NYSE opening bellVincent Forlenza (fourth left), Chairman and CEO of Becton Dickinson & Co, rings the opening bell at the New York Stock Exchange, (NYSE) in New York, US yesterday.

BUSINESSBUSINESSTuesday 9 January 2018

PAGE | 23PAGE | 22

Sukuk issuance likely to reach

$80bn in ’18

Juncker seeks bigger EU budget despite Brexit

Aamal announces three major projectsTHE PENINSULA

DOHA: Aamal Company, one of the region’s fastest growing diversified companies, yesterday announced that via Senyar Industries Qatar Holding W.L.L.,one of Qatar’s leading industrial groups in which Aamal is a 50 percent shareholder, it will further diversify through the development of three major new industrial projects: a copper production facility; an aluminum production facility; and a drum production facility.

Senyar Industries Qatar Holding is a leading Qatari industrial company that cur-rently owns and operates two main divisions - Doha Cables, the first cable manufacturing facility in Qatar, and El Sewedy Cables Qatar. These three new factories will be the first of their kind in Qatar and represent an impor-tant new development in sup-porting Qatar’s industrial trans-formation and fulfilling the needs of the Qatari market. Senyar Industries Qatar Holding will own 100 percent of all three fac-tories and is in the process of obtaining all the necessary approvals to start their construction.

The first factory is the ‘Senyar Copper Production Fac-tory’, with capital of QR95m. The factory will specialise in the pro-duction of copper wires and will be the first of its kind in Doha. Theexpected completion date is the first quarter of 2019 and the project will be funded using a combination of equity and debt.

The second factory is the ‘Senyar Aluminum Production Factory’, with capital of QR10m. The factory will specialise in the production of aluminum bars and will be the first of its kind in Doha. The expected completion date is the end of 2019 and the project will be funded using a combination of equity and debt.

The third factory is the

‘Senyar Drum Production Fac-tory’, with capital of QR10m. The factory will specialise in the pro-duction of wooden and steel-cable drumsand will be the first of its kind in Doha. The expected completion date is the end of 2018 and the project will be funded using a combination of equity and debt.

Sheikh Faisal bin Qassim Al Thani, Chairman of Aamal Com-pany commented: “These signifi-cant new projects which Senyar Industries Qatar Holding is launching are very much in line with Qatar’s vision of industrial diversification andof ensuring that industry is a key source of income for the economy, as well as ful-filling the country’srelentless

drive towards achieving self-suf-ficiency. We have previously said that Aamal has been studying several investment opportuni-ties in the industrial sector and I am very pleasedto today intro-ducethese three industrial projects which fit so well with our overall strategy andwhich will underpin our market-leading position within the industrial manufacturing sector.Once those three projects are completed, we will have an inte-grated cycle for cable manufac-turing that will fulfill the local market needs as a first step

before we then export to other markets. Furthermore, we have plans to add other projectsthat will support the various indus-trial sectors in Qatar. Being the first in Qatar to meet the increasing market demand for these productswill provide us with an excellent opportunity for further growth and willbenefit all our stakeholders.”

Sheikh Mohamed bin Faisal Al Thani, Vice Chairman and Managing Director of Aamal Company said:“We are very pleased to announce these three-major industrial projects, all of

which reflect Aamal’s ability to create new revenue streams which support our medium-term growth plans while also creating synergieswith our other indus-trial activities. Senyar Industries Qatar Holding has been success-fully operating in Qatar since 2007 and has two maindivisions - Doha Cables, the first cable manufacturing facility in Qatar, and El Sewedy Cables Qatar. Today’s announcement signifies the creation of a strong and nat-ural growth platform for these divisions; as well as being able to offer these products to the market, Senyar Industries Qatar Holding’s existing businesses will become even more efficient through the availability of local raw materials and, therefore, an enhanced supply chain. One of Aamal’sgreat strengths is our ability to identify and capitalise on investment opportunities and our ability to meet the increas-ingly sophisticated needs of the market. We believe in building through careful diversification and we have established an envi-able and successful track record of delivery against this strategy. I have no doubt that these three projects will add further value to our business model.”

Sheikh Faisal bin Qassim Al Thani, Chairman of Aamal Company (left) and Sheikh Mohamed bin Faisal Al Thani, Vice Chairman and Managing Director of Aamal Company.

The new factories will be the first of their kind in Qatar and rep-resent an important new development in supporting Qatar’s industrial transforma-tion and fulfilling the needs of the Qatari market.

Three major new industrial projects

include copper, aluminum and drum

production facilities

IMF ‘optimistic’ on global economyBLOOMBERG

PARIS: The International Monetary Fund is “optimistic” about the global economy as it readies a new set of forecasts to be published later this month, Chief Economist Maurice Obstfeld said.

“We’ve mostly seen

positive surprises, in China and most of the advanced econo-mies, including Europe,” Obst-feld told journalists in Paris.

The IMF forecast in October that the world economy will grow 3.7 percent this year, the fastest pace since 2011.

It will update its forecasts at the Davos gathering of world

leaders later this month. One of the key issues the Wash-ington-based fund is looking at is the potential effect of the recently approved tax cuts in the US.

Obstfeld declined to discuss specifics of the impact on the IMF’s outlook because the fund hasn’t yet settled on its view.

Property developers continue to power Qatar stock marketSATISH KANADY

THE PENINSULA

DOHA: Qatar stock market’s benchmark index jumped past 8,900-mark yesterday, the index’s fastest run to a fresh gain of 224.62 points in the post-blockade era. Powered by banks, real estate and insurance, the index jumped 2.57 percent to outperform its regional peers for the second straight session.

Projections for an acceler-ated economic growth, improving sentiments and chase for dividends ahead of the earn-ings season helped powered the market rally.

“We shouldn’t be surprised that market continues to move higher. Because fundamentals are positive and investor opti-mism is actually improving,” a local fund manager told The Peninsula.

Aamal, one of the region’s fastest growing diversified com-panies, made two major announcements yesterday. It announced that via its subsid-iary Senyar Industries Qatar Holding it would develop three major new industrial projects. In a separate announcement

Aamal said its subsidiary Ebn Sina Medical has entered into a deal to import pharmaceutical products from Turkey. Aamal’s shares fell 2.38 percent.

The benchmark index has now rebounded to within 10 percent of its pre-blockade level, having plunged 22 percent at one stage. Qatari companies, which historically pay high div-idend yields, are due to announce fourth-quarter or annual dividends in the next few weeks, and yields could be boosted by the drop in stock prices after the economic embargo imposed by the Arab quartet, Reuters reported.

The trading volume almost

doubled from the previous ses-sion as Commercial Bank gained 3.22 percent and the Islamic lender Masraf Al Rayan added 3.20 percent. Banking major advanced 2.43 percent as QIB rose 2.54 percent.

The shares of Industries Qatar, which is heavily weighted by the benchmark index, surged 3.47 percent. Energy-sensitive MPHC and GISS, rose 2.20 per-cent and 2.22 percent, respec-tively. Property developers UDC, Barwa and Ezdan extended their rally. UDC surged 3.38 percent as Ezdan jumped 3.22 percent.

Sector-wise, the Insurance outperformed the rest, by adding 5.15 percent, followed by transportation (3.01 percent), industrials (2.59 percent), real estate (2.56 percent) banks (2.49 percent) and telecoms (1.77 per-cent). Qatar Navigation (4.30 percent) and Nakilat (4.01 per-cent) lifted transportation sector.

According to ‘Mubasher’, the QSE’s liquidity surged 102.1 per-cent to QR411.39m yesterday, for the first time in 2018, while the trading volume surged 91 per-cent to 15.2million, compared with the previous trading ses-sion’s 7.96 million.

The benchmark index has now rebounded to within 10 percent of its pre-blockade level, having plunged 22 percent at one stage.

8,975.82+224.62 PTS2.57%

QSE FTSE100 DOW BRENT7,696.51-27.71 PTS0.36%

25,310.71+14.84 PTS0.06% Dow & Brent before going to press

$61.54 +0.10

22 TUESDAY 9 JANUARY 2018BUSINESS

Minister receives French official

Minister of Economy and Commerce H E Sheikh Ahmed bin Jassim Al Thani, yesterday met with Pascal Lamy, former WTO Director General. Lamy is the head of France’s bid to host the World Expo 2025.

Aamal to import pharma products from TurkeyTHE PENINSULA

DOHA: Aamal Company and its fully owned subsidiary, Ebn Sina Medical, announced yesterday distribution agreement with Turkish Company CinnaGenI-laç. The deal involves importing several biotech drugs to Qatar used for medical treatment of multiple sclerosis, rheumatoid arthritis, cancer, and blood diseases.

The signing ceremony took place in Doha, with the attend-ance of Turkey’s ambassador to Qatar FikretÖzer, and CEO of CinnaGenIlaç’ Dr Ferhat Farsi and General Manager of Ebn Sina Medical, Sherif Shehata.

Sheikh Mohamed Bin Faisal Al Thani, Vice Chairman and Managing Director of Aamal Company said: “We are very pleased to announce this agree-ment with CinnaGenIlaç, which reflects Aamal’s persistence on exploring new international markets and creating coopera-t ive re lat ionshipswith companies that go in line with-the quality standards of Aamal has set for its products. We are positive that this deal will

support Ebn Sina’s organic growth, which include being alert to the market demands and adopt a proactive approach partnering with leading institu-tions to provide the local market with the best and latestpharma-ceutical productsto meet the increasing market needs”.

