Sunday, December 12, 2021Jumada I 8, 1443 AH

BUSINESSGULF TIMES Argentina seeks further

growth in bilateral ties with Qatar, says envoy

FOOD SECURITY : Page 12

Ooredoo partners with Zscaler to enhance its managed security service

CLOUD ENVIRONMENT : Page 2

Standalone creditworthiness of Qatar banks stays strong: Moody’sBy Pratap JohnBusiness Editor

Standalone creditworthiness remains strong for Qatar’s banks, Moody’s Inves-tor Service said and noted that govern-

ment willingness and capacity to support banks in a crisis boost their long-term credit ratings.

Economic recovery and higher oil prices are building investor confi dence in the region, Moody’s said in its latest ‘Banks — Gulf Co-op-eration Council: 2022 Outlook’.

GCC banks’ strong capital and liquidity shield against rising non-performing loans as loan repayment holidays and other pandemic support schemes expire.

“The outlook for GCC banks is stable as the region’s economies recover,” it said.

Capital will remain strong, providing a solid loss-absorbing buff er, Moody’s said and noted high levels of loss-absorbing capital are a key credit strength of GCC banks.

The shock from the pandemic made little im-pact on GCC banks’ strong capital buff ers. Most banks remained profi table despite higher loan-loss provisioning

Responsible actions by banks and regulatory controls limited dividend payouts during the pandemic and so helped keep capital buff ers steady. Capital requirements set by GCC bank regulators are higher than guidance provided under Basel III global capital standards.

This is to counter risks posed by large con-centrations of loans to single borrowers and to a limited number of sectors. Loan concentrations refl ect a lack of diversifi cation in GCC econo-mies and the control of certain large family-owned conglomerates on business activity.

Banks are increasingly issuing cheaper Basel III-compliant Additional Tier 1 capital instru-ments (particularly in the UAE and Qatar) and Tier 2 capital instruments (predominantly in Saudi Arabia). These provide an additional cushion of regulatory capital, Moody’s said.

Ample provisions provide an extra buff er against credit losses, Moody’s said and noted provisioning coverage is highest in Kuwait, Qa-tar and Saudi Arabia, lowest in Bahrain.

Overall loan-loss reserves (including Stage 1, 2 and 3 IFRS 9 expected credit losses) for GCC banking systems remain healthy and cover more than 100% of problem loans on average, the outlook said.

“We expect loan-loss coverage to remain healthy despite a small increase in problem loans as loan repayment holidays schemes ex-pire. Real-estate collateral pledged against many problem loans provide additional secu-rity,” Moody’s noted.

GCC bank’s profi tability is recovering but re-mains below pre-pandemic levels, it said.

The provisioning needs will fall but will re-main higher than average. Higher rates will be positive for GCC banks’ margin.

“We expect the profi tability of GCC banks to pick up after the shock of the pandemic, but a full recovery will take some time. Provisioning charges will decline signifi cantly but remain higher than normal because new problem loans will form as loan repayment holiday schemes expire,” Moody’s said.

Most GCC countries maintain currency pegs against the dollar and follow the US Federal Re-serve policy interest rate.

Expectation of higher rates will be positive for banks’ margin. Investments in IT infrastructure and digital strategies will allow banks make cost savings. These measures will keep GCC banks’ cost-to-income ratios stronger than those of global peers, Moody’s said.

QIB ranks 3rd in Forbes Middle East top ‘30 Most Valuable Companies in Qatar’Qatar Islamic Bank (QIB) was ranked third place in the Forbes Middle East’s ‘30 Most Valuable Companies in Qatar’, making it the largest in the private sector, at the Forbes Digital Qatar Symposium and Awards 2021.Recognising the biggest companies in Qa-tar, Forbes Middle East acknowledged top companies in the country based on their market capitalisation. With a market value of $11.9bn and a market share of over 40% in the country’s Islamic banking sector, QIB emerged as third place as the ‘Most Valuable Company in Qatar’. Attended by top executives from leading companies in Qatar, Gourang Hemani, chief financial off icer at QIB, received the award on behalf of the bank.The ranking reflects QIB’s outstanding performance, and further highlights the strength and dedication the bank contin-ued to show in the past year. As the largest Islamic bank and the largest private sector bank in the country, QIB’s total income increased to QR6.12bn for the first nine months of 2021 and net profit amounted to QR2.52bn.As part of its digital transformation plan, QIB recently launched an all-new version of its award-winning mobile app, creating a simplified and more engaging user experi-ence. Furthermore, QIB launched the first video banking service in Qatar through its mobile app and introduced more features to ‘Zaki’, the first AI virtual assistant in Qatar, off ering customers more control of their banking needs from anywhere around the globe.QIB recently launched Apple Pay enabling its customers to pay safely and securely using their Apple devices. In addition, QIB partnered with The Group to launch the Stock Trading Service through its mobile app and expanded its Direct Remit Service to the Philippines, Pakistan, and Jordan fol-lowing its successful launch in India.

In addition, QIB enhanced its Absher Rewards programme, adding global and regional favourite fashion and entertain-ment brands to the programme’s extensive list of redemption partners.For corporate customers, QIB launched Host-to-Host (H2H) online payment management solution making it the first Islamic bank that allows corporate customers to submit their payments from their Enterprise Resource Planning (ERP) systems automatically without any manual intervention at any time, in addition to de-veloping its fully integrated postal delivery Point of Sale (PoS).Bassel Gamal, QIB Group CEO, said: “We are pleased to be recognised as one of the most valuable companies in the country by Forbes Middle East. This award reflects the bank’s strength and dedication during these unprecedented times. As a leading bank in Qatar, we have contributed to reshaping the banking scene in the coun-try as we strive to continue to improve our digital transformation strategy and

customer-centric approach. This accolade is a strong reinforcement of the bank’s resilient financial and business model.“These achievements reflect the bank’s success in maintaining its leading position in the competitive banking industry in Qatar. It is a true testament of the eff orts of our employees, the continuous support of our board of directors, the confidence of our customers in our services, and our commitment to constantly develop our products. This new accolade is a great addition to the more than 40 awards received this year from major international magazines, including The Banker, The Asian Banker, and Global Finance.”Forbes Middle East extended the Forbes brand footprint across the Arab world, setting the pace for preemptive business journalism by uncovering trends and anticipating business opportunities in the regional marketplace. The ‘Most Valuable Companies in Qatar’ list ranked companies in diff erent sectors based on their market capitalisation as of November 9, 2021.

GWC honoured at the inaugural ‘Forbes Digital Qatar Symposium & Awards 2021’Qatar’s leading logistics provider GWC has been awarded at the inaugural ‘Forbes Digital Qatar Symposium & Awards 2021’, which was aimed at honouring the digital transforma-tion journey of the public and private sector.The award was received by GWC’s chief financial off icer Hicham Nedjari on behalf of the company, which is among the top listed companies in Qatar and has achieved many milestones in developing the nation’s logistics infrastructure and providing fully inte-grated supply chain solutions.The award comes at a time of a mas-sive overhaul of the services provided and a fast-paced progression of Qatar to being a smart city, in the lead-up to the FIFA World Cup Qatar 2022.Commenting on the distinctive achievement, GWC Group CEO Ranjeev Menon said: “GWC has always been committed to playing its role in the

fulfilment of Qatar National Vision 2030. We are cognisant that our role as the off icial logistics provider for the FIFA World Cup Qatar 2022 is pivotal in making this sporting event an unprecedented success and we look

forward to be extensively involved in all aspects of the tournament logistics operations.”“GWC firmly believes in the power of digitalisation and has put in place vari-ous initiatives to ensure that they are able to provide holistic and innovative solutions to its client while keeping sustainability, cost and eff icacy at the heart of it,” Menon added.Earlier this year, GWC was recognised among the top 10 logistics companies in the Mena region by Forbes Middle East, reaff irming its monumental growth since establishment in 2005 to becoming Qatar’s largest logistics provider and one of the fastest grow-ing companies in the region.As the ‘Regional Supporter and Off icial Logistics Provider’ of FIFA World cup Qatar 2022, GWC has been doing due diligence in ensuring that their proc-esses and systems are of the highest standard.

GWC’s CFO Hicham Nidjari receiving the award.

GWC Group CEO Ranjeev Menon.

Gourang Hemani, chief financial off icer at QIB, receiving the award on behalf of the bank.

Standalone creditworthiness remains strong for Qatar’s banks, Moody’s Investor Service said and noted that government willingness and capacity to support banks in a crisis boost their long-term credit ratings

BUSINESSGulf Times Sunday, December 12, 20212

What’s a taper, and why has Fed started tapering?By Steve Matthews

The financial world has spent much of 2021 arguing over when “the taper” would begin. In the US it’s arrived, and yet there’s still no end of questions about its impact. Tapering is shorthand for a gradual end to the massive bond-buying program the Federal Reserve unleashed in early 2020, when the pandemic crashed the economy. The Fed is hoping to find a balance between supporting a still-vulnerable economy while containing the inflationary pressures sparked by the pandemic’s ebb. Among its peers, the European Central Bank and the Bank of Japan appeared furthest from tapering their own bond programmes, while other central banks, particularly in Latin America, rushed to raise interest rates in an eff ort to cool price increases.

