Strike takes a heavy toll on French business

Travelers stand in the hall of the Gare du Nord railway station in Paris. French unions have been planning for renewed strikes in January to resist a government initiative to raise the retirement age to 64. (AP)
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Updated 23 December 2019

Strike takes a heavy toll on French business

  • Weeks of travel misery worsened on Sunday, when tens of thousands planned to meet up with family and friends for the Christmas break

PARIS: Holiday travelers across France scrambled for alternatives Sunday as an 18-day-old transport strike over pension reform saw train services slashed yet again.

President Emmanuel Macron issued an appeal on Saturday for a truce over the holidays but talks between the government and unions this week have failed to ease the standoff and labor leaders called for further mobilization.

Workers at the SNCF and RATP public rail companies have downed tools to protest at the government’s plan to forge a single points-based pension scheme out of 42 existing ones, which would see some public employees lose certain privileges.

As a result, weeks of travel misery worsened on Sunday, when tens of thousands planned to meet up with family and friends for the Christmas break.

Only half of high-speed TGV and a quarter of inter-city trains were running, and the SNCF urged voyagers to cancel or delay planned trips if possible.

In Paris, trains connecting the capital to its suburbs were down to a trickle, and only two out of 16 metro lines provided a service on the last shopping Sunday before Christmas.

Macron, on a visit to the Ivory Coast, urged striking workers to embrace a “spirit of responsibility” and for “collective good sense to triumph.”

“I believe there are moments in the life of a nation when it is also good to call a truce to respect families and the lives of families,” he said in Abidjan.

A poll by the IFOP agency published on Sunday showed public backing for the action dropping slightly by three percentage points, though 51 percent still expressed support or sympathy for the strikers.

Unions are hoping for a repeat of 1995 when the government backed down on pension reform after three weeks of metro and rail stoppages just before Christmas.

The protest is taking a heavy toll on businesses, especially retailers, hotels and restaurants during one of the busiest periods of the year. Industry associations have reported turnover declines of 30 to 60 percent from a year earlier.

Oil-rich wealth funds seen shedding up to $225 billion in stocks

Updated 30 March 2020

Oil-rich wealth funds seen shedding up to $225 billion in stocks

  • Risking more losses is not an option for some funds from oil-producing nations

LONDON: Sovereign wealth funds from oil-producing countries mainly in the Middle East and Africa are on course to dump up to $225 billion in equities, a senior banker estimates, as plummeting oil prices and the coronavirus pandemic hit state finances.

The rapid spread of the virus has ravaged the global economy, sending markets into a tailspin and costing both oil and non-oil based sovereign wealth funds around $1 trillion in equity losses, according to JPMorgan strategist Nikolaos Panigirtzoglou.

His estimates are based on data from sovereign wealth funds and figures from the Sovereign Wealth Fund Institute, a research group.

Sticking with equity investments and risking more losses is not an option for some funds from oil-producing nations. Their governments are facing a financial double-whammy — falling revenues due to the spiraling oil price and rocketing spending as administrations rush out emergency budgets.

Around $100-$150 billion in stocks have likely been offloaded by oil-producer sovereign wealth funds, excluding Norway’s fund, in recent weeks, Panigirtzoglou said, and a further $50-$75 billion will likely be sold in the coming months.

“It makes sense for sovereign funds to frontload their selling, as you don’t want to be selling your assets at a later stage when it is more likely to have distressed valuations,” he said.

Most oil-based funds are required to keep substantial cash-buffers in place in case a collapse in oil prices triggers a request from the government for funding.

A source at an oil-based sovereign fund said it had been gradually raising its liquidity position since oil prices began drifting lower from their most recent peak above $70 a barrel in October 2018.

In addition to the cash reserves, additional liquidity was typically drawn firstly from short-term money market instruments like treasury bills and then from passively invested equity as a last resort, the source said.

It’s generally a similar trend for other funds.

“Our investor flows broadly show more resilience than market pricing would suggest,” said Elliot Hentov, head of policy research at State Street Global Advisers. “There has been a shift toward cash since the crisis started, but it’s not a panic move but rather gradual.”

The sovereign fund source said the fund had made adjustments to its actively managed equity investments due to the market rout, both to stem losses and position for the recovery, when it comes.

Exactly how much sovereign wealth funds invest and with whom remain undisclosed. Many don’t even report the value of the assets they manage.

On Thursday, the Norwegian sovereign wealth fund said it had lost $124 billion so far this year as equity markets sunk but its outgoing CEO Yngve Slyngstad said it would, at some point, start buying stocks to get its portfolio back to its target equity allocation of 70 percent from 65 percent currently.

Slyngstad also said that any fiscal spending by the government this year would be financed by selling bonds in its portfolio.