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PARIS — The aircraft industry descends on Paris on Monday for the world’s biggest airshow, a prime battleground for bitter rivals Boeing and Airbus, but also a chance for new kids on the block to snap at the heels of the two giants.

Single-aisle planes for short and medium distances are the hottest ticket in the world’s civil aviation industry, with airline demand for models in the Airbus A320 family giving the European company an edge, for now, over its American opponent which is racing to return in force to the mid-range segment.

But the duopoly is not without challengers: Competition is looming, notably from Russia and China who have each been test-flying their own mid-range models.

The airshow comes a little too early for either Russia’s Irkut, with its MC-21, or China’s Comac, with the much-flagged C919, to be able to showcase their aircraft there, but both will leave little doubt that they expect to win a big slice of the aviation pie in the future.

Squeezing in seats

Boeing, meanwhile, is to showcase the 737 Max 9 model as its anti-Airbus weapon in a market segment where the capacity to squeeze a few more seats into a narrow-body cabin while eking out increased fuel efficiency over greater ranges is key.

Airbus’s biggest-capacity member of the mid-range family, the brand new A321neo, is able to fit in 236 seats in an all-economy class version. Low-cost airlines are eyeing the aircraft to break into transatlantic routes.

Coming up next from Boeing is the 737 Max 10 which is to match that capacity, while also being lighter and cheaper, the plane maker has said. Test flights have been completed and Boeing is now talking to customers about ordering the Max 10.

“This airplane would give airlines increased capacity and the lowest seat costs ever for a single-aisle airplane,” said Randy Tinseth, vice president for Boeing Commercial Airplanes.
“Simply put, the 737 MAX 10X would be the most profitable single-aisle airplane the industry has ever seen,” he wrote in a blog entry.

Airbus will also showcase its new long-haul model A350-1000 and Boeing its 787-10 Dreamliner while Ukraine’s Antonov will present its 132 D.

While new civilian aircraft orders will probably fall short of the $130 billion the Paris show clocked up last time — mostly thanks to booming orders for Boeing and Airbus — the industry is still optimistic about sustained long-term growth.

Airbus said earlier this month it expects the market for large passenger planes to more than double in the next 20 years driven by growth from Asian markets.
Supersonic roars
Raising its previous forecasts for the next two decades, the European aircraft maker also said a slowdown in orders over the past several months did not signal a drop in the market.
“The trend is positive,” said Airbus Chief Executive Fabrice Bregier.
The planemaker predicts the need for 35,000 new planes worth $5.3 trillion over the next two decades, an increase from last year’s estimates.
Airbus earlier warned it expected slow orders this year and perhaps next year, too, but said it was a normal part of the business cycle.

The biennial Paris Airshow, which runs to June 25, is expected to attract 150,000 industry professionals from 2,370 companies.

There will also be some 200,000 regular visitors, many of whom will come especially for spectacular displays of supersonic military hardware as fast combat planes break the sound barrier.

One star performer will be Lockheed Martin’s F-35A new generation fighter jet, scheduled to sortie on demonstration flights during the airshow.

RIYADH — Saudi Arabia’s Kingdom Holding Co. said on Thursday it has bought a stake in car ride-hailing business Careem, its latest venture in the booming sector.

Kingdom Holding, chaired by Prince Al Waleed Bin Talal, acquired a 7 per cent share in the firm, valuing the transaction at $62 million.

Dubai’s Abraaj Group said in a separate statement that it has divested its shareholding in Careem.

It did not give the size of the stake, but confirmed it has been acquired by Kingdom Holding, a diversified Riyadh-based global investor.

The firm has stakes in a variety of sectors, including banking, through Citigroup, and media with Time Warner.

In 2015, Kingdom Holding invested more than $100 million in Lyft, a San Francisco-based rival to another US-based ride-hailing operation, Uber, which is a smartphone app that connects passengers and drivers.

“Our investment in Careem is a continuation of our strategy to invest in new technologies”, as it has already done with Lyft and stakes in Twitter and JD.com, Kingdom Holding’s CEO Talal Al Maiman said in a statement.

