OFFICIAL STATISTICS | Page 8

UK wages expected to feed

pressure for Bank of England
interest rate hikes

Tuesday, August 15, 2023

Muharram 28, 1445 AH
ECONOMIC OUTLOOK : Page 7

GULF TIMES Fed is playing a

waiting game
to try to avoid

BUSINESS a recession

QLM reports
QIC net profit surges 181% QR46.7mn net
profit in H1
year-on-year to QR325mn Qatar’s leading life and medical insurer,
QLM Life and Medical Insurance (QLMI), has
reported a 25% year-on-year jump in net profit
to QR46.7mn in the first half (H1) of 2023.

in the first half of 2023

Earnings-per-share was QR 0.13 compared to
QR0.11 the same period of previous year.
“During H1-2023, the company has been able
to deliver strong performance results despite,
the intense competition, rising interest rates
coupled with challenging market conditions

Q
atar Insurance Company (QIC),
the leading insurer in Qatar
and the Middle East North Af-
rica (Mena) region, has reported a 181%
year-on-year increase in net profit to
QR325mn for the first half (H1) of 2023.
“QIC’s bottom-line results demon-
strate the success with which the com-
pany has navigated a challenging mac-
roeconomic environment in H1-2023,”
said Sheikh Hamad bin Faisal al-Thani,
chairman of QIC Group.
In addition to broad increases in net
profitability, he said the group has seen
double digit growth in its core Mena
business activities. The group’s gross
written premiums (GWP) amounted to
QR5.5bn with domestic and Mena GWP
rising 14% in H1-2023.
The macroeconomic and geopolitical
landscapes have remained challenging
in H1-2023 but show recent signs of
improvement, QIC said, adding interest
rate hikes have slowed as inflationary
trajectories ease, global labour markets
have begun to normalise, and global
shipping costs have decreased to reach
almost pre-pandemic levels.
Insurance markets also continued to
harden in select lines of business. How-
ever, inflation in the UK and the effects
of Brexit has had some effect on the UK
motor insurance market.
The group’s international operations,
Antares Global – which includes the
brands Antares Re, Antares Lloyds Syn-
dicate and QIC Europe Ltd – has per-
Sheikh Hamad bin Faisal al-Thani,
chairman of QIC Group.
formed exceptionally well, delivering a
premium volume of QR3.6bn, amid rate
hardening and tightening market con-
ditions.
Insurance service results were val-
ued at QR552mn in H1-2023 compared
to QR32mn the year-ago period and
net investment results amounted to
QR460mn during H1-2023 against
QR475mn the previous year period.
Global financial markets faced signif-
icant headwinds in H1-2023 – including
volatility due to concerns over the glo-
bal banking crisis – while government
bond markets have moved from pricing
in rate hikes to discounting sizeable rate
cuts in some markets.
Salem Khalaf al-Mannai, QIC Group
chief executive officer.
Inflation is persistent – though slow-
ing – in mature markets, meaning that
interest rate hikes by central banks have
continued, albeit at a gentler pace. De-
spite this volatile market environment,
QIC reported net investment results of
QR460mn for H1-2023 compared to
QR475mn for H1-2022. The annualised
return on investment stood at 5.4%
against 4.8% the previous year.
Though market challenges persist
due to inflation and geopolitical unrest,
the company has taken decisive steps to
minimise its exposure to high severity
and volatile international risks, Sheikh
Hamad said.
“We’re proud of QIC’s distinguishing
brand attributes, including its excep-
tional digital capabilities and opera-
tional efficiency. As we look forward to
the rest of the year, we are committed to
providing market-leading levels of cus-
tomer service and innovative, reliable
insurance products across the Middle
East, Europe, and international insur-
ance markets,” he said.
Salem Khalaf al-Mannai, Group chief
executive officer, said throughout H1-
2023, QIC has maintained its strategic
focus on expanding its primary insur-
ance business, mainly the profitable di-
rect-line insurance markets throughout
the GCC or Gulf Co-operation Council.
“Meanwhile, the company has miti-
gated risks by exiting high severity, low
margin, and loss-making international
markets. This strategy’s success has
been demonstrated by 14% growth in
domestic and Mena operations’ GWP
to QR1.9bn in H1-2023 compared to
QR1.7bn for the same period in 2022,”
he said.
As the group looks ahead to the rest
of the year and beyond, QIC remains
committed to growing its direct in-
surance vertical in the region, he said,
adding QIC’s operating priorities have
underpinned the strength of its per-
formance.
“By focusing on process efficiencies
and automation, the company has fur-
ther improved its already outstanding
operational efficiency in H1-2023,” ac-
cording to him.
and rising inflation, QLM is uniquely placed
to successfully navigate its way through and
stay focused towards driving growth and
transformation and meet the expectations
of the stakeholders.” said Sheikh Saoud bin
Khalid bin Hamad al-Thani, the Chairman of
QLM.
Net investment and other income amounted
to QR25.4mn against QR24.8mn for the same
period in the previous year.
”The H1-2023 witnessed careful treading
as we sought to remain competitive on our
pricing front while mitigating the adverse
effect of inflationary pressures and ensuring
discipline is maintained while assessing and
underwriting insurance risks,” said Fahad
Mohamed al-Suwaidi, chief executive officer
of QLM.
This approach has helped retain its valuable
clients and deliver customised solutions
within their budgets while assisting it to
ensure that basic margins are adequately
protected, he said, adding its objective is
to maximise customer satisfaction and
ensure that through its diverse offerings,
all residents and citizens can get a variety
of comprehensive coverages to suit their
specific needs.
QLM’s vision is to continuously improve its
customer experience and deliver robust
performance with a customer centric
approach.
This is effectively demonstrated by its
committed team which ensures that timely
access to quality healthcare is available to all
its insured members.

TotalEnergies Qatar empowers youth

through knowledge-sharing initiatives
TotalEnergies Qatar recently hosted
a week-long internship programme
for students from Lycée Bonaparte
TotalEnergies Qatar further demon-
strated its commitment to empower-
ing women in the energy sector by
HIA fosters collaboration among
Geochemist engineer at TRC-Q, and a
conversation with Amal Zermouni, En-
top airports worldwide
gineering, Construction and Projects

