Focus: Investors' Safe Havens Amid Turbulent Markets

Updated 31 March 2020

Focus: Investors' Safe Havens Amid Turbulent Markets

What happened:

Markets were moderately up yesterday, and the risk sentiment continued for European stock markets into Tuesday.

The WHO said that the coronavirus disease (COVID-19) outbreak may be nearing its peak in Europe. This shifted the conversation from stimulus packages to where the global economy will be headed after the impact of the pandemic abates.

President of the St. Louis Federal Reserve James Bullard told Bloomberg that the US had debt capacity beyond the stimulus. He also cautioned that the US might see unemployment rise to 30 percent.

As China returns to work, the Purchasing Manager’s Index (PMI) rose to 52 in March. It is too early to be jubilant because the March PMI follows on that of February, which stood at 35.7. January and February also saw a 17 percent decline of exports year on year. Expect that number to worsen, as most of China’s export markets halted economic activity. The GDP of the world’s second largest economy is expected to fall for the first time since 1976.

Why it happened:

Black Rock’s Larry Fink thinks that markets have seen their lows, but that after the worst is over the global economy will look different. Investor sentiment, business practices and consumer sentiments will be reshaped substantially. This will have an impact on interconnectivity and supply chains. Morgan Stanley and JPMorgan also estimate that markets have reached their lows. Many disagree.

Volatility was immense since the outbreak. At the beginning of the month, the volatility index reached 85 — the highest in history. While oscillating, it came down, but it still stands above 65. When volatility is up, investors flock to safe havens.

The dollar saw big inflows, which abated somewhat when the $2 trillion package was announced. The Swiss franc and the yen, which are traditional safe havens, also saw big inflows. CNBC reported that the Swiss National Bank doubled its open market operations for 2020 to SFr 12 billion.

Ten-year US treasury yields fluctuated on a downward trajectory. Gold surged at the beginning of the month and dipped later because investors were in securities, such as exchange-traded funds. Access to the physical commodity was restricted amid the lockdown. It has recovered since then, standing at $1,640.65 per ounce mid-morning in Europe.

Where we go from here:

There is discussion on the shape of the recovery: V, U or L. Recovery may look different country to country depending on how strong the economy was going into the crisis and how well equipped its private and public sectors were at dealing with the impact. In all probability, U-shaped recoveries will be most prevalent, the question being the depth of the valley.

On a different note, as oil had its worst quarter in history, Saudi Aramco vouched to stand behind its $75 billion dividend commitment. The first instalment for its $70 billion purchase of SABIC is also due. Bloomberg reported that Aramco is considering to raise $10 billion by selling a stake in its pipeline unit.


— Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairman and CEO of business consultancy Meyer Resources.

Twitter: @MeyerResources

Nuclear talks with Iran ‘cannot go on indefinitely,’ says Blinken

Updated 3 min 32 sec ago

Nuclear talks with Iran ‘cannot go on indefinitely,’ says Blinken

  • US Secretary of State Antony Blinken: “The ball remains in Iran’s court.”

KUWAIT CITY: US Secretary of State Antony Blinken said on Thursday that nuclear talks with Iran “cannot go on indefinitely” but that Washington was “fully prepared” to continue negotiations.
The US is indirectly involved in Iran’s talks with world powers to revive a nuclear deal that gave Iran some relief from international sanctions in exchange for limits on its nuclear program.
The deal was torpedoed in 2018 by then US President Donald Trump, who unilaterally withdrew from the agreement and imposed punishing sanctions.
“We’re committed to diplomacy, but this process cannot go on indefinitely ... we look to see what Iran is ready to do or not ready to do and remain fully prepared to return to Vienna to continue negotiations,” Blinken said during a visit to Kuwait on Thursday. “The ball remains in Iran’s court.”
Iranian President Hassan Rouhani’s government has been holding talks with major powers in Vienna since April on bringing Washington back into the agreement.
But a deal now seems unlikely until after he hands over to President-elect Ebrahim Raisi early next month. Raisi is an ultraconservative but has expressed support for the nuclear talks, arguing Iran needs an end to US sanctions.