Sherif Shehata, General Manager of Ebn Sina Medical added: “I’m pleased to announce this partnership with a leading pharmaceutical firm such as CinnaGenIlaç. As we reveal this agreement, we express our determination and commitment

to secure medicine availability in Qatar – based on the recom-mendations of the Ministry of Health – from different resources, including Turkey, which has shown strong support to the Qatari market in the sta-tus quo. Our deal with CinnaGenIlaç came after care-ful search for a well-establish partner in Turkey to provide us with such an excellent oppor-tunity to expand our product offering”.

Ebn Sina Medical is an ISO Certified subsidiary of Aamal Company and the leading phar-maceutical distribution company in Qatar having exclu-sive distribution agreements with several international phar-maceutical companies. It is active in the importation, distri-bution, promotion and retailing of pharmaceuticals, appliances and disposables in addition to consumer products. Ebn Sina Medical provides complete pro-fessional services to government departments, retail pharmacies, private clinics, industrial com-panies and the local market. Aamal has a 100 percent inter-est in Ebn Sina Medical.

The deal involves importing several biotech drugs to Qatar used for medical treatment of multiple sclerosis, rheumatoid arthritis, cancer, and blood diseases.

Officials of Ebn Sina Medical and Turkish company CinnaGenIlaç during the signing event, in Doha.

Juncker seeks bigger EU budget despite BrexitAFP

B R U S S E L S : E u r o p e a n Commission chief Jean-Claude Juncker (pictured) called yesterday for nations to pay more into the EU budget after 2020 to fill a Brexit void and meet growing needs on defence, migration and climate change.

Brussels proposed increas-ing the budget from one percent of GDP (gross domes-tic product) in the 2014-2020 budget to 1.1 percent of GDP in the next multi-year budget fol-lowing Britain’s departure.

The current budget was set at ¤963bn, or about $1.1 trillion.

“We need more than one percent of European GDP, quite clearly, if we are to pur-sue European policies and fund them adequately,” Juncker told a conference in Brussels.

“It costs the European tax-papyer one cup of coffee a day. Europe is worth more than one cup of coffee a day.”

Eurosceptic campaigners in Britain’s June 2016 referen-dum called on voters to “take back control” of British money, arguing that London sent too much to Brussels and gained little in return.

Britain will leave the EU in March 2019 but has agreed to pay its financial contributions to the bloc until the current seven-year EU budget period expires at the end of 2020.

But EU Budget Commis-sioner Guenther Oettinger of Germany said that Britain’s departure would leave a hole of 12-13 billion euros, and backed Juncker’s call for a big-ger share of Europe’s GDP to go towards the EU.

“I’m not talking about two or three percent. Just 1.1 some-thing. That is what I’m fighting for,” Oettinger told the same conference.

In May, the Commission,

the EU executive, is due to adopt a detailed proposal for the next multi-annual finan-cial framework (MFF), which Oettinger said should be from 2021 until 2027.

Oettinger, whose country is the biggest contributor to the bloc’s budget, said he would deliver his message when he visits European capitals in the next few months.

The European Parliament and the European Council, which groups the EU member states, will then negotiate the details before finally approv-ing the budget, with unanimity required in the council.

Oettinger, who forecast a year of tough negotiations, warned that “big cuts” will be needed in some programmes even as his commission called for fresh revenue.

New demands included fighting terrorism, protecting borders as migrants surge to Europe’s shores and building a common European defence, spending more on research and making the bloc’s econ-omy more competitive in the digital age.

He said more money will also be needed to respond to natural disasters, which he warned will increase as a result of climate change. Southern Europe was plagued last year by forest fires.

Arcapita acquires US firm for over $100mTHE PENINSULA

DOHA: Arcapita, the global investment firm, announced yesterday that is has acquired a controlling interest in MC Sign Company (MC Sign), the leading nationwide provider of signage and lighting services in the United States, for a total transaction value in excess of $100m.

Arcapita is a global Shari’ah compliant alternative investment manager, with offices in Bahrain, Atlanta, London and Singapore. Arcapita’s principal lines of busi-ness are private equity and real estate, and its management team has a 20-year track record of over 70 investments worth a total transaction value of approxi-mately $30bn.

Atif A. Abdulmalik (pictured), Arcapita’s Chief Executive Officer, commented, “We are excited to complete a US private equity transaction and pleased to part-ner with the management team at MC Sign to help grow the Com-pany’s suite of services and

customer base. MC Sign is led by a very experienced team of pro-fessionals who have grown the business considerably over the past few years, and we believe the Company is well positioned to acquire market share in a highly fragmented industry that is dominated by locally-focused, sub-scale service providers. Over 75 percent of MC Sign’s custom-ers are blue chip companies with national presence and, attesting to the Company’s value proposi-tion, MC Sign has averaged an industry-leading customer

retention rate of 99 percent since 2012.”

Martin Tan, Arcapita’s Chief Investment Officer, said, “MC Sign acts as a comprehensive one-stop-shop for customers, eliminating the need to manage multiple relationships with local vendors across diverse geogra-phies. This is especially beneficial for companies with a national or regional footprint. We believe the Company has significant poten-tial to grow organically and through acquiring smaller regional service providers. Given the repeat nature of customer demand, MC Signs also benefits from a sizable and growing recurring revenue base. We are excited to bring this opportunity to our investors and are optimis-tic about the Company’s growth prospects.”

Founded in 1953, MC Sign provides signage and lighting services to customers across the US through a highly-scalable, vendor-managed, and asset-light business model. The Company’s

customer base is comprised of nationally recognized blue chip companies in the retail, banking, hospitality, quick service restau-rant and petroleum/C-store segments throughout the US and Canada. MC Sign has over 275 customers, many of whom have been with the Company for over a decade.

MC Sign provides its custom-ers with a comprehensive suite of signage services including new installations, rebrandings, and refurbishments, as well as on-demand sign maintenance and emergency repairs. The Company has also steadily grown its light-ing services business which completes interior and exterior lighting installations and is cur-rently capitalizing on the high-growth LED retrofit/conver-sion market in the United States. Through its headquarters in Cleveland, Ohio, MC Sign proc-esses over 40,000 work orders per year through over 5,000 field service partners, and has 225 employees.

Google consolidates its payments servicesALPHABET Inc. is consolidat-ing its various payment brands under one name: Google Pay.

The internet company previously offered services such as mobile payments, in-store checkout and money transfers between friends through different features, including Android Pay, Google Wallet and a slew of others. Consumers can now use the payment information saved in their Google accounts for all the compa-ny’s pay offerings under one product, Google Vice Presi-dent Pali Bhat said yesterday.

Google Pay is already available on websites such as Airbnb, Dice, Fandango, Hun-gryHouse and Instacart, the company said.

Oil approaches 2015 highs on fewer US rigs & Opec output cutREUTERS

SINGAPORE: Oil prices rose yesterday, coming close to three-year highs on a slight decline in the number of US rigs drilling for new production and sustained Opec output cuts.

US West Texas Intermediate (WTI) crude futures had risen to $61.67 a barrel by 1422 GMT, 23

cents above their last settlement. WTI last week reached $62.21, the highest since May 2015.

Brent crude futures were at $67.78 a barrel, 16 cents above their last close. Brent hit $68.27 last week, the highest since May 2015.

Traders said the gains were due to a slight decline in the number of US rigs drilling for

new production. The rig count eased by five in the week to Jan. 5 to 742, according to data from oil services firm Baker Hughes.

Despite this, US production is expected soon to rise above 10 million barrels per day, largely thanks to soaring output from shale drillers. Only Russia and Saudi Arabia produce more.

“The US oil price is now into

a range that is anticipated to attract increased shale oil pro-duction,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “Traders may decide that discretion is the better part of valour while markets wait on evidence of what happens to the rig count and production levels over the next couple of months.”

Rising US production is the

main factor countering output cuts led by the Middle East-dom-inated Organization of the Petroleum Exporting Countries and by Russia, which began in January last year and are set to last through 2018.

A senior OpecC source from a major Middle Eastern oil pro-ducer said yesterday that Opec was monitoring unrest in Iran as

well as Venezuela’s economic crisis, but will boost output only if there are significant and sus-tained production disruptions from those countries.

Stephen Innes, head of trad-ing for Asia/Pacific at futures brokerage Oanda in Singapore, said “the Opec vs shale debate will rage” this year, being a key price-driving factor.

23TUESDAY 9 JANUARY 2018 BUSINESS

Sukuk issuance likely to reach $80bn in ’18SATISH KANADY

THE PENINSULA

DOHA: Underpinned by GCC’s jumbo issuance, the global Sukuk issuance rose by 45.3 percent to reach $97.9bn in 2017, up from $67.4bn in 2016. However, it is unclear whether the global sukuk market can stage a repeat performance in 2018, S&P Global Ratings noted yesterday in a report.

Driving the 2017 perform-ance, S&P Global Ratings believes, were good liquidity conditions in the GCC and, more generally, globally, as well as activity by some countries with the goal of further developing their Islamic finance industries. Some GCC issuers, according to S&P, were able to choose sukuk over bonds because they were less pressed for time to raise funds.

“By comparison, the outlook for sukuk in 2018 looks uncer-tain. While we still foresee sig-nificant financing needs for core Islamic finance countries, tighter

global liquidity conditions, mounting geopolitical risks, and slow progress on the standardi-sation of Islamic finance prod-ucts will continue to hold the market back from its full poten-tial”, S&P noted in its Global Sukuk Market Outlook.

