Archives for October 2015

The Trans-Pacific Partnership (TPP) is headed by the US and includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

It’s unlikely that China was not invited to join TPP by mistake. “When more than 95 percent of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy,” said US President Barack Obama in a statement.

The former director of the South American trade bloc Mercosur Jose Manuel Quijano said China is the main victim of TPP. Mercosur unites Argentina, Bolivia, Brazil, Paraguay, Uruguay and Venezuela.

“The main victim is China… because in order to sell to other TPP members, the country needs to have created goods with its raw material or input,” Quijano told the Sputnik news agency.

The countries will therefore not buy raw materials from China, as they would want to sell the goods to the US and other countries, he said.

“It is clear that the aim is to generate trade diversion towards those who are members, and to remove China, which is not [a member],” Quijano added.

This raises questions, whether China and other countries are ready to unite to counter-balance the Pacific Rim pact.

“China and Europe may finally look at each other and find some commonalities that they were unaware of before,” said Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis, in a report quoted by CNBC.

“China expressed interest to the EU commencing negotiations on a bilateral FTA [free trade agreement] when President Xi Jinping visited the EU in March 2014. At the time, the EU recognized this to be a desirable long-term objective rather than something that would be negotiated in the near future,” CNBC quotes Rajiv Biswas, Asia-Pacific chief economist at HIS as saying.

In a report from March 2014, the European Union said economic cooperation with China was the second-largest in the world with €1 billion in trade daily, while bilateral trade in goods reached €428.1 billion in 2013.

Another way for China to oppose TPP is boosting its BRICS participation. Brazil, Russia, India, China and South Africa comprise about 30 percent of world’s GDP at the moment in PPP terms and are projected to increase to as much as 45 percent by 2030. BRICS already accounts for 17 percent of world trade.

China could also speed up the New Silk Road project. Beijing plans to inject tens of billions of dollars to support the project that involves the construction of railways, highways, power grids, oil and gas pipelines, maritime and other infrastructure links across Central, West and South Asia to Europe, increasing the connection between the east and the west.

Valery Mironov from the Russian Higher School of Economics says that big regional blocs undermine the activity of the World Trade Organization.

“Washington has traditionally been ahead of the curve, anticipating China’s intention to implement the New Silk Road in the Asia-Pacific region. As a result, there will be two trade unions with different centers of power, represented by China and the United States,” he said.

Mironov added that China and Russia are highly unlikely to ever join the TPP and should cooperate within BRICS, Shanghai Cooperation Organization (SCO) and the Eurasian Economic Union (EEU).

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Article source: https://www.rt.com/business/318012-china-us-trans-pacific-partnership/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Deutsche Bank expects a €5.8 billion charge on assets in its investment bank and retail and private banking operations due to higher regulatory capital requirements, according to a statement released late on Wednesday.

The charges are also related to a reduced value of Deutsche Bank’s Postbank retail unit, which it is planning to sell off. The bank set aside an additional €1.2 billion for legal reserves.

The company has updated the valuations of its businesses, said the report. It could write down some €600 million of its nearly 20 percent stake in China’s Hua Xia Bank, which is no longer considered to be strategic to the group.

It will review financial plans ahead of the announcement of further details of its Strategy 2020, which is expected October 29.

“The Management Board will recommend a reduction or possible elimination of the Deutsche Bank common share dividend for the fiscal year 2015,” Deutsche Bank’s new co-chief executive, John Cryan said in a statement.

Deutsche Bank has been paying dividends of €0.75 a share in the past six years.

It is the second straight troubled quarter for Deutsche Bank. In April, the bank was fined $2.5 billion by US and UK regulators for rate manipulation. The bank admitted that its employees rigged the yen Libor (London Interbank Offered Rate) and the Brussels and Tokyo equivalents, Euribor and Tibor, to benefit their trading book and those of traders at other banks. Deutsche Bank also acknowledged that its internal monitoring systems were insufficient to prevent the manipulation of Libor.

READ MORE: Deutsche Bank scales back in Russia after US criminal probe

Last month, Deutsche Bank announced it would shut down part of its business in Russia, following the US and EU authorities’ investigations over share trades made by the bank’s Moscow office. The probe focused on whether $6 billion in trades in Moscow and London were part of a possible money-laundering scheme for Russian clients.