This section contains relevant reference points, placed in (Opinion field)

Iran’s ultraconservative camp, which deeply distrusts the US, has repeatedly criticized Rouhani over the 2015 deal.
Iran’s supreme leader Ayatollah Ali Khamenei said on Wednesday that experience has shown “trusting the West does not work,” referring to the US withdrawal from the deal and its fallout.
Raisi has said his government will support talks that “guarantee national interests,” but will not allow negotiations for the sake of negotiations.
One of the major criticisms of the 2015 deal raised by Trump was its failure to address Iran’s ballistic missile program or its alleged interference in regional affairs.
But Tehran has always rejected bringing non-nuclear issues into the agreement, which is known formally as the Joint Comprehensive Plan of Action. Khamenei also criticized the US for refusing to “guarantee that (it) will not violate the agreement in the future” by pulling out unilaterally, as Trump did in 2018.
Iran’s chief negotiator Abbas Araghchi said this month that the talks must “await our new administration” as Tehran is “in a transition period.”
Rouhani, in office since 2013 and preparing to leave after the maximum two consecutive terms, had repeatedly promised to secure relief from sanctions before the end of his term.
But earlier this month, he expressed hope that his successor can clinch a deal to lift sanctions, insisting that from his administration’s side, “the work was ready” to be done.

Manchester United call off Preston friendly over coronavirus fears

Updated 13 min 26 sec ago

Manchester United call off Preston friendly over coronavirus fears

  • United were due to make the short trip to Deepdale at the weekend as part of their build-up to the new Premier League season
  • Routine lateral flow testing on Thursday saw some possible positive cases returned

LONDON: Manchester United have canceled their pre-season friendly at Preston on Saturday after a number of suspected Covid-19 cases within the camp of the English football giants.
United were due to make the short trip to Deepdale, fellow northwest club Preston’s home ground, at the weekend as part of their build-up to the new Premier League season.
But routine lateral flow testing on Thursday saw some possible positive cases returned.
Those concerned are now isolating, pending further PCR tests.
In a statement, United said: “Maintaining Covid security is a priority for us. Following routine testing of the first-team training group today, we have identified a small number of suspected positive cases. This has led to those people isolating, pending further tests.
“As a precautionary measure based on Covid protocols, we have taken the difficult decision that we will not now be able to play the friendly match against Preston North End this Saturday.”
The statement added: “We regret the disruption to Preston and disappointment caused to fans. Any Manchester United fans who have purchased tickets for the game will be automatically refunded.
“At this stage, we do not expect further disruption around our forthcoming matches, but we will continue to follow Premier League protocols in this regard.”
United are due to finish their pre-season program with a game against top-flight rivals Everton at Old Trafford on August 7.

Egyptian electricity minister heads to Russia to launch equipment manufacturing project for Dabaa nuclear plant

Updated 54 min 9 sec ago

Egyptian electricity minister heads to Russia to launch equipment manufacturing project for Dabaa nuclear plant

CAIRO: Egyptian Electricity and Renewable Energy Minister Mohammed Shaker headed to Russia to attend a joint celebration ceremony to begin manufacturing the first long-term equipment for the Dabaa nuclear power plant.

A high-level technical delegation is accompanying the minister.

According to a statement, Shaker and Rosatom Director-General Alexey Likhachev are set to discuss the progress of the Dabaa nuclear power plant and its future work.

Russia’s Rosatom is leading the Dabaa construction work.

The minister will also visit a group of Russian companies responsible for manufacturing long-term equipment for the nuclear plant.

The tour will cover Atomenergomash, which is responsible for manufacturing the compressor vessel, and Tagmash, which is responsible for manufacturing the reactor’s core catcher.

The past period witnessed intense technical meetings at the Nuclear Power Plants Authority.

The talks resulted in agreements regarding the quality assurance program for the manufacturer and quality plans for the equipment, as part of preparations to start manufacturing the plant’s long-term components.

The reactor’s core catcher is distinctive for its advanced third-generation reactors, to which the reactors of the Dabaa nuclear plant belong.

All the technical stages of its manufacture are carried out within the Russian Federation.

Logistical executive measures will then be taken to transfer it to the Dabaa site.

The manufacture of the reactor core catcher is a major milestone in the implementation of the Dabaa nuclear plant and comes as part of a series of continuous achievements that the project has been witnessing recently as a result of the concerted efforts of the Egyptian and Russian technical teams.