“Careem sets an example for regional businesses by providing employment opportunities to locals and developing talent,” he said.

Car booking apps are popular in Saudi Arabia, particularly among women who are banned from driving in the country.

As part of a wide-ranging plan to diversify its oil-dependent economy and give more jobs to Saudis, the kingdom is trying to develop its digital infrastructure and broaden its investment base.

In December, the largest Saudi telecommunication firm, STC, said it would buy a 10 per cent stake in Careem for $100 million.

Uber announced in June last year that Saudi Arabia’s Public Investment Fund would inject $3.5 billion to help the app’s global expansion.

Rival Careem operates in the Middle East and surrounding region.

TOKYO — From edible ink printers to chicken stick conveyor belts, Japan’s food firms put it all on the menu at an industry show this week with one bold exhibitor claiming it could turn anyone into a top sushi chef.

Newmind’s colour printers can graft almost any image — a country flag, Hello Kitty face or message to a loved one — onto cookies and other food just like a conventional printer.

Best of all, you can eat the ink.

Over at Kojima Giken’s booth, a machine plunged wooden skewers into diced chicken and leek bits as they passed along a conveyor belt. 

The result is a wildly popular grilled snack called yakitori, usually accompanied by copious amounts of beer. 

The company says its machines can churn out anywhere from 300 to 20,000 yakitori sticks an hour depending on the size of the machine.

“And we can skewer pretty much anything,” said founder Minoru Kojima.

“Just last year, we designed a big machine to make fruit and vegetables on sticks — the kind of things you eat at parties. We sold them in France.”

There were nearly 800 exhibitors at the International Food Machinery and Technology Exhibition in Tokyo, which wraps up Friday.

Suzumo Machinery has a device that combines rice, spicy green wasabi paste and fresh fish before wrapping the sushi in a clear plastic wrap stamped with an expiration date — at a rate as quick as 2,000 pieces an hour.

“Making sushi is a difficult thing and require skills that take about from three to five years to acquire,” said Suzumo’s Ryosuke Murai.

“With this machine, you can become a sushi chef in a day.”

KUWAIT CITY —  While the Gulf’s bitter diplomatic crisis is unlikely to affect energy prices in the short term, a prolonged rift that disrupts Qatar’s gas supplies could send prices soaring, analysts say.

With rising US shale oil output driving a global supply glut, the decision by Saudi Arabia and its allies earlier this month to sever diplomatic ties with Qatar provided only a fleeting boost to prices.

“Given the severe supply glut in the oil markets globally, it is quite unlikely that the Gulf spat would lead to a spike in oil prices in the short or medium term,” M.R. Raghu, executive vice president of Kuwait Financial Centre (Markaz), told AFP.

Qatar said on Monday that it would comply with an agreement by the OPEC oil cartel and other producers to extend production cuts for nine months until the end of March to rebalance the market.

Qatar’s share in the output cuts of 1.8 million barrels per day is just 30,000.

While its daily oil output of around 600,000 barrels represents less than 1 per cent of world crude production, Qatar is a major player in liquefied Natural Gas (LNG).

The tiny emirate is the world’s leading LNG exporter, accounting for a third of international supplies, mainly to Asia and Europe.

Advisory firm Oxford Economics said Qatar’s exports of oil and gas are unlikely to be significantly affected, with its main sea routes — including through Omani and Iranian waters — still accessible.

But using Iranian waters could involve higher costs, said Jean-Francois Seznec of the US-based Atlantic Council’s Global Energy Center.

“It may have a small indirect impact in the case of continued tension. Insurance rates will start increasing rapidly and those rates would have to be paid by Qatar,” Seznec told AFP.

Most of Qatar’s almost 80 million tonnes of LNG supplies are shipped in tankers, mainly to Japan, South Korea and India, as well as to several European countries.

One-third of Britain’s gas imports, for example, come from Qatar. Other European customers include Spain and Poland.
 Politically fraught
The air, sea and land restrictions imposed by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt have not so far affected maritime routes for Qatari LNG vessels which can pass through the Strait of Hormuz.

