Business

LONDON — US stocks slid on Wednesday following data that showed a slowdown in inflation, but less than investors had expected. 

European stocks, which had been trading strongly higher, pared their gains after the US Labour Department said the consumer price index (CPI) rose by 8.5 per cent in April, down from the 8.5 per cent annual gain registered in March.

Briefing.com analyst Patrick J. O'Hare said the 0.3 per cent month-on-month gain in the overall CPI was above the consensus expectation of 0.2 per cent.

The 0.6 jump in monthly core CPI, which excludes food and energy costs, was also above the consensus of 0.4 per cent.

"The key takeaway from the report is that it provided some leeway that suggests peak inflation might have been hit, but with the moderation not as significant as had been hoped, it also stirred concerns that inflation might stick at persistently high levels longer than anyone would like, including the Fed," said O'Hare.

The US Federal Reserve (Fed) and other central banks have been hiking interest rates to tackle decades-high inflation, both of which tend to slow economic growth.

So far, the European Central Bank has been reluctant to follow suit, but on Wednesday, ECB president Christine Lagarde hinted that it could raise interest rates from historic lows as soon as July.

On Wall Street, the Dow dipped 0.2 per cent after a couple minutes of trading, with the S&P 500 shedding 0.5 per cent and the tech-heavy Nasdaq dropping 1.1 per cent.

In afternoon European trading, London was up 0.5 per cent, Frankfurt added 0.8 per cent and Paris climbed 1.2 per cent.

Ahead of the inflation figure, equities also won a boost from US President Joe Biden's administration looking at possibly lifting trade tariffs on China to try and control inflation.

Equities have been on another roller-coaster ride this week amid high inflation concerns, the Russian invasion of Ukraine and impact of China's COVID-19 lockdowns on supply chains.

Global investors have been spooked by China's sinking April exports — the lowest in almost two years — as well as data showing its consumer inflation had risen at the quickest pace in nearly half a year.

Meanwhile, global oil prices rose around 5 per cent on concerns over Russia's war in Ukraine, China's COVID lockdown and slowing US inflation.

A day after briefly falling below $100 per barrel, benchmark US oil contract WTI surged back above to $105 per barrel.

MOSCOW — New car sales in Russia sank by over 78 per cent in April, industry data showed on Wednesday, after the country was hit by sanctions over Moscow's military campaign in Ukraine.

Only 32,706 units were sold in April, according to the Association of European Businesses.

This was down 78.5 per cent from the same month in 2021 and followed a 60 per cent drop in March.

The fall comes on the heels of Russian President Vladimir Putin's decision to send troops into Ukraine on February 24.

Sales of the country's most popular and affordable brand, Lada, whose Avtovaz manufacturer is majority-owned by the Nissan-Renault group, fell 78 per cent.

Renault is under intense pressure to boycott Russia over Ukraine and is said to be in talk to sell its majority stake in Russia's largest car maker.

Numerous car makers have stopped sales of their cars or parts to Russia — including Audi, Honda, Jaguar and Porsche.

Makes that have halted Russian production include BMW, Ford, Hyundai, Mercedes, Volkswagen and Volvo.

LONDON — Bitcoin slumped below $30,000 for the first time since July 2021 on Tuesday as cryptocurrencies track sinking markets with investors spooked by aggressive US monetary tightening and surging inflation.

The world's largest cryptocurrency by market value fell as low as $29,764 in Tuesday trade, before recovering above $30,000, extending a recent collapse in price as investors desert assets viewed as risky.

Bitcoin's value has more than halved since a November surge that sent the token to a record of nearly $69,000.

While crypto enthusiasts view Bitcoin as a hedge against inflation, an influx of more traditional investors tend to view it as a riskier asset.

They have been offloading Bitcoin and other digital tokens along with other volatile assets like tech stocks as the US Federal Reserve moves to hike interest rates to tackle decades-high inflation.

"Bitcoin is breaking below some key technical levels as the never-ending sell-off on Wall Street continues," said Edward Moya, senior market analyst at OANDA, a foreign exchange platform.

"The institutional investor is paying close attention to Bitcoin as many who got in last year are now losing money on their investment," he added.

While the token's "long-term fundamentals have not changed in months", concerns about growth and a possible recession are creating "a very difficult environment for cryptos", Moya said.

"No one is looking to buy the crypto dip just yet and that leaves Bitcoin vulnerable here."