1. What’s a taper?

The term is used to describe the gradual trimming of the Fed’s purchases of Treasuries and government-guaranteed mortgage-backed securities. The hope is to wean the economy slowly off the extra stimulus the purchases provide to avoid a crash landing. The Fed had been buying $120bn of bonds per month but began trimming that by $15bn a month starting in November, a pace that would bring the program to an end in mid-2022.

2. How much did the Fed buy?

From early March 2020 to late November 2021, the Fed more than doubled the value of its assets, to $8.7tn. An initial lump of purchases came in a three-month scramble described as a way of maintaining market liquidity; the bank switched to steady monthly purchases in December 2020, saying that pace would

continue until there was “substantial further progress” in the economic recovery.

3. What’s the idea?

The Fed’s usual method of fighting recessions is to push down interest rates, stimulating economic activity by allowing banks to off er cheaper loans. But in the wake of the 2008 financial crisis, the Fed realised that cutting the short-term rate it controls virtually to zero was not medicine enough. So it began buying long-term bonds, whose rates are set by the market, a program called quantitative easing. Adding to the demand for long-term bonds lowered their yields.

4. Do other central banks use this tool?

Yes, including the Bank of England, the BOJ and the ECB. The latter two never stopped the bond purchases they started after the financial crisis and stepped up their buying after the pandemic hit. The Covid-19 crisis also led a number of banks that had not previously bought bonds to join in, including the central banks of Canada, Chile and Indonesia.

5. Has the Fed tapered before?

Yes, and it went pretty smoothly after an initial glitch. When then-Fed Chairman Ben Bernanke suggested in May 2013 that the central bank was just considering scaling back its bond purchases, financial markets took fright in what was dubbed the “taper tantrum.” The subsequent rise in long-term interest rates hit the US housing industry and emerging markets hard. The Fed announced the actual taper in December 2013; starting the next month, purchases were cut by increments of $10bn per month until they ended in October 2014.

6. Why is the Fed tapering now?

As the US economy rebounded strongly from the

pandemic, supply chain bottlenecks and pent-up demand drove inflation to its highest since 1982. Meanwhile, the labour market continued to add jobs, with unemployment falling to 4.2% in November. Even as the taper began, Fed chair Jerome Powell suggested its pace might be quickened in response to price pressures. He and other Fed off icials stressed that interest-rate increases would not be considered until the taper was done. Fed policy makers in September had been split on whether rates would rise in 2022 or in 2023.

7. What’s at stake?

A lot. The gusher of cash the Fed poured into the financial system helped drive US stocks and housing prices to record highs. Investors could interpret a sped-up taper as a sign that the Fed will move rate hikes forward. Tightening policy too quickly could derail the economic recovery at a time of continued uncertainty over the duration of the health crisis. Moving too slowly could fuel inflationary pressures. That prospect became more worrisome when energy prices began rising as winter fuel shortages loomed in Europe and Asia.

8. Are other central banks following suit?

The ECB said it would cut the level of its bond-buying in the final quarter of 2021. But its president, Christine Lagarde, insisted the move wasn’t a taper, just an adjustment of a program still set to continue. BOE officials laid the groundwork for tighter monetary policy there, while central banks in Brazil, Chile, Mexico and Paraguay, along with those in Hungary, New Zealand, Norway and Pakistan, have responded to inflation by increasing borrowing costs. Still, JPMorgan Chase & Co economists estimate developed market central banks will add a net $1.5tn in assets to their balance sheets in 2022.

Bloomberg QuickTake Q&A

Ooredoo partners with Zscaler to offer zero trust-based managed security serviceOoredoo Qatar has enhanced its managed security off ering with the addition of the Zscaler Zero Trust Exchange to its portfolio.The new partnership allows Ooredoo customers to be supported in their transformation strategies to create secure cloud-only environments as the basis for delivering secure and user-friendly access to all business applications. With the Zscaler Enforcement Node being hosted by Ooredoo, all data traff ic will be managed in line with local data residency regulations.The Zscaler Zero Trust Exchange cloud platform has been built for the needs of cloud-based businesses that operate in multi-cloud environments

and rely on a fast and secure user experience for their employees. The multi-tenant cloud architecture delivers best-in-class security, scalability, and performance for modern ‘work from anywhere’ organisations. Featuring a proxy-based architecture for a full inspection of encrypted traff ic in the Zscaler cloud, the zero trust concept brings security and policies right up to date and makes appliance-based security obsolete. Ooredoo customers can replace their traditional gateways with the help of this managed security off ering and transform their network and security infrastructures in a modern, cloud-based way.

Hassan al-Emadi, senior director, ICT Product Development at Ooredoo, said: “Ooredoo customers can now work with the transformative zero trust concept, which will allow them to update security and policies, all while rendering appliance-based security redundant. These are exciting times as we move in the direction of a cloud-

based infrastructure for all types of businesses throughout the State of Qatar.” Sean Sullivan, director, Alliances and Channel EMEA at Zscaler, said: “The Zscaler Zero Trust Exchange supports businesses on their transformation journey and helps to provide a simpler, faster, and more productive

experience for today’s digital enterprises. We are looking forward to the partnership with Ooredoo, which provides managed security services that are accelerating the digitisation eff orts of their customers.”Ooredoo Managed Security Services allow users to work from proxy securely. The Zero Trust principle

of ‘least privilege access’ controls all traffic, providing extensive security using context-based identity and policies to regulate access to applications in the corporate data centre or multi-cloud environments. The Zscaler Zero Trust Exchange offers highly integrated security services, such as Secure Web Gateway, Cloud Firewall, Cloud Sandbox, CASB, and Cloud DLP all in one cloud platform.Business customers can leverage the Ooredoo Advantage, making Ooredoo ‘Best for Business’, thanks to its breadth and depth of talent, best fixed and mobile networks, broadest portfolio of ICT services and solutions, and trusted partner for 60 years.

Quantitative easing in US may end in Q1, paving way for rate hikes in 2022: QNBQuantitative easing (QE) in the United

States is set to end in the fi rst quarter (Q1) of 2022, which can pave the way

for rate hikes already in H1 next year, QNB has said in its weekly commentary.

The US Federal Reserve (Fed) continues to dominate macroeconomic discussions. After supporting the ‘Great Pandemic Refl ation’ (2020-21), a stimulus-induced recovery that brought the US economy back to life from the depths of a sharp downturn, the Fed seems to be on the edge of a signifi cant policy change to a more “hawkish” stance.

With the ultra-easy policy following the pandemic shock, the Fed cut interest rates to close to zero and injected massive amounts of liquidity into the fi nancial system.

The liquidity injection took place either through emergency measures or through a large-scale asset purchase programme (quantitative easing, or QE) of $120bn a month.

As a result, the Fed’s balance sheet bal-looned to more than $8.6tn in total assets. This helped to stabilise markets, boost senti-ment and support credit and demand.

However, the Fed is now starting to enact its monetary policy “normalisation” proc-ess. The change was offi cially announced in September 2021, when Jerome Powell, the Fed’s chairman, indicated the expected timeframe of the “tapering” process, i.e., the process of scaling down the QE pro-gramme. Back then, Powell announced a gradual reduction of long-term asset pur-chases, QNB said.

QE already started to be reduced from $120bn per month to $105bn last month. Ac-cording to the Fed September guidance, QE is set to be continually reduced by $15bn all the

way to mid-2022, when net asset purchases from the Fed would reach zero.

More recently, in his Congressional tes-timony on November 30th, Powell doubled down on the normalisation narrative, suggest-ing that elevated infl ation (core personal con-sumer expenditure price index – PCE – spiked to 4.1% y/y in October) could justify ending asset purchases sooner than planned, which would imply a faster than $15bn per month QE reduction. This communication, interpreted as a “hawkish” pivot by several analysts, led to signifi cant risk-off moves in markets, with eq-uity prices declining, short-term interest rates rising and volatility increasing.

In our view, three factors explain Powell’s recent hawkish pivot towards a faster nor-malisation of monetary policy.

First, the Fed leadership was recently empowered by a fresh new four-year term, which strengthens the legitimacy of any sig-nifi cant policy changes. In fact, US President Joseph Biden announced the re-nomination of Jerome Powell for chair of the Fed in mid-November.

The re-nomination took place against a backdrop in which “progressives” were ad-vocating the nomination of more “dovish” names that would support “easier” poli-cies for longer, in order to fund higher social spending from the government.

The confi rmation of Powell was under-stood by many as an additional backing from the administration to a more hawkish mon-etary policy agenda on the back of a strong economic recovery and above target infl a-tion.

Second, to the extent that the US real economy still needs support to achieve pre-pandemic levels of employment, there is lit-

tle evidence that more liquidity would be the right instrument to promote real growth and new jobs. Currently, money supply growth is not feeding credit growth.

Excess reserves are abundant in US com-mercial banks as they are holding much more cash than they need for their commercial operations. The cash-to-total asset ratio of lending institutions, which captures liquidi-ty conditions in the banking sector, has surge to close to all-time highs.

Therefore, QE is currently not supporting the economy while it is still contributing to asset price infl ation which, indirectly, also feeds into consumer price infl ation.

Third, as the Fed playbook requires the end of QE before any policy rate increases, the Fed is creating the conditions for a rapid response to potential price pressures on the infl ation front.

In other words, the Fed wants to be done with the QE tapering process as soon as pos-sible so that it can quickly raise rates in case infl ation accelerates further from here, re-quiring stronger action from policymakers.

