Business

LONDON — European and US stock markets sank on Wednesday as investors worried over rising coronavirus infections in several countries and fresh trade tensions between the European Union and the United States, dealers said.

Also, updated IMF economic forecasts hit at sentiment as the institution sees the global economy contracting by 4.9 per cent this year due to the shutdowns of transport and production meant to halt the transmission of the virus.

As for the increasing trade tensions, the US said it is considering new taxes on $3.1 billion in European imports amid a dispute over subsidies to aircraft manufacturer, Airbus, just days after the EU indicated it plans to move forward on a digital tax that would primarily hit US tech titans.

In afternoon trading, European indices had slumped into the red, while Wall Street also opened lower. 

“Today we have the combination of rising coronavirus cases in various countries, including the US and Germany, which naturally casts doubt over the ability of countries to continue to reopen and people’s willingness to ease their way back to something that resembles normal life,” OANDA analyst Craig Erlam told AFP.

“Both of these are a considerable threat for businesses and employment. Add to that the trade aggression from the US towards Europe at the worst possible time... and investors are understandably unsettled.”

Erlam added: “Whether that lasts is another thing. The [economic] stimulus trade is powerful as we have seen repeatedly.”

While governments and central banks have provided a wall of cash to support markets, investors are nevertheless walking a tightrope between hopes the easing of restrictions will lead to a rebound and the possibility that the relaxation will inflame the pandemic again.

There are growing concerns of a relapse in some countries, with Tokyo Governor Yuriko Koike warning a number of new cases had been found at one workplace.

That comes after Germany reimposed containment measures in two western districts — home to almost 640,000 people — after an outbreak at a slaughterhouse infected more than 1,500 workers. 

Portugal has also announced new restrictions in and around Lisbon.

“Reopening optimism is showing signs of fading,” noted City Index analyst Fiona Cincotta.

“Coronavirus news has been far from good on a global scale.”

“Several states in the US continue to see record daily rises, whilst the death toll in South America has topped 100,000. Yet, investors assume that there is a small chance of a second lockdown on the scale of what we have just experienced.”

Asian equities were mixed as traders weighed positive data suggesting economies are recovering against signs of a second wave of infections and the reintroduction of some lockdowns.

NEW YORK — A US judge permanently barred California from placing a cancer warning on Bayer's Roundup, handing a victory to the German company as it battles litigation over the product.

The case concerned California's Proposition 65, which requires a warning on products known by the state to cause cancer.

Although a World Health Organisation (WHO) body in 2015 classified glyphosate, which is used in the herbicide Roundup, as "probably carcinogenic", US District Judge William Shubb said there are "several other organisations", including the US Environmental Protection Agency and other WHO bodies that "have concluded there is insufficient or no evidence that glyphosate causes cancer".

The warning that glyphosate is known to California to cause cancer is "misleading" and such statements are not "purely factual and uncontroversial", Shubb said in a 34-page ruling released late Monday.

Shubb, who in 2018 had issued a preliminary injunction against California on the matter, made the order permanent and rejected the state's argument.

The decision is a victory for Bayer, which acquired Monsanto in 2018 and has seen tens of thousands of lawsuits filed over Roundup since the deal closed. 

The company has suffered high-profile losses in the US but massive jury damage awards over Roundup were later reduced by judges.

Shubb said the jury rulings against Bayer do not affect the current question before the court.

"The juries in those cases were tasked with determining whether the evidence, as presented in those cases, showed that it was more likely than not that glyphosate caused cancer in those plaintiffs," Shubb said. 

"While those juries ultimately decided that it did, whether a reasonable juror could find that glyphosate causes cancer is a separate question facing the court today — whether a statement that glyphosate is known to cause cancer is purely factual and uncontroversial," Shubb said. 

PARIS (AFP) — Nokia plans to eliminate 1,233 jobs at its Alcatel-Lucent subsidiary in France, slashing its workforce in the country by a third as it grapples with intense competition in the telecoms equipment market amid the launch of 5G networks, the company and unions said on Monday.

It is the fourth round of layoffs at Alcatel-Lucent in the four years since the hardware manufacturer was bought by Nokia in 2016, and the biggest by far.

"It's a catastrophe," Bernard Tremulot of the CFDT labour union told AFP after a meeting where management unveiled the plan.