Any disruption to Qatar’s LNG exports could anger the European Union.

“If Qatar gas finds it increasingly difficult to reach world markets, especially Europe, then the European Union may feel threatened by the prospect of having to depend on more Russian gas imports, a decision that is highly fraught politically in many EU capitals,” Kuwait Financial Centre said in a report on Monday.

Qatar also pumps more than two billion cubic feet of gas daily through a pipeline to the UAE, mainly for power generation. A small part of the pipeline exports goes to Oman.

So any disruption to Qatar’s gas supplies would be painful for several countries. 

A serious escalation of Gulf tensions or a military confrontation — while seen as highly unlikely — could cause energy prices to soar.

“If the conflict develops into a military confrontation... I would expect a very large spike in prices to around $150 a barrel of oil,” from below $50 per barrel now, Seznec said. 

Gas prices would also increase several-fold, he added.

This would be accompanied by a major leap in insurance premiums.

For oil prices to triple as predicted by Seznec, the conflict must disrupt oil and gas supply lines from most of the Gulf nations, including Saudi Arabia, the world’s largest crude exporter.

The six Gulf Cooperation Council (GCC) states — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE — account for a fifth of global crude exports or about 13 million bpd.

Income from energy exports makes up over 80 per cent of public revenues for the six members.

Raghu said an escalation of the crisis could mean “sea routes getting blocked and cost of transshipment of global gas rising”.

Major importers of Qatari LNG like Japan, South Korea and India may face shortages of supplies leading to a scramble for alternative suppliers in the long term, he said.

BEIJING — China must quicken the pace of reforms and do more to curb rising debt, the International Monetary Fund (IMF) said on Wednesday as it raised its growth forecast for the world’s number two economy. 

The International Monetary Fund expects China to expand by 6.7 per cent this year, faster than its previous estimate of 6.6 per cent due to expanding credit and investment.

That would match last year’s growth rate, which was the slowest in a quarter of a century. 

The economy is then expected to slow to an average of 6.4 per cent expansion between 2018 and 2020.

After years of blistering growth, China’s economy has been slowing as it moves from an investment and export-driven model to one more reliant on consumer spending.

However, Beijing’s Belt and Road infrastructure project, for which the government has earmarked hundreds of billions of dollars, has raised concerns it may be retreating from the difficult transition.

David Lipton, the IMF’s first deputy managing director, said it was “critical” that China capitalises on its still-strong pace of expansion to speed up reforms. 

“While some near-term risks have receded, reform progress needs to accelerate to secure medium-term stability and address the risk that the current trajectory of the economy could eventually lead to a sharp adjustment,” Lipton told reporters at the end of a two-week visit to China.

The IMF also called on Beijing to do more to rein in soaring credit, warning that runaway lending could lead to a bad debt problem if borrowers default on their loans.

China’s overall debt liabilities, which include corporate and household borrowing, are above 260 per cent of gross domestic product compared to about 140 per cent before the 2008 financial crisis.

When the debt-to-GDP ratio “rises quickly, when that rise gets beyond certain bounds, there tends to be vulnerabilities and a greater probability of crisis”, Lipton said.

The IMF also urged Beijing to phase out support for underperforming state-owned enterprises (SOEs) and so-called zombie companies — those firms that survive only on rolling credit from the banks. 

Lumbering SOEs and debt-choked companies have been a drag on the economy. While the government recognises the need for restructuring, it also fears mass lay-offs and social instability.

PARIS — Increased oil production in the United States is hampering efforts to balance out market supply and demand, the Organisation of Petroleum Exporting Countries (OPEC) said on Tuesday.

While a "rebalancing of the market" was "under way", it was "at a slower pace than originally anticipated", OPEC wrote in its latest monthly oil market report.

This was "due to changes in fundamentals, especially the shift in US supply from a forecast contraction to positive growth", the report said.

It was being observed, "despite the very high overall conformity to the production adjustments in the first four months of 2017", OPEC added.

Back in November, OPEC members agreed to cut production by 1.2 million barrels per day for six months beginning from the start of the year in a bid to reduce the glut of oil supplies on the shore up prices. 

