Focus US Bankruptcies:

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UK Chancellor of the Exchequer Rishi Sunak (C) speaks with CEO of Worcester Bosch, Carl Arntzen (R) during a visit to the Worcester Bosch factory in Worcester, central England, on July 9, 2020. (AFP)
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Updated 10 July 2020
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Focus US Bankruptcies:

The week that was:
At the beginning of the week global stock markets shrugged off increasing COVID-19 cases in the US amid fears of a second wave in Asia and Australia. As the US surpassed 60,000 new cases the S&P 500 started to fall on Thursday. Asian stocks, including the Shanghai Composite, carried over the losses into Friday. Approaching the weekend, optimism seems to have given way to de-risking.


As COVID-19 cases spiked in the sunbelt, New York, New Jersey and Connecticut increased the number of states requiring incoming travelers to quarantine to 19.
US first-time jobless claims fell to 1.3 million for the week ending July 4, stubbornly remaining above the one million mark
US plans to raise tariffs against France in retaliation for a 3 percent French tax on the in-country revenues of big tech firms, which mainly affects US big tech.
At minus 8.4 percent, the EU predicts the highest drop in gross domestic product (GDP) in the history of the EU. The previous forecast stood at minus 7.4 percent.
UK Chancellor Rishi Sunak unveiled a £30 billion plan to save jobs and the economy. It includes a ceiling on stamp duty for home purchases until March 31, 2021, cutting VAT on restaurants, hotels and attractions by 75 percent for six months and £9 million to protect workers returning from furlough. This sum is in addition to the previous £35 billion to protect the jobs of 12.1 million workers, and the £45 billion for over a million companies under three lending programs.
UK Prime Minister Boris Johnson told German Chancellor Angela Merkel that the UK would exit the EU without a deal if the EU was unwilling to compromise. (Germany assumed the six months rotating presidency of the EU on July 1.) According to UK Environment Secretary George Eustice, it may take until December until an agreement on fisheries can be reached.
Merkel kicked off Germany’s EU presidency with a speech endorsing the EU’s proposed rescue package. It involves the European Commission raising 750 billion euros in debt, constituting a de facto mutualization, much against the wishes of several northern countries. (Consensus is not expected at next week’s summit, but is hoped for before the summer recess).
On Thursday the Eurogroup, consisting of finance ministers from the 19 eurozone countries elected Irish Finance Minister Paschal Donohoe as its president, against the wishes of France, Italy, Spain and Germany, who had supported Spanish Finance Minister María Jesús Montero.
Siemens concluded its restructuring with shareholders approving the spin-off of its energy group comprising coal, gas and wind energy generation. CEO Joe Kaeser announced that the new entity would exit coal at an accelerated pace. The new Siemens consists of three separately listed companies: Siemens Global, comprising industrial automation and digitization, mobility and smart infrastructure; Siemens Healthineers, which was listed in 2018, and Siemens energy, which will be listed at the end of September. Splitting the company up is expected to generate focus and agility.
Background:
COVID-19 has hit the global economy with full force. According to the OECD the G20 GDP contracted by 3.4 percent and is estimated to decline by between 6 and 7.6 percent for the full year, depending on a second wave of COVID-19 outbreaks.
This is the biggest contraction since the Great Depression. It is unsurprising that it led to bankruptcies in the US, which is the world’s largest economy and the worst affected by the virus.
The US has seen a record number of bankruptcies. Retail, travel, leisure and hospitality have been particularly hard hit, but we have also seen energy companies affected, particularly in the shale space with the likes of Chesapeake. Other sectors are also hurting. This will have ramifications on sustained unemployment and consumption down the road. It will also have an impact on the banking sector as many of the insolvent companies are highly levered.


Where we go from here:
The ECB will, in all likelihood, extend its 13.5 billion euros stimulus programs by the end of the year. ECB President Christine Lagarde expects deflation in the eurozone over the next two years. She feels that the economy will need to be supported, because the possibly disruptive shift toward digitization, automation, shorter supply chains and greener industries has been accelerated by the pandemic.
The rally in Chinese stocks seems to have come to a halt for now amid concerns of overheating by Beijing. (The Shanghai Composite has been up by 12 percent this month alone.) This has less of an impact on global equity markets than movements in US exchanges. According to Bloomberg, the effect of the SSE Composite on the MSCI global was less than half compared to the one on the S&P 500 over the last 10 years.


Earnings season in the US will get underway with all of the major US banks reporting next week. The numbers will give us an inkling on how the balance sheets of big banks have been hurt by the downturn and bankcruptcies.

  •  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

Iraqi father launches legal action against BP over son’s cancer death

Updated 1 min ago
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Iraqi father launches legal action against BP over son’s cancer death

  • Hussein Julood says practice of flaring in Rumaila oil field caused Ali’s leukemia
  • ‘I am also representing those poor people living here and suffering from pollution’

London: An Iraqi father has launched legal action against British oil giant BP after his son died of leukemia allegedly as a result of flaring, the BBC reported on Tuesday.