in Doha.
The internship kicked off with an
insightful health, safety, and environ-
ment (HSE) induction, followed by a
stint at the Geoscience Department to
explore earth sciences in the energy
sector. They also visited the TotalEner-
gies Research Center Qatar (TRCQ)
to witness first-hand the innovative
research and sustainable develop-
ment projects being undertaken. This
exposure to diverse departments
aimed to offer the students a real-life
glimpse of TotalEnergies’ operations
and ethos.
In recent months, TotalEnergies
Qatar has continued to underscore its
commitment to empowering youth
through various engaging and educa-
tional events, focusing on knowledge
sharing, career exploration, and lead-
ership development. These initiatives
offer students invaluable experiences
and insight into the energy sector.
TotalEnergies Qatar recently hosted a week-long internship programme for students from
Lycée Bonaparte in Doha
participating in the Women in Energy
Forum at Texas A&M University at
Qatar (TAMUQ) in June.
The presentation, delivered by
Michelle D’Lima, Field Operations
Engineer in offshore Al-Khalij field,
detailed TotalEnergies’ transforma-
tive journey in Qatar, highlighting the
proactive measures taken towards a
sustainable future.
Michelle discussed TotalEnergies’
efforts in energy efficiency, renewable
energy investments, and advance-
ments in carbon capture, utilisation,
and storage technology in Qatar and
worldwide. To promote energy re-
search awareness, TotalEnergies Qatar
also hosted 20 students at TotalEner-
gies Research Center in Qatar (TRC-Q)
located in QSTP in June.
The visit included a tour of the
centre, presentations about TRCQ’s
history, achievements, and ongo-
ing projects by Guillaume Vannier,
manager at TotalEnergies Qatar
who is a member of TotalEnergies
Women’s Initiative for Communication
& Exchange (TWICE).
The students were also introduced
to the ‘TAMKEEN’ programme,
TotalEnergies Qatar’s human de-
velopment initiative for enhancing
education and empowering the youth
in Qatar. “Through these events, we
aim to inspire and cultivate the talents
of the next generation, equipping
them with practical insights and
perspectives about the energy sector,”
expressed Matthieu Bouyer, managing
director of TotalEnergies Qatar and
country chair in Qatar.
“By partnering with educational
institutions and undertaking initiatives
like the TAMKEEN programme, we are
supporting the path toward an innova-
tive, diverse and progressive nation,
contributing to Qatar’s vision of foster-
ing a knowledge-based economy.”
H
amad International Air-
port (HIA) has taken a
leading role in fostering
collaboration among top airports
worldwide, resulting in the pro-
duction of an industry handbook
known as the Smart Data Hub
(SDH). Released under the patron-
age of Airport Council Interna-
tional (ACI), and the stewardship
of ACI’s World Airports IT Stand-
ing Committee (WAITSC), this
comprehensive publication high-
lights Hamad International Air-
port’s “commitment” to advanc-
ing the capabilities of the industry
in harnessing the value of data.
In today’s data-driven world, air- Hamad International Airport has taken a leading role in
ports are increasingly recognising fostering collaboration among top airports worldwide,
the immense potential of leverag- resulting in the production of an industry handbook
ing data to enhance operational ef- known as the Smart Data Hub
ficiency and passenger experience.
Understanding the significance of connect, share data and make in- Committee (WAITSC) since 2019,
this transformation, Hamad Inter- formed decisions. The key benefits said, “We are proud to have played
national Airport provided this glo- of adopting a Smart Data Hub ap- a leading role in fostering collabo-
bal initiative with a solid foundation proach are enhanced connectivity, ration among prominent airports
by contributing key elements of its flexibility and scalability, action- worldwide to create the Smart
own data strategy, such as the Data able insights and data maturity Data Hub handbook. This initia-
Maturity Framework. assessment. The whitepaper in- tive represents our commitment
While also facilitating the in- cludes a data maturity self-assess- to advancing the capabilities of the
clusion of valuable insights, best ment tool, helping airports gauge airport community in harnessing
practice and experience of a broad their progress in becoming data the value of their data.
community of data leaders from pioneers and identifying areas for “By sharing insights, experi-
major airports across North Amer- improvement. ences and best practices, we aim
ica, Europe, Africa & Asia. Commenting on the Smart Data to drive innovation and enhance
The Smart Data Hub handbook Hub initiative, senior vice-presi- operational efficiency across the
represents a significant milestone dent (Technology and Innovation) industry. The Smart Data Hub
in the journey towards optimising Suhail Kadri at Hamad Interna- provides a roadmap for airports
the power of data in the aviation tional Airport, who has also had to connect, collaborate and make
industry. This holistic resource the privilege of serving as the Vice- data-driven decisions – ultimately
provides a roadmap for the airport Chair and then the Chair of the delivering exceptional airport ex-
industry and its stakeholders to ACI World Airports IT Standing periences for all passengers.”
2 Gulf Times
Tuesday, August 15, 2023

BUSINESS

Blackstone explores Japanese
property after selling $4.5bn
Bloomberg
Tokyo
B
lackstone Inc is exploring
more acquisitions in Japanese
real estate, after selling about
$4.5bn worth in the past year to cap-
italise on high international interest
in property in the island nation.
The world’s largest alternative-
asset manager is working on more
acquisitions with several bids out
and properties like hotels and data
centres in the pipeline, according
to Blackstone’s head of Japan real
estate Daisuke Kitta. That comes
after it spent most of last year shed-
ding assets, including about $1.3bn
in properties sold to investors like
GIC Pte and Gaw Capital Partners,
according to Cushman & Wakefield .
“Our pipeline has increased
since the spring,” Kitta said in an
interview in Tokyo. “Our acquisi-
tions team is finally getting back to
business.” Real estate investments
in Japan have been rosy compared
to other countries, where rising
borrowing costs have squeezed fi-
nancing and workers have shunned
offices. Rock-bottom interest rates
make Japan one of the few devel-
oped markets where income from
real estate assets still exceeds the
cost of borrowing, attracting for-
eign investors.
Blackstone has used that interest
to turn over many of its assets — Ja-
pan has been one of its most active
markets in Asia-Pacific in terms of
The Tokyo Tower, left, and commercial and residential buildings stand at dusk in Minato district of Tokyo.
Blackstone is exploring more acquisitions in Japanese real estate, after selling about $4.5bn worth in the past year
to capitalise on high international interest in property in the island nation.
buying and selling. One impetus
for the move to resume acquisi-
tions was the indication that the US
Federal Reserve will slow rate hikes
— which impacts strategy globally,
Kitta said.
The $1tn asset manager, which
also has a private equity business
and recently began private credit
operations in Japan, closed on a
$30bn global real estate fund in
April. It also has $8.2bn in com-
mitted capital for a third Asia real
estate fund, according to its lat-
est earnings statement. Based on
past allocations, that means it may
deploy at least $2bn in Japan over
the next five years, according to
Bloomberg calculations.
A recent wave of pressure on
corporate governance in Japan also
means many companies are shed-
ding non-core property assets — a
rich source of acquisitions, accord-
ing to Kitta.
Blackstone has made bids, in-
cluding for real estate businesses
via its private equity arm, in deals
that could be as high as $1bn, he
said. Japan exited coronavirus re-
strictions later than many other
countries, meaning recovery-relat-
ed growth still has room to expand,
Kitta said.
The robust rebound in tourism
has been one particular bright spot.
“Hotels probably are our top of
the list,” Kitta said. Although for-
eign tourism numbers are not fully
recovered in Japan, “if you look at
the revenue per available room, it’s
all exceeding 2019 levels.”
Tuesday, August 15, 2023
BUSINESS
Asian markets fall on
China property woes
AFP
Hong Kong
Asian markets posted sharp
losses yesterday after falls in
US tech stocks and as concerns
over China’s property sector
weighed on sentiment.
Hong Kong — Hang Seng Index
closed down 1.6% to 18,773.55
points; Shanghai — Composite
ended down 0.3% to 3,178.43
points and Tokyo — Nikkei 225
closed down 1.3% to 32,059.91
points yesterday.
Leading the losers in Hong
Kong — where shares closed
down more than 1% — was
developer Country Garden,
after it missed bond payments
and warned of multi-billion-
dollar losses, deepening
concerns over China’s heavily
indebted real estate sector.
Its shares were down more
than 18% at the close, days
after its billionaire boss Yang
Huiyan said the firm was
“facing the greatest difficulties
since our establishment”.
Privately owned Country
Garden is on Forbes’ list of the
500 largest companies in the
world. The firm has long been
deemed financially solid but
was unable last Monday to
make two bond payments, and
after a 30-day grace period, the
company risks defaulting in
September if it still cannot pay.
Like its heavily indebted
competitor Evergrande, any
collapse of Country Garden
would have catastrophic
repercussions for the Chinese
Gulf Times
5
financial system and economy.
Fears for Chinese property
companies were causing
regional markets’ gradual
decline, Stephen Innes of SPI
Asset Management wrote in
a note.
“This negative sentiment has
spread to other Asian markets,
resulting in a generally
subdued atmosphere across all
exchanges,” he said.
Singapore dipped by more
than 1%, and Tokyo closed
down by a similar amount.
During the morning, the dollar
was fetching 145.10 yen, its
strongest level against the
Japanese currency since
November.
But the yen rebounded
throughout the day, and was
trading at 144.80 per dollar
when the market closed,
against 144.93 yen seen Friday
in New York. Shanghai and
Manila were also down.
European markets opened
little changed, with traders
keeping a wary eye on China,
as well as US inflation risks.
In London, shares fell 0.2%,
while Paris was flat and
Frankfurt edged up 0.2%.
The rouble slid past 100
against the dollar, its lowest
level since March 23, 2022 —
shortly after Russia invaded
Ukraine.
Stock markets had wavered on
Friday after US data showed
a bigger-than-expected
rise in wholesale inflation,
with traders weighing the
likelihood of more interest rate
hikes this year.
6 Gulf Times
Tuesday, August 15, 2023

