Focus: Equity markets fall as oil continues decline

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Updated 22 April 2020
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Focus: Equity markets fall as oil continues decline

What happened:

Yesterday virtually all global equity markets fell in reaction to the historic fall of WTI into negative territory. The markets are, however, well above their March lows.

The oil price rout continued into Wednesday. Brent followed WTI in the race to the bottom, reaching levels not seen since 1999. Storage in major hubs like Amsterdam, Rotterdam, Fujairah and Singapore is filling up quickly, and the industry is desperately seeking storage off-shore, underground, or wherever else possible at whatever price. Mid-day Monday CEST, Brent traded at $18.98 per barrel and WTI at $11.42 per barrel — down 1.81 and 1.30 percent respectively

OPEC+ ministers held a conference call to discuss the situation. There were no decisions made about further action — another sign that the drop in demand is beyond any measures that a subgoup of producers can take. This is a demand-driven global problem, requiring global solutions.

The macro picture in the Eurozone looks dismal: The GDPs of Germany, France and Spain are forecasted to shrink by 4 percent, 8.6 percent and 12.4 percent respectively. The ECB will hold a crucial call this evening to discuss government debt in the Eurozone, particularly Italy.

US congress passed another $545bn corona relief package targeting the healthcare sector and small businesses.

Background:

The financial sector is also exposed to the collapse of oil prices as loans turn bad and bets on future prices go badly wrong.

ETFs specializing in oil saw inflows in the billions over the last few months as investors sought to catch the bottom of the market — a dangerous game at the best of times.

The United States Oil Fund (USO) is the world’s largest oil-based ETF with more than $4bn in assets. As WTI dropped below zero, it was forced to change its allocation to longer durations and other kinds of energy derivatives. It had to seek permission from the US SEC to issue further shares.

Equity markets seemed immune to developments in the real economy. The MSCI global traded 20 percent above its low point earlier this year. There is an apparent lack of correlation between what has happened in most major economies as they went into lockdown with steadily declining GDPs.

The recent rally was fuelled by stimulus packages of an unprecedented scale. Still, how companies fare in future depends on the shape and pace of the recovery, which is uncertain

The rally was also fuelled by sliding interest rates, meaning companies paying dividends are king.

The rush into bonds, particularly treasuries, can be explained by investors not looking at government bonds in terms of return on investment but security of investment. We have seen a shift in favor of longer durations like the 30-year treasury, because of their yield.

Where we go from here:

The Bureau International des Exposition agreed to postpone the Dubai EXPO by one year. This is a huge blow to the economy of Dubai, given the importance of travel, leisure, hospitality and conferences to its GDP.

We shall have to look out for credit events in the GCC with oil prices at their current low levels. The weakest economies in the region are Oman and Bahrain.

Hopefully currency events can be avoided, as it becomes harder to defend the dollar pegs when reserves decline. Currencies of oil-exporting countries that do not have a dollar peg depreciated in line with how their economies were affected by the falling oil price.

 

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

Twitter: @MeyerResources


Pakistan records ‘wettest April’ in more than 60 years — weather agency

Updated 23 sec ago
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Pakistan records ‘wettest April’ in more than 60 years — weather agency

  • Pakistan’s metrology department says April rainfall was recorded at 59.3 millimeters, ‘excessively above’ the normal average of 22.5 millimeters
  • There were at least 144 deaths in thunderstorms and house collapses due to heavy rains in what the report said was the ‘wettest April since 1961’

ISLAMABAD: Pakistan experienced its “wettest April since 1961,” receiving more than twice as much rain as usual for the month, the country’s weather agency said in a report.

April rainfall was recorded at 59.3 millimeters, “excessively above” the normal average of 22.5 millimeters, Pakistan’s metrology department said late Friday in its monthly climate report.

There were at least 144 deaths in thunderstorms and house collapses due to heavy rains in what the report said was the “wettest April since 1961.”

Pakistan is increasingly vulnerable to unpredictable weather, as well as often destructive monsoon rains that usually arrive in July.

In the summer of 2022, a third of Pakistan was submerged by unprecedented monsoon rains that displaced millions of people and cost the country $30 billion in damage and economic losses, according to a World Bank estimate.

“Climate change is a major factor that is influencing the erratic weather patterns in our region,” Zaheer Ahmad Babar, spokesperson for the Pakistan Meteorological Department, said while commenting on the report.