Non-cartel producers led by Russia partially matched the cuts.

The measures helped stabilise oil prices at the beginning of the year, with the international benchmark Brent crude sticking above $50 per barrel.

At a meeting at the end of May, both OPEC and non-OPEC countries decided to roll over the output cuts for a further nine months. 

Nevertheless, increased output in the US was getting in the way of the rebalancing process, OPEC complained.

Brent has dropped back below $50 since the OPEC meeting.

American producers have benefitted from the OPEC and non-OPEC efforts to push prices higher.

Shale producers, in particular, can react quickly to market developments, because they are less capital intensive than other ventures. They have racked up production as prices rise.

The bulk of the upward adjustment in non-OPEC oil supply since December "has come from the US," OPEC said, adding that this was skewing the market.

"The revisions to non-OPEC supply growth have been much greater than the upward adjustments to world oil demand growth, accentuating the imbalance in the market," it said.

Looking at anticipated growth in global oil demand this year, OPEC reiterated its forecast of 1.27 million
barrels per day.

With regard to the global economic outlook for 2017, stronger-than-anticipated momentum since the beginning of the year led to an upwards revision in the growth forecast to 3.4 per cent following growth of 3.1 per cent in 2016, OPEC said.

LONDON — British inflation soared close to a four-year high in May, official data showed on Tuesday, boosted by the rising cost of energy, food and recreational goods.

Consumer Price Index inflation unexpectedly hit 2.9 per cent last month, which was the highest level since June 2013 when it last stood at that level.

The reading compared with a rate of 2.7 per cent in April 2017 and overshot market expectations for no change.

Inflation had held close to zero throughout 2015 — but has surged since then as a weak Brexit-hit pound raises import costs.

"Rising prices for recreational and cultural goods and services — particularly games, toys and hobbies — was the main contributor to the increase in the rate," the Office for National Statistics said in a statement on Tuesday.

"There were smaller upward contributions from increased electricity and food prices.

"These upward contributions were partially offset by falls in motor fuel prices, and air and sea fares, the latter two influenced by the timing of Easter in April this year."

British inflation remains stubbornly above the Bank of England's (BoE) 2-per cent target.

That could raise the pressure on the central bank's rate-setting monetary policy committee when it considers a rate hike later this week.

However, the outlook remains clouded by ongoing political uncertainty in the wake of Britain's election last week — and by looming Brexit negotiations.

"Inflation continues to push higher, but political and economic uncertainty mean the BoE is likely to tread carefully," said ING economist James Knightley.

"We do not expect a BoE rate hike until there is much greater clarity on the outlook."

The outlook is heavily dependent on what sort of divorce terms Britain reaches with the European Union and whether it can secure a trade deal.

ISTANBUL — Turkey’s economy grew a stronger-than-expected 5 per cent in the first quarter of 2017, official data showed on Monday, driven by a surge in export growth.

The robust data surprised markets, who had been expecting a consensus of 3.8 per cent, and indicated the economy is managing to turn the corner following a slump in the wake of a failed coup last July.

The Turkish economy grew 4.5 per cent in the first quarter of 2016, but only 2.9 per cent overall in 2016. The growth rate in the last quarter of 2016 stood at 3.5 per cent. The official data published by the Turkish Statistics Institute showed that the main driver of the strong first quarter was exports, with exports of goods and services increasing 10.6 per cent.
“That appears, in part, to have been a result of the weakness of the lira supporting the competitiveness of goods exports,” said William Jackson, senior emerging markets economist at Capital Economics in London. The lira has lost over 20 per cent against the dollar over the last year, although it has rallied slightly in recent months while imports increased only 0.8 per cent.

The strong data will be a boost for the government under President Recep Tayyip Erdogan, who in April narrowly won a referendum on boosting his powers with the economy a key issue.

Economists said the first quarter gross domestic product (GDP) data suggests that Turkey will grow faster this year than expected, requiring a revision of full year forecasts. 

Ozgur Altug, chief economist at BGC Partners, said he had revised his 2017 GDP growth forecast from 2.5 per cent to 4.7 per cent, versus a government forecast of 4.4 per cent.