BUSINESS
QSE MARKET WATCH

Hedge funds prepare COMPANY NAME

Zad Holding Co
Widam Food Co
Vodafone Qatar
United Development Co
Lt Price
13.64
2.28
1.88
1.19
% Chg
-2.36
-2.40
0.91
-0.83
Volume
1,974
2,274,633
210,320
884,072

for legal battle with SEC

Salam International Investment 0.73 -0.68 4,984,237
Qatar & Oman Investment Co 0.86 -1.83 2,189,100
Qatar Navigation 10.15 0.00 293,988
Qatar National Cement Co 3.98 1.30 86,958
Qatar National Bank 16.50 -1.02 1,943,320
Qlm Life & Medical Insurance 2.73 -2.64 15,234

over fee disclosures

Qatar Islamic Insurance Group 9.28 2.54 48,429
Qatar Industrial Manufacturing 3.05 0.00 43,731
Qatar International Islamic 10.06 -2.99 582,813
Qatari Investors Group 1.73 0.52 524,452
Qatar Islamic Bank 20.20 -0.98 712,250
Qatar Gas Transport (Nakilat) 3.84 -0.83 2,728,025
Qatar General Insurance & Reinsurance 1.32 -8.04 105,504
Bloomberg Qatar German Co For Medical 2.44 -0.65 9,629,132
Washington Qatar Fuel Qsc 16.33 -0.55 170,383
Lesha Bank Llc 1.51 -0.85 1,801,300
Qatar Electricity & Water Co 18.09 0.00 242,367

H
edge funds and private
equity firms are laying
the groundwork for a le-
gal clash with the US Securities
and Exchange Commission (SEC)
over its bid to tighten rules on
disclosing fees and dealing with
investors.
The Managed Funds Associa-
tion (MFA) recently told members
that the trade group could sue the
SEC within two weeks of the new
regulations being finalised, un-
less they’re softened significantly
from what the agency proposed
in February 2022. The e-mail
message, which was obtained by
Bloomberg News, spotlights ris-
ing industry angst around a cor-
nerstone of Chair Gary Gensler’s
regulatory agenda.
As proposed, the new rules
would require hedge funds and
private equity firms to disclose
details of what they charge inves-
tors, while blocking certain types
of fee arrangements. It would
also be easier for pensions and
endowments to successfully sue
managers over investment deci-
sions.
Trade groups and investment
firms, including Citadel and An-
dreessen Horowitz, have sent the
SEC comments opposing the plan
since the regulator released its
initial proposal.
The SEC hasn’t announced a
date to implement the plan, but
a near-final version is now cir-
culating between the offices of
the agency’s five commissioners,
according to people familiar with
the status, who asked not to be
identified discussing non-public
matters. That typically means a
final vote could come in a month,
or less.
“MFA has been preparing to
defend members through litiga-
tion,” the group said in its recent
note to members. “As a part of
MFA’s litigation strategy, we have
gathered a coalition of impacted
trade groups to join our poten-
Tesla reignites EV price war with new cuts in China
Bloomberg
Beijing
Tesla Inc cut prices again in China,
sending auto stocks tumbling on
concerns the move will rekindle
an international price war that had
shown signs of abating.
The automaker marked down the
Long Range and Performance
versions of the Model Y sport
utility vehicle by 14,000 yuan
($1,900) to 299,900 yuan and
349,900 yuan, according to a
post on its Weibo account. Tesla
also extended an 8,000-yuan
insurance subsidy for the base
version of the Model 3 sedan,
keeping the perk in place through
the end of next month.
The reductions — amounting to
about 4.5% and 3.8% for the two
The US Securities and Exchange Commission headquarters in Washington, DC. Hedge funds and private
equity firms are laying the groundwork for a legal clash with the SEC over its bid to tighten rules on
disclosing fees and dealing with investors.
tial suit against the SEC.” The
group said that suing depends on
an internal approval process and
whether the final version ulti-
mately fails to blunt aspects of the
plan that MFA opposed. Its mem-
bers include many of the biggest
hedge fund and private equity
firms in the world.
The US Chamber of Commerce
and private equity-funded Amer-
ican Investment Council have
spoken with the MFA and other
trade groups about common con-
cerns about the proposed rules,
said people with knowledge of
the discussions, who asked not be
identified discussing the delib-
erations. Various trade groups are
waiting for the final details before
deciding how to mobilise.
Tom Quaadman, executive
vice-president for the US Cham-
ber of Commerce’s Center for
Capital Markets Competitive-
ness, said that his organisation
would review the final rule before
making any decisions on poten-
tial lawsuits. “In its current form,
the proposal is unworkable for
Model Y versions, respectively —
may presage “similar select cuts”
in the US and Europe soon, Chris
McNally, an analyst with Evercore
ISI, said in a note.
That would pressure the
company’s third-quarter profit
margin, he added.
Tesla’s actions follow moves
by Geely Automobile Holdings
Ltd’s Zeekr brand, which lowered
prices by as much as 37,000 yuan
last week, as well as Zhejiang
Leapmotor Technologies Ltd,
which discounted by as much as
20,000 yuan at the beginning of
the month. Tesla started the price
war with an initial round of cuts
beginning late last year that have
made some of its models almost
50% cheaper than in the US and
Europe.
Rivian Automotive Inc and Lucid
many private fund advisers,” he
added. A representative for AIC
declined to comment.
In a statement, the SEC said it
“undertakes rulemaking consist-
ent with its authorities and laws
governing the administrative
process.” The agency didn’t ad-
dress the MFA’s plans.
Under the SEC’s rulemaking
process, a majority of the agen-
cy’s five commissioners vote to
propose regulatory changes. Af-
ter taking into account comments
from industry, academia, lawyers
and the general public, the regu-
lator’s staff makes tweaks and
then the commission holds a sec-
ond vote months or years later to
finalize a version of the plan. The
agency is nearing that final stage.
Since taking office in 2021,
Gensler, the SEC chair, has been
focused on bringing more trans-
parency to hedge funds and pri-
vate equity firms. He has also
often argued that their fees are
opaque, while their footprints
across markets demand height-
ened scrutiny. The private equity
Group Inc also declined. China’s
best-selling automaker, BYD
Co, sank 6.2% in Hong Kong,
while Li Auto Inc, Xpeng Inc and
Leapmotor shares all slumped.
“Price competition has been and
will remain an ongoing theme
in China’s auto market,” said
Joanna Chen, an auto analyst at
Bloomberg Intelligence. “Tesla
is trying to keep volume rolling
after July sales showed its slowing
order intake without new models
to attract Chinese buyers.”
Tesla’s shipments from its China
plant plunged 31% in July to
the lowest level this year. The
automaker announced last month
that global production would
drop in the third quarter due to
downtime for factory upgrades,
without offering specifics. It’s
expected to start making a
Qatar Exchange Index Etf 10.37 -0.52 12,930
Qatar Cinema & Film Distribution 3.15 1.25 11,160
Al Rayan Qatar Etf 2.32 20,590
-1.19
Qatar Insurance Co 2.14 3.33 2,124,212
Qatar Aluminum Manufacturing 1.36 0.30 24,560,925
Ooredoo Qpsc 11.16 0.36 563,834
Alijarah Holding Company Qps 0.88 1.27 6,372,614
Mazaya Real Estate Development 0.80 0.00 14,852,025
Mesaieed Petrochemical Holding 1.94 0.36 3,399,272
Mekdam Holding Group 5.00 0.00 910,486
Al Meera Consumer Goods Co 14.30 1.42 70,701
Medicare Group 6.19 15,365
0.68
Mannai Corporation Qsc 5.42 0.04 393,320
Masraf Al Rayan 2.49 -0.36 9,969,547
Industries Qatar 13.35 -1.91 1,785,615
Inma Holding Company 4.99 0.32 220,525
Estithmar Holding Qpsc 2.13 0.85 1,529,781
Gulf Warehousing Company 3.37 1.54 800,049
Gulf International Services 2.37 9.97 13,741,871
Al Faleh Education Holding 0.96 -0.31 36,706
Ezdan Holding Group 1.10 -0.27 5,534,114
Doha Insurance Co 2.40 4.30 1,256,304
Doha Bank Qpsc 1.72 0.41 2,238,194
Dlala Holding 1.64 5.72 6,023,776
Commercial Bank Psqc 6.09 2,341,829
-0.21
Barwa Real Estate Co 2.76 0.00 3,777,751
Baladna 1.53 0.92 2,947,962
Damaan Islamic Insurance Co 3.80 2.15 7,700
industry has ballooned in the past Al Khaleej Takaful Group 3.08 8.69 6,099,191
decade as pensions, endowments Aamal Co 0.86 -0.12 1,039,301
Al Ahli Bank 3.92 -
and insurers have reached further 0.00
beyond stock and bond funds into
more complex and illiquid invest-
ments in search of yield. Buyout
firms and nonbank lenders, which
grew on the back of lighter regu-
lations than the mutual fund in- Weak yen gives Japan’s
dustry, now face more scrutiny
from US financial watchdogs over
how they are protecting investors
automakers temporary
and the costs of their reach.
The SEC’s 2022 proposal called
relief from China pain
for lowering the legal threshold
investors must meet for success- Reuters conservative forecasts for the
fully suing fund managers. Law- Tokyo currency.
yers for the industry say that such For instance, Toyota has stuck
a change would likely lead to an to its forecast for an average
up-tick in litigation against fund Japanese automakers are getting exchange rate of 125 to the dollar
managers. much-needed cover from an this business year, a level not
It would also prohibit funds old standby, as the weaker seen since April 2022, about
from giving certain investors yen helps prop up profits amid a month after the US Federal
special redemption abilities and declining sales in China and Reserve started raising interest
require earlier disclosure of pref- the increasingly tough shift to rates. The yen was at 144 on
erential treatment. So-called ac- electric vehicles. Thursday.
celerated monitoring fees, which Toyota, Honda and Nissan At smaller Subaru, a move of
involve charging lump sums when recently reported earnings that one yen against the dollar has a
a portfolio company is sold ahead topped analyst estimates by ¥20bn impact on operating profit,
of schedule, would be banned. 6% to 21% in the three months CFO Katsuyuki Mizuma said
through June, and all cited the earlier this month.
currency as a factor. On Wednesday, a Honda official
“If the yen stays low, they clearly said its April-June operating profit
benefit but it doesn’t offset any
other concerns,” said Satoru
came in tens of billions of yen
higher than expected, with the
Aoyama, senior director at Fitch weak yen accounting for about
revamped version of the Model 3 Ratings Japan. half of that.
sedan soon. “They are struggling in the “The yen wasn’t only weak
While plug-in vehicle deliveries in Chinese market,” he said. “They against the dollar, but also
China slipped in July from June, just don’t have an immediate against other currencies,
BYD, Li Auto and Nio Inc all set solution” for their problems there, including in Asia and Europe, so
new records for shipments. he added. that comes through as a profit,”
Tesla Chief Executive Officer Nissan late last month upgraded the official said.
Elon Musk warned last month its full-year operating profit The yen’s cushion couldn’t come
that the carmaker would have forecast, raising it by ¥30bn at a better time for Japanese
to keep cutting prices if interest ($208mn) to ¥550bn. About automakers, which are struggling
rates continued to rise. Several ¥20bn of that came from the in China. The world’s largest auto
rounds of discounting already currency, CFO Stephen Ma told a market is increasingly being
have taken a toll on the company’s briefing. dominated by home-grown
automotive gross profit margin, A weak yen has traditionally lifted players.
which fell to a four-year low in the profits for Japan’s big exporters, Nissan’s China sales to retail
second quarter. although it is no longer as large customers slumped 46% during
A group of automakers including a boon for automakers that the quarter and those of Honda
Tesla and BYD pledged early have increased their overseas were down 5%.
last month to maintain fair manufacturing in recent years. Sales of Toyota, including of its
competition and avoid “abnormal Automakers’ shares are quick Lexus luxury brand, rose over
pricing” in China, only to retract to react to swings in the yen, the period. For the first half of
the agreement days later due to although the companies the calendar year, they declined
antitrust concerns. themselves tend to stick to almost 3%.

