Business

BEIRUT — Prime Minister Hassan Diab said on Friday that Lebanese bank deposits have plunged $5.7 billion in the first two months of the year despite curbs on withdrawals and a ban on transfers abroad.

      Lebanon is grappling with a severe lack of liquidity and its worst economic crisis in decades, compounded since mid-March by a lockdown to stem the novel coronavirus.

      Banks have gradually restricted dollar withdrawals until halting them altogether last month, and transfers abroad have been banned.

      But reports have circulated of persistent capital flight, the latest announced by Diab during a televised speech on Friday.

      "Figures reveal the exit of $5.7 billion worth of deposits from Lebanese banks in January and February this year" alone, the premier said.

      A source close to the government said the large part of the $5.7 billion had likely been transferred abroad.

      "Some portion of that was withdrawn and likely kept in households within Lebanon," the source said.

      But "given that over the counter withdrawals were limited to relatively small amounts during that time period, one can logically conclude that a big portion of the $5.7 billion left the country," the source said.

      According to official estimates, $2.3 billion were transferred abroad last year after the start of mass protests on October 17 against a political class demonstrators accused of being corrupt and inept.

      The Lebanese pound has been pegged to the dollar since 1997, but in recent months it has lost more than half its value on the parallel exchange market.

      Diab criticised the central bank and called on its governor Riad Salameh to "come forward to announce the honest truth to Lebanese".

      He urged the governor, who has held the post since 1993, to explain his plans and when the exchange rate would stop rising.

      Central bank losses from the start of the year to mid-April have reached $7 billion, including $3 billion in the past four weeks alone, Diab said.

      The premier said a "neutral international company" had been tasked to audit the central bank's books, without giving a name.

      Salameh's supporters credit him for stabilising the Lebanese pound for more than two decades, in the wake of the country's 1975-1990 civil war.

      But his detractors accuse him of having contributed to Lebanon's endless borrowing and ballooning sovereign debt, leading to the country's first ever default in March.

      In recent months, the Lebanese pound has plummeted in value from around 1,500 pounds against the US dollar to almost 3,800 on the parallel market.

      Economist Jad Chaaban said factors such as Lebanon's sizeable informal economy and the coronavirus lockdown that has impeded the influx of dollars in cash have contributed to the crash of the pound.

      He also faulted a banking control commission over its monitoring of the exchange rate.

      Lebanon is one of the most indebted countries in the world, with a debt equivalent to 170 per cent of its gross development product.

NEW YORK — Boeing said on Saturday it was pulling out of a $4.2 billion deal to acquire the commercial plane division of its Brazilian rival Embraer.

      The companies had planned to form a joint venture in which Boeing would take an 80 per cent stake in that division. The deal had been due to be finalised no later than Friday.

      But Boeing said on Saturday it was exercising its right to pull out of a preliminary deal reached in July 2018. It said in a statement, "Embraer did not satisfy the necessary conditions."

      "Boeing has worked diligently over more than two years to finalise its transaction with Embraer," said Marc Allen, the Boeing executive who led the joint venture plan.

      He said that over the past several months the companies held extensive talks on what he terms unsatisfied conditions in the initial accord.

      "We all aimed to resolve those by the initial termination date, but it didn't happen," Allen said, without explaining what the unresolved issues were. 

NEW YORK — Stock markets struggled on Friday as hopes of quickly finding a treatment for coronavirus were dashed, and more crushing economic data delivered a body blow to confidence.

      Investors were "reacting badly" to reports the initial trials of the remdesivir coronavirus drug being developed by Gilead Sciences had flopped, Oanda analyst Craig Erlam said.

      "This was a ray of hope earlier this week and already we're learning the pitfalls of getting too excited about these cures at the early stages of testing," Erlam told AFP.

      Key European markets were all lower at the close, but Wall Street soldiered to a positive daily finish.

      Despite that, indices were down for the week for the first time in three weeks, with the Dow posting a 1.9 per cent loss.

      'Crumbs of comfort'

      The United States this week approved nearly half a billion dollars for small businesses, which cheered investors despite unrelentingly grim economic data -- including a Congressional Budget Office prediction that the economy would contract 12 per cent in the second quarter. That brings total aid approved in the past six weeks to nearly $3 trillion.

      "The market is now comfortable with the second quarter being absolutely horrible," Karl Haeling of LBBW said. "It's a time issue about when the activity will start back up."