Gigantic local and foreign currency issuance by some GCC countries drove the sukuk market higher in 2017. Of spe-cific note, the $9bn sukuk issued by Saudi Arabia was the largest issued globally to date. The

market also continued to attract some Islamic finance noncore countries, with Hong Kong tap-ping the market for the third time and the first issuance of a sukuk in Nigeria. S&P Global expects this trend to continue as Morocco and Tunisia plan to tap the market in 2018 and the UK announced its intention to go to the market again in 2019 upon the maturity of the sukuk it issued in 2014. “While we believe the financing needs of some Islamic finance core countries

will remain high, we expect that total issuance will likely decline to $70bn-$80bn in 2018,” S&P analysts noted.

Liquidity conditions in GCC countries improved last year. The increase in oil prices, which S&P Global now expects to remain at about $55 per barrel, helped. At the same time, muted economic growth and declining lending activity shifted banks’ focus from lending to capital market activi-ties where they sought higher yields than for cash and money market instruments. However, the recent resurgence in geopo-litical risk in the region might worry regional and international investors. Investors based in Europe and the US accounted for about 28 percent of sukuk pri-mary investors for the sample of international sukuk that S&P looked at.

“Driving this (2017) perform-ance were good liquidity condi-tions in the GCC and, more gen-erally, globally, as well as activity by some countries with the goal of further developing their

Islamic finance industries,” said S&P Global Ratings Head of Islamic Finance, Dr. Mohamed Damak.

S&P sees a couple of inter-esting trends in the market that are likely to shape its perform-ance in 2018 and onward. These include a more stringent appli-cation of the profit-and-loss sharing principle and a

broadening of the investor base to include retail and Waqf money. “While we do not opine on Sharia compliance, we are of the view that a more stringent application of the profit and loss sharing principle could deprive the market of an important class of investors (fixed-income inves-tors) and ultimately lead to higher pricing,” added Dr. Damak.

Susuk issuance by region.

Driving the 2017 performance were good liquidity conditions in the GCC and, more generally, globally, as well as activity by some countries with the goal of further developing their Islamic finance industries.

S&P noted

in its

Global Sukuk

Market

Outlook that

Telecom Italia should be split in two: Minister Calenda

Jaguar Land Rover reports record 2017 sales

REUTERS

LONDON: Britain’s biggest automaker Jaguar Land Rover said sales rose 7 percent to a record 621,109 vehicles in 2017 but warned it faces tough conditions in its home market due to weakening consumer confidence and a planned diesel tax hike on new cars.

Since being bought by India’s Tata group in 2008, the company has pursued a major turnaround plan to refresh and expand its model line-up and to increase vol-umes to around 1 million by the turn of the decade.

It said growth in China, its largest market, and in the United States helped to offset difficult conditions in Britain and the rest of Europe.

“We have once again delivered year-on-year sales increases thanks to a world-class product range and new models such as the E-PACE and Velar, as well as China-specific models such as the XFL,” group sales operations director Andy Goss (pic-tured) said.

“But we are facing tough times in key markets such as the UK where consumer con-fidence and diesel taxes will hit us,” he said.

Its first electric model, the I-PACE, will be built in Austria.

Britain’s car industry body said last week that 2017 sales across the sector recorded their biggest drop since 2009, blaming plans to increase a levy on new diesel cars from April and weak-ening consumer confidence in the wake of Brexit.

Like the rest of the British car industry, Jaguar Land Rover faces uncertainty over possible tariffs or customs delays if Britain fails to secure a favourable Brexit deal before the country leaves the European Union in March 2019.

Kuwait Energy in merger talks with SOCOREUTERS

DUBAI: SOCO International, an oil and gas exploration and production company listed on the London Stock Exchange, said yesterday it was evaluating a merger with Middle East oil and gas firm Kuwait Energy .

Its statement confirmed a Reuters report earlier on Monday that the two companies were in merger talks.

A merger would provide a way for the Kuwaiti company to go public after it failed last year to complete an initial public offer of its shares on the London exchange, through which it hoped to raise about $150m.

SOCO, which has a market capitalisation of about $500m, said discussions with Kuwait Energy’s newly constituted board were preliminary and no deal terms had been agreed.

“SOCO confirms that, in the context of its stated objective to strategically reshape its business

and grow its portfolio, it is eval-uating a potential merger of equals with Kuwait Energy,” the company said in a statement issued via the London Stock Exchange.

Kuwait Energy declined to comment on the merger discussions.

SOCO’s shares rose as much as 15 percent on news of merger talks and were up 9.9 percent at 123.4 pence at 1224 GMT.

Kuwait Energy has assets in Iraq, Oman, Egypt and Yemen. SOCO has a very different geo-graphic exposure, with interests in Vietnam, Congo and Angola but no major assets in the Middle East.

Thomas Streater, head of investment research at MB Com-modities Capital in Dubai, said the merger could benefit both companies.

“With volatile oil prices, it makes sense for small oil com-panies to merge as getting bigger scale gives them balance sheet

to face volatility. SOCO would get a portfolio of low cost, attractive assets, and for Kuwait Energy it would be a way to monetise some of their holdings,” he said.

Streater added that Kuwait Energy’s portfolio was quite attractive “but assets are in Iraq so straight away from an IPO

perspective it’s seen as too risky. With the merger, the company’s shareholders will probably get SOCO stock, and then they’ll be able to sell at a later stage.”

SOCO had $132m in cash as of September last year.

Kuwait Energy had $43m in cash at the end of September.

The potential merger would be “a merger of equals, two companies with very similar size and operations, but dif-ferent geographic exposures”, said one of the sources, who did not want to be named because the discussions are private.

“The difference is that SOCO has a slightly more mature or developed asset base and is in a stronger liquidity position. Kuwait Energy has a less mature asset base with huge potential, but it is more leveraged and needs to fund a substantial cap-ital expenditure requirement to realise the potential.”

Kuwait Energy had appointed Numis and BofA

Merrill Lynch as global coordi-nators and joint bookrunners for last year’s planned IPO, with E F G H e r m e s a s co-bookrunner.

The Kuwaiti firm announced last June that it had not been able to complete the IPO. It did not give a reason, but said that in light of positive feedback from potential investors, it remained committed to obtaining a London listing and continued to explore its options.

In December, a board shake-up included the resigna-tion of the company’s long-standing chief executive and co-founder Sara Akbar and the appointment of six new board directors.

Kuwait Energy also announced last month that it had agreed to extend the matu-rity of the principal repayment of a $155 million convertible loan due in November 2017, partially held by private equity group Abraaj.

A merger would provide a way for the Kuwaiti company to go public after it failed last year to complete an initial public offer of its shares on the London Exchange, through which it hoped to raise about $150m.

BLOOMBERG

ROME: Telecom Italia SpA should be split into two sepa-rate listed companies with one entity handling its commercial services and the other its land-line network, Italian Economic Development Minister Carlo Calenda (pictured) said in an interview.

“My opinion is very clear, I think that we should have two legal entities, separated, on the market. I think that they are considering this,” Calenda told Bloomberg Television in an interview at his ministry in Rome yesterday. “They are studying the various possibili-ties and opportunities.”

Calenda, whose ministry oversees the telecoms sector, said he was also in talks with Telecom Italia “to define the perimeter of the network, which is not easy at all.” He said progress was being made as the company is working with tel-ecommunications authority AGCOM on the spinoff. “It is a very important operation and will take time to complete.”

The company may split in order to address government concerns over foreign owner-ship of the network, an asset valued at about ¤15bn ($18bn) that Italy considers strategic.

French media conglom-erate Vivendi SA, Telecom Ita-lia’s largest shareholder with a

24 percent stake, increased its influence over the Italian phone company last year.

Vivendi’s strategy led the Italian government to invoke so-called “golden power” authority to curb the French company’s influence.

In September, an Italian government panel determined that the phone carrier should have informed the prime min-ister earlier of Vivendi’s increased role. As a result, Tel-ecom Italia risks a fine of about 1 percent of Telecom Italia and Vivendi’s combined sales, which would amount to about ¤300m.

Calenda said he needs to understand whether a fine imposed on Telecom Italia under golden power legislation can be reduced.

“The problem is related to

the amount of the fine that we, according with the law, should give to them because it is really very important, it is one per-cent of the turnover” Calenda said.

“Now, what we are asking the State Council is if we need to stick to this number or we have space” to change the amount if Telecom accepts all the demands made of it, Cal-enda said.

“I think it would be wise to reduce the fine but we need to understand if this is feasible from a purely legal point of view.”

The minister said Telecom Italia told him “they are fine” with the main prescriptions beyond the fine, adding that “they are already working in order to be compliant with it.”

Telecom Italia will have to set up measures to show it is compliant with golden power r e q u i r e m e n t s b y mid-January.

Premier Paolo Gentiloni decided to apply the powers to the company’s main phone service, branded TIM, and two other units: its Sparkle whole-sale arm, which owns under-water cables from the Mediter-ranean region to the U.S. and Israel, and a smaller unit called Telsy Elettronica that supplies cryptography for mobile phones used by the military and top politicians.

Spain investment bank is said to mull London move despite BrexitBLOOMBERG

LONDON: Spain’s Alantra Part-ners SA is considering moving its headquarters from Madrid to London in a bet the UK capital will remain the center of Euro-pean business and finance even after Brexit, according to two people with knowledge of the matter.

The investment bank and money manager, which oversees ¤3.7bn ($4.4bn) of assets and employs about 350 staff in 21 countries, is weighing how many workers it might deploy in London if it completes the move, the people said, asking not to be identified because the plan is pri-vate. A spokeswoman for Alantra declined to comment.