Russia rouble tumbles, Kremlin blames loose monetary policy

Reuters “The main source of rouble den criticism of the central bank loss of the bulk of the European
Moscow weakening and accelerating in- late last week. gas business but also by the suc-
flation is soft monetary policy,” “Every other country is laugh- cess of the G7 oil price cap, the
Oreshkin wrote in an op-ed for the ing at us, at our rouble being one much higher cost of imports due

P
resident Vladimir Putin’s
economic adviser rebuked
the central bank yesterday as
the rouble slid past 101 per US dol-
lar, blaming loose monetary policy
in a sign of growing discord among
Russia’s monetary authorities.
The rouble has lost around a
quarter of its value against the
dollar since Putin sent troops
into Ukraine in February 2022, as
Western sanctions shrink Rus-
sia’s balance of trade and military
spending soars.
It hit 101.7475 per US dollar yes-
terday, its weakest point in almost
17 months and 30% down so far
this year. Based on the cross rate,
the year-to-date fall was 26.2%.
Putin’s economic adviser Max-
im Oreshkin said the central bank
could ensure that the pace of
lending drops to sustainable levels
with higher rates. High consumer
lending, along with a stark labour
shortage and wide budget deficit
have all fanned inflation this year.
TASS news agency. “The central
bank has all the tools to normalise
the situation in the near future.”
The Bank of Russia’s next scheduled
interest rate decision is on Septem-
ber 15. Asked whether it might make
an emergency hike from the current
8.5%, it declined to comment.
Oreshkin said a strong currency
was important for the economy.
“A weak rouble complicates the
economy’s structural transfor-
mation and negatively affects the
population’s real incomes,” he
said. The central bank has blamed
the rouble’s slide on Russia’s
shrinking current account surplus
— down 85% year-on-year in Jan-
uary-July. Yesterday, the bank said
it saw no financial stability risks
from the rouble’s weakening but
that a rate hike was possible soon.
Higher interest rates would
make life harder for borrowers,
including companies and the gov-
ernment as it finances military
operations in Ukraine. Central
of the three weakest currencies,
thanks to the ‘genius’ policy of the
central bank,” he said.
The rouble has chartered a tur-
bulent course since Russia invad-
ed Ukraine, slumping to a record
low of 120 against the dollar in
March last year before recovering
to a more than seven-year high a
few months later, supported by
capital controls and surging ex-
port revenues.
In the year leading up to the the
war, the rouble traded at around
74 to the dollar on average, with
its movement dictated by factors
US one-dollar and Russian 100-rouble banknotes in an illustration like prices for oil, Russia’s major
picture. Rouble hit 101.7475 per US dollar yesterday, its weakest point in export, and susceptible to sharp
almost 17 months and 30% down so far this year. geopolitics-induced swings.
“The weaker rouble is a damn-
Bank Governor Elvira Nabiullina rouble and stubbornly high infla- ing indictment of Russia’s war on
won plaudits for her handling of tion hurt consumers. Ukraine,” Timothy Ash, a Lon-
the economy in the immediate Popular pro-Kremlin televi- don-based senior sovereign strat-
aftermath of Russia’s invasion, sion presenter Vladimir Solovyev, egist at BlueBay Asset Manage-
but she may be being lined up as whose Rossiya 1 shows are watched ment, said in an email.
a scapegoat ahead of next March’s by millions of Russians, launched “It is being driven not only by
presidential election, as the weak into an aggressive, expletive-rid- lower energy receipts due to the
to sanctions and then continued
capital flight.” Last week, Russia
effectively abandoned its budget
rule, with the central bank halt-
ing the finance ministry’s FX pur-
chases to try to reduce volatility.
Analysts widely agreed that those
measures alone were too minimal
in scope to significantly support
the currency.
“The central bank is not fully in
control,” independent Moscow-
based economist Ian Melkumov
told Reuters, although it has ag-
gressive tools that it is currently
reluctant to use. He said the bank
could hike rates drastically, as it
did to 20% shortly after Russia be-
gan what it calls a “special military
operation” in Ukraine. A move to
even 15% would stop the rouble’s
decline, he said, but it would come
at a price.
“The central bank doesn’t want
to kill the economy and businesses
in the same way it had to last year,”
he said.
 Gulf Times
Tuesday, August 15, 2023 7