While much of Asia is sweltering dure to heat waves, Pakistan’s national monthly temperature for April was 23.67 degrees Celsius (74 degrees Fahrenheit) 0.87 degrees lower than the average of 24.54, the report noted.


India opposition social media chief arrested over doctored video

Updated 21 min 3 sec ago
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India opposition social media chief arrested over doctored video

  • Congress party’s Arun Reddy was detained in connection with the edited footage, showing Interior minister Amit Shah
  • Shah is often referred to as the second-most powerful man in India after Hindu-nationalist Prime Minister Narendra Modi

NEW DELHI: Indian police said Saturday they had arrested the social media chief of the country’s main opposition party over accusations he doctored a widely shared video during an ongoing national election.

The Congress party’s Arun Reddy was detained late Friday in connection with the edited footage, which falsely shows India’s powerful interior minister Amit Shah vowing in a campaign speech to end affirmative action policies for millions of poor and low-caste Indians.

Shah is often referred to as the second-most powerful man in India after Hindu-nationalist Prime Minister Narendra Modi, and the pair have been close political allies for decades.

Reddy “was arrested yesterday on investigation about... a doctored video of the home minister,” deputy commissioner of Delhi police Hemant Tiwari told AFP.

“We produced him in the court and he is in police custody.”

Congress spokesperson Shama Mohamed confirmed Reddy’s arrest to AFP but denied he was responsible for creating or publishing the clip.

“He is not involved in any doctored video. We are supporting him,” she said.

Authorities seized Reddy’s electronic devices for forensic verification, the Indian Express newspaper reported Saturday, quoting an unnamed police officer who accused Reddy of having “cropped and edited” the video.

Shah has been campaigning on behalf of Modi’s ruling Bharatiya Janata Party (BJP), which is widely expected to win a third term when India’s six-week election concludes next month.

Analysts have long expected Modi to triumph against a fractious alliance of Congress and more than two dozen parties that have yet to name a candidate for prime minister.

His prospects have been further bolstered by several criminal investigations into his opponents and a tax investigation this year that froze Congress’s bank accounts.

Opposition figures and human rights organizations have accused Modi’s government of orchestrating the probes to weaken rivals.

Modi’s government remains widely popular a decade after coming to power, in large part due to its positioning of the nation’s majority Hindu faith at the center of its politics despite India’s officially secular constitution.

That in turn has left India’s 220 million-strong Muslim community feeling threatened by the rise of Hindu nationalist fervor.

Since voting began last month, both Modi and Shah have stepped up campaign rhetoric on India’s principal religious divide in an effort to rally voters.

In the original campaign speech at the center of the police investigation against Reddy, Shah vows to end affirmative action measures for Muslims established in the southern state of Telangana.

Modi last month used a campaign rally to refer to Muslims as “infiltrators” and “those who have more children,” prompting condemnation and an official complaint to election authorities by Congress.

But the prime minister has not been sanctioned for his remarks despite election rules prohibiting campaigning on “communal feelings” such as religion, prompting frustration from the opposition camp.

“Where is the election commission when the Prime Minister is spewing hate every day?” Shama said.


Omoda 7 all set for global launch, with brand debut in KSA slated for Q3 2024

Updated 04 May 2024
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Omoda 7 all set for global launch, with brand debut in KSA slated for Q3 2024

One year after the launch of its first global model, the Omoda 5, Omoda is set to introduce the Omoda 7 to the global market at the Beijing International Automotive Exhibition. The new vehicle embodies an all-dimensional “evolution” in design aesthetics and smart innovations, leading the way to a new era of mobility.

According to the official teaser images released, the design language of the new vehicle emphasizes futuristic sensibility and aesthetic beauty. Every angle exudes style; the front face of the car is sharp and distinctive, the side profile boasts an elegantly smooth waistline, and the lightning tail light design conveys the power of technology and aesthetics. The Omoda 7 will undoubtedly be an avant-garde model that refreshes SUV aesthetic standards.

Compared to the Omoda 5, the Omoda 7 positions itself higher with larger dimensions. In addition to continuing the futuristic, technological, and fashionable design ethos, it will further enhance the intelligent driving experience.