A relocation would buck the trend for financial-services firms to plan on moving staff from London to the continent in case Britain’s departure from the European Union sees it lose the passporting rights that allow for goods and services to be traded freely throughout the bloc. Goldman Sachs Group Inc., Deutsche Bank AG and Bank of America Corp. are all said to be bolstering their operations in cities such as Frankfurt and Paris in case the UK crashes out of the EU without a trade deal.

Brexit could cause as many as 75,000 banking and insurance

job losses, largely in London, if there’s no deal, Sam Woods, chief executive officer of the Bank of England’s Prudential Regulation Authority, said late last year. Concerns that Prime Minister Theresa May will struggle to negotiate a favorable departure agreement were fanned by a Telegraph report that she plans to appoint a min-ister responsible for Britain’s exit in a no-deal scenario.

Alantra, which went public via its merger with Dinamia Cap-ital in 2015, shrugged off Brexit fears to buy London-based advi-sory Catalyst Corporate Finance last October. Catalyst has 70 pro-fessionals in the UK.

At the time of the deal, Executive Chairman Santiago Eguidazu called Britain the most important mergers-and-acquisitions market in Europe, and said the firm’s expansion there was driven by the nation’s importance to global finance, which outweighed the uncer-tainty of Brexit.

Alantra advised on about 120 transactions globally last year, including KKR & Co.’s ¤3bn takeover of Q-Park in May and Bankia SA’s acquisi-tion of Banco Mare Nostrum SA. The firm was ranked No. 11 in Mergermarket’s list of top European M&A advisers for 2017.

24 TUESDAY 9 JANUARY 2018BUSINESS

France’s solar power facilityFrench Minister for the Ecological and Inclusive Transition Nicolas Hulot poses in a photovoltaic solar power facility yesterday in Allonnes, northwestern France.

Sri Lanka to raise $500m via bondsREUTERS

COLOMBO: Sri Lanka aims to raise $500m this month via development bonds and is in the process of divesting two state-owned hotels, the central bank and a ministry said yesterday, as the government faces unprec-edented debt repayment this year.

President Maithripala Sirise-nea’s administration must repay an estimated 1.97 trillion rupees ($12.85bn) in 2018 - a record high - including $2.9bn of for-eign loans, and a total of $5.36bn of interest.

The central bank announced plans to raise $500m in 2-year, 3-year, 4-year, and 5-year Sri Lanka Development Bonds (SLDB) out of planned $3bn for this year at both fixed and float-ing rate arrangement, the central bank said in a posting on its website.

The Cabinet last week approved plans to borrow some

$5bn in 2018, including $2bn of sovereign bond sales and $3bn of development bonds to refi-nance big debts that fall due this year.

A total of about $2.5bn worth of SLDBs mature this year.

The government has also called for a request for proposal (RFP) to find investors for 45bn rupees ($293m) worth of Grand Hyatt Colombo property that includes a 458-room, 5-star hotel and 100 apartments.

The government has offered 100 percent shares in Grand Hyatt Colombo property and said an investor would be selected through a competitive process, the Ministry of Public Enterprise Development said in a posting on its website.

The government has entered into a 20-year management contract with the Hyatt Group to run the hotel, which is due to be completed and to begin oper-ations this year.

The government also said it was seeking investors for a 51 percent controlling stake in a 350-room 5-star hotel in the heart of the capital, Colombo, which Hilton International runs under a management contract.

The ministry said Hilton International had indicated its desire to renew the contract after the current one ends in 2019.

The divestment of state-owned hotels comes as the repayment of expensive infra-structure foreign loans starts this year, which has left the island nation facing a debt crisis.

Central bank governor Indrajit Coomaraswamy said last week the government should go for the sovereign bond as early as possible as there was ample money in global capital markets ahead of expected rate increases by the US Federal Reserve.

The government is trying to pass a Liability Management Act that would allow it to borrow more than budget limit as it tries to manage a debt repayments over the next two years. It also plans to reschedule some loans.

The $81bn economy expected foreign currency out-flows of $5.6bn in the next 12 months including loans, securi-ties, and deposits, compared with a current $8bn in foreign exchange reserves, according to central bank data.

German industrial orders dip in NovAFP

FRANKFURT AM MAIN: Indus-trial orders in Germany fell in November, data showed yester-day, but not enough to derail the growth outlook for Europe’s biggest economy, analysts said.

Industrial orders fell by 0.4 percent in November from the preceding month, the federal sta-tistics office, Destatis calculated

in a statement. Analysts had been expecting a bigger drop, fol-lowing a 0.7-percent increase in orders in October.

The economy ministry in Berlin attributed the dent to a drop in more volatile larger orders, insisting that, overall, contracts had developed “very dynamically in the second half of 2017.” And that would “lay the foundation for a strong start to

the year for industry,” the min-istry said in a statement. Analysts also agreed.

“The decrease comes after three consecutive increases and is more of a technical nature than any sign of weakness,” said Carsten Brzeski, economist at ING Diba bank.“There is little reason to get concerned” about German industry, the expert said.

Celgene Corp to buy cancer-drug maker Impact for $1.1bnBLOOMBERG

WILMINGTON: Celgene Corp agreed to buy closely held Impact Biomedicines for $1.1bn upfront to gain an experimental blood cancer treatment. The price could reach as much as $7bn over time if the drug reaches certain milestones.

Under the agreement, Cel-gene will add as much as $1.25bn to the upfront payment if Impact’s drug fedratinib reaches approval milestones to treat myelofibrosis, a form of bone marrow cancer, and another $150m for other indications. Additional payments could reach as much as $4.5bn if global annual sales rise above $5bn, according to a statement Sunday.

The total price would make Impact one of Celgene’s biggest

acquisitions ever. The drugmaker is under increasing pressure to replace revenue from its top-selling cancer treatment before copycat medicines eat into Rev-limid sales. Its stock lost more

than a quarter of its value dur-ing a five-day stretch in October, after a highly anticipated drug for Crohn’s disease failed a late-stage trial and the drugmaker cut its 2020 profit target.

The shares haven’t recovered all of the lost ground, and as of Friday traded 28 percent below their 2017 peak of early October, giving Celgene a market value of about $83bn. After news of the deal broke, shares climbed as high as $106.88 in premarket trading yesterday, and were recently up less than 1 percent at $105.80.

Jefferies analyst Michael Yee said in an email that the com-pany “wisely structured” the deal to base much of its value on sales milestones, and isn’t overpaying for a late-stage asset.

The Summit, New Jersey-based company has made a

series of acquisitions and signed partnerships in recent years to bring in new drug candidates. Those include ozanimod, which it gained through the $7.2bn pur-chase of Receptos Inc. in 2015 and is being tested in Crohn’s disease, ulcerative colitis and multiple sclerosis.

Chief Executive Officer Mark

Alles (pictured) has pledged to look outside Celgene’s own labs for new drugs to bolster its pipe-line, telling investors in October that “we look for opportunity all the time.”

Impact, based in San Diego, was founded in 2016 by Chief Executive Officer John Hood and other executives. For Hood, it will be the second time he’s been involved in the sale of fedratinib. He was a co-inventor of the drug while working at TargeGen Inc., according to Impact’s website. French drugmaker Sanofi acquired TargeGen in 2010 for an upfront payment of $75m.

Sanofi dropped development of fedratinib in 2013 after some patients in clinical trials suffered a neurological condition known as Wernicke’s encephalopathy that prompted the FDA to put the studies on hold. Impact’s

founders acquired the rights to the drug from Sanofi and formed the company in 2016. Impact was able to get the FDA to allow tri-als to proceed after showing that the rate of Wernicke’s enceph-alopathy in the trial wasn’t unusual for a patient population of that size, Umer Raffat, an ana-lyst at Evercore ISI, said in a note to clients.

Besides the founders, inves-tors in Impact include venture capital firm Medicxi. Credit Suisse Group AG and Hogan Lovells advised Celgene while Impact worked with PJT Part-ners Inc. and Latham & Watkins LLP.

The acquisition announce-ment comes as JPMorgan Chase & Co.’s annual health-care investment conference, a key deal-making venue, kicked off yesterday in San Francisco.

Angola plans currency sale today Mercedes-Benz claims luxury pole position in 2017AFP

FRANKFURT AM MAIN: Mercedes-Benz said yesterday it had defended its top spot as the world’s biggest luxury carmaker in 2017, with a surge in sales, particularly in China, enabling it to clock up another record year.

The Stuttgart-based group reported sales of around 2.3 million cars last year, an increase of almost 10 percent on the figure for 2016 and its seventh record year in a row.

Much of the growth was attributable to Mercedes’ breakneck expansion in China, where sales grew by 26 percent, and the ever-rising appeal of its SUVs, with the luxury four-w h e e l - d r i v e v e h i c l e s accounting for more than one in three sales worldwide.

The group claimed its three-pointed star remained

the top high-end car brand worldwide, after overtaking Munich-based rivals BMW in 2016.

BMW has yet to release full-year sales figures for 2017, but the latest release from Novem-ber shows the group s i g n i f i c a n t l y l a g g i n g Mercedes.

“Success in our core busi-ness provides the basis for us to actively shape the mobility of the future,” said Dieter Zet-sche, chief executive of Mercedes parent company Daimler.

Like other carmakers, Mer-cedes is investing heavily in hybrid and all-electric vehicles, as well as more efficient, less polluting traditional motors.