BUSINESS
Eurozone
Fed is playing a waiting game government
bond yields
to try to avoid a recession edge higher
Bloomberg ing, it doesn’t necessarily rule
Washington out more overheating that leads Reuters
to another leg of higher prices. London
“I don’t think you can know

A
n increasing number of whether there’s a soft landing

economists — including
the Federal Reserve’s own
staff — are predicting the US will
escape a recession, though it’ll be
well into 2024 before anyone can
be sure of it.
Fed Chair Jerome Powell says
he expects the central bank to
navigate a path where the US
economy expands with inflation
rates falling back to the 2% tar-
get, though the task will be chal-
lenging.
On one side, a failure to act ag-
gressively enough against price
pressures could result in re-
bounding inflation that requires
harsher moves later. There’s also
the risk that the lagged effects of
what’s already the most aggres-
sive tightening in four decades
could tip the economy into re-
cession.
“Unfortunately, I don’t think
the picture on any of this will be
clear for at least two quarters,
though the fact that inflation has
come down has bought the Fed
some time, for now,” said Jonath-
an Millar, a senior economist at
Barclays Capital Inc. “The Fed
seems to be well ahead of markets
in recognizing that the path to a
soft landing is far from assured.”
The National Bureau of Eco-
nomic Research’s business cycle
committee, the official arbiter of
US downturns, defines a reces-
sion as a significant decline in
economic activity spread across
the economy that lasts more than
a few months. It can take as long
as 21 months to declare such an
event, once the group processes
what can be initially mixed re-
ports and data revisions.
While there’s no formal defi-
nition of a soft landing, most
economists see it as the mod-
eration of inflation without a
recession or serious harm to the
labour market.
The US Federal Reserve building in Washington, DC. An increasing number of economists — including
the Fed’s own staff — are predicting the US will escape a recession, though it’ll be well into 2024 before
anyone can be sure of it.
The path isn’t easy: A study
by former Fed Vice Chair Alan
Blinder of 11 monetary policy
tightenings from 1965-2022
found that four resulted in some-
thing approximating that suc-
cessful outcome with stable or
lower inflation, the rest in hard
landings and or a re-acceleration
in inflation two years later.
“There are risks on both sides,”
said Richard Clarida, who served
as vice-chair from 2018-2022
and is now global economic ad-
visor at Pacific Investment Man-
agement Co. “I think we’re going
to have a pretty good sense of this
by next spring.”
“On recession, a lot of indica-
tors point to July 2022 as pos-
sibly the cyclical peak. The out-
standing indicator that doesn’t
is payrolls — and lots of murmurs
there on large downward revi-
sions which have the potential
to actually turn nonfarm payroll
numbers into negative territory
in the past few months. But we
won’t know until next year for
‘real’ 2022 figures, and we will
only know in 2025 what the ‘real’
2023 figures look like,” says Anna
Wong, economist at Bloomberg.
Fed officials are looking over
an even longer period. The Fed-
eral Open Market Committee,
the central bank’s policy-setting
group, is forecasting inflation
hitting its 2% target likely soon
after 2025. But the contours of a
moderate economy with stable
prices would be pretty clear in the
incoming data by later next year
or the following if the projections
prove prescient.
Because engineering such an
outcome is time consuming, the
committee is estimating inter-
est rates will be higher for long-
er. They’re anticipating a rate
at 4.6% at the end of next year,
which is two points higher than
the long-term trend and about
a half-point higher than what
markets are expecting.
The Fed raised rates last month
to a range between 5.25% and
5.5%, the highest in two decades,
and has signalled they may hike
again this year.
Recent economic data has ex-
ceeded economists’ projections,
with the 3.5% unemployment
rate among the lowest in decades,
while a key measure of underly-
ing inflation in July posted the
smallest back-to-back increases
in more than two years. While
that’s supportive of a soft land-
without the benefit of hindsight,”
said Neil Dutta, head of econom-
ics at Renaissance Macro Re-
search LLC, who sees a potential
“inflationary boom” as oil prices
are climbing and high home pric-
es could feed into rents.
His concern has been echoed
by policymakers who are keen to
avoid repeating the mistake of the
1970s, when the Fed prematurely
let up on its efforts to contain in-
flation, only to see price increases
re-accelerate to double-digit
levels later.
“The worst outcome for eve-
ryone, of course, would be not to
deal with inflation now, not get it
done,” Powell said in July.
Because economic data often
looks mixed at turning points
and is later revised, and it’s not
too unusual to have a quarter of
negative growth during a long
expansion, it will be impossible
to determine whether the Fed has
succeeded in real time.
After all, the US experienced
two consecutive quarters of con-
traction in the first half of 2022
— what typically constitutes a
recession in other economies.
History provides a similar
guide. Six months into what was
later defined as the 2007-2009
recession, FOMC participants
were predicting moderate growth
in 2008.
Then-Chair Ben Bernanke ini-
tially dismissed concerns about
the subprime mortgages’ broader
effect on the economy.
“In most cycles, even at a
turning point, we’re not re-
ally sure,” said Julia Coronado,
president of MacroPolicy Per-
spectives LLC and a former Fed
economist, who worries about
the Fed overdoing rate hikes.
“Let’s have some patience. The
only hope for a soft landing is
that they stick to that patience.”
E
urozone government bond
yields edged higher yesterday
as US economic data and a rise
in natural gas prices last week high-
lighted the upside risks to the infla-
tion outlook.
US Treasury yields rose to one-
week highs on Friday after pro-
ducer price inflation in July was
stronger than expected, a day after
data showed consumer prices rose
modestly.
Gas prices rose last week on con-
cerns strikes could affect Australian
liquefied natural gas (LNG) produc-
tion, but retreated as the prospect of
disruption appeared to ease.
US natural gas futures hit their
highest in over five months last week,
while Dutch gas futures, widely used
as the benchmark for the European
market, gained nearly 30% in a day.
Germany’s 10-year government
bond yield, the euro area’s bench-
mark, was flat at 2.62% after hitting
a one-month high at 2.64%.
Analysts said that expectations for
the rate outlook in the euro area are
unchanged despite the rise in yields,
with the US Treasuries setting direc-
tion in the fixed-income market.
Money markets priced in a more
than 50% chance of a European Cen-
tral Bank rate hike by year-end, which
would bring the depo rate to 4% and a
rate cut by the first half of 2024.
December 2023 ECB euro short-
term rate (ESTR) forwards were at
3.83%, implying expectations for a
depo rate at around 3.93%, from the
current 3.75%.
“These expectations (no rate hike
in September but possible further
rise by year-end) keep German yields
rangebound, with the benchmark 10-
year Bund yield around 2.5%,” said
Annalisa Piazza, rate strategist at
MFS.
MFS’s Piazza does not expect the
ECB to raise rates in September, but
suggested further tightening moves
were possible if inflation keeps rising.
Some analysts see euro area bonds
as relatively insulated from a poten-
tial sell-off in US Treasuries due to
weak economic data.