Egypt completes initial design phase of MisrSat-2 satellite

Updated 29 July 2021

Egypt completes initial design phase of MisrSat-2 satellite

CAIRO: Egypt’s new satellite, MisrSat-2, is scheduled to launch in December 2022, just three months behind schedule despite the COVID-19 pandemic, the CEO of the Egyptian Space Agency (EgSA) said on Thursday.

Mohammed ElKoosy said the “first phase of the initial designs” had been completed and that the “engineering model” was currently being manufactured “with Chinese support.”

The satellite was initially set to launch in September next year, but the timeline has been slightly altered because of the COVID-19 pandemic, he explained.

The EgSA CEO also revealed that the satellite assembly center — located in Egyptian Space City near the New Administrative Capital — is close to completion. Egyptian Space City is due to open in March or April, he said.

Once the center is complete, assembly of MisrSat-2 will begin almost immediately, he said.

ElKoosy said Egypt’s ambitious plans for its space industry are in line with the country’s strategy for sustainable development. He cited the African Development Satellite — currently being manufactured by five African countries, with Egypt taking the lead — as an example. That satellite is designed to “measure the climate considerations of African countries, reducing their danger and controlling emissions rates.”

Yemen's Houthi militia reject US call to stop Marib offensive

Updated 29 July 2021

Yemen's Houthi militia reject US call to stop Marib offensive

  • Yemeni government complying with peace efforts while resisting militia’s attempts to seize control of new areas

ALEXANDRIA: The Iran-backed Houthis have rebuffed the latest US call to stop their deadly military offensive on the central Yemeni city of Marib, accusing the Americans of supporting their opponents.

Houthi spokesman Mohammed Abdul-Salam lashed out at the US on Wednesday for calling for the offensive to cease, and for renewing support for the internationally recognized government, accusing Washington of fueling the war in Yemen and imposing a “blockade.”

The latest Houthi statement was part of a series of criticisms of other countries and rights groups for rebuking them for refusing to stop military operations in the area, which have claimed the lives of thousands of combatants and civilians.

On Wednesday, the US special envoy for Yemen, Tim Lenderking, slammed the Houthis for attacking the city, warning that their offensive in the province would aggravate the already miserable humanitarian crisis in Yemen.

In a tweet sent by the US State Department’s Near Eastern Affairds branch, Lenderking and Yemeni Prime Minister Maeen Abdul Malik “condemned the Houthi offensive on Marib for exacerbating humanitarian suffering and sacrificing Yemen’s young men, and agreed on the need to restore political stability in southern Yemen.”

The US envoy also echoed his concerns about the impact of the Houthi attacks on Marib during a meeting with the Acting UN Special Envoy for Yemen Muin Shreim.

The Yemeni government said on Thursday that it would keep resisting Houthi attempts to seize control of new areas whilst complying with peace efforts to end the war.

Speaking to a gathering of government officials in Yemen’s Seiyun city on Thursday, Yemen’s Parliament Speaker Sultan Al-Barkani stated that tens of thousands of Yemenis who fled Houthi repression and sought refuge in Marib would not allow the militia to capture the city.

“We will continue to seek peace, but at the same time, we will not abandon fighting,” Al-Barkani said.

“The Houthis will not reach Marib. This is impossible for the Yemenis since Marib hosts hundreds of thousands (of people) who escaped from Houthi oppression and tyranny,” said Al-Barkani.

The government’s renewed pledges to defend Marib against Houthi incursions came as fighting raged on Thursday between government troops and the Houthis in several locations outside the city, near a military base in the west of the province and in mountainous areas and valleys in Rahabah to the south.

Yemen’s Defense Ministry said on Wednesday that 11 Houthis were killed in the southern city of Taiz after an attack on government-controlled areas in the northwest were foiled.

In the western province of Hodeidah, a landmine planted by the Houthis killed three civilians and wounded 11 on Thursday in Al-Durihimi district, the Yemeni Landmine Monitor said.

Yemen’s President Abed Rabbo Mansour Hadi on Thursday returned to the Saudi Arabian capital Riyadh from Cleveland, Ohio after a medical checkup, official news agency SABA said.

For almost a decade, Hadi has traveled frequently to the US to receive medical treatment for heart problems.