“The data confirmed that the economy managed to recover in the fourth quarter of 2016 and with a faster pace in the first quarter after the failed coup attempt,” he said, saying government measures to stimulate activity were now being felt in the data. 

But he warned that a GDP restatement last year — which saw past data revised — and the discrepancy between monthly and quarterly figures continued to complicate making forecasts. 

DOHA/DUBAI/ABU DHABI — Shortages of US dollars hit money exchange houses in Qatar on Sunday, making it harder for worried foreign workers to send money home, as foreign banks scaled back business with Qatari institutions because of the region’s diplomatic crisis.

“We have no dollars because there is no shipment or transportation from the United Arab Emirates. There is no stock,” said a dealer at the Qatar-UAE Exchange House in Doha’s City Centre mall. “The shipment is blocked from the UAE.”

Several other exchange houses in Doha also told Reuters they had no supplies of dollars. At Qatar-UAE Exchange, dozens of people — some of the foreigners who comprise nearly 90 per cent of the population of 2.6 million — waited quietly in line to change money or make remittances to their home countries.

“I spoke with my wife this morning. She said, ‘Send your savings to me now.’ I am not panicked but my family is scared,” said John Vincent, an air-conditioning repairman from the Philippines. 

“I sent 2,000 riyals ($550) home but I have some more savings left here in Qatar. I will see what the situation is in coming days before I decide what to do.”

The dollar shortages do not mean Qatar, which is one of the richest states in the world per capita and has huge foreign reserves, is running out of money. But they show how the diplomatic crisis is disrupting parts of the financial system.

Saudi Arabia, the UAE, Bahraini and Egyptian banks began scaling back business with Qatar last week after their governments cut diplomatic and transport ties, accusing Doha of supporting terrorism. 

Then at the weekend, the UAE told its banks to exercise “enhanced due diligence” towards six Qatari banks which, it alleged, might have done business with people or entities on a terrorism blacklist.

That stopped short of a complete ban on business with Qatar but the effect may turn out to be much the same. UAE banks were absent from Qatar’s foreign exchange and money markets on Sunday, causing both those markets to slow down, because they feared any deals could expose them to legal risk, bankers said.

Some Western banks with a presence in Qatar continued business as normal, partly because they did not want to lose out on billions of dollars of building projects which Qatar plans before it hosts the soccer World Cup in 2022.

But other Western banks have halted new Qatar business including interbank and syndicated lending, while continuing to service existing business, banking sources said, declining to be named because of political sensitivities.

“Everybody is shocked — they’re not worried about Qatar’s credit, they’re worried about compliance and the risk that the local sanctions could be escalated to an international level,” said one foreign banker in the region.

Dollars

Exchange house dealers in Qatar said the dollar shortage was partly a seasonal phenomenon, because the Gulf’s hot summer and the holy month of Ramadan had begun, periods when there was traditionally high demand for travel abroad.

Sudhir Kumar Shetty, president of UAE Exchange, which has eight branches in Qatar, said his firm was continuing to handle remittances and currency buying as usual in that country. He said the firm hadn’t seen any major change in remittance volumes due to the diplomatic tension.

But he added that dollar supply was not meeting demand in Qatar and attributed this partly to flows of the US currency from other Gulf countries being disrupted.

“Everywhere, all the banks and exchange houses, there are no dollars. All the exchange houses are trying to get currencies from other countries,” the dealer at Qatar-UAE Exchange said, adding that his firm was hoping for a shipment from Hong Kong.

The six Qatari banks named by the UAE — Qatar National Bank (QNB), Qatar Islamic Bank, Qatar International Islamic Bank, Masraf Al Rayan, Doha Bank and unlisted Barwa Bank — did not respond to Reuters requests for comment.

The share price of all five of the listed banks fell on Sunday, with QNB losing 0.5 per cent, as investors reacted to the prospect of the banks facing funding difficulties because of reduced ability to borrow from foreign institutions.