Manufacturers are racing to polish up their environmental credentials and meet more s t r i n g e n t e m i s s i o n s requirements.

BLOOMBERG

LISBON: Angola’s central bank will hold an auction today to sell foreign currency to commercial banks, its first since saying it will abandon a dollar peg, according to three people famil-iar with knowledge of the matter.

The kwanza will probably be allowed to depreciate at the auction as the central bank shifts to a trading band, the peo-ple said, asking not to be identified because they aren’t authorized to speak publicly on the matter. About $100m of for-eign currency will be offered at the auction, one person added.

Angola, Africa’s second-largest oil producer, will join a long list of commodity export-ers -- from Russia to Egypt, Kazakhstan, Nigeria and Uzbekistan -- that have floated or devalued currencies in a bid to end crippling shortages of foreign exchange and revive economic growth.

The kwanza has been fixed at 166 against the dollar since April 2016, but trades at 430 per

dollar in the black market.The currency’s exchange

rate will be determined at the auctions, the central bank said in a statement on its website on January 4. A spokeswoman for the regulator said she had no information about today’s sale.

“There will be an exchange-rate adjustment with the kwanza losing about 15 percent of its value against the dollar,”

said Tiago Dionisio, a Lisbon-based analyst for Eaglestone Advisory SA.

“Once that adjustment hap-pens, I expect the kwanza to trade between 190-210 per dol-lar in the foreseeable future.”

Central bank Governor Jose Massano said last week that the country’s dwindling foreign-exchange reserves triggered the end of a peg that “does not

reflect the truth.” Reserves dipped to $14.2bn in November from $15.4bn in October, and are down from $20bn at the start of 2017, according to the central bank.

The kwanza will “clearly face” depreciation pressure in the upcoming auctions, Sonja Keller and Yvette Babb, strate-gists at JP Morgan Chase & Co, said in a research note Friday.

“Despite a 65 percent deval-uation against the dollar in the year to June 2016, the kwanza has become increasingly over-valued,” Keller and Babb said.

The results of the foreign-currency auction will probably be made public on tomorrow, the people said.

“It’s obvious that there will be a gradual depreciation of the kwanza at these auctions,” said Kaan Nazli, a strategist at Neu-berger Berman Europe Ltd in The Hague, which manages almost $300bn, including Ango-lan Eurobonds.

“I wouldn’t be surprised if the currency would lose 20 to 30 percent of its value against the dollar over the next year.”

The Cabinet last week approved plans to borrow some $5bn in 2018, including $2bn of sovereign bond sales and $3bn of development bonds to refinance big debts that fall due this year.

The government must repay an

estimated $12.85bn in 2018

Two thousand denomination kwanza currency banknotes is seen in this file image.

The total price would make Impact one of Celgene’s biggest acquisitions ever. The drugmaker is under increasing pressure to replace revenue from its top-selling cancer treatment before copycat medicines eat into Revlimid sales.

25TUESDAY 9 JANUARY 2018 BUSINESS

S Korea inspects 6 banks over crypto servicesREUTERS

SEOUL: South Korean financial authorities yesterday said they are inspecting six local banks that offer virtual currency accounts to institutions, amid concerns the increasing use of such assets could lead to a surge in crime.

The joint inspection by the Financial Services Commission (FSC) and Financial Supervisory Service (FSS) will check if banks are adhering to anti-money laundering rules and using real names for accounts, FSC Chairman Choi Jong-ku (pic-tured) told a press conference.

The six banks named by the regulator have all provided vir-tual currency accounts to clients that handle cryptocurrencies, according to the FSC. The banks are NH Bank, Industrial Bank of Korea, Shinhan Bank, Kookmin Bank, Woori Bank and Korea Development Bank.

Choi said the inspections are

intended to provide guidance to banks and are not the result of any suspected wrongdoing.

“Virtual currency is currently unable to function as a means of payment and it is being used for illegal purposes like money laun-dering, scams and fraudulent investor operations,” said Choi.

“The side effects have been severe, leading to hacking prob-lems at the institutions that handle cryptocurrency and an unreasonable spike in speculation.”

A Woori Bank spokesperson

told Reuters the bank was filling out a checklist for the inspection. The spokesperson said Woori had stopped providing virtual account services last month as the costs of using a real-name transaction system were too prohibitive.

NH Bank and Shinhan Bank representatives declined to com-ment, while the other three banks could not immediately be reached for comment.

Choi said authorities are also looking at ways to reduce risks associated with cryptocurrency

trading in the country, which could include shutting down institutions that use such currencies.

Last month, the government said it would impose additional measures to regulate specula-tion in cryptocurrency trading within the country, including a ban on anonymous cryptocur-rency accounts and new legisla-tion to allows regulators to close

virtual coin exchanges if needed.Bitcoin and other virtual

coins have been extremely pop-ular in South Korea, drawing wide investments from house-wives and students. Government officials have expressed concern over frenzied speculation, with South Korea’s central bank chief warning of “irrational exuber-ance” in trading of virtual cur-rency last month.

A South Korean cryptocur-rency exchange, Youbit, shut down and filed for bankruptcy in December after it was hacked twice last year, highlighting security and regulatory concerns.

South Korea’s virtual cur-rency exchanges have been more vulnerable to hackers as bitcoin trades at higher rates on local exchanges than they do else-where. As of 0710 GMT, bitcoin’s global price average was trading at $16,294 while in South Korean markets, it stood at 25 million won, or $23,467.35, according to

Coinhills.com.South Korea’s bitcoin prices

are higher because of the extreme popularity of the virtual currency in the country, with buyers greatly outnumbering those willing to sell, said Park Nok-sun, a cryptocurrency ana-lyst at NH Investment & Securities.

The fact that some of the most active virtual currency exchanges in the world are in South Korea also makes the country an attractive target for hackers, he added.

Choi warned on Monday authorities would crack down on virtual currency crime and dole out heavy punishments on those who partake in market price manipulation, pyramid schemes and money laundering.

“No one knows what is going on at these places that handle cryptocurrency because there is no direct regulation system in place regarding these institu-tions,” Choi said.

Eurozone economic confidence soars BLOOMBERG

ZURICH: Confidence in the euro area continued its advance at the end of 2017, capping what was probably the strongest year for the economy in a decade.

The European Commis-sion’s measure of sentiment touched its highest since late 2000 in December. The reading of 116 was above the median forecast of 114.8 in a Bloomberg survey and was based on an improvement in the outlook for industry and services.

After slowly emerging from the bank failures, record joblessness and sovereign debt crisis that marred its last decade, the 19-nation economy has found its feet. Growth in 2017 was probably the fastest since before the financial crisis and momentum this year is fore-cast to be almost as impressive.

Reports last week showed the region’s economic activity at the end of the year was the strongest in almost seven years, and unemployment continuing to decline. In Spain, the jobless rate is at a nine-year low, while Germa-ny’s is the lowest on record.

Still, despite the European Central Bank’s negative interest rates and asset pur-chases worth ¤2.3trillion ($2.8trillion) so far, inflation has been slow to stage a con-vincing return, remaining below the bank’s goal.

One reason is that, despite the better employment pic-ture, wages have been slow to rise. In Germany, the euro area’s biggest economy, pay talks for metalworkers and engineers this week could be key for determining whether inflation is finally on track for a pickup.

In the meantime, the ECB’s bond buying is set to continue until September. The monthly pace was halved to ¤30bn from January, but offi-cials have retained an option to prolong or increase the programme if needed.

In light of the robust eco-nomic backdrop, the ECB’s more hawkish policy makers have been pushing for the programme not to be extended again. President Mario Draghi has said strong cyclical momentum and reduced slack has increased confidence on the inflation outlook.

Pension crisis looms as Afghanistan grapples to fix public financesREUTERS

KABUL: In a country not short of problems, a looming pensions crisis that could cripple Afghanistan’s budget in coming years is a new head-ache for a government dependent on increasingly war-weary foreign donors.

Pension liabilities - set to swallow the equivalent of a third of the current $5bn budget within 15 years unless something is done - typify accumulated problems the government is now trying to tackle.

“Previously, they kicked the can down the road and it’s snowballing right now and needs to be fixed,” said Deputy Finance Minister Khalid Pay-enda (pictured).

Many countries face pen-sion problems but it is espe-cially unwelcome in Afghani-stan, struggling to restore an

economy shattered by four decades of war.

Provisions that award gov-ernment workers with service of 40 years benefits equivalent to full final salary were origi-nally introduced to compen-sate for low pay.

Many pensioners, who complain that actual benefits are meagre and often paid late, would be surprised to hear the system described as generous. But with no separate pension fund to generate investment income and benefits paid directly from the Treasury, payments are set to spiral out of control as more of almost 900,000 government workers retire over coming years.

“The economics of it doesn’t work. It’s not sustain-able and at a certain point it will explode,” Payenda said from his office in the ministry, where he is overseeing a drive to make the budget more

transparent and spending more efficient.

“It’s the start of a process but it will take a few years,” he said, adding that it was vital that foreign donors showed “understanding” and do not cut off funds abruptly.

Although down since most international troops withdrew in 2014, foreign aid still accounts for 54 percent of the budget. But donor willingness is not eternal and most funding pledges run only to 2020.

While progress has been made in increasing revenues, preparing for a reduction in aid is urgent, especially given likely disruption around pres-idential elections next year.

As in each of the past eight years, parliament is wrangling over budget approval, an opaque process that has encouraged backroom deals, waste and corruption.