Omoda’s SUVs are known for their futuristic designs, enjoyable intelligent experiences, cutting-edge new energy technologies, and comprehensive safety features, making them highly competitive in the market and a popular choice among many young people. The first global model, the Omoda 5, introduced the fashionable crossover C5 and all-electric E5, not only reshaping consumer perception of Omoda but also leading a new trend of green technology and unique aesthetic style. The Omoda E5, in particular, achieved a 65 percent month-over-month growth in March, making it the fastest-growing star of the global A0-class all-electric SUVs in 2024. The launch of the new model will undoubtedly become another significant highlight in the global trend of youth-oriented consumerism, leveraging the power of technology to propel Omoda to new heights.

Alongside the debut of the Omoda 7, Omoda will also bring the Omoda E5 to the Beijing International Automotive Exhibition. This event will feature the largest group of international dignitaries ever assembled to support the launch, and Omoda will unveil a completely new brand ecosystem and a global public welfare initiative. With these major international-level events, the unveiling of a new model, new strategies, and a new ecosystem, the surprises that Omoda has in store are highly anticipated.

Omoda and Jaecoo are set to launch in the Saudi market by the start of the third quarter of 2024, by establishing their international subsidiary in the Kingdom — a big step as this business model is new in the Saudi market, yet the most awaited one, where customers have the chance to reach the OEM.

The level of care that the Saudi customers will get will be unmatched. One of the main reasons for establishing the international head office here in the Kingdom was to make sure that Omoda and Jaecoo customers can get the best after-sales services and access all spare parts at any given moment. Needless to say, this was the major problem that was prevailing in the Middle East market. However, with the soon-expected launch of the OJ brand, this problem will be eradicated from the stem. Furthermore, Omoda and Jaecoo have opened their first warehouse in Saudi Arabia’s Eastern Province, and the first shipment of spare parts has been shipped from China with 99 percent parts availability, to ensure a convenient customer experience. 


Hamas negotiators arrive in Egypt for Gaza truce talks: media

Updated 29 min 1 sec ago
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Hamas negotiators arrive in Egypt for Gaza truce talks: media

  • A top Hamas official earlier accused Israeli Prime Minister Benjamin Netanyahu of trying to derail a proposed Gaza truce

GAZA STRIP, Palestinian Territories/CAIRO: A Hamas delegation arrived Saturday in Egypt for the latest round of talks on a proposed truce and hostage release in Gaza, Egyptian state-linked media Al-Qahera News reported.

Al-Qahera News, linked to Egyptian intelligence services, quoted an unnamed high-ranking source as saying that “there is significant progress in the negotiations” between the Palestinian militant group and Israel, and that the Egyptian mediators have “reached an agreed-upon formula on most points of contention.”

A top Hamas official earlier accused Israeli Prime Minister Benjamin Netanyahu on Friday of trying to derail a proposed Gaza truce and hostage release deal with his threats to keep fighting the Palestinian militant group.

“Netanyahu was the obstructionist of all previous rounds of dialogue... and it is clear that he still is,” senior Hamas official Hossam Badran said by telephone.

Foreign mediators have waited for a Hamas response to a proposal to halt the fighting for 40 days and exchange hostages for Palestinian prisoners, which its chief Ismail Haniyeh has said the group was considering in a “positive spirit.”

A major stumbling block has been that, while Hamas has demanded a lasting ceasefire, Netanyahu has vowed to crush its remaining fighters in the far-southern city of Rafah, which is packed with displaced civilians.

The hawkish prime minister has insisted he will send ground troops into Rafah, despite strong concerns voiced by UN agencies and ally Washington for the safety of the 1.2 million civilians inside the city.

World Health Organization chief Tedros Adhanom Ghebreyesus said the agency was “deeply concerned that a full-scale military operation in Rafah... could lead to a bloodbath.”

“The broken health system would not be able to cope with a surge in casualties and deaths that a Rafah incursion would cause,” an agency statement said.

Badran charged that Netanyahu’s insistence on attacking Rafah was calculated to “thwart any possibility of concluding an agreement” in the negotiations brokered by Egyptian, Qatari and US mediators.

Israeli air strikes killed several more people in Rafah overnight, Palestinian medics and the civil defense agency said.

One bereaved resident, Sanaa Zoorob, said her sister and six of her nieces and nephews were killed.

Two of the children “were found in pieces in their mother’s embrace,” Zoorob said, appealing for “a permanent ceasefire and a full withdrawal from Gaza.”

The war broke out after Hamas’s October 7 attack on Israel resulted in the deaths of more than 1,170 people, mostly civilians, according to an AFP tally of Israeli official figures.