“All in all, the hawkish pivot is real. In our view, the pace of Fed tapering or QE reduc-tion will likely increase to $30bn per month from the current $15bn per month. This im-plies that the QE is set to end in Q1, 2022. In principle, this can pave the way for rate hikes already in H1 next year.

“However, we expect it to be much more diffi cult to implement rate hikes than QE tapering. This leaves us to place a question mark on the expected pace of rate hikes in H1 2021, given that the macro environment remains uncertain, in light of renewed Cov-id-19 concerns with the Omicron variant,” QNB said.

Turkish central bank seen to cut policy rate by 100bpsReutersIstanbul

Turkey’s central bank is expected to cut its policy rate by 100 basis points to 14% next week, a Reuters poll showed on Friday,

forging on with an easing cycle that has sent the currency crashing to record lows and infl ation soaring above 21%.

The central bank has already cut its policy rate by 400 basis points to 15% since September.

Twelve of 13 economists polled expected the bank to cut its key interest rate on December 16 with estimates ranging from 25 to 200 basis points.

One economist expected the bank to hold steady and none predicted a hike.

The currency is down 31% since the begin-ning of November, upending household budgets, eroding incomes and driving import infl ation.

The policy has drawn widespread criticism from economists and opposition politicians who call it reckless.

On investor conference calls this month, cen-tral bank governor Sahap Kavcioglu signalled the easing would likely pause in January after one more cut this month.

One participant told Reuters that the bank, in response to a question, said the chances of hold-ing rates at 15% in December had increased due to the selloff .

Barclays said authorities are determined to continue easing since they consider infl ation — which hit a three-year high of 21.31% last month — transitory, and they see lira volatility as irra-tional.

“One critical question, in our view, is what is a low interest rate — 12%, 8% or 5%? We expect a 200-point cut (in) December followed by a 100-point cut in January 2022,” Barclays said in a note.

It added that “excessive” currency volatility makes any medium-term prediction quite dif-fi cult.

The poll also showed an expectation that the policy rate will stand at 12% at the end of 2022, according to the median of eight respondents.

Economists generally see infl ation shooting toward 25% by the end of this year and toward 30% next year, due in part to the currency plunge.

Turkey’s real interest rate is deeply negative, a red fl ag for investors and savers, including Turks who have fl ocked to hard currencies.

Separately, Turkey’s industrial production is expected to have expanded 8.3% annually in October, rising for a 16th consecutive month in a sustained burst of economic activity since the lifting of coronavirus measures, a Reuters poll showed on Friday.

Output plummeted more than 31% in April 2020 as many factories temporarily halted opera-tions in the initial coronavirus wave.

After a strong economic rebound in the sec-ond half of 2020, new virus-related curfews were adopted earlier this year but did not aff ect pro-duction.

The median estimate in a Reuters poll of six in-stitutions showed year-on-year growth of 8.3% in the calendar-adjusted industrial production index in October.

Forecasts ranged between 6.8% and 10.4%.

S&P lowers Turkey outlook to negative, citing ‘rising risks’

S&P Global Ratings on Friday changed its outlook for Turkey’s credit rating to negative from stable, as the country struggles with high inflation and a depreciating currency, reports AFP.Turkey’s annual inflation has surged above 20% to its highest level in three years. In justifying its outlook downgrade, S&P pointed to both price increases and the lira currency’s loss in value as risks. “The negative outlook reflects what we view to be rising risks to Turkey’s externally leveraged economy over the next 12 months from extreme currency volatility and rising inflation, amid mixed policy signals,” the ratings agency said.S&P made no change in its ratings of Turkey’s debt.But it warned that could change if the govern-ment’s policies “further undermined the exchange rate of the lira and worsened the inflation outlook, heightening the risk of banking system distress.”

BUSINESS3Gulf Times

Sunday, December 12, 2021

Dip buyers scoring historic win in stocks that defy bond warningBloombergNew York

The twin issues that have recently rocked stocks - the Omicron coronavirus variant and a hawkish Federal Reserve - did noth-ing this week to deter dip buyers, who powered American equities to their best rally in 10 months.

As the latest Covid-19 strain sparked fresh restrictions around the world and surging consumer prices kept the Fed on track to tighten, bargain hunters poured back in, powering the S&P 500 to an all-time high with gains in four of the five days. Hedge funds, who cut equity exposure at a ferocious pace during the November rout, re-emerged as buyers. Eq-uity funds lured money for an 11th straight week. And bullishness crept higher in the options market.

It’s another lesson for bears that’s been driven home repeatedly in 2021: Betting against stocks has become futile. Dip buy-ers have been rewarded virtually every time the market has pulled back, so much so that by one measure the strategy is having one of its best years on record.

“All of our fears seem to have been overblown about 2021, and that’s proved to be a successful environment for dip buyers,” said Art Hogan, chief markets strategist at National Securities. “Nothing succeeds like success, and when that pat-tern starts to repeat itself, it gets noticed and more people join the game.”

The latest episode has bulls basically ignoring an ominous sign from the bond market, where short-term rates are rising, while long-term ones fall. This flattening of the yield curve is viewed by many as a message that the Fed is poised to snuff out the economic growth that’s been rocket fuel for corporate earnings.

Stock buyers argue that a booming economy can withstand the anticipated two 25 basis-point rate hikes next year af-ter the Fed signalled it would move faster to wind down its bond-buying program. And even though data on Friday showed consumer prices rose the most in four decades last month, views on the pace of tightening did not get more dire.

“By speeding up taper and starting rate hikes early, the Fed should be able to proceed at a pace that doesn’t threaten the expansion,” said Steve Chiavarone,

portfolio manager and head of multi-asset solutions at Federated Hermes. “So you’ll see the 10-year go up more as the market gets comfort that the growth they’re see-ing today will persist for some time.”

The equity faithful can be forgiven for

focusing on the bright side because every threat in 2021 - from supply-chain disrup-tions to commodity inflation to the new coronavirus variant - has done nothing to halt the $30tn rally since the pandemic trough in March 2020.

After two weeks of declines, the S&P 500 started this one with the best three-day rally in more than a year. Traders went risk-off on Thursday ahead of the widely followed inflation data, only to return the next session and power the S&P 500 to its first record in almost a month. All told, the benchmark index climbed almost 4% for the best week since February.

The dip-buying strategy has rewarded investors throughout the year after big down days. Since January, the index has posted 19 sessions of dropping more than 1%. Thirteen of them were immediately followed by an up day. The 68% win rate is poised to be the third-best for any year since 2007.

Hedge funds, who slashed their equity exposure at the fastest pace since April 2020 during the prior two weeks, were back as a source of demand. They were net buyers of stocks for the first time in four weeks, driven mostly by a reduction in bearish positions, according to data compiled by Goldman Sachs Group Inc.’s prime brokerage.

More broadly, investors keep pouring money into stocks. Funds focused on US equities attracted $8bn of fresh money

over the week through Wednesday, Bank of America Corp said, citing data from EPFR Global. In the options market, bears retreated, with the Cboe equity put-call ratio falling from a 13-month high. Apple Inc, which climbed almost 11% this week, saw bulls snapping up call contracts to wager on further gains.

“Fear of missing out is still alive,” said Alon Rosin, Oppenheimer & Co’s head of institutional equity derivatives. Though he noted some nervousness among money managers who are under pressure to pre-serve performance heading into year-end while the Fed’s policy meeting looms next week. There are “lots of cross currents clearly with the biggest mystery being how will this market really digest the Fed’s ‘new stance’ ahead,” he added.

Rate anxiety was evident underneath the surface of market buoyancy. From initial public off erings and shares of unprofitable technology companies, the speculative corners of the market have yet to recover their post-omicron declines despite the recent gains.

In fact, year-to-date, they’ve suff ered deep losses, in stark contrast with the S&P 500 that’s up more than 20%.

Italy’s stocks go from laggards to winners, leaving Spain behindBloombergRome

In this year’s race between two periph-eral European stock markets, Italy has left Spain in the dust mostly thanks to Mario

Draghi’s reforms. Fund managers and strat-egists see the gap between the two bourses widening further in 2022.

After trailing the Stoxx Europe 600 dur-ing last year’s recovery rally, Italy’s FTSE MIB Index has surged 20% in 2021, while Spain’s IBEX 35 benchmark has barely risen. Even more impressive is the performance of the country’s small companies: The FTSE Italia Small Cap Index has jumped 48% this year.

Political stability, good economic growth and attractive valuations have powered Italian shares, with Draghi’s ascension to prime min-ister in February reassuring investors. By con-trast, Spanish equities have been hurt by their high exposure to the tourism sector - which is struggling to recover from the pandemic - and to the ailing utility sector.

Draghi has given Italy “a unique political stability and credibility,” said Alberto Toc-chio, a portfolio manager at Kairos Partners. “Italy is our top pick within Europe.”

Earlier this month, Fitch Ratings raised Ita-ly’s credit rating, the country’s fi rst upgrade in four years, in a sign of confi dence in Draghi’s policies that helped the economy grow faster than the European average.

“Historically, politics has been a huge de-tractor for Italian equities but the current government seems to be steady,” said Fabio Caldato, a partner at Olympia Wealth Man-agement, who favours Eni SpA and UniCredit SpA among Italian stocks. The market’s strong exposure to the fi nancial sector as well as value companies could also help fuel Mi-lan’s outperformance next year, he said.