SoftBank in talks to buy Vision Fund’s 25% stake in Arm
Reuters years given the size of the stake. It would
New York also be more risky for the fund’s investors
since it is possible that Arm’s shares could
drop following the IPO.
are handling the negotiations, one of the
sources added. The exact valuation for
Arm that the two sides are discussing for
their transaction could not be learned, and
as cornerstone investors in Arm ahead of
its IPO, including Amazon.com Inc, Reu-
ters has reported.
SoftBank last week said VF1 delivered a
German wholesale prices fell by
2.8% in July compared to the same
time a year ago.
The German yield curve narrowed
its inversion, with the gap between
2-year and 10-year yields at -40 bps,
close to its highest level since the end
of May.

S
oftBank Group Corp is in talks to
acquire the 25% stake in Arm Ltd it
does not directly own from Vision
Fund 1 (VF1), a $100bn investment fund it
raised in 2017, according to people familiar
with the matter, potentially delivering a
win for investors who have waited years for
strong returns.
The discussions come as Softbank is
preparing to list the chip designer on Nas-
daq next month at a valuation of $60bn to
$70bn.
If the negotiations lead to a deal, the
Japanese tech investor would be deliver-
ing a major, immediate windfall to VF1
investors, including Saudi Arabia’s Public
Investment Fund and Abu Dhabi’s Mu-
badala. They nursed losses after many of
Softbank’s bets on startups such as work-
space provider WeWork Inc and ride-
sharing firm Didi Global soured.
The alternative — letting VF1 sell its
Arm shares in the stock market over time
following the initial public offering (IPO)
— would typically take at least one to two
VF1 returned to profitability in the lat-
est quarter thanks to investors’ excitement
around artificial intelligence boosting the
value of some of the startups in which it
invested.
Yet its previous losses prevented Soft-
Bank from securing outside investors for
Vision Fund 2 (VF2), whose $56bn in capi-
tal came from the Japanese firm and its
management, including Chief Executive
Masayoshi Son.
A big windfall for VF1 investors could
boost SoftBank’s chances of tapping them
for capital again in the future. It has been
considering raising a third Vision Fund.
Son, who has hired investment bank
Raine Group to advise SoftBank on the
negotiations, has recused himself from
VF1’s deliberations on the matter so that
the fund makes a decision independently
in the interest of its investors, the sources
said.
VF1’s investment committee and Soft-
Bank’s investment advisory board, at-
tended by fund investor representatives,
the sources cautioned that it is possible
that no agreement will be reached.
If a deal is inked, SoftBank would be sell-
ing fewer Arm shares in the IPO and would
be likely retaining a stake of between 85%
and 90%, according to the sources, who
requested anonymity because the negotia-
tions are confidential.
SoftBank, VF1 and Arm declined to
comment. Raine did not immediately re-
spond to requests for comment.
Arm’s IPO would be a boon not just for
VF1 but also for SoftBank, which reported
its third consecutive quarterly loss last
week.
It was hit by declines in the valuations
of major holdings such as Chinese e-com-
merce firm Alibaba Group, German tel-
ecommunications company Deutsche Tel-
ekom and US wireless carrier T-Mobile US.
SoftBank, which took Arm private for
$32bn in 2016, sold a 25% stake in the com-
pany to VF1 for $8bn in 2017. SoftBank has
also been in talks with several technology
companies about bringing them onboard
gain of $12.4bn on $89.6bn of investments,
while VF2 carried a $18.6bn loss on $51.8bn
of investments.
The investment giant has been in “de-
fence mode” since May 2022 after technol-
ogy valuations crashed amid a rise in inter-
est rates and economic uncertainty. But in
June, Son said he was planning to shift to
“offence” mode amid excitement over ad-
vances in artificial intelligence.
SoftBank began preparations for an IPO
of Arm after a deal to sell the company to
Nvidia Corp for $40bn collapsed last year
over objections from US and European an-
titrust regulators. Arm’s IPO could now
raise up to $10bn.
Arm’s business has fared better than
the broader chip industry because it li-
censes designs rather than paying to make
processing systems itself. Its technology
has become ubiquitous in smart phones
and data centres, delivering lucrative
royalty payments. Yet demand for smart
phones has weakened lately, weighing on
Arm’s earnings.
An inverted curve, which is usu-
ally a reliable indicator of a future
recession, means markets are pricing
events that would trigger rate cuts by
central banks.
Expectations that the ECB will
keep rates high for longer to tame in-
flation are driving long-dated yields
higher making German curves less
inverted.
Investors will monitor short-dated
German bonds as the Bundesbank
said it would stop remunerating de-
posits for the German public sector
from October.
“We expect a considerable amount
of the remaining deposits to be
switched into BuBills over time,” said
Christoph Rieger, head of rates and
credit research at Commerzbank.
The German 1-year BuBill yield
dropped 2.5 bps to 3.56%. It was
around 3.64% on August 4 before the
Bundesbank decision. It hit its high-
est since 2008 at 3.785% on July 12.

US Steel shares soar after it rejects $7.25bn Cliffs bid

Bloomberg
New York
United States Steel Corp surged in
premarket trading after it rejected a
takeover offer from rival Cleveland-Cliffs
Inc to create one of the world’s biggest
steelmakers, and said it will begin a review
of its strategic options instead.
US Steel, an icon of American industry
with roots stretching back over a century,
on Sunday announced a formal process
to assess its alternatives after receiving
approaches for parts or all of the business.
About three hours later, Cliffs went public
with its cash-and-share bid, which values
the company at about $7.25bn based on
closing prices on Friday, a 43% premium. US
Steel surged as much as 32% in premarket
trading, while Cliffs edged lower.
Cliffs said it submitted the proposal
privately on July 28 and received a
rejection letter on Sunday, calling the offer
“unreasonable.” US Steel later confirmed
the response, but defended its decision
saying that Cliffs had refused to sign a
non-disclosure agreement unless the
Pittsburgh-based producer agreed to
the economic terms of the proposal in
advance. The back-and-forth jousting was
part of a whirlwind Sunday in which two of
the biggest American steelmakers thrust
the future makeup of the industry into
question, just a week from the start of the
biggest steel conference in North America.
A deal with US Steel would catapult
Cliffs into the ranks of the top producers
globally, a list dominated by China. The
combined company would hold a powerful
position as the primary supplier to the
US auto industry, as well as ownership of
100% of domestic iron ore reserves. It’s
an issue US Steel addressed in its letter to
Cliffs, saying it had discussed with Cliffs’
counsel questions that both sides would
need to better understand to assess
antitrust risk in the proposal.
Cliffs, which was traditionally an iron
ore miner rather than a steelmaker, has
been the most active dealmaker in the US
industry in recent years — first snapping
up AK Steel Holding Corp, and then buying
the US business of European steel giant
ArcelorMittal. The purchases made Cliffs a
key operator of traditional blast furnaces
in the US, and gave it a massive foothold
in the highly profitable business of
steelmaking for the car industry.
The bid comes at a time when producers
including US Steel are predicting that
domestic demand will benefit from green-
energy infrastructure and manufacturing
projects, bolstered by the Biden
administration’s Inflation Reduction Act.
It also shines a light on one of the key
dynamics in the global steel industry: the
divide between traditional blast-furnace
production of steel from iron ore, and the
more efficient, cost-effective and lower-
emission plants that remelt scrap and turn
it into steel, called electric-arc furnaces.
Cliffs Chief Executive Officer Lourenco
Goncalves, known for his combative
personality and who never shies away
from publicly stating his opinions, still has
little footprint in electric-arc furnaces.
However, US Steel, which traces its roots
back to 1901 when J Pierpont Morgan
merged a collection of assets with
Andrew Carnegie’s Carnegie Steel Co,
has undergone a dramatic shift in recent
years under CEO David B Burritt, as its
investment focus pivoted towards the
more modern plants.
Burritt, who took the helm of the then-
struggling metal producer in 2017,
purchased Big River Steel in Arkansas and
expects to pour an additional $3bn in the
operation by 2024 to double its capacity.
The bet has paid off, with shares of the
company doubling since the end of 2019,
although the stock had retreated 9.3% this
year through last week. Cliffs had declined
8.8% in 2023.
Ohio-based Cliffs said on Sunday it offered
to pay $17.50 in cash and 1.023 of its shares
for each US Steel stock. That implies a
value of $32.53 per share as of Friday’s
close, a 43% premium to US Steel’s last
closing price of $22.72 and values the
Pittsburgh-based company at about
$7.25bn.
“Although we are now public, I do look
forward to continuing to engage with
US Steel on a potential transaction, as I
am convinced that the value potential
and competitiveness to come out of a
combination of our two iconic American
companies is exceptional,” Goncalves said
in the statement.
 Tuesday, August 15, 2023