The militants also took some 250 hostages, of whom Israel estimates 128 remain in Gaza.

The army says 35 of them are dead, including 49-year-old Dror Or, a resident of the badly hit kibbutz Beeri, whose death was confirmed by authorities on Friday.

Israel’s devastating retaliatory campaign has killed at least 34,622 people in Gaza, mostly women and children, according to the Hamas-run territory’s health ministry.

Israel has weathered an international backlash over the spiralling death toll.

Pro-Palestinian protests that have rocked US campuses for weeks were more muted Friday after a series of clashes with police, mass arrests and a stern White House directive to restore order.

But similar demonstrations have spread to campuses in Britain, France, Mexico, Australia and elsewhere.

Turkiye announced on Thursday that it was suspending all trade with Israel, valued by the government at $9.5 billion a year.

President Recep Tayyip Erdogan said the move was intended to “force Israel to agree to a ceasefire and increase the amount of humanitarian aid to enter” Gaza.

Yemen’s Iran-backed Houthi rebels, who have carried out months of attacks on merchant shipping in the Red Sea in a costly blow to maritime trade, said they would extend their attacks on Israel-bound shipping to the Mediterranean “immediately.”

Israel’s siege has pushed many of Gaza’s 2.4 million people to the brink of famine.

US pressure has prompted Israel to facilitate more aid deliveries to Gaza, including through the reopened Erez crossing that leads directly into the hardest-hit north.

Food availability has improved “a little bit,” said the World Health Organization’s representative in the Palestinian territories, Rik Peeperkorn.

But he warned that the threat of famine had “absolutely not” gone away.

Five Israeli human rights groups that took Israel to court over restrictions on aid to war-torn Gaza said the state’s insistence that it has met its obligations was “incomprehensible.”

The government had told the supreme court that the steps it had taken went “above and beyond” its obligations under international law.

Gisha and four other Israeli non-profit organizations retorted that the shortages evident inside Gaza indicated “the respondents are not meeting their obligations, not to the required extent nor at the necessary speed.”

The US-based charity World Central Kitchen resumed operations this week, after suspending them in the aftermath of Israeli drone strikes that killed seven of its staff as they unloaded aid in Gaza on April 1.

The group’s kitchen manager Zakria Yahya Abukuwaik said: “We realized after the kitchen closed that many mouths were left hungry.”

World Central Kitchen was involved in an effort earlier this year to establish a new maritime aid corridor to Gaza from Cyprus to help compensate for dwindling deliveries by land from Israel.

The project suffered a new blow Friday when the US military announced high winds had forced troops working to assemble a temporary aid pier off the Gaza coast to relocate to the Israeli port of Ashdod.

“The partially built pier and military vessels involved in its construction have moved to the Port of Ashdod, where assembly will continue, and will be completed prior to the emplacement of the pier in its intended location when sea states subside,” US Central Command said in a statement.

Several Arab and Western governments have also airdropped aid into northern Gaza. Civil defense spokesman Mahmud Basal said one person was killed and several injured when they were hit by falling pallets.


Fire erupts at Karachi garment factory, no loss of live reported

Updated 04 May 2024
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Fire erupts at Karachi garment factory, no loss of live reported

  • The biggest Pakistani city, known for poor fire safety protocols, witnesses hundreds of such incidents annually
  • In November last year, a blaze at a shopping mall in Karachi killed around a dozen people and injured several others

KARACHI: A fire broke out at a garment factory in the southern Pakistani city of Karachi on Saturday, rescue officials said.

The blaze erupted on the ground floor of the garment factory in Zarina Colony in the New Karachi area, according to Rescue 1122 service.

“One fire truck is actively participating in the operation,” a Rescue 1122 spokesperson said, adding that another fire tender has been called to the site.

No loss of life has been reported in the wake of the fire.

Karachi, Pakistan’s largest city and the main commercial hub, is home to hundreds of thousands of industrial units and some of the tallest buildings in the South Asian country. 

The megapolis, known for its fragile firefighting system and poor safety controls, witnesses hundreds of such incidents annually.

In Nov., a blaze at a shopping mall killed around a dozen people and injured several others. In April last year, four firefighters died and nearly a dozen others were injured after a fire broke out at a garment factory, while 10 people were killed in a massive fire at a chemical factory in the city in August 2021. 

In the deadliest such incident, 260 people were killed in 2012 after being trapped inside a garment factory when a fire broke out.