      However, Michael Hewson at CMC Markets UK predicted markets would probably be "swinging around" in coming weeks on the success or failure of antiviral and vaccine trials "as investors look for crumbs of comfort."

      European equities were knocked also by news that EU leaders are divided over the size of a financial rescue package to stimulate the bloc's economy, left battered by the pandemic.

      "They seem to have agreed on the idea of a recovery fund while leaving the details for a future date," Erlam said.

    Britain's retail sales by volume slumped by a record 5.1 per cent last month as the country's lockdown shut stores, despite surges in food and alcohol purchases and online buying, official data showed.

      JP Morgan Asset Management strategist Hannah Anderson warned that while some countries were moving to ease lockdowns and the virus was growing at a slower rate, dangers remain ahead.

      "It is important to not conflate medical and economic data," she said in a note.

      "Obviously a deceleration in infection rates is a positive development for the economy, but progress in combating this awful disease is not the same as returning the economy to the place it was" in late 2019.

      "Investors need to understand that the risks associated with lifting public health measures too early could further exacerbate market pain," she added.

      Further pain

      Oil was volatile, but posted a modest gain. That followed a 20 per cent surge for WTI on Thursday triggered by a new flare-up between Washington and Tehran.

      Iran warned the US of a "decisive response" after President Donald Trump said he had ordered the US Navy to destroy Iranian boats that harass American ships in the Gulf.

      But storage facilities are near to bursting with demand almost non-existent -- a situation that sent the May contract for WTI to minus $40 this week.

      On currency markets, the pound fell against the euro after the EU's chief Brexit negotiator accused Britain of stalling in ongoing post-Brexit negotiations.

      A round of talks on Friday brought scant progress, raising the possibility that the current transition period will end without a deal on crucial areas such as trade and fishing.

      And among secondary stocks markets, the Sao Paolo exchange, Latin America's biggest, plunged eight per cent in morning business after the resignation of Brazil's justice minister over "political interference."

NEW YORK — Boeing is set to lay off workers just one day after re-opening its plants in Washington state.

Boeing plans to reduce the workforce in its civil aviation unit by 10 per cent to cut costs as the coronavirus causes a crisis for airlines, according to two sources familiar with the matter.

The layoffs would impact the unit manufacturing the troubled 737 MAX, which has been grounded for more than a year after two deadly crashes, as well as the 787 and 777 long-haul aircraft, the sources said.

The job cuts could affect up to 7,000 workers. Boeing employs more than 160,000 people worldwide, including 70,000 in Washington state, where most of its civilian aircraft are assembled. The plant in South Carolina produces only part of the 787.

The news comes just a day after the company slowly resumed production at its Puget Sound facility in Washington, with new measures to keep workers six-feet apart along with health checks and hand-washing stations.

Chief Executive David Calhoun wants to resolve the downsizing plan before Boeing embarks on complex and sensitive negotiations with the US Treasury to win in federal support for the industrial giant, the sources said.

Boeing has sought $60 billion in public aid for the US aerospace industry in light of the heavy hit to the aviation business from the coronavirus crisis.

Around $17 billion aimed at Boeing was included in the giant federal relief bill approved in late March.

But the government aid is conditional on companies agreeing not to lay off workers once they have received taxpayer dollars.

'Voluntary layoffs'

A spokesman for the Boeing said the company is offering "voluntary layoff" programmes, but did not confirm the size of the planned reductions.

Workers who take Boeing's voluntary layoff offer would receive a pay and benefits package as part of the programme that "aims to help reduce the size of our workforce through voluntary actions and, importantly, minimize future workforce actions," the spokesman said.

The company, already under strain amid the controversy surrounding the top-selling 737 MAX and uncertainties over when the plane will return to the skies, has suffered a wave of order cancelations from airlines struggling to survive as air travel has ground to a halt amid the pandemic shutdowns.

Aircraft leasing company Avalon canceled an order for 75 of the 737 MAX planes, and the China Development Bank scrapped a request for 29 of the aircraft.

There also is uncertainty about an order from Norwegian Air for 92 MAX planes and five 787 planes after four subsidiaries filed for bankruptcy.

The spokesman said "there is no doubt the aviation industry will look very different as we eventually recover from this pandemic."

