners LP co-head Tyler Zachem.

“It could be we’re part-nering with a family, and they want to have a longer- duration hold partner and

limited exit rights. It could be that management has an investment plan that they want to see executed over a longer period of time.”

The big private equity firms aren’t the only ones looking for a way to get into Buffett’s buy-and-hold model of investing. The ever-more sprawling network of global investors who are scrambling for a way to deploy billions upon billions of dollars in the private equity market are also searching for a toehold.

Buffett, however, is no ordinary investor. And only a few managers have found themselves equipped well enough to even attempt to play in his league. The less willing have kept to their tra-ditional three- to five-year hold period for buyout funds, which continue to outper-form other asset classes.

The success of those challenging the norm in pri-vate equity may help stir the industry into potentially accepting a new long-term model.

But even those who are using the strategy acknowl-edge investors and managers will take some time to warm to the idea.

“It’s a big ask to go to LPs to lock up their money for 10 years, let alone something well beyond that,” Zachem says. “This is not an asset class where you are going to have the same number of GPs getting funded. You have to be incredibly thoughtful about what firms and insti-tutions you have confidence in, given the time frame.”

Capital Comment

Corruption is not about culture. If you have weak institution, you will find the same behaviour(corruption) everywhere.

Ngozi Okonjo-Iweala, Nigerian economist.

NAME IN THE MARKET: LABOUR SHARES

Market Talk

New York Agencies

The AI Powered Equity Exchange-Traded Fund (AIEQ.P), which launched in the United States last week, will

use IBM Corp’s (IBM.N) Watson artificial intelligence technology to pick several dozen stocks with potential to beat the market, the fund’s backers say.

The actively managed fund chooses stocks based on a set of rules created by EquBot LLC that uses artificial intelligence to ana-lyse up to 10 years of data on thousands of stocks, including market sentiment, regulatory fil-ings, news articles and social media posts.

It ranks each company based on the forecasted probability that each will profit from cur-rent economic conditions and world events.

“There has been an explo-sion of information,” Art Amador, co-founder of EquBot, said in an interview.

The explosion of data from the internet and elsewhere

needs to be processed objec-tively, he said. “Humans do not have the capacity or the reten-tion rate to do that.”

AI involves computers combing through troves of raw data to recognize patterns and predict outcomes, and joins a set of technologies displacing tra-ditional - human - equity analysis.

Index-tracking ETFs have grown popular for letting inves-tors trade entire markets as easily as a single stock, with no research necessary.

Even investors hoping to beat the market have increas-ingly turned to algorithms to pick stocks with attractive prospects.

Starting in 2019, the Char-tered Financial Analyst exam that is a respected license for portfolio managers will add questions on artificial intelli-gence, automated investment services and mining unconven-tional sources of data.

The fund technically does have two human managers, Timothy Collins and Travis Trampe of ETF Managers Group

LLC, though they will be “prima-rily making purchase and sale decisions based on information” from the computer model, according to the fund’s offering documents filed with the US Securities and Exchange Commission.

The fund’s managers said certain activities, including buy-ing stocks that are not easily traded, still need to be done by people.

“Everyday, there is more information, not less,” CNBC quoted Art Amador as saying in a seperate report. “That informa-tion explosion has made the jobs of portfolio managers, equity analysts, quantitative investors and even index builders more challenging,” “New technology in artificial intelligence helps solve those challenges and we’re very pleased to be bringing AIEQ to market to make an AI approach to investing available to all.”

The fund currently is com-posed of 70 stocks, plus an allotment of cash, that are spread around sectors. Components are determined by “their probability of benefiting from current

economic conditions, trends, and world- and company-specific events,” EquBot said in a news release.

The top five holdings by con-centration are Penumbra, Genworth Financial, Boyd Gam-ing, Mednax and Triumph Group, according to XTF.com. The weightings range from 4.64 per-cent for Penumbra to 3.45 percent for Triumph.

“That’s a gutsy structure,” Colas said. “You’re putting your money where your mouth is if you’re concentrating positions. That’s an active-style portfolio. There is nowhere to hide. This is not a closet indexer.”

The fund’s expense ratio is 0.75 percent, or 75 basis points. That’s more expensive than a typ-ical passive ETF, with an average ratio of 0.58 percent, but a bit cheaper than other actively man-aged ETFs, which average 0.85 percent. While small, with just a $7m asset value so far, AIEQ could be the beginning of a trend.“Somebody’s got to be first,” Colas said. “If it works, it’s going to have a lot of competition pretty quickly.”

New ETF has robots pick investments

South Africa’s President rejects tax allegationsJohannesburg Bloomberg

South African President Jacob Zuma’s (pictured)office rejected allegations in a book that he failed to file tax returns for at least the first

five years of his term and said he hasn’t benefited from receiving unde-clared funds.

The allegations were published in the Johannesburg-based Sunday Times newspaper this weekend, which seri-alized excerpts from a book called “The President’s Keepers,” written by inves-tigative journalist Jacques Pauw.

“President Zuma has declared to the relevant authorities all income received and allegations contained in the reports are misleading and are clearly part of the ongoing smear cam-paigns,” the presidency said in an emailed statement. “The tax matters of the president are in order.”

Investor confidence in South Africa has been dented by Zuma’s implica-tion in a succession of scandals, including allegations that he allowed

members of the wealthy Gupta fam-ily, who are in business with his son, to loot billions of rand from state com-panies. Zuma and the Guptas deny any wrongdoing.

“The Presidency rejects the alle-gations contained in media reports today‚ 29 October 2017‚ claiming wrongdoing by President Jacob Zuma in relation to some undeclared funds‚” Presidency spokesman Dr Bongani Ngqulunga said, according to a seper-ate news report.