Tech gloom 

Other cryptocurrencies are not faring better: The total market is valued at just over $1.5 trillion, compared with $3 trillion at its peak, according to data from the CoinGecko website, which tracks over 13,000 crypto assets.

The sector's woes are linked to investors' heightened caution.

Worried about the war in Ukraine, COVID lockdowns in China, and tighter monetary policy in the US, they are abandoning the stock markets — especially shares in technology companies, whose performance was boosted by the easy money policies of central banks during the pandemic and bets on long-term growth.

The slump in crypto follows dives on US equities and other markets, with the tech-heavy Nasdaq sinking by more than 4 per cent on Monday.

Nasdaq's correlation with Bitcoin has reached "historic highs", according to the Kaiko analytics firm.

But it is difficult to say which way Bitcoin will move next, given the proven volatility of crypto assets.

In 2021, Bitcoin temporarily fell below $30,000 twice, in June and July, before surging again to hit its all-time high a few months later, in November.

Despite a less impressive 2022 in terms of prices, some players in the sector are seeking to comply with increasingly demanding authorities.

One of the largest trading platforms, Binance, was granted approval to operate in France from the Financial Markets Authority in early May.

Meanwhile in the US, the Securities and Exchange Commission has announced it is strengthening its team responsible for regulating cryptocurrencies.

El Salvador confident 

In a sign of the growing importance of cryptocurrencies, two countries, El Salvador and the Central African Republic, have even taken the gamble of adopting Bitcoin as their official currency — despite strong criticism from international financial institutions.

While the Central African Republic's project is still in its infancy, Salvadoran President Nayib Bukele proudly announced on Twitter on Monday that "El Salvador just bought the dip" by adding 500 Bitcoins to its fund, using the vocabulary of stockbrokers who see falling prices as opportunities to invest.

On Tuesday, Bitcoin rose 2.3 per cent to $31,695 at around 09:25 GMT.

But since its creation in 2009, the cryptocurrency has existed in a context of ultra-low rates.

The US Federal Reserve has instead signalled in recent months that its recent rate hikes would be renewed to stem inflation.

City Index analyst Fawad Razaqzada warned: "Granted, we will see bounces here and there, but for as long as yields on government bonds are on the rise and the dollar is in an uptrend, the risks remain skewed to the downside." 

RAMALLAH, Palestinian Territories — The World Bank on Monday urged donors to boost support for the Palestinian Authority (PA), which it said was facing a de-stabilising budget crisis linked partly to "record low" foreign aid contributions. 

The report published ahead of a donor conference in Brussels paints a contrasting view of the Palestinian economy, which is seeing a post-lockdown recovery even as food insecurity worsens in places.

The economy in the West Bank, Palestinian territories occupied since 1967, posted 7.8 per cent growth in 2021 — part of a rebound also fuelled by an increased number of work permits for Palestinians to find jobs in the areas ruled by the Israeli occupation.

In Gaza — a separate Israeli-blockaded territory ruled by Hamas — the economy slowed down last year but still saw 3.4 per cent growth.

The growth in the West Bank allowed the PA to increase tax revenue but the financial outlook remains "precarious", the World Bank said.

"The fiscal situation remains highly challenging," the organisation said, adding that the PA was now paying only "partial salaries since November".

The PA's 2021 budget deficit hit $1.26 billion, while a "record low" $317 million was received in foreign aid, the World Bank said.

Palestinian Prime Minister Mohammed Shtayyeh was set to meet EU officials in Brussels to push for "progress in the European position in terms of supporting the PA", the authority's spokesman Ibrahim Melhem said.

Israel's Regional Cooperation Minister Issawi Freij is also expected at the Brussels conference.

Israeli Prime Minister Naftali Bennett opposes Palestinian statehood but has said he wants to boost economic opportunities in the West Bank.

He has argued that Palestinians earning high wages while working in the areas ruled by the occupation forces along with other economic opportunities could help reduce violence in the long-running conflict, which has spiked again in recent weeks.

LIBREVILLE — In the Central African Republic (CAR), nine out of 10 people do not have internet, and only one in seven has electricity — that is, when there are no power cuts.

Yet, the CAR has just followed El Salvador in adopting Bitcoin as legal tender, a currency that requires access to the net to be bought, sold or used.

Foreign experts and CAR citizens themselves are struggling to understand why the world's second least developed economy has announced this leap into monetary hyperspace.

Among people queuing at one of the rare automatic teller machines (ATMs) in the capital Bangui, the word "Bitcoin" stirred befuddlement.