Nokia said the job cuts, mainly in research and support departments, were part of global cost-cutting efforts launched in late 2018, "in a market environment where pressure on costs remains very intense".

"Our goal is to increase operational efficiency, improve productivity and become more agile in terms of R&D, so we can reinforce our competitive positions and guarantee the group's long-term performance," it said in a statement.

The move comes after Nokia's CEO Rajeev Suri said in March that he would step down in September, having overseen the company's transformation into a network systems company after its mobile phone business was decimated by the rise of Apple and Samsung.

Nokia's attempts to break into the 5G equipment market have struggled in the face of fierce competition from Huawei and Ericsson.

Last year, it had its first net profit — 7 million euros ($7.8 million) — since 2015.

Nokia said the French job cuts would be made through voluntary departures or transfers of some employees to other sites.

But the French finance ministry said after the announcement that it would begin talks with Nokia, which must "improve very significantly" its plan.

A ministry official told AFP that it would make counter-proposals in order to show that France is an attractive country for industrial firms.

France is planning to auction off 5G frequencies in September ahead of a commercial rollout by telecom providers by the end of this year.

"Nokia will continue to be a major employer in France, with a solid base in terms of R&D, sales and services," Nokia France chief Thierry Boisnon said in the statement.

But unions denounced a "betrayal", noting that Suri vowed to protect French jobs when securing French approval of the merger in 2015, when Emmanuel Macron was finance minister in the Socialist government of president Francois Hollande.

"This fourth round of layoffs is a betrayal, not only for employees but also for the politicians. Everyone should feel betrayed," Tremulot said. 

DUBAI — The giant Dubai-based ports operator DP World is “preparing for the worst” in the months ahead, as coronavirus inflicts the heaviest blow on global trade since World War II.

However, the firm which runs port and logistics operations in 54 countries is still hungry for revenue-generating acquisitions, its Chairman Sultan Ahmed Bin Sulayem told AFP in an interview.

Already one of the most profitable government-linked entities in Dubai, DP World has spent billions of dollars on assets, ranging from P&O Ferries in Britain to terminals in Chile.

But the coronavirus crisis has stifled world trade, 80 per cent of which is transported by sea, leaving major supply chains paralysed and scaling down imports and exports, including from powerhouse China.

Bin Sulayem said the pandemic has taken a “big toll” on trade, eclipsing the aftermath of the 2007-2008 global financial crisis and drawing similarities with the post-World War II devastation.

In those dark times, the global economy collapsed with the destruction of industries and transport infrastructure and as people fled cities, he said.

“Today, factories are intact, but nobody can work. The streets are clear and safe, and nobody goes out. Shops are full with all kinds of cargo but nobody buys.”

Predictions of a U or V-shaped recovery, with a slump followed by a pick-up, were too optimistic, Bin Sulayem said.

Instead, he warned that the world faced an L-shaped scenario — a drop followed by a slump — unless stimulus measures were adopted.

‘We will go for it’ 

The World Trade Organisation said in April that global trade is expected to fall by between 13 and 32 per cent in 2020, as the pandemic ravages normal economic activity.

Bin Sulayem said trade handled by DP World through its 82 ports, terminals and logistics centres worldwide dropped by only 4 per cent in the first quarter.

“But this could be misleading”, he said, noting that the traffic reflected orders placed before the crisis.

“From now on until the next four months, that’s the key issue... what’s going to happen — we need to watch but we are preparing for the worst,” he said.

Despite the gloomy outlook, the chairman and CEO said DP World has not sought financial help from Dubai’s government and that it would raise debt from the market to fund expansion if needed.

The firm and its subsidiaries are a major source of cash for the emirate’s economy, one of the most diversified in the oil-rich Gulf. 

In recent years, DP World has made a series of acquisitions as part of its strategy to become the world’s leading end-to-end logistics provider, with a network including economic zones, industrial parks and inland transportation.

“Even during this crisis, if I find something that is bankable and we believe it is an investment that will enhance our revenue and make profit,” the company will act, Bin Sulayem said.

“We look at investments that are ready to generate revenue... We are a company that has become a source of revenue for the government,” he said.

“At the end of the day, we have to make money immediately.”