To be sure, Italy is set to face a political test when President Sergio Mattarella’s seven-year term expires in January. Analysts have long suggested that reappointing Mattarella was the smoothest path of assuring the con-tinuation of Draghi’s government, but Mat-tarella has recently signalled that he’s not up for a second term. Draghi is seen as a top candidate to replace him. His early departure from the government could interrupt a reform process that’s key to lowering debt and re-versing years of economic stagnation.

But even after this year’s strong gains, valu-ations are still on Italy’s side. With a forward price-to-earnings ratio of about 11, the FTSE MIB still trades at a discount of about 26% to the Stoxx 600. The earnings momentum has been strong since the latest earnings season, according to Barclays Plc strategists.

By contrast, Spain has been underperform-ing during the recovery and it’s “unlikely to reverse course soon owing to feeble household consumption, a troubled construction sector and a slow tourism recovery,” the strategists said in a recent note.

The Spanish market has suff ered from a less favourable sectoral mix than its Italian coun-terpart, said Stefano Girola, a portfolio man-ager at Alicanto Capital SGR. “The Italian in-dex has benefi ted from the presence of strong industrial assets and a China-exposed luxury industry, which are both absent in Spain,” he said, citing Ferrari NV and CNH Industrial NV as examples.

The IBEX has been hurt by its strong expo-sure to tourism through International Con-solidated Airlines Group SA and airport oper-ator Aena SA, among its worst performers this year. Poor returns from utilities, which have a 22% weighting in the benchmark, were also a drag, hit by the government’s intervention to soften the impact of a power crunch.

For Spanish stocks to catch up, the coun-try would have to see economic growth “greater than in the rest of Europe” to boost its banks and service industry, especially tourism, said Ricardo Seixas, a fund man-ager at Bestinver Gestion.

Wealth rises in Canada’s recovery, but so does food bank usageBloombergOttawa

Food insecurity is rising in Can-ada, a country that has long-prided itself on its social safety

net - including a roughly C$300bn pandemic relief package meant to leave no one behind.

The number of people turning to food banks rose 10% in the province of Ontario during the fi rst year of the Covid-19 pandemic. That’s aligned with fi gures that show food bank us-age across the country was signifi -cantly higher this past March than in 2019.

At fi rst glance, the numbers are hard to reconcile with data show-ing that Canadians became much wealthier during the pandemic. But the rise in household net worth was largely due to a boom in housing and stocks, leaving behind those with lower incomes and few fi nancial as-sets. In Ontario, only about 6% of food bank users are homeowners.

The cost of food and housing are two of the top three reasons why

people access a food bank, according to a survey by Food Banks Canada. With a recent surge in infl ation af-fecting food and fuel, the situation may get worse in 2022.

“A volatile combination of high rental housing costs, rapid food infl a-tion, and pandemic-related unem-ployment created a ‘perfect storm’ that drove up the number of visits to food banks in the last year, espe-cially in larger urban areas,” Richard Matern, research director with Food Banks Canada, said in an emailed statement.

The households of greatest con-cern, particularly in urban areas, are those that face higher rental and food costs combined with static income, such as social assistance.

“It is more about income than it is food prices,” said Valerie Tarasuk, a professor in the University of Toron-to’s nutritional sciences department. “The thing that is most predictive of someone’s food insecurity status is their income, it’s not their rent cost.”

Those on the front lines of hunger relief in Canada say vulnerabilities that have been building for years may

be about to get worse as government emergency income programs for Covid-19 end. Matern said his or-ganisation expects a “tidal wave” of new clients in the months ahead.

Ontario, the most populous prov-ince with nearly 15mn people, is a case in point. Food bank use has been on the rise since 2017, stoked in part by rising shelter costs for some of the province’s most vulnerable residents.

The pandemic increased the pres-sure. Between April 1, 2020 and March 31, 2021, the province’s food banks saw the biggest surge in visits since 2009, according to data from Feed Ontario, an organisation of 1,200 hunger-relief organisations.

“This has to do with a constella-tion of several issues,” said Siu Mee Cheng, Feed Ontario’s interim exec-utive director. “People are willing to give up food in order to pay for a roof over their heads and make sure that electricity and water is running.”

There’s no doubt pandemic aid programs were benefi cial, said Cheng.

One of the biggest, the C$2,000-per-month Canada Emergency

Response Benefi t, off ered many struggling workers more generous assistance than they received under traditional employment insurance.

Most of the surge in food bank use during the pandemic was in seg-ments of the population that were supposed to be protected by other social programmes, like disability or old age payments, which have not kept up with infl ation, Cheng said.

The proportion of Ontario sen-ior citizens using food banks is still lower than the general population - roughly 8% - but that group saw a 36% spike in the 12-months ended March 31.

That period doesn’t include the recent stretch of higher food prices. In British Columbia, retail ground beef prices were 8% higher in Oc-tober than they were six months earlier; in Quebec, pork loin was up 19%. “Significant increases in in-flation really began in the last few months,” Cheng said. “We do an-ticipate in the food bank sector that usage will only continue to increase in next year’s report.”

Still, the University of Toronto’s

Tarasuk said it’s too early to con-clude food insecurity is spiralling. “I’m wary of claims that it has in-creased substantially because we don’t have data to suggest that right now,” she said.

What’s indisputable is that food infl ation has been running ahead of general infl ation in Canada for the last 20 years, according to a new food price report from four universities. Between 2015 and 2019, average food expenditures rose 16.3% while me-dian incomes grew 6.6%.

Supply chain problems, drought and wildfi res added still more pres-sure in Canada in 2021, says the report, led Dalhousie University’s Sylvain Charlebois, which forecasts a 5% to 7% overall increase in food prices next year.

“This means that Canadians are having to allocate a higher propor-tion of their income for food, a trend that has only been exacerbated by Covid-19,” the report states. “Real concerns around food insecurity persisted in 2021 as wages and sala-ries for most have not kept pace with the increase in prices.”

Omicron variant spells bad news for poundBloombergLondon

There’s trouble brewing for the pound as the UK tightens its coronavirus restrictions

once again.Sterling is heading for its first

yearly loss since 2018 as Prime Minister Boris Johnson advises people to work from home to help curb the spread of the Omicron variant.

The measure is stoking fears about the country’s sputtering re-covery and forcing traders to pare back bets on a Bank of England rate hike on Thursday – which just weeks ago looked like a done deal.

Mizuho Bank Ltd, MUFG and Canadian Imperial Bank of Com-merce see a deeper decline toward $1.30 or beyond in the coming weeks, while sentiment in the op-tions market is close to the most bearish in 12 months.

Unlike their peers in other major currency markets, pound traders are having to recalibrate their ex-pectations for central bank policy. Parts of Europe face far stricter lockdowns, yet there is little ques-tion the European Central Bank will remain dovish. And in the US, hawkish expectations for the Fed-eral Reserve continue to build, lift-ing the dollar.

“Up until recently we had a De-cember hike and a zero-lockdown scenario as bolted on for the UK,” said Neil Jones, head of foreign-exchange sales to financial institu-tions at Mizuho, who expects ster-ling to fall to $1.295, its weakest in 13 months. “This week has seen an abrupt 180 on the rate- and Covid-trade as far as the pound is con-cerned.”

Nerves are fraying. The cost of hedging swings in the pound go-ing into the BOE decision is at its

highest in more than nine months, with money market traders bet-ting an increase in borrowing costs won’t come until February.

“Cautious comments from BoE officials and further Covid restric-tions mean that it’s more likely to delay raising rates until there’s more clarity on omicron’s impact,” said Lee Hardman, a strategist at

MUFG who expects sterling to dip toward its lowest since November 2020, when fears prevailed that a Brexit deal couldn’t be reached. “In contrast we expect the Fed to speed up tightening plans next week.”

Strategists are paring back their targets for the pound, though they may still be playing catch-up with

the news cycle. They’ve slashed their forecasts by nearly 4% to $1.35 for the end of March, com-pared with $1.40 three months ago, according to the median fore-cast in a Bloomberg survey.

For Citigroup Inc, the pound is the least preferred Group-of-10 currency against the dollar with a fair value of $1.29, more than 2%

weaker from current levels, accord-ing to Global Head of Foreign Ex-change Analysis Ebrahim Rahbari.

Not everyone is so bearish. While Barclays Plc expects the BoE will start raising rates in February, passing on Thursday’s meeting is not going to cause “much of a disappointment for financial mar-kets,” said Eimear Daly, an analyst at the firm.

“We think the pound is going to benefit from inflation peaking in the first half of next year,” she said. “And growth has actually been rel-atively resilient in the UK.”

Still, a further rethink about the BoE’s ability to tighten next year could be in store. And investors are beginning to take note of the po-litical turmoil engulfing the prime minister after his staff were ac-cused of breaking lockdown rules with a Christmas party last year.

“The market has priced in too many rate hikes in 2022 given the headwinds that face the economy in the form of rising food and en-ergy prices and the national in-surance tax hike,” said Jane Foley, head of foreign-exchange strategy at Rabobank.

“The chaos in Downing Street is not a positive factor for sterling and could increase the reluctance of investors to buy into post-Brexit Britain.”

The European Central Bank, the Bank of England and the Federal Reserve all make their final policy decisions of the year.

Purchasing managers’ indexes and euro-area inflation are the highlight of the European data calendar.