"What is it?" asked Sylvain, a man in his 30s, waiting for his turn at the cash machine, which was operating thanks to a generator.

"I don't know what cryptocurrencies are — I don't even have internet," said Joelle, a vegetable hawker nearby.

On April 28, President Faustin Archange Touadera announced that lawmakers had unanimously approved a bill that legalised the use of Bitcoin alongside the CFA franc.

All transactions using the cryptocurrency, including payment of taxes, are being authorised.

Government spokesman Serge Ghislain Djorie said: "We are going to launch an awareness campaign and shortly introduce fibre optic cable — a low Internet connection is enough to buy cryptocurrency."

But even among CAR's business community, which in theory is best placed to use Bitcoin and other cryptocurrencies regulated by the new law, scepticism runs deep.

"I'm not interested in having Bitcoin here — we have no infrastructure and no knowledge for getting involved in this adventure and there's no cybercrime unit to ensure security," said an entrepreneur, who spoke on the condition of anonymity.

"There are other priorities, like security, energy, access to water, the Internet, building roads...”

Technical hurdles are just one of the questions raised by the Bitcoin move.

Foreign analysts have been pondering why this deeply troubled economy should adopt a novel and volatile currency rather than a time-honoured stable unit such as the US dollar.

Just this week, Economy Minister Herve Ndoba said a shortfall in government income was so severe that without foreign help, spending cuts of up to 60 per cent loomed for some ministries.

"CAR has many problems. Adding another currency like Bitcoin as legal tender will unlikely meaningfully address those," said Ousmene Jacques Mandeng, a visiting fellow at the London School of Economics (LSE).

Bitcoin's "excess volatility... translates to fluctuations in household savings, consumption and wealth", warned Ganesh Viswanath-Nastraj, an assistant professor of finance at Warwick Business School in England.

Locked in a nine-year-old civil conflict, the CAR is heavily dependent on mineral extraction, much of which is informal, for its economy.

In a report in December 2020, a US watchdog called The Sentry said the CAR had become "a breeding ground for transnational criminal networks".

"Money laundering and the trafficking of natural resources, drugs, weapons and diplomatic passports are rampant," it said.

The CFA franc that until now was the CAR's sole legal tender is a regional currency backed by France and pegged to the euro.

Other members of the currency are Cameroon, Chad, the Republic of Congo, Gabon and Equatorial Guinea.

Didier Loukakou, regulatory chief at the Central African Financial Market Surveillance Commission, said the six had been discussing plans to regulate crypto-currencies.

But, he said, "We were not warned by Bangui about its decision."

Russian factor? 

Some experts see a possible explanation for Touadera's announcement in his entwinement with Russia, perceived as desperate for currency after Western countries imposed sanctions over its invasion of Ukraine.

In 2020, Russia sent paramilitaries to shore up Touadera as armed groups advanced on the capital.

France and rights campaigners describe these operatives as mercenaries from the Wagner group, which reputedly receives mineral wealth in exchange for their services.

"The context, given systemic corruption and a Russian partner facing international sanctions, does encourage suspicion," said Thierry Vircoulon, a specialist on Central Africa at the French Institute of International Relations (IFRI) think tank. 

"Russia's search for ways to get around international sanctions is an invitation to be cautious."

But some voices, including the head of the International Monetary Fund, Kristalina Georgieva, have voiced doubts that digital currencies can be an effective tool for bypassing sanctions.

HONG KONG — Hong Kong's next leader John Lee is inheriting a once vibrant Asian business hub mired in its third year of pandemic isolation, but he may prioritise security over an economic reboot, business leaders and observers say.

Lee, a former security chief, is expected to be confirmed Hong Kong's next chief executive on Sunday by a committee of 1,463 elites.

He has promised a "results-oriented" government and a new chapter for the southern Chinese city — although his manifesto announced few major policy shifts. 

Business leaders have expressed concern over Lee's lack of details on how he might kickstart the city's fortunes, including moving beyond Chinese-style travel curbs that have left the city cut off and sparked an exodus of talent.

"In order to reboot Hong Kong's reputation as a business hub, we need a COVID exit plan," said Kristian Odebjer, head of the Swedish Chamber of Commerce in Hong Kong.

Tara Joseph, former head of the city's American Chamber of Commerce, said travel connectivity was a key first step for Hong Kong to regain its international stature after "so much reputation damage".

But Lee appeared to brush aside those concerns last week, saying that he will instead prioritise reopening the border with mainland China — signalling any immediate policy U-turn is unlikely.