GULF TIMES BUSINESS

Foreign funds’ selling pressure drags QSE index 70 points
By Santhosh V Perumal
Business Reporter
The foreign institutions’ increased
net profit booking yesterday
steered the Qatar Stock Exchange
to the negative terrain as it lost 70
points in key index and QR3bn in
capitalisation.
Selling pressure, especially in the
banking counter, led the 20-stock
Qatar Index shed 0.65% to
10,708.35 points.
The Gulf institutions’ weakened
net buying had its influence in the
main market, whose year-to-date
gains weakened to 0.26%.
The Arab retail investors’ lower net
buying interests also had its say
in the main bourse, which saw the
index touch an intraday high of
10,793 points.
The Gulf individuals continued
to be net profit takers but with
lesser intensity in the main
market, whose capitalisation shed
QR3.15bn or 0.5% to QR628.86bn
with midcap segments losing the
most.
The foreign individual investors
turned bullish in the main bourse,
which saw a total of 0.03mn
exchange traded funds (sponsored
by Masraf Al Rayan and Doha
Bank) valued at QR0.18mn
changed hands across 11 deals.
The local retail investors were seen
net buyers in the main market,
which saw no trading of sovereign
bonds.
The Islamic index was seen
declining slower than the main
index in the main market, which
saw no trading of treasury bills.
The Total Return Index fell 0.65%,
Al Rayan Islamic Index (Price)
by 0.58% and All Share Index by
0.56% in the main bourse, whose
trade turnover grew amidst lower
volumes.
The banks and financial services
Holding saw its shares depreciate
in value.
Nevertheless, Gulf International
Services, Al Khaleej Takaful, Dlala,
Doha Insurance, Qatar Insurance,
Alijarah Holding, Qatar National
Cement, Qatar Islamic Insurance,
Beema and Gulf Warehousing
were among the gainers in the
main bourse. In the junior market,
Mahhar Holding saw its shares
appreciate in value.
The foreign institutions’ net selling
increased noticeably to QR17.06mn
compared to QR7.74mn on August
13.
The Gulf institutions’ net buying
Selling pressure, especially in the banking counter, led the decreased considerably to
20-stock Qatar Index shed 0.65% to 10,708.35 points QR6.52mn against QR19.68mn the
previous day.
sector index declined 0.95%, Major losers in the main market The Arab individuals’ net buying
consumer goods and services include General Insurance and weakened perceptibly to
(0.46%), industrials (0.44%), Reinsurance, QIIB, QLM, Widam QR1.08mn compared to QR3.55mn
transport (0.39%) and real estate Food, Zad Holding, QNB, Industries on Sunday.
(0.32%); whereas insurance shot up Qatar and Nakilat. Ion the venture However, the foreign individual
2.1% and telecom 0.49%. market, Al Faleh Educational investors turned net buyers to
the tune of QR5.97mn against net
sellers of QR0.6mn on August 13.
The domestic funds were net
buyers to the extent of QR2.68mn
compared with net sellers of
QR2.6mn the previous day.
The local retail investors turned
net buyers to the tune of QR1.03mn
against net profit takers of
QR11.94mn on Sunday.
The Gulf retail investors’ net profit
booking eased marginally to
QR0.22mn compared to QR0.35mn
on August 13.
The Arab institutions had no major
net exposure.
Trade volumes in the main
market fell 6% to 150.6mn shares,
while value expanded 15% to
QR385.14mn and deals by 55% to
17,194.
The venture market saw a
90% surge in trade volumes to
1.2mn equities, 106% in value
to QR2.55mn and 103% in
transactions to 237.

Mannai
Corporation
consolidated
revenue at
QR2.6bn in H1
Mannai Corporation has earned net profit
of Q38mn on revenues of QR2.6bn in the
first half (H1) of this year.
Earnings before interest and taxes
(EBIT) for the period were QR165mn.
On a like-for-like basis, excluding profits
from discontinued operations, this was
an increase of QR84mn over the same
period last year.
The net profit comes amid finance
costs of QR126mn, which increased
“significantly” over the same period last
year due to the increased bank interest
rates, the company said.
With economic activity across Qatar
expected to increase in the second half of
the year, the group’s business-to-business
divisions in particular remain well
positioned to benefit with further growth
in revenue and net profit compared to the
previous year.
Dollar hits more than
one-month high
Reuters
Washington
UK wages expected to feed
pressure for BoE rate hike
Bloomberg
London
B
ritain’s inflation fever may be
starting to break, but data due out
this week is expected to show the
economy has more cooling to do before
the Bank of England can change course
on interest rates.
Official statistics are slated to show
today that wages accelerated to the fast-
est pace on record in July, pushing up
inflation in the services sector, accord-
ing to a Bloomberg survey of economists.
That will likely temper optimism about a
subsequent report on Wednesday that is
forecast to show consumer price pres-
sures eased to the lowest level in almost
1 1/2 years.
Such figures leave little reason yet for the
Bank of England to end its longest cycle of
interest rate hikes in three decades. Inves-
tors are betting that policymakers led by
Governor Andrew Bailey will raise the key
lending rate again in September and No-
vember, while the European Central Bank
and US Federal Reserve have left the door
open to a pause in their tightening. Commuters pass the Bank of England in the City of London. Britain’s inflation fever may be starting to break, but data due out this
“Taken together, the latest data sug- week is expected to show the economy has more cooling to do before the BoE can change course on interest rates.
gest that strong wage growth will likely
contribute to keeping inflation elevated
in the coming months,” said Paula Bejar-
be driven to a large extent by the fact that
last year’s energy price rises in July would
Official data, are not expected to show
any easing of wages pressures yet as scarce
ratcheted up the cost of mortgages, eating
into household budgets already strained
ano Carbo, an economist at the National fall off the calculations.”
He also said that, “if inflation surprises
workers bid up wages. Average earnings
growth excluding bonuses may tick up
by the biggest cost-of-living squeeze in
generations. A YouGov survey showed
Institute of Economic & Social Research.
“High nominal wage growth may contrib- to the upside and that means markets to 7.4% in the quarter through June from consumer confidence dropped for a sec-
ute to making inflation more persistent.” start pushing rate expectations up again, 7.3% in the previous three-month period. ond month in July. The outlook for retail
UK inflation probably slid to 6.7% in that would force the bank to act.” That would be the highest in records going sales that month is also negative, reflect-
July from 7.9% the month before, accord- Inflation has fed through to govern- back to 2001. The BoE has said the current ing chilly weather and concerns that rates