“There are leakages,

bloated structures and there is unnecessary expenditure on conspicuous items,” Payenda said. “We want to see where there are problems and fix them.”

As long as security accounts for 40 percent of spending, Afghanistan’s public finances will be unbalanced and the room for investment to boost revenue in areas like mining

or agriculture limited.But there are many areas

where improvements are possible.

Due to weak administrative capacity, funds assigned to ministries are often not fully used, with unspent amounts carried over to following years, reducing accountability and making it harder to track real spending. In future, the gov-ernment plans a “use it or lose it” approach.

On pensions, a special fund will need to be set up to sepa-rate contributions and benefits from regular Treasury funds. Both benefits and government contributions may have to be cut, a process fraught with political risk.

But more open processes to allocate funds are key, Pay-enda said. “Reasonable people will listen and unreasonable ones can’t shout at you because of what the others will think.”

Romania surprises with first rate hike in a decadeBLOOMBERG

BUCHAREST: Romania unex-pectedly raised borrowing costs for the first time in almost a decade as inflation bounces back and its economy expands at one of the continent’s quickest paces.

The central bank lifted its benchmark interest rate to 2 percent from a record-low 1.75 percent yesterday, according to an emailed statement. The move was predicted by five of 15 economists in a Bloomberg survey, while 10 saw no change.

“We increased the key rate because of inflation and because we want to anchor inflationary expectations from the start,” central bank Gov-ernor Mugur Isarescu told a news conference in Bucharest.

“If you fail to act in due time, expectations don’t tend to be anchored and we wanted to avoid that. It’s better to take preventive actions, like we did today, than to risk.”

Romania is following the Czech Republic and the U.K. in increasing borrowing costs, even as Isarescu warns that raising rates before the Euro-pean Central Bank risks luring volatile foreign capital and denting financial stability. But the central bank has been left with little choice: inflation

accelerated to the most in four years in November, while a raft of tax cuts and public-sector pay increases drove economic growth to an annual 8.8 per-cent in the third quarter.

“While the decision comes as a surprise, the central bank is trying to get on the curve very fast,” Ciprian Dascalu, a Bucharest-based economist at ING Bank NV, said by email. “This is positive for the leu and Romanian debt.”

Money markets have priced in higher rates. The three-month inter-bank offered rate, known as ROBOR, has gained 120 basis points in the past six months and now exceeds 2 percent, the highest in three years.

Having missed last year’s rally in regional currencies from Prague to Warsaw, Romania’s leu has gained 0.9 percent against the euro in 2018. The currency erased ear-lier losses and traded 0.1 per-cent stronger after the decision.

In its last meeting of 2017, the central bank narrowed its liquidity-regulating interest-rate corridor for a second time in what was seen as a prelude to a rate hike. Isarescu has also voiced concerns over fiscal pol-icies that have confused busi-nesses and triggered warnings from the European Union over the widening budget deficit.

Byton President Daniel Kirchert (left) and CEO Carsten Breitfeld speak during the launch of the Byton connected car yesterday, in Las Vegas, the US.

AFP

LAS VEGAS: A Chinese startup unveiled its vision for the auto-mobile of the future on Sunday, promising to deliver an “intui-tive and intelligent” car to global markets starting next year from around $45,000.

The electric-powered con-cept car shown by Byton at the Consumer Electronics Show in Las Vegas is touted as a com-puting device on wheels, equipped with a “digital” lounge featuring a panoramic display acting as a hub for navigation, entertainment and even moni-toring the health of its occupants.

Backed by more than $200 million from investors including Chinese tech giant Tencent, Byton -- whose name was chosen to suggest “bytes on wheels” -- is among the latest entrants to a crowded field of startups and established players

looking to emulate Tesla in the race for a new kind of vehicle which can be adapted for auton-omous driving.

“This is a product which is tailor-made for the future, which is autonomous and shared,” said Daniel Kirchert, president and co-founder of the Nanjing-based startup.

Byton, led by former exec-utives from Tesla, BMW, Apple and Google, said it expects to launch in China by 2019 and in the United States and Europe by 2020.

“This will be the most advanced vehicle in the market as of 2019,” said chairman and chief executive Carsten Breit-feld, a former BMW executive, at a presentation in one of the first media events at the huge electronics show.

The Byton car will use facial recognition to unlock and adapt to the driver and offer a range of other ways to interact

including voice control with Amazon Alexa, touch and ges-ture. It will include 5G connec-tivity to the internet cloud and improve its functions with arti-ficial intelligence. “It will improve your experience the more it knows you,” said Kirchert.

While other concept electric cars have been promoted at prices of $100,000 or more, the new Byton will face competi-tion from the Tesla Model 3 and offerings from major automakers.

Byton said the car will have a range of more than 500 kil-ometers (300 miles) before needing a recharge and will be able to “top up” its battery in 15 to 30 minutes. It will be offered with “level 3” autonomy which enables some functions without a driver and be capable of “level 4” for near-autonomous func-tion from 2020, according to the company.

South Korea’s virtual currency exchanges have been more vul-nerable to hackers as bitcoin trades at high-er rates on local ex-changes than they do elsewhere.

Inspections will check if banks are

adhering to anti-money

laundering rules

Startup unveils $45,000 ‘car of future’