European government bond auctions slow down as year-end nears, with Italy and Austria sell-ing €4.3bn ($3.7bn) of debt.

The BoE will conduct its fi-nal bond buying operations on Wednesday.

A man holds pound sterling banknotes in an arranged photograph in London. There’s trouble brewing for the pound as the UK tightens its coronavirus restrictions once again.

BUSINESS9Gulf Times

Sunday, December 12, 2021

Australia investment boom set to help trim budget deficit

BloombergCanberra

Australian businesses will boost investment at the fastest pace in a decade as the economy shakes off the impact of new and old variants of the coronavirus, Treasurer Josh Frydenberg said.Business investment will grow 16% over the two years to June 30, 2022, the most since the end of the mining boom, Frydenberg said in an interview broadcast by the Australian Broadcasting Corp. Non-mining investment is expected to lead the way, he added.“Non-mining investment will reach its highest level on record at more than A$200bn ($143bn),” Frydenberg said. “This is a sign of growing confidence in our economy by businesses big and small and by households, who are going out and spending.”The accelerating economic rebound

will improve the government’s bottom line, cutting more than A$8bn from the expected budget deficit for the fiscal year ending June 30, 2022, Frydenberg told the Australian earlier.The central bank on Tuesday predicted a return to the strong growth trajectory seen before recent lockdowns, even as it expressed caution about the potential impact of the omicron variant and held interest rates at a record low. Australia’s economy shrank 1.9% last quarter from a year earlier, beating an expected 2.7% drop as trade and fiscal stimulus helped cushion a slump in household spending.The government is due to announce on Thursday an update to the 2021-22 budget that it released in May, which had forecast the deficit would narrow to A$106.6bn, or 5% of gross domestic product, from A$161bn in the prior fiscal year.Frydenberg also said that the initial signs from Omicron aren’t as concerning as for previous variants.

‘Stability’ is most important word for China’s economyBloomberg

The most important word for Chinese economic policy in 2022 is “stability,” accord-

ing to a senior economic offi cial of China’s Communist Party.

There are many hidden risks in the economy and the fi nancial sec-tor, and China can’t return to the old growth path, Han Wenxiu, ex-ecutive vice-minister of the party’s central fi nancial and economic af-fairs commission, said in an online event yesterday. Han was explain-ing the economic plans for 2022, which the Communist Party re-leased on Friday.

The property sector is large, has a long supply chain, and accounts for a high proportion of the econ-omy, fi xed-asset investment, local governments’ income and fi nan-cial institutions’ loans, Han says. It holds key signifi cance in the econ-omy and for fi nancial stability and risk prevention, and China needs to explore a new development model for industry, he said without elab-orating.

“All regions and agencies must take responsibility to uphold eco-nomic stability, actively introduce policies that can help stabilise the economy, and be cautious in im-posing measures that will have a contractionary eff ect,” Han said.

To ensure the economy grows in a reasonable range next year, the government will take measures to stimulate activity and the confi -dence of market entities, senior offi cial Ning Jizhe said at the event. It will also deepen the enforcement

of fair competition policies and strengthen anti-monopoly regula-tions, he said.

Meanwhile, consumption and investment still face multiple bar-riers, said Ning, who heads the statistics bureau and is a vice-chairman of the National Devel-opment and Reform Commission. “Domestic demand remains insuf-fi cient,” he said, adding that the government “must fully explore

the potential of domestic demand in 2022.” While consumption of goods has grown, the expansion of services such as tourism, transpor-tation or entertainment have been “hurt badly” because they involve contact with and concentration of people, he said. However, the government plans to continue its policies to control any outbreak of Covid-19, he said.

The government will implement

policies to boost demand for major goods such as cars and home appli-ances and accelerate the building of e-commerce infrastructure and delivery networks in rural areas, Ning said. It will also expand ef-fective investment in programs like new infrastructure, new urbanisa-tion, hydro-power and transporta-tion, and speed up progress in 102 major projects in the 14th fi ve-year plan, he said.

Malaysia charges Dyson supplier ATA with labour law violations

ReutersKuala Lumpur

Malaysia has charged Dyson supplier ATA IMS with four violations of labour law on accommodation for workers as it investigates complaints of forced labour, authorities said yesterday.The step comes after British home appliance maker Dyson said last month it was severing relations with ATA, and ending its contract within six months, after an independent audit of the company’s labour practices and accusations by a whistleblower.“The complaints were mainly on allegations of appalling working and living conditions and foreign workers being forced to work excessive overtime hours,” Malaysia’s labour department told Reuters in an e-mail response. “It is too early to make any conclusion on the allegations.”The department, which inspected the company in February, May and July, added that the four charges were for violations of minimum standards for

worker accommodation. The company did not immediately respond to a request for comment on the charges.Reuters reported on November 25 and December 5 that ATA’s mostly migrant workforce did overtime in excess of the monthly legal limit of 104 hours, and worked on Sundays.ATA, which makes parts for Dyson vacuum cleaners and air purifiers, has said all overtime was voluntary, and that it paid double for work on Sundays and triple on public holidays.The company has taken steps to ensure no recurrence, it added, saying it had begun a policy of zero overtime on Sunday that led to the resignations of nearly 300 workers in the first week of December.Police are also investigating ATA over claims that a former worker was beaten by police after being taken to a police station where he was questioned about sharing information on working conditions with activists. ATA has dismissed the accusations by the worker, Dhan Kumar Limbu, as unsubstantiated and “unlikely to have taken place”.

People wearing face masks walk on a street in Shanghai (file). There are many hidden risks in the economy and the financial sector, and China can’t return to the old growth path, Han Wenxiu, executive vice-minister of the party’s central financial and economic aff airs commission, said in an online event yesterday.

Weekly Market Report

The Qatar Stock Exchange (QSE) index increased by 16.38 points or 0.14% during

the week, to close at 11,619.41. Market capitalisation declined by 0.26% to QR667.6bn compared to QR669.3bn at the end of the previous week.

Of the 47 traded companies, 19 ended the week higher, 25 ended lower, while three remained un-changed. Qatari German Company for Medical Devices (QGMD) was the best performing stock for the week, with a gain of 3.6%. On the other hand, Widam Food Company (WDAM) was the worst performing stock with a decline of 3.3%.

Qatar Islamic Bank (QIBK), Indus-tries Qatar (IQCD) and Qatar Elec-tricity & Water Co (QEWS) were the primary contributors to the weekly index gain. QIBK and IQCD added 20.6 and 16.7 points to the index, re-spectively. Moreover, QEWS added another 5.8 points to the index.

Trading value during the week dropped by 47.0% to QR1,809.4mn vs. QR3,416.1mn in the prior trad-ing week. QNB Group (QNBK) was

the top value traded stock during the week with total traded value of QR356.0mn.

Trading volume also declined by 47.1% to 518.2mn shares vs. 980.1mn shares in the prior trading week. The number of transactions went down by 31.5% to 53,356 vs. 77,932 in the prior week. Investment Hold-ing Group (IGRD) was the top volume traded stock during the week with to-tal traded volume of 64.3mn shares.

Foreign institutions remained bearish, ending the week with net selling of QR11mn vs. net selling of QR129mn in the prior week. Qatari institutions remained positive with net buying of QR43mn vs. net buy-ing of QR5mn in the week before. Foreign retail investors ended the week with net buying of QR10mn vs. net selling of QR18mn in the prior week. Qatari retail inves-tors turned bearish with net sell-ing of QR42mn vs. net buying of QR142mn the week before.

So far YTD (as of Wednesday clos-ing), foreigners were net buyers of $1,638.7mn.

This publication has been prepared by QNB Financial Services Co WLL (“QNBFS”) a wholly-owned subsidiary of Qatar National Bank (QPSC). QNBFS is regulated by the Qatar Financial Markets Authority and the Qatar Stock Exchange. Qatar National Bank is regulated by the Qatar Central Bank. This publication expresses the views and opinions of QNBFS at a given time only. It is not an off er, promotion or recommendation to buy or sell securities or other investments, nor is it intended to constitute legal, tax, accounting, or financial advice. Gulf Times and QNBFS accept no liability whatsoever for any direct or indirect losses arising from use of this report.

DISCLAIMER

Technical analysis of the QSE index

Source: Qatar Exchange (QE)

Source: Bloomberg

Source: Bloomberg

Source: Qatar Exchange (QE)

Source: Qatar Exchange (QE)

QSE Index and Volume

Weekly Index Performance

Qatar Stock Exchange

Top Five Gainers

Most Active Shares by Value (QR Million)

Investor Trading Percentage to Total Value Traded

Top Five Decliners

Most Active Shares by Volume (Million)

Net Traded Value by Nationality (QR Million)

RSI (Relative Strength Index) indica-tor – RSI is a momentum oscillator that measures the speed and change

of price movements. The RSI oscillates be-tween 0 to 100. The index is deemed to be overbought once the RSI approaches the 70 level, indicating that a correction is likely. On the other hand, if the RSI approaches 30, it is an indication that the index may be getting oversold and therefore likely to bounce back.

MACD (Moving Average Convergence Di-vergence) indicator – The indicator consists of the MACD line and a signal line. The diver-gence or the convergence of the MACD line with the signal line indicates the strength in the momentum during the uptrend or downtrend, as the case may be. When the MACD crosses the signal line from below

and trades above it, it gives a positive indica-tion. The reverse is the situation for a bear-ish trend.