T
he US dollar hit more than a one-month
high yesterday as investors sought a
safe haven due to concerns about Chi-
na’s economy, and traders braced for possible
Japanese government intervention after the
yen hit its lowest level since November.
The dollar index, which tracks the cur-
rency against its major peers, was up 0.36% to
103.23, its highest level in more than a month.
Analysts said investors bought the dollar as
shelter from concerns about the health of the
global economy, particularly China.
A source told Reuters that Country Gar-
den, China’s largest private developer, is
seeking to delay payment on a private on-
shore bond for the first time, in a new sign of
stress in the sector.
Meanwhile, two Chinese listed firms said at
the weekend they had not received payment
on maturing investment products from asset
manager Zhongrong International Trust Co.
ing to the median forecast collected by
Bloomberg. That compares with the lat-
est reading of 3.2% in the US and 5.3% in
the euro area.
Any decline in the headline number
would be a relief to Prime Minister Rishi
Sunak’s government, whose budget defi-
cit is under growing strain from higher
debt-service costs and demand from
workers for more pay.
While the UK figure would be the low-
est since early 2022, underlying pressures
that exclude food and energy prices are
likely to remain near their strongest level
in three decades. The core measure of
the Consumer Prices Index is expected
to ease to 6.8% from the peak of 7.1%
reached in May.
“We expect what I’d say would be a
significant fall,” said Debapratim De, a
senior economist at Deloitte. “It would
ment spending, which rose 5.7% from a
year ago in June and was £2.3bn ($2.9bn)
higher than the Office for Budget Re-
sponsibility forecast. The overshoot was
due to a 6.4% increase in public-sector
staff costs, a 22.9% rise in welfare benefits
and the £3.6bn cost of the energy support
scheme for struggling households.
Lower inflation would relieve some of
those pressures. But Bailey and the BoE
say that upside risks to inflation are lin-
gering and that policymakers probably
will keep rates high until those pressures
subside.
Labour market figures coming Tuesday
are likely to show a more mixed bag. Un-
employment is expected to remain at 4%.
However, with recent surveys showing
people returning to the workforce, some
economists are expecting joblessness to
tick higher.
pace of wage growth is incompatible with
the 2% inflation target.
“There is also wage pressure from em-
ployers wanting to do the right thing by
their staff if they can when the cost of
living is high,” said Kitty Ussher, chief
economist at the Institute of Directors.
“Conversely if employers start to believe
we are through the worst because that’s
what the data and the media says, we may
see a reduction in wage growth.”
Those factors have left the BoE signal-
ling that rates will remain at an elevated
level for months if not years to ensure in-
flation is under control.
“It’s the last mile which obviously is
where policy is really doing the work,
and we’re going to have to see policy stay
restrictive,” Bailey told Bloomberg TV
on August 3 after delivering a 14th con-
secutive rate hike. Those increases have
would head much higher.
“Following a near uninterrupted up-
swing in consumer sentiment since No-
vember last year, British consumers have
cooled on their assessment of economic
conditions in recent months,” said Kay
Neufeld, director at the Centre for Eco-
nomics and Business Research, which
helped conduct the survey.
UK economists have shaved their
growth forecasts for next year to 0.5%
from 0.6% in the past month, a poll by
Bloomberg showed. It’s the lowest figure
they’ve estimated since the survey start-
ed in early 2022.
While the main forecast is that the UK
will avoid a recession, interest rates, now
at 5.25%, are likely to peak at 5.75% in
November, according to the survey. That
would be the highest level since 2007 —
just before the global financial crisis.

Texas oil executives net $122mn in bankruptcy-to-Exxon journey

Bloomberg
New York
About three years after Texas oil
producer Denbury Inc emerged
from bankruptcy, four top
executives are set to collect the
final instalment of a $121.5mn
post-reorganisation pay deal that
rivals some of the industry’s most
generous compensation packages.
Chief Executive Officer Chris
Kendall will receive the final
portion of equity awards valued
in total at $68.7mn by year
end, according to this year’s
proxy statement. His three top
lieutenants will also split the
remainder of their $52.8mn
package, just as the company
looks to close a $4.9bn takeover by
Exxon Mobil Corp. Kendall’s total
is just shy of the value of stock
awards Exxon CEO Darren Woods
received over the past three years
for running a company 100 times
Denbury’s size.
Denbury’s payouts, which are
tied to share performance and
staying with the company, are due
to the executives in December
regardless of any takeover,
though a sale would expedite
the process. The coincidental
deal with Exxon — whose offer
was only marginally higher than
Denbury’s stock price — highlights
the lucrative compensation plan
and how awards granted during
a company’s darkest days can
swell to extraordinary levels if its
fortunes turn.
“It’s not a bad payday for a
company that came out of
bankruptcy two-and-a-half years
ago,” said Timm Schneider, an
analyst at Schneider Capital
Group. “It becomes interesting
from a shareholder perspective
because they’re doing this deal at
no premium. The optics don’t look
great.”
Denbury shareholders must still
approve Exxon’s all-stock takeover,
which won unanimous backing
of the company’s board. Exxon’s
$89.45-a-share offer was just 2%
higher than Denbury’s share price
when announced July 13 and the
deal was almost 20% less than
the average target price among
analysts at the time, according to
data compiled by Bloomberg.
Most of Denbury’s incentive
package stems from so-called
post-emergence grants given
to executives following its exit
from Chapter 11 proceedings in
2020. This type of equity award
is commonly given to executives
of bankrupt companies to entice
them to stick with the business
through a reorganisation and to
make up for the fact that their
pre-existing equity was probably
wiped out — as was the case for
Denbury’s executives.
“The vast majority of Denbury’s
executive compensation results
from the 2020 emergence grants,
which are nearly completely
vested and were scheduled to
be delivered in December 2023,
regardless of the company’s
pending merger,” a company
spokesperson said by email.
Like most public companies,
Denbury’s compensation plan
included an accelerated payout
schedule if the company gets sold
— which would get triggered if the
Exxon deal closes as planned in the
fourth quarter.
Kendall’s equity package is more
than double what the CEOs of
California Resources Corp. and
Talos Energy Inc would stand to
receive in the event of a sale and
higher than that of Occidental
Petroleum Corp, a company twelve
times Denbury’s market value.
California Resources also declared
bankruptcy in 2020.
Denbury’s payout stands out
in part because its stock has
seen a fivefold increase since
the company emerged from
bankruptcy, more than its peers.
Denbury was one of many US
oil and gas producers to fall into
bankruptcy when Covid-19 struck,
causing energy prices to plunge.
Its specialisation in enhanced
oil recovery, a high-cost method
of producing crude by pumping
carbon dioxide into old wells, left it
unable to pay debts, prompting the
company to file for Chapter 11.
Kendall, who became CEO in 2017,
led Denbury through bankruptcy
and remained in charge when the
company re-listed in September
2020. On December 4 that year,
the board granted him and
key executives equity awards,
according to a 2021 filing. Half
the shares would vest in equal
increments over three years while
the rest would pay out in full if
the stock topped a series of price
hurdles, with the highest being
$25.75 a share.
Denbury’s stock easily surpassed
these thresholds, averaging
$27.50 in the first two months
following the award and more than
doubling within six months as oil
prices rebounded, ensuring the
executives would be entitled to the
full award if they stayed with the
company.
“It is uncommon to see
performance targets so obviously
unchallenging,” said Maria Vu, a
senior director of North American
compensation research at proxy
adviser Glass Lewis & Co. She
described Denbury’s price targets
as “unusually lacking” in rigour.