Crucial to Dubai 

DP World has not announced any lay-offs over the crisis and Bin Sulayem ruled out cutting salaries — unlike other major companies in the Gulf, including Emirates airline, which has announced job cuts and months of salary reductions.

In February, DP World said it would return to full state ownership and delist from the Nasdaq Dubai stock exchange, saying that market demands for short-term return were not compatible with its longer-term strategy.

The company, which operates a global network of 123 business units run by a 56,500-strong workforce, posted a 4.6 per cent rise in net profit last year to $1.33 billion.

In 2019, DP World handled 71.2 million TEU (twenty-foot equivalent units), putting it among the top five operators in the world.

Its home port of Jebel Ali handled 14.1 million TEU, a 5.6 per cent decline, but still leaving it among the top 10 globally.

Bin Sulayem said none of the 8,000 companies based at the Jebel Ali Free Zone, a subsidiary which contributed a whopping 23 per cent of Dubai’s gross domestic product last year, had left because of the crisis.

WASHINGTON —- Layoffs caused by the coronavirus pandemic in the United States have passed 45.7 million, raising fears that despite some positive signs, the economy faces a halting recovery from the downturn.

Another 1.5 million US workers filed new claims for unemployment benefits last week, the Labour Department said on Thursday, a decrease of only 58,000 from the prior week and higher overall than analysts expected.

An additional 760,526 filed claims under a programme for those who would not normally be eligible for benefits, while the insured unemployment rate showing people still receiving aid was unchanged as of the week ended June 6 at 14.1 per cent, with 20.5 million people getting benefits.

"Based on this side of the firing and hiring equation, labour market improvement is muted," tweeted Mohamed Al Erian, chief economic adviser at Allianz.

The world's largest economy has seen a protracted downturn since businesses began closing in mid-March to stop the spread of the coronavirus, with the unemployment rate climbing to 13.3 per cent in May and millions of lay-offs reported each week. 

In an interview with The Wall Street Journal, President Donald Trump reiterated his expectation that the economy would recover by the time voters decide whether to give him a second term.

"We will have created a lot of jobs prior to November 3," Trump told the newspaper on Wednesday. "I expect a tremendous increase in GDP. And we'll be heading for the top. We'll be back."

Claims 'still so high' 

The wave of jobless claims peaked in late March and has been decreasing ever since. Yet it remains well above any single week reported during the global financial crisis in 2008, even as states move to reopen businesses and get consumers spending again.

Those efforts have paid off in sectors such as retail sales, which the Commerce Department said spiked 17.7 per cent in May, nearly double the gain analysts expected, while other data has shown growing optimism among consumers and businesses.

Wall Street has also recovered much of its losses for the year after plunging as the virus arrived, though markets had an uneventful session on Thursday, with traders holding back as they weighed the claims data.

"It's not clear why claims are still so high; is it the initial shock still working its way up through businesses away from the consumer-facing jobs lost in the first wave, or is it businesses which thought they could survive now throwing in the towel, or both?" said Ian Shepherdson of Pantheon Macroeconomics. 

"Either way, these are disappointing numbers and serve to emphasise that a full recovery is going to take a long time."

In congressional testimony earlier in the week, Federal Reserve (Fed) chair Jerome Powell said that unless consumers feel confident COVID-19 has been defeated, "a full recovery is unlikely".

"The levels of output and employment remain far below their pre-pandemic levels, and significant uncertainty remains about the timing and strength of the recovery," Powell told the Senate Banking Committee.

The central bank chief has predicted the contraction of GDP in the April-June quarter "is likely to be the most severe on record", and called for more support to the economy. 

But the Fed can only lend, not spend, and it will be up to Congress to decide whether to act ahead of the expiration of parts of the $2.2 trillion CARES Act stimulus package in the coming weeks.

The United States has seen the world's worst coronavirus outbreak with more than 117,000 deaths and 2.1 million cases diagnosed.

The epicentre has shifted from New York and states in the northeast to the south and west of the country.

AMMAN — The Arab Petroleum Investments Corporation (APICORP), a multilateral development bank, on Wednesday announced its first direct equity investment in a wind energy venture, the Jordan Wind Project Company (JWPC), the developer of the Tafileh Wind Project in Jordan.

APICORP’s 20 per cent equity stake in the project also marks its first equity investment in the country, according to an APICORP statement.