Lawmaker and businessman Michael Tien said the coronavirus has trapped Hong Kong's leader between a rock and a hard place, no matter who fills that seat.

"Our country is going for zero-COVID while the rest of the world is living with the virus," Tien said.

"Hong Kong is stuck in the middle."

The city was slammed by an Omicron-fuelled outbreak which killed more than 9,000 people and contributed to a four percent drop in economic output for the first quarter.

Siddharth Sridhar, a microbiologist at the University of Hong Kong, said Hong Kong was enjoying a "grace period between waves" and that Lee must waste no time in getting the elderly vaccinated.

In recent weeks outgoing leader Carrie Lam has eased some pandemic restrictions, including reducing quarantine to seven days and allowing non-residents in for the first time in some two years.

Last week Lee told reporters he would continue "a good balancing act" between keeping the virus out and the economy afloat.

His 44-page manifesto did not specifically address the coronavirus, aside from vowing to learn from the pandemic and set up a new emergency procedure to deal with future threats.

Lee spent some four decades within Hong Kong's security services, prompting questions over his business acumen in a city that markets itself as the financial gateway between China and the world.

"The choice of John Lee illustrates Beijing's priorities of security and control in Hong Kong," former US chamber head Joseph said. 

"He will be the first HK leader with no business background." 

Lawmaker Tien said Lee would be receptive to outside opinions — a compliment echoed by many of Lee's supporters.

"Lee won't listen in matters of security, but in other areas he has no choice, he must listen and consider opinions," Tien said.

Discussing his own governance style, Lee said he was a pragmatist eager to streamline procedures for greater efficiency.

Pro-Beijing business mogul Allan Zeman, who praised Lee's policy ideas, said "[Lee] came from the police and police used to make things happen".

Lee was among 11 top Hong Kong and Beijing officials sanctioned by the US Treasury in 2020 in the wake of China's imposition of a sweeping security law aimed at snuffing out dissent.

Last month, YouTube suspended Lee's campaign channel citing the need to comply with sanctions.

Lee has defended his role in crushing the 2019 democracy protests and recently said his government will prioritise livelihood issues over democratisation.

He has presented himself as a no-nonsense leader who can get things done and cut through red tape.

AMMAN — Arab Bank Group reported net income after tax for the first quarter of 2022 of $166 million compared to $128.3 million for the prior period, recording an increase of 29.4 per cent, according to a bank statement.

The group loan portfolio grew by 5 per cent to reach $35.2 billion as of March 31, compared to $33.5 billion for the same period last year, while customer deposits grew by 3 per cent to reach $47.3 billion compared to $45.8 billion for the same period last year. The increase in loans and deposits in most areas of operations are in line with the bank’s sustainable growth strategy to expand and diversify its clients and deposit base. The group maintained its strong capital base with a total equity of $10.2 billion.

In the statement, Sabih Masri, chairman of the Board of Directors, said the results achieved by the bank in the first quarter of this year, reflect its strong financial position and its ability to deliver sustainable performance, while prudently managing the regional and global developments.

Randa Sadik, chief executive officer, stated that the underlying performance of the group continues on its growth path with first quarter results driven by an increase in core banking income and a lower cost of risk, highlighting that the bank’s net interest and commission income increased by 6.3 per cent compared to prior period, despite ongoing market volatilities.

Sadik said the Arab Bank group enjoys strong liquidity in the form of a granular deposit base and strong capitalisation where loan-to-deposit ratio stood at 74.3 per cent and the capital adequacy ratio is at 16.5 per cent in accordance with Basel III regulations. Sadik added that the asset quality of the group remains high, with credit provisions held against non-performing loans exceeding 100 per cent.

Masri concluded by expressing his confidence in the group’s ability to maintain its leading position and to capture new business opportunities to deliver sustainable profitable growth.

NEW YORK — ExxonMobil and Chevron reported soaring profit on Friday despite lower oil and natural gas volumes as the petroleum giants return billions of dollars to shareholders in the wake of lofty crude prices and refining margins.

Both US oil giants scored huge profit increases propelled by crude prices that rose after the Russian invasion of Ukraine. But both companies have thus far avoided additional capital spending increases to fund drilling and development in spite of a tightening global energy outlook.

"We continue to invest prudently," said Kathy Mikells, chief financial officer of ExxonMobil, which increased spending on share buybacks by $20 billion.