Candlestick chart – A candlestick chart is a price chart that displays the high, low, open, and close for a security. The ‘body’ of the chart is portion between the open and close price, while the high and low intraday movements form the ‘shadow’. The candle-stick may represent any time frame. We use a one-day candlestick chart (every candlestick represents one trading day) in our analysis.

Doji candlestick pattern – A Doji candlestick is formed when a security’s open and close are practically equal. The pattern indicates indecisiveness, and based on preceding price actions and future confirmation, may indi-cate a bullish or bearish trend reversal.

Definitions of key terms used in technical analysis

The QSE index stabilised after the recent drop seen over the past few weeks; it closed at 11,619.41

(+0.1% from the week before). We did not see a strong move after the recent

reversal signal against the correction. However, the chances for a short-term rally remains strong. Our expected support level remains at 11,400 points, and the resistance at 12,000 points.

BUSINESSGulf Times Sunday, December 12, 202110

BUSINESS11Gulf Times

Sunday, December 12, 2021

Hedge funds face expansive short-selling probe, exciting criticsBloombergNew York

The US Justice Department has launched an expansive criminal investigation into short selling by hedge funds and research firms - thrilling legions of small investors and other sceptics of the tactics that investigative firms use to bet on stock declines.

The probe, run by the department’s fraud section with federal prosecutors in Los Angeles, is digging into the symbiotic relationships between funds and research-ers, hunting for signs that they improperly co-ordinated trades or broke other laws to profit, according to people familiar with the matter.

The government is examining how the investors handle information and set up their bets, especially in the run-up to publication of reports that move stocks. Authorities are looking for signs that money managers sought to engineer startling stock drops or engaged in other abuses, such as insider trading, said two of the people, asking not to be named

because the inquiries are confidential.News of the broad investigation on

Friday set off a flurry of celebration across platforms such as Reddit, Stocktwits and Twitter, where small day traders have long railed against what they see as stock manipulation by Wall Street’s establish-ment. Their complaints set the stage for this year’s surges in so-called meme stocks, and have even won sympathy from members of Congress, who’ve called for more scrutiny of the market.

With that charged backdrop, the Justice Department will have to be careful to zero in on blatant wrongdoing, said John Cof-fee, a professor at Columbia Law School.

“They do not want to look as if they are criminalising conduct that was formerly only actionable civilly,” he said. “It would be the traditional pattern of prosecutors, particularly in the first case they bring, to search for a case that has ‘badges of fraud’ - for example, bribes or clear insider trading.”

Underscoring the inquiry’s sweep, fed-eral investigators are examining trading in at least several dozen stocks, including well-known short targets such as Luckin

Coff ee Inc, Banc of California Inc, Mallinck-rodt Plc and GSX Techedu Inc. And they’re scrutinising the involvement of about a dozen or more firms - though it’s not clear which ones, if any, may emerge as targets of the probe. Toronto-based Anson Funds and anonymous researcher Marcus Aure-lius Value are among firms involved in the inquiry, the people said. Other prominent firms that circulated research on stocks under scrutiny include Carson Block’s Muddy Waters Capital and Andrew Left’s Citron Research.

The US probe opens yet another front in an already treacherous era for those who try to profit on stock drops. Some bearish funds threw in the towel as govern-ment stimulus buoyed prices during the pandemic. That pressure intensified as retail investors organised counterattacks on popular short targets, bidding up shares to inflict losses on hedge funds this year. By late January, Citron vowed to give up short-selling research and focus on long bets.

Meanwhile, companies criticised by short sellers have become increasingly bold in firing back, sometimes launching legal battles even as they face govern-

ment probes that ultimately support short sellers’ theses. A number of corporate executives have been hoping US authori-ties might help to further shift the focus to investors’ tactics.

Still, successfully bringing charges against short sellers could be challeng-ing, given that betting against companies and publishing research believed to be accurate is lawful and even beneficial for markets. So far, nobody has been accused of wrongdoing, and authorities may ulti-mately decide not to pursue charges.

Government attorneys are trying to determine whether short sellers engaged in some form of deception - say, by mis-leading the public about their financing of what appears to be independent research, violating confidentiality agreements with authors, or orchestrating stock plunges to panic shareholders and exacerbate selling.

Spokespeople for the Justice Depart-ment and Muddy Waters declined to comment, and there was no response to messages sent to Anson Funds and Aurelius.

An attorney for Citron said he’s aware of an industry probe but that it’s routine for

US investigators to open and close cases. He expressed doubt that their theories would be borne out.

“Citron Capital and Mr Left are suc-cessful because they do quality research and keep their reports secret from other short sellers until publication,” said the lawyer, James Spertus. “There is simply no truth behind any theory that short sellers coordinate amongst themselves before publishing reports, at least in regard to publications by Citron Capital and Andrew Left. I am hopeful that anyone investigat-ing the issue will reach that conclusion as soon as possible.”

Authorities are prying into financial relationships between hedge funds and researchers, according to the people. Such firms are known wide variety of deals, with funds sometimes paying research-ers handsome subscription fees for fresh insights into possible corporate trouble, or even becoming an author’s primary source of funding. In one example, prominent financial investigator Harry Markopolos, who normally makes money from whistle-blower awards, said he part-nered with a hedge fund to share profits

when he released a report on General Electric Co.

Some hedge funds have been known to suggest targets to researchers, who then deliver scathing reports.

One cautionary tale emerged in court after Dallas-based Sabrepoint Capital agreed to pay a short-selling researcher a monthly retainer of $9,500 in 2018. Sabre-point encouraged him to dig into real es-tate company Farmland Partners Inc. The researcher, who also wrote publicly under a pseudonym, later published an article on Seeking Alpha, setting off a 39% drop in Farmland’s share price. The company sued and used a judge’s order to force him to reveal his identity: Quinton Mathews.

Mathews later said in a statement that he subsequently learned his article “con-tained inaccuracies and false allegations” and retracted it. He and Farmland reached a settlement. Sabrepoint has said it didn’t know about the Seeking Alpha article.

Farmland is also on the list of stocks that the Justice Department is examining as it looks at short sellers.

Lawyers for Sabrepoint and Mathews declined to comment.

Shipping costs likely to remain abnormally high until 2023ReutersLondon

Much like the coronavirus pan-demic, and the economic dis-ruption that it has caused, a

global shipping crisis looks set to go on delaying goods traffi c and fuelling in-fl ation well into 2023.

Shipping rarely fi gures in econo-mists’ infl ation and GDP calculations, and companies tend to fret more about raw materials and labour costs than transportation.

But that might be changing.The cost of shipping a 40-foot

container (FEU) unit has eased some 15% from record highs above $11,000 touched in September, according to the Freightos FBX index.

But before the pandemic, the same container cost just $1,300.

With 90% of the world’s merchan-

dise shipped by sea, it risks exacer-bating global infl ation that is already proving more troublesome than an-ticipated.

Peter Sand, chief analyst at the freight rate benchmarking platform Xeneta, does not expect container shipping costs to normalise before 2023.

“This means the higher cost of lo-gistics is not a transitory phenom-enon,” Sand said. “For infl ation, that means trouble...

The element of shipping, in over-all prices, small as it may be, is much bigger than ever before, and it could be a permanent lift to prices going forward.”

Ocean transport costs initially leapt after a six-day blockage of the Suez Canal in March caused backlogs worldwide.

That tightened an already strained vessel-hiring market as uncertainty

about future fuel and emissions regu-lation had driven orders for new ships to record lows.

Then came a surge in demand for goods from consumers in coronavi-rus lockdowns, while dockyards were struggling with Covid-related labour shortages.

In early November, 11% of the world’s loaded container volume was being held up in logjams, down from August peaks but well above the pre-pandemic 7%, Berenberg analysts estimate.

In late October at Los Angeles/Long Beach, one of the world’s biggest con-tainer ports, ships were taking twice as long to turn around as before the pan-demic, RBC Capital Markets estimates.

Although the worst may be past, RBC analyst Michael Tran does not see freight prices returning to pre-pandemic levels for another couple of years. Even if plans to unload an extra

3,500 containers each week are imple-mented, the Los Angeles/Long Beach backlog is unlikely to clear before 2023, he said.

“The softening in prices we saw at the end of September is a false dawn.

What we see from a big-data per-spective is that things are not getting materially better.”

A United Nations report said last month that high freight rates were threatening the global recovery, sug-gesting they could boost global import prices by 11% and consumer prices by 1.5% between now and 2023.

The impact also ripples out; a 10% rise in container freight rates cuts US and European industrial production by more than 1%.

The report noted that cheaper goods will proportionally rise more in price than dearer ones, and that poor na-tions producing low-value-added items such as furniture and textiles will

take the biggest hit to competitiveness.The retail price of a low-end refrig-

erator will rise 24% compared with 6.5% for a costlier brand, Ben May, head of macro research at Oxford Eco-nomics said, adding: “Companies may just stop shipping very cheap fridges, as it just won’t be worth it.”

The shipping boom was expected to abate as economic reopening al-lowed people to spend on travel and dining out rather than clothing or ap-pliances.

But that theory is being challenged by new Covid variants, and the huge pandemic-time savings that cus-tomers could channel into even more goods.

During the last earnings season, toymaker Hasbro, retailer Dollar Tree and consumer goods giant Nestle were among companies bemoaning freight costs — and fl agging price increases.