Boeing also may replace the executive in charge of the MAX programme in announcements that could come when the company releases quarterly results April 29, the sources said.

SEOUL —  South Korea's largest automaker Hyundai Motor reported a crash in first-quarter net profit on Thursday, blaming weakening global demand.

      Net profit in the January-to-March period was 552.7 billion won ($448 million), down 42 per cent from a year ago, it said in a statement.

      The fall is mainly due to "temporary production disruption at its Korean facilities and weak global demand caused by COVID-19", the company added.

      But operating profit rose 4.7 per cent year-on-year to 863.8 billion won, while sales were also up 5.6 per cent, thanks to a "weaker Korean won against the US dollar", among others, it said.

      Crucial supply lines for the car industry were disrupted after the coronavirus outbreak in China earlier this year saw Beijing ordering factories closed in several areas, as it sought to contain the epidemic.

      This had fractured the supply of parts for Hyundai -- which with its affiliate Kia ranks as the world's fifth-largest auto manufacturer.

      As a result, the firm has repeatedly suspended production at its factories across South Korea and overseas since February.

      The automaker plans to halt operations at most of its domestic plants -- including its giant Ulsan complex, capable of making 1.4 million vehicles annually -- from April 30 to May 5.

      The company "expects to face weakening profitability in the second quarter as the impact of COVID-19 continues to hurt auto demand around the world", it said in a statement.

      Hyundai Motor shares closed down 0.22 per cent in Seoul.

WASHINGTON — Google said on Thursday it would expand its programme of verification of advertisers on its platform as part of an effort to weed out fraud and "bad actors."

      The internet giant and global leader in digital advertising said it would start by verifying advertisers in phases in the United States and expand the programme globally.

      The move builds on Google's efforts launched in 2018 to verify political advertisers with a requirement to indicate where they are located.

      Google's action comes amid growing concerns over ads promoting fraud or fake treatment for coronavirus, among other things.

      "As part of this initiative, advertisers will be required to complete a verification program in order to buy ads on our network," Google's ads integrity chief John Canfield said in a blog post.

      "Advertisers will need to submit personal identification, business incorporation documents or other information that proves who they are and the country in which they operate."

      With the change, which will take "a few years" to complete, according to Canfield, users will be able to click on a link to get information about specific advertisers.

      "This change will make it easier for people to understand who the advertiser is behind the ads they see from Google and help them make more informed decisions when using our advertising controls," he said.

      "It will also help support the health of the digital advertising ecosystem by detecting bad actors and limiting their attempts to misrepresent themselves."

DUBAI — Air traffic in the Middle East and North Africa is set to plummet by more than half this year due to the coronavirus pandemic, a global aviation body said on Thursday.

      "Airlines in the Middle East continue to be battered by the impact of COVID-19," said Muhammad Albakri of the International Air Transport Association (IATA).

      "Passenger traffic has all but ground to a halt and revenue streams have evaporated."

      Albakri, the IATA's vice-president for Africa and the Middle East said traffic would fall by at least 51 per cent compared to last year.

      MENA airlines' revenues slashed by $24.5 billion, he added.

      Almost all the MENA region's 19 state-owned airlines and a dozen private carriers have been grounded amid strict measures to combat the spread of the coronavirus, including halting air traffic.

      A few airlines have continued or resumed limited operations, including Qatar Airways, Emirates Airline and Etihad.

      The International Civil Aviation Organisation, a UN agency, said on Wednesday that the pandemic could mean 1.2 billion fewer air passengers worldwide by September.

      The IATA, an industry association, said the Middle East's aviation shutdown threatens some 1.2 million jobs -- 300,000 thousand more than a previous estimate three weeks ago and half the total jobs in the industry.

      The estimates are based on a scenario that severe travel restrictions will last three months, before being gradually lifted for domestic flights, followed by regional and intercontinental services.

      To minimise the damage to MENA economies, IATA urged governments to offer airlines direct financial support, loans and tax relief.

      The body said it is meeting virtually this week with governments and airlines to ensure that the sector is ready to resume operations when the pandemic is contained.

      "Starting up will be complicated. We need to make sure that the system is ready, have a clear vision of what is needed for a safe travel experience," Albakri said.

LONDON — Oil prices made a spectacular comeback on Thursday as fresh US-Iran tensions erupted while equities were slow to build on recent gains as data provided proof of a dire economic fallout from the coronavirus pandemic.