26 TUESDAY 9 JANUARY 2018BUSINESS

QATAR STOCK EXCHANGE

QE Index 8,975.82 2.57 %

QE Total Return Index 15,051.92 2.57 %

QE Al Rayan Islamic Index 3,614.55 1.48 %

QE All Share Index 2,567.51 2.51 %

QE All Share Banks &

Financial Services 2,817.88 2.49 %

QE All Share Industrials 2,731.39 2.59 %

QE All Share Transportation 1,905.09 3.01 %

QE All Share Real Estate 1,995.16 2.56 %

QE All Share Insurance 3,654.60 5.15 %

QE All Share Telecoms 1,142.17 1.77 %

QE All Share Consumer

Goods & Services 5,092.81 0.33 %

QE INDICES SUMMARY QE MARKET SUMMARY COMPARISON WORLD STOCK INDICES

GOLD AND SILVER

08-01-2018Index 8,975.82

Change 224.62

% 2.57

YTD% 5.31

Volume 15,201,778

Value (QAR) 411,388,405.82

Trades 6,694

Up 30 | Down 12 | Unchanged 107-01-2018Index 8,751.20

Change 120.53

% 1.40

YTD% 2.67

Volume 7,956,985

Value (QAR) 203,522,736.66

Trades 3,567

EXCHANGE RATE

GOLD QR155.0522 per grammeSILVER QR2.0198 per gramme

Index Day’s Close Pt Chg % Chg Year High Year Low

All Ordinaries 6236.5 6.8 0.11 6232.1 6141.4

Cac 40 Index/D 5493.53 22.78 0.42 5470.75 5258.66

Dj Indu Average 25295.87 220.74 0.88 25299.79 19677.94

Hang Seng Inde/D 30899.53 84.89 0.28 30911.01 30028.29

Iseq Overall/D 7162.3 -11.84 -0.17 7178.18 7021.69

Kse 100 Inx/D 43112.12 588.13 1.38 42584.96 40169.62

S&P 500 Index/D 2743.15 19.16 0.70338 2729.29 2682.36

Currency Buying SellingUS$ QR 3.6305 QR 3.6500

UK QR 4.9051 QR 4.9740

Euro QR 4.3447 QR 4.4051

CA$ QR 2.9111 QR 2.9677

Swiss Fr QR 3.7048 QR 3.7564

Yen QR 0.03191 QR 0.03253

Aus$ QR 2.8302 QR 2.8859

Ind Re QR 0.0569 QR 0.0580

Pak Re QR 0.0325 QR 0.0334

Peso QR 0.0720 QR 0.0734

SL Re QR 0.0235 QR 0.0240

Taka QR 0.0434 QR 0.0442

Nep Re QR 0.0356 QR 0.0363

SA Rand QR 0.2911 QR 0.2969

INTERNATIONAL MARKETS - A LIST OF SHARES FROM THE WORLD

A C C-A/D 1818.05 12.35 9842

Aarti Drugs-B/D 732 -5.85 7126

Aban Offs-A/D 220.3 5.15 955416

Ador Welding-B/D 575.25 18.15 22618

Aegis Logis-A/D 294.5 0.25 45316

Alembic-B/D 59.35 0.15 525395

Alfred Herb-X/D 1073.85 178.95 1674

Alkyl Amines-B/D 748.2 71.95 8365

Alok Indus-T/D 3.97 0.06 7082180

Apollo Tyre-A/D 283.8 2.3 381091

Asahi I Glass-/D 380 6.35 413986

Ashok Leyland-/D 128.45 1.05 853079

Bajaj Hold-A/D 2864 37.05 1751

Ballarpur In-B/D 18.3 0.05 1018668

Banaras Bead-T/D 85.15 -4.45 4002

Bata India-A/D 761.2 -3 74729

Beml Ltd-A/D 1571 20.6 48920

Bhansali Eng-B/D 202.4 0 173304

Bharat Bijle-B/D 1446.05 15.1 10346

Bharat Ele-A/D 184 1.8 739979

Bharatgears-B/D 206 -1.4 9447

Bhartiya Int-B/D 540 22.75 16302

Bhel-A/D 102.55 0.1 1683313

Bom.Burmah-X/D 1697.95 92 77346

Bombay Dyeing-/D 295.1 17.6 2243388

Camph.& All-X/D 1220 4.35 2305

Canfin Homes-A/D 479.55 9.35 111762

Caprihans-X/D 127.3 3.5 28480

Castrol India-/D 193.1 -1.9 1636059

Century Enka-B/D 362.45 6.8 15683

Century Text-A/D 1437 0.5 17482

Chambal Fert-A/D 156.45 -2.25 62613

Chola Invest-A/D 1333.35 23.85 25778

Chowgule St-Xt/D 17.5 0.8 6541

Cimmco-T/D 129 0.6 4298

Cipla-A/D 613.45 0.45 108407

City Union Bk-/D 175.4 -0.65 18917

Colgate-A/D 1117.15 16.1 27460

Container Cor-/D 1370 -9.65 2564

Dai-X/D 462.7 7.4 13537

Dcm Financia-B/D 3.2 0.04 5532

Dcm Shram Ind-/D 293.05 -2.35 18256

Dhampur Sugar-/D 223.35 7 119243

Dr. Reddy-A/D 2465.8 -1.55 46145

E I H-B/D 184.2 30.1 197920

E.I.D Parry-A/D 386.15 3.3 18880

Eicher Motor-A/D 29131.3 -119.55 1494

Eimco Elecon-B/D 535.05 -2.6 1299

Electrosteel-B/D 41.25 -1.25 289853

Emco-B/D 21.8 -0.1 47772

Escorts Fin-Xt/D 4.29 -0.22 12700

Escorts-A/D 780.45 -13.75 220554

Eveready Indu-/D 443.3 -2.1 30825

F D C-B/D 241.95 -0.75 7409

Federal Bank-A/D 115.2 3.6 5697225

Ferro Alloys-X/D 17 0.8 201207

Fgp Ltd-T/D 1.52 0 1342

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LONDON

US equities responded to the Trump presidency with euphoria. The Dow Jones Industrial Average rose 25 percent in 2017, becoming one of the best-performing global asset classes. It was a

different story with U.S. Treasuries: The yield on 10-year notes fell slightly from 2.44 percent at the end of 2016 to close 2017 at 2.41 percent. And the spread in yield between two-year and 10-year notes, often a signal of slowing growth or forthcoming recession, plunged from 125 basis points to 51.8 basis points at year-end 2017.

As they receive different messages from equities and Treasuries, investors should pay particular heed to the bond market in making asset-allocation decisions for 2018. Treasuries have been a better predictor of the two recessions in the 21st century -- the first lasted from March to November 2001, and the second from December 2007 to

June 2009. In the case of the latter, yields plunged during the months before the recession whereas equities remained strong well into the first half of 2008 when the economy was already in a downturn.

There is good reason to believe Treasuries are sending a warning now.

The bond market’s sense of caution in 2017 was not assuaged by the successful passage of the tax bill. While the yield on 10-year notes rose to almost 2.50 percent on Dec. 20 when it became clear the measure would pass and get President Donald Trump’s signature, it fell subsequently,

closing the month little changed.The surge in equities stemmed from corporate earnings

that exceeded consensus estimates in recent quarters and, lately, the reduction in the corporate tax rate to 21 percent from 35 percent. Nonetheless, the decline in bond yields signals that the surge in equities may not be accompanied by faster economic growth or a significant pickup in inflation.

Narrower spreads between two- and 10-year Treasuries also reflect speculation that the Fed’s stated objective of raising the federal funds rate three times in 2018 may not be met.

While recessions have always been preceded by the two- to 10-year spread going negative, a negative spread has not always ended in a recession. For example, the inversion of the yield curve in May through June 1998 did not deter gross domestic product from rising in inflation-corrected terms by more than 3 percent in 1999 and during the first half of 2000. This has led some market watchers to suggest that a potential negative spread should not be a source of concern. There are several reasons I disagree with this sanguine view.

First, wage growth remains anemic despite the quintupling of the Fed’s balance sheet since the financial crisis and the still-low interest rates almost 10 years later. Second, the new regulations incorporate reduced government spending on health care. Third, a pickup in economic growth is contingent on companies responding to the lower corporate tax rate by hiring more workers and increasing their wages. In sum, as investors consider where markets are headed in 2018, they should be especially mindful of the message from the bond markets. From their current lofty valuations, equities cannot keep rising for long if bond yields and the economy do not cooperate.

Investors should heed warning from Treasuries

There’s a better way to unite Europe

Komal Sri-Kumar Bloomberg

JOHN LLOYD

REUTERS

THE European political year, grinding back into gear for 2018, is full of doubt, even woe. In the continent’s major

countries politics are stuck, or likely to stick, in cul-de-sacs from which exit is difficult. Only in France, under the banner not so much of the tricolor as the injunction En Marche! (Let’s Go!), is there official optimism and vigor.

Germany, Europe’s leading economy, has yet to agree on a government. Talks between the governing Christian Democrats and the opposition Social Democrats on the formation of a third coalition are due to start on January 7. A coalition agreement may take a long time – and even if successful, the marriage will be even more loveless, and thus more fragile, than the two preceding.

Yet Germany remains strong in its economy and forecasts are bullish for this year, its businesses apparently insouciant about the politicians’ dilemmas. By contrast, Italy’s growth, up a little from the stagnation of recent years, remains highly dependent on a coherent government emerging from elections on March 4. The outcome, however, is forecast to end in a hung parliament, as a weakened governing Democratic Party faces a rejuvenated right and a populist Five Star Movement, presently the most popular single party.

In Spain, expected economic growth has been reduced from 2.6 percent to 2.3 percent on fears of continued turbulence between the Madrid government and the separatists in Catalonia, where pro-independence parties are in the majority. Poland, with its population of 38.5 million, is locked in moral and mortal combat with the European Union. And the United Kingdom is, of course, leaving the group.

Still, hope must spring eternal in an EU which works under the rubric of “ever-closer Union,” and that hope focuses itself on the youthful 40-year-old shoulders of Emmanuel Macron, whose “En Marche” party slogan is the daily wake-up call to a France he believes had gone prematurely old,

cold and weary. His plans for the Union are bold and aimed at relatively rapid integration of the economy, but also designed to be protective of European citizens, a bulwark against the chill winds of globalization. It will be a trick hard to pull off, but at least an injection of optimism into a torpid continent.

The plans have strong supporters in other countries –Germany’s Social Democrats are led by the former president of the EU’s parliament, Martin Schulz, passionate for “more Europe,” and in Italy, a new political grouping is actually called More Europe (Piu Europa), led by the veteran radical and former foreign minister, Emma Bonino. Like Macron, they want a United States of Europe; unlike him, they are in a minority.

Brave as Macron’s plans may be, they lack the central, necessary element which would give them a chance of success against already-heavy odds. They frame the advantages of closer integration in terms of a more efficient economy and a necessary underpinning of the euro currency. Many economists believe the euro is too fragile to survive ongoing shocks unless it has a kind of state backing similar to that provided by national central banks. Since the EU is at best a state-in-embryo, its currency’s fragility remains.

That makes sense to bankers and economists. But much of what comes out of the EU is not comprehensible to ordinary citizens, and the missing element in Macron’s project is a credible plan to bring the countries of the EU together. That integration cannot just make sense to an establishment, it must make the resulting state-in-construction understandable (again) and above all acceptable to European citizens on democratic grounds, with a parliament and other institutions whose functions they can both grasp and affect with their votes, their views and their protests.

We should reflect on what that integration means. It means that European citizens will have to accept a government, which rules at least initially in the financial-economic sphere, and which thus makes decisions affecting their incomes, jobs, pensions and much more. These decisions will be made not by Spaniards for the Spanish or Finns for the Finnish, but by ministers likely to come from other countries, whose

names and biographies are unknown to most and who will be unlikely to speak their language.

Where these decisions hurt the pockets or the job prospects of the governed – as they are bound to do, especially in times of low growth – will these ministers command assent, even if grudging? Or will the populist-nationalists receive a shot in the arm, and lead a revolt – the more widely supported for being attractive to both left and right?

That missing narrative – how to get from national to European democracy – is the fatal flaw of the Macron project. That weakness is one which will haunt him not just beyond the borders of France, but within them, since his large majority over Marine Le Pen of the far-right National Front conceals the fact that several of the candidates defeated in the first round of last year’s presidential election were almost as anti-EU as Le Pen – and with her, constituted a Euroskeptic majority.

Given the lack of a democratic “story” for the EU, the need is not to pursue an integrationist pipe dream, but to strengthen national governments and in doing so, address the gulf which has opened up between the haves (have higher education, have secure jobs, have good salaries) and the have-littles (have little education, little secure employment, little pay.) This does not mean abandoning the realization of a more closely-cooperating Europe.

It has, in its seven decades of development, shown how useful cooperation is, how necessary it is to have common objectives and common action, how much the states can learn from each other. But they must learn from the Brexit vote that citizens demand an administration which is responsive to them, one they can hate, despise and condemn – but which they recognize as theirs, because it was elected by them.

For those states it may be that the oft-repeated intention of their governments to develop common policies under the command of European ministers will prove acceptable and will work.

THE euro euro slipped a third of a percent on Monday as investors took profits after a

recent rally though currency markets remained bullish about the outlook for the single currency on the backdrop of a strengthening economic recovery.

With foreign exchange markets extending the “sell dollar” theme from late last year and Asian stocks creeping towards all-time peaks, the euro’s dip was taken as an opportunity to buy the single currency by some investors.

“The outlook for the Fed has been already priced into the market so the uncertainty is around ECB’s policy stance though the low inflation and the

strong euro will certainly be a concern for policymakers,” said Kenneth Broux, an FX strategist at Societe Generale in London.