Ali died aged 21 last year because a local BP-run oil field had practiced flaring, the burning off of gas, his father Hussein Julood has alleged.

The village where Ali grew up, which lies within the boundaries of the oil field, contained high levels of carcinogenic pollutants that are linked to flaring, a BBC investigation in 2022 showed.

Julood’s case is believed to be the first instance of individual legal action against an oil firm over the practice of flaring.

In a claim letter, he argues that “toxic emissions from the Rumaila oil field” led to Ali’s leukemia and subsequent death, and that as the lead contractor of the site, BP holds partial responsibility.

Julood is demanding compensation for his son’s lengthy medical treatment, which included overseas trips, as well as for loss of earnings, funeral costs and “moral losses.”

He told the BBC: “I am just hoping for those who hear my voice, from BP, to consider my situation. I am not representing myself alone, I am also representing those poor people living here and suffering from pollution.”

Rumaila oil field has the highest known levels of flaring in the world, according to BBC analysis of World Bank figures.

Aged only 15, Ali was diagnosed with acute lymphomatic leukemia and endured two years of treatment, including chemotherapy, a bone marrow transplant and radiotherapy.

Despite being a keen footballer and student in school, he was unable to return to classes after his treatment.

But after being declared in remission in 2021, Ali opened a local phone business and “was excited about the future.”

In 2022 he was found to be in relapse, and his father urgently tried to raise funds for experimental treatment in India, but Ali died on April 21 last year before he could make the journey.

Julood said one of the most important goals of his case is preventing regular flaring from taking place in Rumaila “so that more families did not suffer.”

He told the BBC that last year “was a very sad year for the family,” adding: “For me, his mother, and his brothers, too. Ali was an unforgettable person, he was my backbone, I depended on him in my work, my life and in everything in the house. All the days we live are sad.”

A week after Ali died, Julood addressed the BP board at the firm’s annual general meeting, demanding an end to gas flaring in Rumaila.

But in the year since, populated areas within the oil field have “seen flaring and black smoke” almost daily, he said, adding that up to four or five deaths have occurred locally due to cancer since Ali’s death.

Wessen Jazrawi, partner at Hausfeld & Co., the law firm representing Julood, said: “This is an important example of environmental litigation seeking compensation for harmful emissions from a carbon major.

“Such companies have generally been able to carry out harmful environmental practices with impunity, particularly where these occur in the Global South.”


Israel military strikes northern Gaza in heaviest shelling in weeks

Updated 44 sec ago
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Israel military strikes northern Gaza in heaviest shelling in weeks

  • Army tanks made a new incursion east of Beit Hanoun on the northern edge of the Gaza Strip, though they did not penetrate far into the city
  • The renewed shelling and bombing of northern Gaza comes almost four months after the Israeli army announced it was drawing down its troops there

GAZA: Israel bombarded northern Gaza overnight in some of the heaviest shelling in weeks, causing panic among residents and flattening neighborhoods in an area from which the Israeli army had previously down its troops, residents said on Tuesday.
Army tanks made a new incursion east of Beit Hanoun on the northern edge of the Gaza Strip, though they did not penetrate far into the city, residents and Hamas media said. Gunfire reached some schools where displaced residents were sheltering.
In Israel, where government offices and businesses were shut to celebrate the Jewish Passover holiday, incoming rocket alerts sounded in southern border towns, although no casualties were reported.
The armed wing of Islamic Jihad, a group allied to Hamas, claimed responsibility for the rocket attacks on Sderot and Nir Am, indicating fighters were still able to launch them almost 200 days into the war, which has flattened large swathes of the enclave and displaced almost all of its 2.3 million people.
Thick black smoke could be seen rising in northern Gaza from across the southern Israeli border. Shelling was intense east of Beit Hanoun and Jabalia and continued on Tuesday morning in areas such as Zeitoun, one of Gaza City’s oldest suburbs, with residents reporting at least 10 strikes in a matter of seconds along the main road.
Just west of Beit Hanoun in Beit Lahiya, medics and Hamas media said strikes had hit a mosque and a crowd gathering on the coastal road to collect aid dropped from the air. Reuters could not immediately confirm those targets.
“It was one of those nights of horror that we had lived in at the start of the war. The bombing from tanks and planes didn’t stop,” said Um Mohammad, 53, a mother-of-six living 700 meters from Zeitoun.
“I had to gather with my children and my sisters who came to shelter with me in one place and pray for our lives as the house kept shaking,” she told Reuters via a chat app.
“I don’t know if we will make it alive before this war stops,” she added.
The Israeli army said rockets launched overnight into Israel had come from firing positions in northern Gaza. It had struck rocket launchers and killed several militants overnight, in what it called “targeted and precise” strikes.
“Over the past day, IAF fighter jets and additional aircraft struck approximately 25 terror targets throughout the Gaza Strip, including military infrastructure, observation posts, terrorists, launch posts,” it said in a statement.
Hitting areas where troops had withdrawn
The renewed shelling and bombing of northern Gaza comes almost four months after the Israeli army announced it was drawing down its troops there, saying Hamas no longer controlled those areas.
This month, Israel also drew down most of its forces in southern Gaza. But efforts to reach a ceasefire have failed, and Israeli bombardment and raids on territory where its troops have withdrawn are making it difficult for displaced Gazans to return to abandoned homes. Israel also struck Khan Younis in the south on Tuesday, a day after tanks raided eastern parts of that city.
Israel says it is seeking to eradicate Hamas, which controls the enclave, following an attack by the militant group on Oct. 7, killing 1,200 and taking 253 hostages by Israeli tallies.
Across the Gaza Strip, Israel’s military strikes killed 32 Palestinians and wounded 59 others in the past 24 hours, Palestinian health authorities said. They say more than 34,000 people have been confirmed killed in the seven-month war, with thousands more bodies as yet unrecovered.
Residents also reported bombing east of Deir Al-Balah on Tuesday in a central zone separating the north from the south.
In Nasser Hospital, southern Gaza’s main health facility, authorities recovered a further 35 bodies from what they say is one of at least three mass graves found at the site, taking the total found there to 310 in one week.
Israel says it was forced to battle inside hospitals because Hamas fighters operated there, which medical staff and Hamas deny.