Article source: https://www.rt.com/business/317993-deutsche-quaterly-profit-losses/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Some 2,147 luxury homes and flats with a $2 – $5 million price tag were sold in London in 2009. At the time, the city was behind Hong Kong and on a par with New York. Since then, the number of London sales in the segment skyrocketed to 6,250, according to a report from estate agency Knight Frank published on Wednesday.

It is now more than triple the number of sales in Hong Kong, Singapore and Sydney, and double the number in Manhattan, the report showed.

In the ultra-prime property segment above $5 million, rich residents of Manhattan can now be considered poor when compared to Londoners.

There were 1,638 properties sold in London for more than $5 million in 2014, compared with 796 in Manhattan, 258 in Sydney and just 21 in Los Angeles.

London and New York have been battling it out for the position as the world’s premier property market, according to the report.

“These two cities continue to lead development trends, in terms of design, pricing and iconic architecture,” the global head of research, Liam Bailey said. He added that London’s dominance of the global luxury property market is expected to remain for the next decade, although New York could surpass it by 2024.

Prime property prices in west central London soared by 138 percent in a 10-year period, the report found. Hong Kong comes second, with a 93 percent increase. Prices for prime property have risen 78 percent in New York and 69 percent in Singapore.

UK’s capital is experiencing a skyscraper boom with luxury residential tower blocks replacing its traditionally low-rise skyline. Residential buildings in Hong Kong and New York in 2014 were lower than in London, according to the report.

One of the reasons for the attraction of London property is its rising population and workforce. The number employed in London’s finance, insurance, IT and telecoms industries rose from 1.28 million to 1.56 million between 2009 and 2014. To compare, there were 1.1 million employed in the same sectors in New York and 0.8 million in Hong Kong.

While foreign workers sooner or later leave their luxury apartments, it’s the everyday residents in London and New York who suffer from inflating prices and increased rents.

The report also said that Miami may become the surprise city where the property market could grow to the size of London and New York. Prices for prime property there have increased 91 percent in the last five years. Last week, an ocean front apartment in the 18-floor tower was sold in Miami for $60 million.

Article source: https://www.rt.com/business/317920-london-luxury-property-dominance/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The Israeli presence in the Golan Heights is in dispute. The region is internationally recognized Syrian territory that has been occupied by Israel since the 1967 Six-Day War between Israel and several Arab states. UN Resolution 242 (1967) demands the withdrawal of Israeli armed forces from the territories occupied in the conflict. Israel disagrees with the wording of the resolution, saying the territories are disputable.

Reportedly, the potential production may reach billions of barrels, while Israel consumes 270,000 barrels per day. Israel currently imports up to three quarters of its oil from the semi-autonomous Kurdish region in Iraq, the Financial Times reported in August.

“We are talking about a strata which is 350 meters thick and what is important is the thickness and the porosity. On average in the world strata are 20-30 meters thick, so this is ten times as large as that, so we are talking about significant quantities. The important thing is to know the oil is in the rock and that’s what we now know,” Israel business website Globes quotes Yuval Bartov, chief geologist of Afek Oil and Gas as saying. Afek is a subsidiary of the America’s Genie Energy.

The reported discovery coincides with the civil war raging in Syria. Israel has been accused of taking advantage of the conflict. The Israeli-occupied Golan Heights also border Syrian territory controlled by anti-government rebels. Israel has reportedly provided medical aid to the rebels and has responded to rocket fire from rebel-controlled territory by striking Syrian Army positions. Israel’s explanation has been that it “holds the Syrian military responsible for all events stemming from its territory.”

Article source: https://www.rt.com/business/317906-oil-golan-heights-israel/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“If all goes according to plan, we can start the recall in January. All the cars should be fixed by the end of 2016,” Mueller told the Frankfurter Allgemeine Zeitung, Reuters reports.

Mueller said every model and brand would be scrutinized for its contribution to Volkswagen Group, except the Bugatti supercar brand. However, the company needs “evolution” rather than “revolution”, he said.

Volkswagen Group owns the Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, Skoda and Volkswagen brands.

“This crisis gives us an opportunity to overhaul Volkswagen’s structures. We want to make the company slimmer, more decentralized and give the brands more responsibility,” said Mueller.

Speaking to 20,000 workers on Tuesday, Mueller said that the crisis was going to be “enormous”, and “still not possibly to quantify,” and that “every euro that stays in the company helps us,” the Telegraph reported.