Qatari banks have around 60 billion riyals ($16.5 billion) in funding in the form of customer and interbank deposits from other Gulf states, SICO Bahrain estimated. Most of this could eventually be withdrawn if the crisis continues.

Bankers expect Qatari banks to borrow from the central bank’s repo facility if they become short of funds. The repo rate is currently at 2.25 per cent and the cost of borrowing three-month money among Qatari banks rose near that level on Sunday, to 2.20 per cent, the highest in many years.

Central bank rules limit the size of the repos to 2 per cent of each bank’s private sector deposits. Bankers speculate the central bank may lift this cap; the central bank did not respond to requests for comment.

DUBAI/DOHA — Qatar's central bank has asked commercial banks to provide it with detailed information on foreign exchange trading; banking sources told Reuters on Thursday as Doha's diplomatic rift with other Gulf countries put its currency under pressure.

The riyal hit an 11-year low of 3.6530 to the dollar late on Wednesday after Standard & Poor's (S&P) cut Qatar's credit rating, citing this week's decision by Saudi Arabia and the United Arab Emirates to sever diplomatic and transport ties with Doha.

The dispute, over Saudi and UAE charges that Doha supports terrorism, triggered outflows of capital from Qatar which, if they persist, could eventually make it harder for authorities to maintain the riyal's peg of 3.64 to the dollar. 

The central bank's move to gather data on the currency market was in response to this concern, Qatari commercial bankers said.

"We now consider risks to external financing lines to the whole economy, including foreign direct investment, portfolio flows and to the financial sector, to be elevated, and this could lead to pressure on Qatar's pegged monetary arrangement," said S&P.

The sources said banks in Qatar were asked to provide daily information on their foreign exchange trading, a daily statement of withdrawals and transfers from deposits worth at least 10 million Saudi riyals ($2.7 million), and daily data on cash withdrawals and deposits.

Previously, banks were generally required to provide such information monthly.

The central bank also asked banks to supply on a weekly basis a breakdown of their customer deposits by maturity and type from Gulf Cooperation Council countries, Egypt and other countries, the sources said. The central bank did not respond to requests for comment.

The riyal rebounded to trade much closer to its peg in the spot market on Thursday; some traders said the central bank was supplying dollars to banks which wanted to close out their riyal positions, in order to avoid downward pressure on the currency.

"There's some stress in the Qatari riyal currency market but it's too early to talk about pressure on the Qatari peg," said a UAE treasury banker, who like most bankers declined to be named because of political sensitivities.

S&P estimated the government's liquid external assets were worth 170 per cent of gross domestic product, a massive amount equivalent to nearly 10 years of the country's imports — a much higher degree of backing for its currency than most countries. 

Tension

Nevertheless, there were other signs of tension in Qatari financial markets on Thursday. The riyal remained under pressure in the offshore forwards market, which banks use to hedge against future moves in the currency.

The cost of buying insurance against a Qatari sovereign debt default hit a seven-month high, and the cost of borrowing three-month riyal funds in the interbank market jumped to 2.16 per cent, the highest in at least several years — a sign nervous banks were holding back funds.

A major source of capital outflows from Qatar so far has been the stock market, which plunged 9.7 per cent over three days before partially rebounding on Thursday. Some foreign portfolio managers sold stocks and sent the proceeds home. In addition, some banks in Saudi Arabia and the UAE are closing out Qatari riyal long positions and offloading part of their riyal assets to reduce their risk. 

While Riyadh has told its banks it does not want them to do new business with Qatari institutions, neither Saudi Arabia nor the UAE has yet clarified whether banks will be required to liquidate existing deals. Some bankers are cutting exposure now to limit the pain if they are forced into a firesale of assets.

Other banks in Saudi Arabia and the UAE have halted all transactions in the Qatari riyal, viewing them as too risky, although some remittances of money between the UAE and Qatar were continuing on Thursday, bankers said.

A much bigger threat to the Qatari riyal than outflows from the stock market is the risk of an exodus in coming weeks and months from loans and deposits provided by foreign banks to Qatari banks. Foreign liabilities of Qatari banks increased to 451 billion riyals ($124 billion) in March from 310 billion riyals at the end of 2015.