With the US inventory-sales ratio

near record lows, businesses will also need to restock. “This will support de-mand for goods through the fi rst half of next year,” Unicredit analysts said.

The problem could get worse if smaller companies are unable to meet their commercial obligations and struggle to stay afl oat, said James Gel-lert, CEO of analytics company Rapid-Ratings:

“These time bombs are riddled through large enterprises’ supply chains and will present many problems for their customers who rely on their goods and services.”

Real relief may come only when more vessels appear.

Ship orders have risen signifi cantly this year.

But it takes three years to build and deliver one, and it will be 2024 before sizeable new tonnage hits the water, senior ING economist Rico Luman predicted.

Wealth fund star’s new $110bn job redefi nes energy betBloombergOslo

The former chief execu-tive of Norway’s $1.4tn wealth fund says he plans

to bring investors in renewable energy much closer to the point of production than has previ-ously been the norm, as he tries to attract some of the biggest as-set owners to his new venture.

Yngve Slyngstad, who oversaw the world’s largest wealth fund for almost 13 years until handing the job to former hedge-fund boss Nicolai Tangen last year, will start running Aker Asset Management in March. The new unit, which will be part of billionaire Kjell Inge Rokke’s energy conglomerate Aker ASA, targets €100bn ($110bn) in investment capital that will go to-ward climate solutions and green energy projects.

“I want to help create a type of management and an investment environment that is diff erent from what we already have in the market today,” Slyngstad said in an interview. It’s now “necessary to rethink how managers can be linked to industry, and how in-dustry can deliver what large in-vestors want.”

During his time as CEO of the Norwegian wealth fund, Slyngs-tad oversaw a fi ve-fold expansion in its assets under management. He also helmed a campaign to lobby Norway’s parliament to let its sovereign investment vehicle extend the range of assets it’s al-lowed to hold from stocks, bonds and real estate to renewable en-ergy infrastructure.

The energy market is now in the grip of an historic period of transition in which new technol-ogies are being tested in a race to drive down carbon emissions and prevent catastrophic levels of planetary overheating. His-torically a fossil-fuel giant, Aker has spent the past year trying to shift its focus towards renewable energy. Rokke, who started out as a fi sherman to build a per-sonal fortune of about $5bn from Norway’s off shore industry, has targeted wind power and carbon capture as part of a major strat-

egy adjustment. The intention is that adding an asset management arm to the conglomerate will create a unique set of synergies, whereby the design of renew-able energy projects and inves-tor goals can be tightly aligned. Slyngstad says such strategies work best when there’s enough scale on the investment side to make meaningful commitments.

“There is huge innovation happening, and we don’t know exactly which solutions will come next,” Slyngstad said. “Regard-less of whether it is carbon cap-ture, wind or sun, there are very large amounts to be invested.”

The sea-change around en-ergy investing is one for which asset managers across the world are now positioning.

“The market opportunity is truly massive,” Connor Teskey, chief executive of renewable power and co-head of transi-tion investing at Brookfi eld As-set Management Inc, said at the Bloomberg Sustainable Business Summit on Thursday.

“The majority of that capital is going to need to come from pri-vate capital,” Teskey said. “Pub-lic government balance sheets simply cannot sustain that level of investment. But the private markets absolutely can.”

For Aker’s asset management arm, the goal is to produce in-vestment products within re-newable energy and infrastruc-ture that will appeal to “the largest funds in the world,” Slyngstad said. For now, inves-tors are held back by a “lack of projects,” he said.

Norway’s wealth fund, where Slyngstad has stayed on to help Tangen transition into the CEO role, added renewable energy in-frastructure to the list of assets it can own in 2020. But the inves-tor has struggled to fi nd targets, and as of early December, had only made a single investment.

“There are large investments to be made in the energy shift and the industrial shift ahead,” Slyngstad said. He said the goal is to “acti-vate private capital and the larg-est corners of wealth that exist, whether it is in government funds, pension funds or elsewhere.”

Wall St investors await faster taper, infl ation view at Fed meetingReutersNew York

Investors are bracing for the last Fed-eral Reserve meeting of the year, with market participants hungry to learn

how quickly the central bank plans to fi nish unwinding its bond-buying pro-gramme and pick up signs of when it may start to raise rates in 2022.

Stocks are back at record highs follow-ing last week’s selloff — a market spasm brought on by worries over the Omicron variant of the coronavirus and comments from Fed chairman Jerome Powell, who said the central bank may discuss speed-ing up the reduction of its $120bn per month bond buying programme at next week’s meeting.

There is potential for renewed vola-tility, however, if the Fed takes a more hawkish than expected view on roll-ing back the easy money policies that have helped stocks more than double from their March 2020 lows, including a rapid reduction in bond buying that clears the way for the central bank to raise rates sooner.

Markets could also be roiled if the Fed signals greater worry about infl ation, which Powell said can no longer be described as “transitory.” Data on Friday showed con-sumer prices last month notched their largest annual gain in nearly four decades, bolstering the case for higher rates.

“The biggest factor in the equity mar-ket remains and will remain to be interest rates,” said Jack Ablin, chief investment offi cer at Cresset Capital Management.

Higher yields — which can rise on ex-pectations of tighter monetary policy — can dim the allure of stocks by creating a greater discount for companies’ future cash fl ows, potentially pressuring valua-tions that are already elevated by histori-cal standards.

The S&P 500, which has climbed 25% this year, is trading at 20.5 times forward 12-month earnings estimates, compared with its historic valuation average of 15.5 times, according to Refi nitiv Datastream.

The yield on the benchmark 10-year

Treasury note has climbed about 15 ba-sis points from the start of the month to 1.49%, but is below the 1.776% it reached in March.

Some stocks have already been hit by higher rate worries this year, including technology and growth companies that thrived during 2020’s lockdowns.

The broader market, however, has generally tolerated tightening monetary policy, analysts at BofA Global Research said in a recent report, noting that stocks mostly climbed as the Fed normalised policy in the last decade.

The Fed last month began “tapering” its purchases of Treasuries and mort-gage-backed securities at a pace that would have put it on track to complete

the wind-down by mid-2022. Follow-ing Powell’s comments, investors now believe the Fed could quicken the pace of reductions that will end the bond-buying by March, which could allow the central bank to potentially start raising rates sooner.

Bets on earlier rate increases have also grown. Traders late on Friday saw a more than 50% chance of a rate hike by May 2022, up from a roughly 30% chance a month ago, according to the CME Group’s FedWatch programme.

Investors are also keen to learn the cen-tral bank’s view on the Omicron variant’s potential impact on economic growth or infl ation. One possible scenario outlined by UBS Global Wealth Management in a

report sees the virus complicating sup-ply-chain issues that have helped stoke infl ation in recent months, bringing con-cerns the Fed may need to tighten mon-etary policy faster.

The bank’s base case scenario, howev-er, assumes the Omicron variant will not derail the recovery.

Mona Mahajan, senior investment strategist at Edward Jones, said the Fed meeting could bring more clarity to in-vestors after an upsurge of volatility in recent weeks.

“It feels like the market has climbed two walls of worry already: Omicron and the path of the Fed,” she said. “I do think over the next couple of weeks we will get a little bit more certainty on both fronts.”

Traders work on the floor of the New York Stock Exchange (file). Investors are bracing for the last Federal Reserve meeting of the year, with market participants hungry to learn how quickly the central bank plans to finish unwinding its bond-buying programme and pick up signs of when it may start to raise rates in 2022.

BUSINESSSunday, December 12, 2021

GULF TIMES

Oil prices rise on easing concerns over Omicron’s impact on fuel demandwww.abhafoundation.org

OilOil prices rose slightly on Friday and posted their biggest weekly gain since late August, with market sentiment buoyed by easing concerns over the Omicron coronavirus variant’s impact on global economic growth and fuel demand. The Brent and US West Texas Intermediate (WTI) crude benchmarks each posted gains of about 8% last week, their first weekly gain in seven, even after a brief bout of profit-taking. Brent futures settled at $75.15 a barrel on Friday while WTI rose to $71.67 after both slid in a volatile session the previous day. US consumer prices at the pump, rose further in November to produce the largest year-on-year rise since 1982, government data showed, adding to bullish sentiment on oil demand. Earlier in the week the oil market had recovered about half the losses suff ered since the Omicron outbreak on November 25, with prices lifted by early studies suggesting that three doses of Pfizer’s Covid-19 vaccine off ers protection against the Omicron

variant. Keeping a lid on prices are faltering domestic air traff ic in China, owing to tighter travel restrictions, and weaker consumer confidence after repeated small Covid-19 outbreaks.

GasAsia LNG prices rose last week amid heating demand from South Korea during winter and from India and China for the longer term. The average LNG price for January delivery into Northeast Asia rose to $35.80 per metric million British thermal units

(mmBtu), up $1.20 from the previous week. Prices for cargoes delivered in February were estimated to be about $34.80 per mmBtu. South Korea’s GS Energy was seeking a cargo for delivery in January while Korea Gas Corp (KOGAS) bought 4 to 6 LNG cargoes for delivery for January to February. For next year, Asian demand continues, with Chinese off shore oil and gas major CNOOC seeking 10 cargoes for delivery for March to December.Still, many companies have already procured spot cargoes for this winter and are unlikely to need further volumes unless there is a sudden cold snap. European and British gas prices also firmed on Friday, despite forecasts showing less demand, amid ongoing concerns over winter supplies and a return to colder weather. US natural gas futures followed the upward trend, climbing almost 3% to a one-week high on Friday on forecasts for heating demand to rise in a couple of weeks with a seasonal cooling of the weather.