JWPC’s seeks to have clean energy account for 20 per cent of the country’s overall power generation by 2021, thus developing new and sustainable energy sources as part of the country’s energy mix.

The $287 million 117-megawatt wind farm, connected to the national grid, accounts for 12 per cent of Jordan’s total operating renewable energy generation, generating around 350GWh of clean energy, annually, which can be used to power 83,000 homes.

Tafileh Wind Farm is owned and operated by the Jordan Wind Project Company PSC (JWPC), in which Abu Dhabi’s renewable energy firm Masdar owns a 50 per cent stake. APICORP and Tamasuk Holding, the infrastructure and development arm of Al Blagha Holding for Investments Co., partnered to acquire the remaining 50 per cent stake, owning 20 per cent and 30 per cent stakes, respectively.

Commenting on this new tie-up, Ahmed Ali Attiga, chief executive officer of APICORP said: “We are proud to partner in the Jordan Wind Project Company, one of the MENA region’s pioneering energy companies. This equity investment affirms APICORP’s position as a trusted partner to the region’s energy sector and underscores the strategic drive to enhance access to sustainable power, an area in which Jordan continues to be a regional leader. “

“With the Arab world’s abundant wind resources, we see wind power as a viable component and key technology in the region’s future power generation mix, offering a sustainable, cost-effective energy source that will enable wider access to modern electricity to millions of people and spur employment and economic growth,” he added.

Mohammed Al Balwi, chairman of Tamasuk Holding Company noted that the Jordan Wind Project Company is a strategic investment, stressing Tamasuk Holding’s commitment to sustainable infrastructure.

“We are immensely proud of our partnership with leading institutions like Masdar and APICORP. With this investment, we have established a presence in the Kingdom of Jordan and look forward to growing our asset base in sustainable infrastructure investments such as Tafileh Wind Farm,” he said in the statement.

According to the Global Wind Energy Council’s (GWEC) Global Wind Report, published in February, Jordan’s 190 megawatts of wind power capacity trails only Egypt (262 megawatts) and Morocco (216 MW) in the MENA region.

Masdar’s CEO, Mohamed Jameel Al Ramahi expressed his business satisfaction with the new partnership.

“Masdar is pleased to welcome APICORP and Tamasuk Holding as partners in the Jordan Wind Project Company and the Tafileh Wind Farm, the first utility-scale commercial wind project in the Middle East. The involvement of these prestigious entities signals the confidence of the regional investment community in the potential of renewable energy to become a large-scale and reliable provider of the Middle East & North Africa’s power needs. It further illustrates the success of the Hashemite Kingdom of Jordan in diversifying its energy mix, using both wind and solar power,” he noted.

According to Samer Judeh, JWPC chairman, the Tafileh Wind Farm is playing a leading role in responding to the growing energy demand in Jordan, effectively utilising the wind potential in the country.

“The involvement of APICORP and other leading industry players like Masdar and Tamasuk Holding demonstrates the economic viability of this project and validates our vision of generating clean and sustainable energy in Jordan.”

“The investment by APICORP will encourage further investment in renewable energy generation and contribute to the country’s mission of diversifying its domestic energy supply,” he said.

APICORP’s recently issued MENA Energy Investment Outlook 2020-2024 report indicates that the MENA region will need to invest $144b in the power sector to meet energy needs.

Moreover, the GWEC report forecasts that 10.7 gigawatts of wind energy capacity will be installed in the MENA region during the same period, a 167 per cent increase from the current 6 gigawatts currently installed, according to the statement. 

DUBAI — Armies of workers in protective masks are racing to complete the mammoth Dubai Expo 2020 site despite the coronavirus that forced a one-year postponement and created a logistical headache.

The six-month world fair, a milestone for the emirate which has splashed out $8.2 billion on the eye-popping venue in the hope of boosting its soft power and resetting the economy, will now open its doors in October 2021.

But organisers grappling with the complexities of rescheduling the event are intent on delivering the main buildings of the Expo by the original start date.

They are keeping the Expo 2020 name and logo, which is emblazed on everything from billboards to aircraft.

As well as the onset of the scorching Gulf summer, organisers have had to contend with coronavirus infections and layoffs among a large workforce recruited from across the world.

"Of course, the impact of COVID-19 has affected the logistics and the processes of delivering some of the remaining works," said Ahmed Al Khatib, chief development and delivery officer.