      At one point the US crude oil benchmark WTI was up by 20 per cent on the day, having earlier this week plunged below zero.

      "Heightened risk in the Middle East" triggered the upturn, said Phillip Futures, after US President Donald Trump tweeted he had "instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea".

      Iran, meanwhile, said it put its first military satellite into orbit. Washington alleges the space programme is a cover to develop ballistic missiles.

      The tensions offset news of another surge in US crude stockpiles as the pandemic crushes demand for energy.

      "Oil prices are enjoying another little bounce on Thursday but don't be fooled, at these levels, the percentage change can be very misleading," cautioned Craig Erlam, an analyst at Oanda.

      Things were looking up "as the price doesn't start with a minus", he said, "but I wouldn't bet against visiting those depths again".

       'Unprecedented' collapse

      Equity markets posted slight gains on both sides of the Atlantic, but traders were nervous as bad economic news kept pouring in.

      The eurozone economy headed by Germany is suffering an "unprecedented" collapse according to a PMI index released Thursday by analysis firm IHS Markit.

      The company's purchasing manager's index (PMI) dived to a record low in April, confirming private sector gloom that is savaging the 19-nation eurozone.

      Markets were not too hopeful as they looked to a meeting of EU leaders who were expected to hammer out a plan to help their economies, but not without much bickering.

      In a further sign of the battle ahead for governments, a gauge of Japan's services sector on Thursday came in at a record low for April and pointed to a deep contraction, while a measure of factory activity dropped to its lowest since the financial crisis 11 years ago.

      Data showed South Korea's economy contracted 1.4 per cent in January-February, its worst number since 2008.

MUMBAI — Facebook has taken a $5.7 billion stake in the Jio digital platforms business of India's richest man Mukesh Ambani in one of the biggest foreign investments in the country, the companies said on Wednesday.

      The deal will give the US social media giant a 10 per cent stake in Jio Platforms, part of Ambani's oil-to-telecoms Reliance Industries empire.

      Announcing the deal, Facebook said it wanted to connect the "power of WhatsApp", its messaging subsidiary, with the Indian platform, which has sought to increase its digital business on the back of a massively successful telecom venture.

      India is Facebook's largest market with some 400 million users.

      In four years, Ambani has turned his Jio telecoms unit into the country's biggest mobile operator with 388 million subscribers, clobbering competitors with aggressive low pricing.

      Jio Platforms provides internet and e-commerce services that tap into the huge subscriber base.

      Reliance said it wanted to boost income for farmers, micro-traders and other small businesses that are the cornerstone of the economy in the country of 1.3 billion people.

      The company is expected to roll out an e-commerce initiative later this year and has been conducting trials with mom-and-pop stores to test its payment devices, with the aim of connecting small shops with consumers.

      "Jio digital new commerce platform and WhatsApp will empower nearly 30 million small Indian Kirana (grocery) shops to digitally transact with every customer in their neighbourhood," Ambani said in a video statement.

      The deal will boost "the ease of living for all Indians, especially common Indians and the ease of doing business for all entrepreneurs, especially for small ones", he added.

      It will also help Jio expand its reach, analysts said, paving the way for similar partnerships with companies working in sectors including entertainment, education and finance.

      The deal will be particularly closely watched by US rivals Amazon and Walmart, which are currently engaged in a fierce battle with Reliance for a share of India's e-commerce market.

      "This is an opportunity for Amazon and Walmart to go back to the drawing board and... perhaps consider joining hands with other Indian telecom firms," said Arvind Singhal, founder of management consultancy Technopak Advisors.

       'Muscle and money'

      Facebook has come under scrutiny over the spread of fake news in India, where the proliferation of unverified information via WhatsApp led to mob violence in 2018.

      "Given Facebook's credibility issues in India, it makes a lot of sense for them to get into a strategic alliance with Jio, which has muscle and money," said Faisal Kawoosa, founder of digital consultancy techARC.

      The Silicon Valley giant has faced regulatory hurdles in its push to pilot WhatsApp digital payments or launch its cryptocurrency Libra in India.

      "Facebook will certainly try to bring payment services to India but I am skeptical if this will work," Kawoosa told AFP.

      "It has no first-mover advantage compared to apps like Paytm... and the Indian digital space is not mature enough for cryptocurrencies."