This article was supplied by the Abdullah Bin Hamad Al-Attiyah International Foundation for Energy and Sustainable Development.

WEEKLY ENERGY MARKET REVIEW

Qatar Chamber calls for increased Arabexports to France

Qatar Chamber chairman Sheikh Khalifa bin Jas-sim al-Thani has called

for an increase in Arab exports to France during the board meet-ing of the Arab-French Chamber of Commerce held recently in Paris, France.

The meeting reviewed the ac-tivities and events, which will be held in 2022, and the means to enhance co-operation relations between France and Arab coun-tries in the fi elds of trade and in-vestment.

Sheikh Khalifa emphasised the growing relations between Arab countries and France, noting that Qatar Cham-ber works closely with Arab members in the Arab-French Chamber of Commerce to unify the stance towards vari-

ous economic and commercial issues that would promote the growth of Arab exports to France.

He underscored the close re-lations between the State of Qa-tar and France, stressing Qatar Chamber’s keenness on bolster-ing cooperation ties between Qatari businessmen and their counterparts in France.

France is an important trade partner to Qatar, he said, add-ing that trade volume last year amounted to QR5bn; it reached about QR4bn during the fi rst nine months of 2021.

Sheikh Khalifa also stressed that Qatari investors are eager to access the French market, which is characterised by an attractive investment environment and vi-able opportunities.

Qatar Chamber chairman Sheikh Khalifa bin Jassim al-Thani.

Qatar fi rm among winners of HSBC’s ‘Living Business’ programme

Gulf Agency Company (Qa-tar) was one of the country winners at this year’s ‘Liv-

ing Business’ for showing com-mitment and change in their ap-proach to environmental, social and governance (ESG) issues at the second edition of the Living Business programme.

Businesses in Qatar, Bahrain, Egypt, Oman and the United Arab Emirates (UAE) participated.

Organised by ‘Globally’, ‘Get in the Ring’ and HSBC, the Living Business programme aims to help businesses deliver signifi cant en-hancements to their ESG initia-tives by embedding sustainable principles in their organisational framework.

Daniel Howlett, HSBC’s Head of Commercial Banking in the Middle East, North Africa and Turkey, said: “It has been an-other fantastic year for our Liv-ing Business programme. We are seeing tangible changes and a shift in mindset towards environ-

mental and ethical sustainability. The participants, coming from a wide range of industries, have all shown a real desire to make a contribution to becoming more sustainable. We congratulate them all for coming this far and addressing some of the key issues that our world faces.”

This year’s intake came from across Mena with more than 120 applicants and covered several strategic sectors including con-struction and infrastructure, re-tail, transport, energy and utili-ties, and hospitality.

“We are committed to the transition to a global net-zero economy, not just by playing our part, but by helping to lead it. We are proud of the progress we see in the market as more companies are focusing on ESG priorities to ensure their future economic growth in a sustainable way.

We are here to support them and grow with them in the fu-ture,” said Elie Maroun El As-mar, head of CMB in Qatar. Par-ticipants were given one-on-one coaching with ESG experts to help them achieve their goals. The companies presented their ini-tiatives at the UK pavilion at Expo 2020 Dubai to a panel of judges.

The winners will attend a course at the Institute for Sus-

tainability Leadership at The University of Cambridge.

Applications came from Bah-rain, Egypt, Oman, Qatar and the UAE who were prepared to im-plement a project that will have a signifi cant ESG impact such as reducing the business’s or indus-try’s environmental footprint, enhancing social capital of the business by improving staff well-being or creating a sustainable governance framework.

Living Business will expand next year globally to 15 countries across 4 continents.

Keith Bradley, managing part-ner at Globally, said: “Being able to expand the program from the Mena region to become a glo-bal programme is a testament to the desire to make fundamen-tal changes in companies’ ESG agendas. We are proud to be a partner in this programme and help companies manage their environmental footprints and build social capital.”

Elie Maroun El Asmar.

Massive US debts could ‘trap’ Powell as Fed fights inflationBloombergWashington

The US went on a borrowing binge last year and the hangover could make it harder for the Federal Reserve to fight inflation without crashing the economy.

Corporate debt has surged $1.3tn since the start of 2020 as borrowers took advantage of emer-gency Fed action as the pandemic spread, slashing interest rates and backstopping financial markets to keep credit flowing. More debt held by more companies suggests potential risks as borrowing costs rise from currently low levels.

That could create financial stability concerns for Fed Chair Jerome Powell and his colleagues as they debate removing pandemic support in the face of what a report Friday showed were the hottest price rises in almost 40 years. And a tough task: Not since Alan Greenspan’s time has the US central bank tried to navigate the economy back to price stability from too-high inflation.

Powell’s challenge is to try to curb price pressures without large costs to employment or growth, a move that would likely anger both political parties and blotch his record with the first Fed-assisted hard landing since the 1990-1991 downturn.

“They are in a diff icult position,” said Jeremy

Stein, professor of economics at Harvard University and a Fed governor from 2012-2014. If inflation is more persistent “and they really have to hike rates significantly, you can imagine what happens to asset valuations: There’s just a tremendous amount of interest-rate sensitivity in markets.”

The Fed’s Financial Stability Report on Novem-ber 2 noted that key measures of vulnerability from business debt, including leverage and interest cover ratios, were back at pre-pandemic levels.

But it also discussed risks to asset prices from a sharp rise in interest rates that could slow growth and lead to harmful losses.

Intense market volatility has swayed the Powell Fed before. Off icials paused after raising rates in late 2018 in the face of severe swings in stocks and bonds and cut rates three times the following year.

Financial stability remains on policy makers’ minds. Minutes of their November meeting show that a number of them raised it during their delib-erations, as they decided to start scaling back bond buying. Powell said last week that off icials would consider accelerating their reduction of asset purchases when they meet on December 14-15 to end the programme a few months earlier than mid-2022, as initially planned.

Wrapping the taper up sooner gives the Fed scope to raise rates earlier and faster if inflation fails to ease next year as expected. But record lev-els of debt may force them to temper their actions.

Argentina seeks further growth in bilateral ties with Qatar, says envoyBy Peter AlagosBusiness Reporter

Argentina is looking to attract Qa-tari investments in the fi elds of food production and agriculture,

according to ambassador Marcelo Gilar-doni, who said further discussions are underway to promote growth in both countries’ bilateral relations.

“We are very much looking at Qatari investments in food and agricultural land, as well as in companies that would produce food exports to Qatar. This may also include animal fodder and agricul-tural products,” Gilardoni told Gulf Times in an exclusive interview.

Gilardoni stressed that aside from looking to improve Qatar-Argentina eco-nomic ties, the embassy is “working very closely” with Qatar to meet the objectives of the country’s food security strategy.

“We’re also exploring the possibility of attracting Qatari investments in some of Argentina’s food industries. And we’re working together in these areas with the Ministry of Municipality and their re-spective counterparts in Argentina.

“We are open to having business dele-gations from Argentina and Qatar explore the investment climates of both coun-tries. We have postponed some of these visits because of the pandemic, but we’re hoping that by mid-2022, we could set up a joint commission with Qatar either a virtual or face-to-face, but these plans are in the pipeline,” he also stressed.

With less than $1bn in trade exchange fi gures, Gilardoni emphasised that Qatar and Argentina still “have a lot of space for improvement” in terms of the import and export of goods and services between

both countries. Beef and lamb, as well as chicken, are among Argentina’s major food exports to Qatar, the ambassador said.

“The next step is to get the govern-ment ministries and their counterparts

in Argentina to work on the agreements that we need to sign that would enhance bilateral trade of both countries, and to reduce the obstacles to trade and invest-ment, and to discuss other issues that Qatar and Argentina must overcome,” the

ambassador pointed out. He further said: “We are also working with diff erent pro-ducers and companies in the fi eld of ag-riculture and machinery, as well as in the construction materials sector. Argentina has a lot to off er to our international part-ners, such as Qatar.”

As a major tourism destination, Gilar-doni said Argentina is also looking to at-tract more Qataris and people from Qatar to visit and experience what the South American country has to off er. He said talks are underway with Qatar Airways to resume its fl ights to

Buenos Aires.Only recently, the ambassador hosted

a beef and wine tasting event at his resi-dence to introduce and promote these Argentinian products to key stakehold-ers in Qatar. The event, which was held under health and safety protocols, show-cased the culinary expertise of an Argen-tinian chef. It was also highlighted by a performance of Argentinian tango danc-ers and a singer.

He added: “We want to put in touch producers in Argentina with the import-ers in Qatar to determine the demand in Qatar. We’ve been working with Qatar Distribution Company (QDC) and also with other hypermarkets in Qatar. The idea is to promote our country’s chick-en, lamb, beef, and fi sh, as well as other products from our country.

“We plan to collaborate with hyper-markets in Qatar in organising ‘Argentina Week’ so we can showcase our products. We can hold a much bigger beef tasting event during the celebration of Argentina Week, which could include a large del-egation from Argentina meeting with the concerned authorities in both the public and private sector.”

Argentinian ambassador Marcelo Gilardoni.