But "work continues and some of the pavilions have actually reached a very final stage. 2020 is the year of delivery," he told AFP during a rare visit to the site, which will be mothballed once the major work is done.

Difficult decisions

Once a tangle of concrete and dust, the 4.5 square kilometre venue has now risen from the deserts of Dubai. Many of the buildings' main structures have been completed.

The United Arab Emirates pavilion, built in the shape of a falcon in flight, is only a few feathers away from completion, while the adjacent Saudi Arabian pavilion is now a huge window opening up into the sky.

Tunnels are open and streets have been paved. The sound system and 5G towers have been installed, and transplanted mango and olive trees are flourishing.

Before the coronavirus pandemic, Dubai hoped the largest event ever staged in the Arab world -- billed as the "World's Greatest Show" -- would attract some 25 million visitors.

Since the first "World Expo" was held at London's Crystal Palace in 1851, global fairs have been used to showcase new ideas and technology as well as serving as nation-branding exercises.

With a lavish promotional campaign featuring superstars such as Lionel Messi, Dubai hopes the Expo will be a lifeline for the property, tourism and trade sectors, after years of malaise in the region which has now been aggravated by the global coronavirus-induced slowdown.

Chief Engagement Officer Manal Al Bayat said the postponement approved in May by the governing Bureau International des Expositions had no impact on the "commitment to deliver an Expo that inspires the world".

But as the timeline stretches out, putting pressure on budgets, it has led to layoffs among staff that once thronged the air-conditioned temporary buildings on site.

"Very sadly, a number of Expo employees will be leaving us. Of course, the decision was very difficult taken in (the) context of the postponement and it's difficult because they're members of the tribe," said Al Bayat, without specifying how many jobs were lost.

 Daily challenges

On the vast Expo site south of the city, the pandemic creates daily challenges, as workers converse and share crane boxes, at a time when the UAE is still registering hundreds of new infections every day.

Al Bayat said that among the many precautionary measures are a testing facility built on site and awareness sessions held for workers.

But like many workplaces in the region, infections have emerged.

"We have had some positive cases with our workers as well as with our Expo staff," she said, declining to say how many.

"We ensure that if anyone has tested positive they do not come back until they have tested negative and have been approved by the health authorities to come back to work regardless of whether they are workers or Expo employees".

More than half of the coronavirus cases registered in the six Gulf countries -- which now exceed 355,000 and rising -- are among foreign workers, who often live in cramped conditions that do not allow for social distancing.

Measures to contain the coronavirus pandemic forced Dubai -- which attracted 16.7 million visitors last year -- to close its doors in March. It is aiming to reopen ahead of the start of the tourist season in September, when the summer heat dissipates.

"We believe that Dubai will come back to its number of visitors and we will work closely to achieve the best number of visitors for our Expo," said Al Khatib when asked whether original goals would need to be revised.

"One year of postponement means more... room for improvement," he added optimistically.

DAMASCUS — Syria's central bank devalued the Syrian pound on Wednesday giving in to weeks of depreciation on the black market as new US sanctions took effect.

The central bank raised the official exchange rate from 704 to 1,256 Syrian pounds to the dollar, in a statement published on its social media pages. 

The previous rate had been in force since March.

Earlier this month, the war-torn country's currency hit a record low on the black market of around 3,000 pounds to the dollar, sparking rare protests, before appreciating slightly after an apparent injection of dollars.

On Wednesday, the rate on the parallel market stood at around 2,600 to 2,800 pounds to the dollar, traders told AFP.

The devaluation comes as the United States prepares to implement new sanctions this week under the Caesar Act, targeting foreigners doing business with the Damascus government, as well as reconstruction of the country.

Zaki Mehchy, a senior consulting fellow at the London-based Chatham House think tank, said the central bank was trying to minimise the gap between the official and black market rates.

"It is trying to encourage people to use the official channel instead of the black market," he said.

But the pound would probably continue its slide, punctuated by short periods of appreciation, he said. 

Syria's economy has been battered by nine years of war, and is now reeling from the knock-on effects of a financial crisis in neighbouring Lebanon that has stemmed the flow of dollars into government-held areas.

Analysts have said the recent lows on the black market are likely due to worries ahead of the introduction of new US sanctions, and the sudden fall from grace of tycoon and cousin of the president, Rami Makhlouf, which has set other top businessmen on edge.