Flash inflation estimates for December across the eurozone area printed at 1.4 percent last week, slightly slower than 1.5 percent in the previous month and well below an ECB target. Lacklustre inflation pressure in Europe has been accompanied

by a strengthening economic recovery across the continent and improvement in China and the United States, fueling risk appetite.

“The overall economic trend is minutely supportive for the US dollar as we are seeing a global recovery led by China and Europe and there is a lot of cash sitting on the sidelines waiting to buy European

assets,” said Peter Chatwell, head of European rates strategy at Mizuho International in London.

Friday’s headline US nonfarm payrolls increased by 148,000 jobs last month, against broader expectations of an increase of 190,000 jobs, though an unchanged unemployment rate holding stable at a decade low of 4.1 percent pointed to a solid jobs market.

Positioning data showed net dollar positions against a broader basket of currencies, including some emerging market currencies, not far away from a 5-year low hit in October. The euro slipped 0.3 percent to $1.19890 after rising more than 2 percent over the last three months. It wasn’t far away from a four-month high of $1.2092 hit in September.

The US currency had begun

2018 on the defensive, after the dollar index fell about 9.9 percent in 2017, its weakest performance since 2003.

A synchronized global recovery has prompted other countries’ central banks to start moving towards tighter monetary policy in recent months, helping bolster their currencies.

Euro stumbles after recent rally though outlook bullishSAIKAT CHATTERJEE

REUTERS

Poland, with its population of 38.5 million, is locked in moral and mortal combat with the European Union. And the United Kingdom is, of course, leaving the group.

Lacklustre inflation pressure in Europe has been accompanied by a strengthening economic recovery across the continent and improvement in China.

Narrower spreads between two- and 10-year Treasuries also reflect speculation that the Fed’s stated objective of raising the federal funds rate three times in 2018 may not be met.

The US currency had begun 2018 on the defensive, after the dollar index fell about 9.9 percent in 2017, its weakest performance since 2003.

27TUESDAY 9 JANUARY 2018 BUSINESS

28 TUESDAY 9 JANUARY 2018

INsightback to BUSINESS

CAPITALCOMMENT

Any fundamental fallout for the pound seems unlikely

from the PM’s (Theresa May) team tinkering this week.

Viraj Patel,Currency Strategist, ING.

NAME IN THE MARKET: GLOBAL M&A FALLS

The last time Goldman Sachs Group Inc.’s financial con-ditions index was pointing to a market environment this good, its then-chief economist was using the gauge

to analyze the effects of Federal Reserve decisions that he now helps make.

New York Fed President William Dudley developed the index in the 1990s while at Goldman to create an alternative way to measure the impact of monetary policy on the econ-omy. Now, with the index signaling the easiest conditions since 2000 after a big run-up in US stocks, Fed officials are starting to wonder if they will need to address inflated asset prices in order to avoid over-inflated consumer prices.

An account published Jan. 3 of the December 12-13 meeting of the interest-rate setting Federal Open Market Committee, which Dudley vice-chairs, revealed a debate over the risks that easy financial conditions could lead to

the kind of economic bounce that would spur unwanted inflation and warrant faster rate increases. A few officials aired the view that it already may be getting started.

Policy makers also pub-lished projections after the meeting that show their median forecast was for three rate hikes this year. Outgoing Fed Chair Janet Yellen then explained, in her final scheduled FOMC press conference, that part of the reason why that number wasn’t four was due to uncer-tainty over why inflation had decelerated in recent months. Yellen will be replaced by Fed

Governor Jerome Powell when her term expires in early February.

That question over low inflation will probably need to be resolved before officials feel confident enough to step up the pace of tightening to counteract rising stock prices and low long-term interest rates, which are key reasons why financial conditions have eased.

US stocks hit record highs as President Donald Trump signed a $1.5 trillion package of tax cuts into law, shortly after the Fed’s mid-December gathering. The lack of upward movement in long-term interest rates -- even as the Fed raises short-term rates -- is also contributing to the improvement in financial conditions indexes.

At the December FOMC meeting, “many participants expected the proposed cuts in personal taxes to provide some boost to consumer spending,” while “a few partici-pants noted that expectations of tax reform may have already raised consumer spending somewhat to the extent that those expectations had spurred increases in asset val-uations and household net worth,” according to the minutes.

Mainstream economic theory suggests spending encouraged by the “wealth effect” from higher asset prices will reduce unemployment and push up inflation. But infla-tion slowed in 2017 despite unemployment falling to a 16-year low.

Fed eyes financial conditions as possible source of inflation NEW YORK / BLOOMBERG

Policy makers also published projections after the meeting that show their median forecast was for three rate hikes this year.

Tech leaders gather at innovation capital AFP

LAS VEGAS: After a rollercoaster year for the tech world, many industry leaders are looking to the cutting edge for salvation.

As tech industry players con-verge in Las Vegas for the 2018 Consumer Electronics Show, an overriding theme is that gizmos, artificial intelligence, cloud com-puting and superfast internet connections hold answers to many if not all ills -- the new religion.

One of the world’s largest trade shows, CES is drawing an expected 170,000 people and 40,000 exhibitors from dozens of countries showing wares in robotics, digital health, artificial intelligence, sports and more.

Technology will continue to improve communication, enchanting us with bolder and brighter screens, exhibitors say -- but it additionally vows to end urban congestion, treat cancer and depression, and help us live fitter and more productive lives.

Jensen Huang, chief execu-tive of the computer chip and artificial intelligence group Nvidia, said advances in machine learning have opened up vast possibilities, including the ability of software writing software.

“This means we can solve previous ly unsolvable

problems,” Huang told a media event Sunday, ahead of the offi-cial Tuesday opening of the trade event.

Some exhibitors envision a world where self-driving cars could be summoned any time of the day, eliminating struggles to find parking or petrol stations.

Machines would tend to the tedium of traffic, which would run smoother since vehicles would wirelessly “talk” to one another to optimize travel efficiency.

A new “intuitive and intelli-gent” car from Chinese startup Byton aims to tackle the billions of hours lost to traffic conges-tion around the world each year.

Those times lost “could be used for things which are so much more fulfilling,” Henrik Wenders, vice president of Byton, said Sunday at one of the first media events at the show.

While tech is being touted as a solution to many ills, there is also a darker side, noted analyst Bob O’Donnell of Technalysis Research.

“Tech is being seen as the cure for everything, but it can also be the cause of societal issues,” O’Donnell said, citing concerns over cybersecurity and a recently revealed flaw in com-puter chip technology that could leak data.

“Most people in tech are

optimistic, but they may be naively optimistic.”

Robin Raskin, who heads the CES segment called Living in Digital Times, pointed to advances in health and medi-cine in recent years, particularly new technologies to assess can-cer and treatment possibilities.

Startups and major firms are also using new apps and tech-nologies to tackle diabetes and depression.

One startup on Sunday unveiled eye-tracking technol-ogy to analyze ailments including autism, concussions and Parkinson’s disease.

RightEye co-founder and chief executive Adam Gross her-alded the technology as “a game-changer” for the health care and sports industries, emphasizing the ability to quickly and accurately gener-ate “amazing insights” into h e a l t h , v i s i o n a n d performance.

In collaboration with doc-tors or trainers, the information could be used to guide therapies or exercise routines.

“The potential for this tech-nology to change people’s lives around the world is incredible and really exciting,” Gross said.

Technology will automate and augment the treatment of disease in the years ahead, pre-dicted Consumer Technology

Association research manager Lesley Rohrbaugh.

“You can talk with a health care provider through an app, and get remote monitoring,” Rohrbaugh said, speaking at CES.

“You can visit your doctor without actually physically vis-iting them.”

Virtual reality is also being incorporated into therapy, used to treat traumas, phobias and even dementia from aging, according to Rohrbaugh.

As much of the global pop-ulation migrates to urban areas, technology is powering “smart cities” -- where sensors, cam-eras and cloud computing work like house elves to manage needs like recycling, trash dis-posal, traffic, pollution and road repairs.

Inside homes, devices can make sure water and air stay clean, and that people are sleep-ing well.

Technology can also keep us safe, exhibitors say. Biometrics including fingerprint, iris and facial recognition are being built into smartphones, computers and padlocks as security features.

Robots, meanwhile, are being designed to do everything from patrol oceans for fish poachers to watching after us, especially as we age.

Vietnam starts trial over oil firm lossesREUTERS

HANOI: Vietnam began the trial yesterday of 22 executives charged over losses at the state oil firm, including a business-man Germany accuses Hanoi of kidnapping from a Berlin park and the communist state’s first politburo member to face trial in decades.

The most serious offences could carry the death penalty for the executives accused over losses at state oil firm PetroVietnam.

A widespread crackdown on fraud and mismanagement in the energy and banking sec-tors has gathered pace since the security establishment gained greater influence in the ruling party last year.

The trial opened under high security at the Hanoi People’s

Court. Of the 22 executives on trial, 12 are accused of “viola-tion of state regulations on economic management caus-ing serious consequences”. Eight are accused of embezzle-ment, according to the government’s official news website. Some are accused of both.

The most senior former executive on trial is Dinh La Thang, who was arrested last month. He is a former politburo member who was dismissed from his post over the losses at PetroVietnam and then stripped of his role as party head of Ho Chi Minh City. Also on trial is Trinh Xuan Thanh, who Ger-many says was kidnapped last year and taken home against his will to face accusations over losses of more than $150m at a subsidiary of PetroVietnam.