"We're going to stay disciplined on capital. We've given you a range, we've stuck within the that range ever since we started putting it out there," said Mike Wirth, chief executive of Chevron, which raised its plans for share buybacks to $10 billion per year after previously targeting $5 to $10 billion per year.

Both oil giants are implementing planned 2022 capital spending increases, but ruled out additional investment. 

Part of the reticence to spend more to drill comes as the oil giants ramp up investment in hydrogen, carbon capture and storage and other low-carbon ventures amid pressure from environmental, social and governance investors.

Russia hit 

After a dreadful 2020 amid COVID-19 lockdowns that devastated petroleum demand, oil companies returned to profitability in 2021 and have continued to see earnings soar this year.

ExxonMobil's first-quarter profits more than doubled to $5.5 billion, as a strong market for energy commodities more than offset $3.4 billion in one-time costs connected to its withdrawal from the vast Sakhalin offshore oil field following Russia's invasion of Ukraine.

Revenues rose 52.4 per cent to $87.7 billion. At Chevron, profits came in at $6.3 billion, more than four times the year-ago level on a 70 per cent rise in revenues to $54.4 billion.

Friday's eye-popping profits could add to cries of oil industry "profiteering" from congressional Democrats, who plan legislation in the wake of painful gasoline price hikes. Petroleum industry officials have dismissed the effort as "political posturing".

Oil prices have generally lingered above $100 a barrel after spiking to around $130 a barrel in early March shortly after Russian invasion of Ukraine. 

Natural gas prices have also been elevated amid worries over the reliability of Russian supplies to Europe, while refining profit margins are "above the 10-year range, with the tight supply/demand balance expected to persist", as ExxonMobil put it. 

Wirth said there are few signs of immediate relief in the tight oil market, given rising demand as more economies ease COVID-19 restrictions, moves by some oil majors to cut petroleum investment in favor of low-carbon energy and other factors.

"Inventories are quite low, demand is still strong and economies at this point seem to be handling it," Wirth said on a conference call with analysts. "At some point, particularly if prices were to move higher, I do think it starts to be a bigger drag on the economy."

But the oil market remains cyclical and "the supply response is coming", he said.

Not chasing growth 

Although both companies have announced plans to lift production later this decade, output dipped in the first quarter of 2022.

ExxonMobil's oil and gas output declined three per cent from the 2021 period, with the company pointing to severe cold weather that crimped output in Canada, as well as scheduled maintenance activity in Qatar and Guyana.

While Chevron touted a 10 per cent jump in US oil and gas production following an aggressive ramp-up in the Permian Basin in Texas, overall oil and natural gas volumes fell 2 per cent from last year's level.

Factors in Chevron's production decline included lower output in Thailand and the effect of lost output from a project in Indonesia where the contract expired.

Chevron Chief Financial Officer Pierre Breber said the company's record in the Permian Basin shows its ability to grow output efficiently as he confirmed the company would not lift its capital budget beyond the current range of $15 to $17 billion in 2022.

"We can sustain and grow our traditional energy business at very reasonable rates," Breber said. "We don't need to grow faster. We don't get paid for that. There's no time in our history where the market has valued growth."

Shares of ExxonMobil shed 2.2 per cent to $85.25, while Chevron dropped 3.2 per cent to $156.67.

WASHINGTON — The International Monetary Fund (IMF) Executive Board on Friday approved a two-year, $9.8 billion credit line for Colombia that the South American country can use to help its economy weather shocks from abroad.

"The new arrangement under the Flexible Credit Line will reinforce market confidence and provide added insurance against external risks," such as high inflation and the fallout from the war in Ukraine, IMF Deputy Managing Director Antoinette Sayeh said in a statement.

"The authorities intend to continue to treat this new arrangement as precautionary and to gradually phase out use of the instrument, conditional on a reduction of global risks."

The new credit line cancels a previous $17.2 billion arrangement agreed to in September 2020 to help the country cope with disruptions caused by the COVID-19 pandemic.

Colombia has had a Flexible Credit Line since 2009 and the IMF board has renewed it every two years, providing the country with money that could be deployed to head off a crisis.

Sayeh noted that Colombia "has very strong economic fundamentals" and "the authorities remain firmly committed to maintaining very strong macroeconomic policies going forward", noting its economy is recovering from the pandemic and the government is working to raise living standards.

"With a robust recovery underway but risks tilted to the downside, Colombia has taken steps to normalise policies from a crisis footing and manage higher inflation, while strengthening public finances and reducing external imbalances," she said in her statement.