“While the technical solutions to these problems are imminent, it is not possible to quantify the commercial and financial implications at present,” said Mueller who replaced Martin Winterkorn as CEO.

VW is obliged to submit to the German watchdog a plan to make its cars compliant with emissions laws. The company is also due to testify before a US congressional oversight panel on Thursday.

Volkswagen is considering options from a simple software upgrade to replacing some cars, Bloomberg reported.

The pollution scandal is the biggest in Volkswagen’s 78-year history. It started with a US Environmental Protection Agency investigation. The report concluded that VW diesel engine cars were equipped with software that turns off emissions controls when driving normally and turns them on when the car is undergoing an emissions test. Statistics from the agency showed that such a device allowed VW vehicles to pollute 10 to 40 times over the legal limit.

The outcome of the scandal led to the resignation of CEO Martin Winterkorn and lawsuits around the world, which could cost the company $18 billion in the US alone. The scandal has wiped almost €30 billion off Volkswagen’s value. The company has prepared €6.5 billion to pay for repairs, however, that may not be enough to cover fines and damages.

Article source: https://www.rt.com/business/317852-volkswagen-recalls-emission-scandal/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

There was a “substantial” increase in the use of the Chinese currency in the final week of August, and came on the back of market volatility, according to a report by SWIFT. This was caused by concerns over the Chinese economy slowing down and Beijing’s devaluation of the yuan, the report added.

Data shows the yuan was used far less in global payments than the US dollar, the euro and the British pound. In August 2012 the yuan was twelfth on SWIFT’s list.

The yuan was used in 2.8 percent of global payments in August, compared with 44.8 percent for the dollar, 27.2 percent for the euro and 8.5 percent for the British pound.

More than 100 countries used the yuan for payments in August, with over 90 percent concentrated in 10 countries. Most of those payments have been processed in Singapore (24.4 percent) and the United Kingdom (21.6 percent). Worldwide payments in the yuan were up 14 percent from a year earlier, and have been provided by more than 1,700 financial institutions.

READ MORE: Yuan won’t join IMF reserve currency basket till September 2016 

China’s devaluation was probably a factor which has boosted foreign exchange transactions in the yuan by value, according to SWIFT. Transactions increased by 20 percent in August from a month earlier.

The yuan recorded its biggest one-day loss in two decades of two percent in August following the devaluation. The Chinese regulator aimed at reviving faltering exports.

China has been pushing hard for the inclusion of the yuan in the International Monetary Fund (IMF) currency basket. Rivaling the dollar in the global financial system has been Beijing’s ambition for the yuan since 2010, opening up clearing hubs for its currency in London and Frankfurt.

However, in August the IMF postponed the inclusion of the yuan in the reserve basket of currencies, extending the current composition (US dollar, euro, yen and British pound) by nine months from December 31. It praised China for progressively devaluing its currency against the US dollar, saying that would allow the market to play a greater role in determining the exchange rate. Nevertheless, the IMF said the yuan was still tightly controlled by the Chinese government. The US, IMF’s largest shareholder, has long accused China of keeping the yuan undervalued to boost exports.

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Article source: https://www.rt.com/business/317755-yuan-global-currency-devaluation/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Germany’s export-driven economy has been challenged by the slowdown in China and other emerging economies. Making the situation worse, the August figures do not yet reflect the impact of the Volkswagen emissions scandal which could affect 11 million vehicles worldwide as well as future sales of diesel cars.

“While order data in August was overall disappointing, it’s too early to fall into a panic about the economy because orders from within the country and the currency union amid all the volatility still point upward,” economist at Bayerische Landesbank in Munich Stefan Kipar told Bloomberg. “However, a high uncertainty about China and the cooling of the Chinese economy has left its mark,” he added.

Orders from other countries in the euro area were up 2.5 percent following a smaller gain in July, the Economy Ministry said in a statement. However, domestic demand was off 2.6 percent and orders from outside the eurozone dropped 3.7 percent.

The Ministry explained that demand from countries beyond the euro area appears to be “less reliable at present.”

READ MORE: China’s factory activity lowest since 2009

Waning Chinese industrial demand has forced Henkel to cut 1,200 jobs at its adhesives unit as it adapts capacity, according to Bloomberg. While most of the layoffs are expected in Asia, 250 jobs will be cut in Europe and 100 in Germany.