The Damascus government has long blamed the country's economic crisis on international sanctions.

Last week, President Bashar Assad sacked his prime minister of four years after criticism of the government's handling of the crisis.

Before the conflict, the exchange rate stood at 47 Syrian pounds to the dollar.

WASHINGTON — The COVID-19 pandemic has unleashed a truly global economic crisis, but countries that rely on services like tourism are suffering the worst damage, International Monetary Fund (IMF) Chief Economist Gita Gopinath said on Tuesday.

Despite the scale of devastation, financial markets are rising, apparently disconnected from world events, Gopinath said in a blog post.

“For the first time since the Great Depression, both advanced and emerging market economies will be in recession in 2020,” she said. “Past crises, as deep and severe as they were, remained confined to smaller segments of the world.”

While most crises hit manufacturing as investment falls, advanced and emerging market economies are seeing a larger impact in services, she said.

In China, which was the first to exit the lockdown, “the recovery of the services sector lags manufacturing as such services as hospitality and travel struggle to regain demand”.

She said pent-up consumer demand might lead to a quick recovery. “However, this is not guaranteed in a health crisis as consumers may change spending behaviour to minimise social interaction, and uncertainty can lead households to save more.”

This is of particular concern for economies that depend on tourism.

The IMF official also noted the “striking divergence of financial markets from the real economy”, possibly buoyed by the massive policy response from governments and central banks.

However, she cautioned that markets could see “sharp corrections” if bad news emerges on economic data or health issues.

Even as countries begin to emerge from lockdowns, “there remains profound uncertainty about the path of the recovery”.

The IMF is due to release its updated World Economic Outlook on June 24 which Gopinath said “is likely to show negative growth rates even worse than previously estimated”.

LONDON — Equities slid on Monday, extending last week's losses on fears that a second wave of virus infections could spark fresh lockdowns and snub out economic recovery.

"Markets around the world have sold off again on heightened fears around a second wave of coronavirus infections and deaths," said Investment Director Russ Mould at stockbroker AJ Bell.

Tokyo tumbled to a loss of 3.5 per cent by the close, Hong Kong slid 2.2 per cent and Shanghai lost 1 per cent on signs that the deadly COVID-19 disease has returned in China amid a resurgence in the United States.

Stocks in Europe dived more than 2 per cent at the open, but later trimmed their losses, as European nations press ahead with easing their strict lockdowns.

Oil prices also extended last week's losses on fears that a second wave could ravage demand for the commodity.

Under pressure 

"It seems a combination of a new spike in COVID-19 cases in Beijing and disappointing Chinese data is weighing on sentiment at the start of the week," noted analyst Craig Erlam at trading firm OANDA.

"The numbers are still very low in the Chinese capital but the risks are high which may explain the apprehension we are seeing in the markets."

Beijing has carried out mass testing and locked down several neighbourhoods after 79 cases were linked to a single wholesale food market in the capital. City official Li Junjie on Monday said cases had also been found at another market.

The city has raced to quash the new outbreak, closing the affected markets, deploying paramilitary police and putting nearby housing estates under lockdown.

That came as more than a dozen US states, including populous Texas and Florida, reported their highest-ever daily case totals, while Rome and Tokyo have also seen fresh spikes.

"It means the virus hasn't lost its infectiousness, it isn't weakening... we shouldn't let down our guard," World Health Organisation Deputy Director Ranieri Guerra told Italian journalists.

AxiCorp analyst Stephen Innes warned that new US infections could be an ominous sign for markets.

"Falling infection rates have provided investors the confidence that the lockdown approach was working, allowing equity investors to look forward to 2021 as impressive monetary and fiscal policy provide a post-pandemic bridge."

"However, rising new daily COVID-19 cases in two of the three most populous states in the US will test that resolve."

Despite the latest equity losses, global stock markets have soared up to 50 per cent from their March troughs thanks to the lifting of stay-at-home orders and trillions of dollars of stimulus by governments and central banks.

On Monday in Europe, Germany, Belgium, France and Greece reopened their borders to EU countries from Monday. Austria will follow on Tuesday and Spain on Sunday.

France on Monday allowed cafes and restaurants to serve customers inside, as well as on terraces.