      But he added that the company was poised to make gains in the Indian digital advertising market through Jio, which could sell "bundled offerings" to businesses, encouraging them to market products on Facebook.

      Ambani lost his crown as Asia's richest man last month after the coronavirus-fuelled rout across global markets wiped billions off his fortune, according to Bloomberg Billionaires Index.

      This was only days after the company reported record net profits for the quarter ending December 2019.

      Ambani, whose fortune ballooned on the back of India's telecoms boom, lives with his family in a 27-storey luxury Mumbai skyscraper reputed to have cost more than $1 billion to build.

      Shares in Reliance jumped more than 7 per cent in Mumbai on the news of the deal, which came after markets closed in New York.

HONG KONG — Brent hit a two-decade low on Wednesday as oil resumed its painful retreat and extended a rout that has torn through energy markets, though stock exchanges in Asia and Europe were mixed following a two-day sell-off.

      With demand virtually non-existent owing to virus lockdowns, and production still high despite storage at bursting point, crude markets have been sent into freefall with WTI for May delivery diving to minus $40 on Monday.

      Focus has turned to the June contract, which started on Wednesday on fine form, following news that top producers had held talks -- but it plunged into the red in the afternoon, having lost almost half its value on Tuesday, when Brent collapsed by a fifth.

      WTI surged 20 per cent before changing course to sit more than four per cent down later, while Brent was off more than 11 per cent after earlier dropping 18 per cent to $15.98 -- its lowest since 1999.

      The crisis in the oil market caused by coronavirus was compounded by a price war between Russia and Saudi Arabia, but while they drew a line under the row and joined other key producers in slashing output by 10 million barrels a day, that has not been enough.

      Crude's rout "merely reflects the underlying theme that there is no demand for physical oil, and there is nowhere to store it", said AxiCorp's Stephen Innes.

      "Disappointment following the new (oil cut) agreement continues to resonate, and responding to that outcry could be the one thing that turns the oil price around in the near term, absent evidence of demand recovery."

      Analysts said the morning bounce was driven by news that members of OPEC, as well as some allies in the OPEC+ grouping, held a teleconference Tuesday -- but gloom soon returned.

      Equity markets, buoyed in recent weeks by trillions of dollars of stimulus and signs of a slowdown in the rate of virus infection and death in some countries -- and moves to slowly ease lockdown measures in a number of nations -- are beginning to feel the spillover from the crude collapse.

      Investors fear the rout could compound an expected deep global economic downturn.

      Innes added that the oil crisis "has negative connotations for other areas of the market, most notably banks, given their high exposure to US shale producers".

       'Reality check'

      Asian markets have struggled this week, though there were some recoveries Wednesday.

      Tokyo ended down 0.7 per cent while Singapore and Bangkok each shed 0.9 per cent and Wellington retreated more than one per cent. Manila also fell and Sydney was marginally lower.

      However, Hong Kong, Shanghai, Mumbai, Seoul and Taipei were all up along with Jakarta.

      In early trade, London, Paris and Frankfurt all rallied.

      There was little reaction to the US Senate approving a near-half-trillion-dollar coronavirus relief package, with funding earmarked for small businesses, hospitals, and a ramp-up of testing nationwide.

      Adding to the sense of unease on trading floors is uncertainty around earnings season, with many firms struggling to provide forecasts as they try to assess developments in the pandemic, which has shattered their bottom lines.

      "There's no way you can predict earnings right now," Michael Cuggino, at Pacific Heights Asset Management, told Bloomberg TV.

      "It's virtually impossible until we have more visibility with respect to how the world comes out of the coronavirus on the other side."

      In Hong Kong, the de facto central bank stepped in to sell the local dollar for a second successive day to defend its peg with the US dollar.

      The Hong Kong Monetary Authority (HKMA) sold HK$2.79 billion ($360 million) of the unit, which has strengthened in recent weeks owing to near-zero US interest rates and higher borrowing costs in the city as investors look to buy into its stock market.

      The move came a day after it sold HK$1.55 billion, which marked the first intervention to offload the local unit since 2015. It last intervened to buy the currency in March last year.

      Under the city's Linked Exchange Rate System, the HKMA is required to buy the local currency at HK$7.85 to US$1 to ensure exchange rate stability.

      The financial hub has maintained a decades-old peg with the US dollar, which keeps Hong Kong at the mercy of Fed policymakers.