Minister affirms Riyadh as global solutions hub ahead of special meeting of World Economic Forum

Updated 8 min 33 sec ago
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Minister affirms Riyadh as global solutions hub ahead of special meeting of World Economic Forum

RIYADH: Riyadh has emerged as a beacon of “thought leadership, action, and solutions,” stated one of Saudi Arabia’s top officials as the Kingdom’s capital prepares to host the World Economic Forum.

Faisal Al-Ibrahim, the minister of economy and planning, made the comments ahead of the summit on global collaboration, growth, and energy for development, slated for April 28 to 29, which aims to empower leaders from both public and private sectors to tackle mutual global challenges.

According to the WEF website, the meeting will also advance key forum initiatives in the region and beyond as it aims to bridge the growing North-South global divide, which has further widened on issues such as emerging economic policies, the energy transition and geopolitical shocks.

“The Crown Prince’s patronage of the World Economic Forum Special Meeting in Riyadh is a testament to our leadership’s determination to convene the world to take action and expand global collaboration on the critical topics of our time,” said Al-Ibrahim in a post on X.

He welcomed global leaders to this pivotal moment for social, economic, and human development, urging them to “build bridges toward a secure, stable and sustainable future.”


Riyadh prepares to host special meeting of World Economic Forum

Updated 57 min 10 sec ago
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Riyadh prepares to host special meeting of World Economic Forum

  • Special meeting scheduled to be held in Riyadh on April 28-29
  • Heads of state and senior private sector executives to attend 

RIYADH: Final preparations are taking place this week in the Saudi capital, Riyadh, for a special meeting of the World Economic Forum in the city on April 28 and 29.

Heads of state and senior executives from the public and private sectors are expected to be among the participants, who will discuss a range of global economic issues and developments under the theme “Global Collaboration, Growth and Energy for Development.”

The aim of the meeting is to find solutions to a host of global challenges relating to humanitarian issues, the climate and the economy. On the sidelines of the main event, the Kingdom will host exhibitions and other events to highlight the latest developments and trends in areas such as sustainability, innovation and culture.

The selection of Riyadh as host of the special meeting reflects the extensive partnership between Saudi Arabia and the WEF, officials said.

It builds upon the Kingdom’s active participation and contributions to the WEF’s Annual Meetings in Davos.

The agenda is designed to rekindle the spirit of cooperation and collaboration with various panel discussions, workshops, and networking opportunities. It represents a significant gathering of global leaders and experts dedicated to forging a path toward a more resilient, sustainable, and equitable world.


Saudi Arabia’s Diriyah Co. unveils its mixed-use commercial office and retail offering Zallal

Updated 59 min 22 sec ago
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Saudi Arabia’s Diriyah Co. unveils its mixed-use commercial office and retail offering Zallal

RIYADH: Saudi Arabia’s Diriyah Co. has shared plans for its inaugural mixed-use commercial office and retail development Zallal, set to launch in the Bujairi district during the first half of 2025.

This project will feature two low-rise office buildings with a combined leasable space of around 6,000 sq. m. Additionally, there will be 12 mixed retail and food and beverage outlets spread across about 8,000 sq. m.

Located next to the popular Bujairi Terrace, Zallal will benefit from proximity to a venue that attracts thousands of visitors daily.

The development is also located close to the recently completed Diriyah Art Futures and the soon-to-open Bab Samhan Hotel.

Jerry Inzerillo, group CEO of Diriyah Co, said: “We have been delighted with the hugely positive reception that Zallal has had from the commercial sector, and we are in advanced negotiations with international and local companies eager to benefit from the central location in the heart of Diriyah and the diverse range of accessible retail, F&B and office space available.” 

He added: “With construction well underway, Zallal maintains the exciting momentum at Diriyah, and when open, will benefit from the thousands of daily visitors to Bujairi Terrace becoming the latest completed precinct in our rapidly developing masterplan.”