READ MORE: German prosecutors investigate former VW boss

The German auto industry is also waiting to feel the impact of last month’s VW emission cheating scandal. Chairman Hans Dieter Poetsch warned that the diesel emissions scandal could pose “an existence threatening crisis for the company,” which faces a Wednesday deadline to present a plan to fix some 2.8 million vehicles in its home market.

Article source: https://www.rt.com/business/317752-germany-pmi-slowdown-factors/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Several hundred employees attacked the company’s headquarters near Charles de Gaulle Airport in Paris on Monday where the central committee was holding a meeting. Air France’s executives met to finalize a restructuring plan, including cutting some 300 cockpit crew, 900 flight attendants and 1,700 ground staff.

Executives were met by a crowd of protesting employees when they arrived for the meeting. The workers were shouting and waving flags, but later dozens took their protest into the headquarters, storming the meeting and ripping off the manager’s clothes.

The CEO of Air France Frederic Gagey managed to escape. However, vice-president of the Air France hub at Orly Airport, Pierre Plissonnier was not so lucky. The crowd ripped his shirt and jacket, forcing him to scale a fence to find safety.

Cameras caught the fleeing deputy director for human resources Xavier Broseta, who was also half-naked. Security helped Broseta climb over a fence away from the protesters.

“These attacks were made by isolated and particularly violent individuals as the demonstration by personnel on strike was going on calmly,” Air France said in an e-mailed statement. The company also filed a complaint of aggravated violence.

Air France voiced plans to cut jobs following the failure of productivity talks with the pilots last week. The company hadn’t managed to find a compromise with employees who had been asked to work more hours for the same pay. The measure is part of an attempt to end four years of annual losses.  Air France executives said they were going to reduce the fleet by 14 jets, with the order for Boeing 787s scrapped and aging Airbus A340s phased out. The government called on both sides to continue negotiations in order to save jobs. The company last fired employees in 1993 and that cost the job then CEO Bernard Attali.

Article source: https://www.rt.com/business/317705-air-france-job-cuts/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The bloc is headed by the US and includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

The Trans-Pacific Partnership (TPP) agreement covers 40 percent of the world’s economy. Negotiations have been going on for five years.

However, the newly established bloc has its critics, too. Watch more:

On Sunday morning, a handful of protesters unfurled a large banner reading “#StopTPP!” outside the Westin Hotel in Atlanta, USA. They chanted “TPP is corporate greed. Affordable medicine is what we need” before being removed from the lobby.

The Obama administration “is pursuing policies under extreme secrecy,” director of responsible trade for the Sierra Club Ilana Solomon told the Washington Post. “The entire TPP has been negotiated behind closed doors. . . . The lack of dialogue is abysmal,” he added.

TPP objectives, according to United States Trade Representative (USTR):

The US visible exports to TPP countries totaled $727 billion in 2014, which is 45 percent of America’s exported goods, says the organization website.

The deal is expected to boost US exports to partnership countries.

Australian Trade Minister Andrew Robb told reporters on Sunday that the deal was postponed due to Canberra’s disagreement with the US over next-generation pharmaceuticals.

“To formalize the outcome of the agreement, negotiators will continue technical work to prepare a complete text for public release, including the legal review, translation, and drafting and verification of the text,” said a TPP statement.

Article source: https://www.rt.com/business/317673-tpp-pacific-trade-deal/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“The low oil price had no impact on the production plan,” an oil and gas analyst at Deutsche Bank said.

Russian oil firms have increased profits and output since a weaker domestic currency has protected their business. The depreciating Russian currency cuts costs and taxes for the companies that generate earnings in US dollars but pay most of their expenses in rubles.

Gazprom’s oil subsidiary, Gazprom Neft had earlier reported a 47 percent increase in second quarter net profit and its output was up 25 percent.

Russia’s second-largest oil producer, Lukoil boosted output in the first half of the year by reducing spending as a weaker ruble cut costs. The company stated capital expenditure was cut by 31 percent to $5.32 billion mostly due to the ruble devaluation.

In early August, Goldman Sachs upgraded Rosneft, Bashneft and Gazprom Neft to ‘buy’ and named Lukoil its ‘top pick’ in the energy industry. The rating agency also predicted Russian crude production to grow by 1.1 percent this year.

READ MORE: Shell cuts 6,500 jobs investment by 20% over weak oil

Meanwhile global energy players such as BP and Shell are struggling with plunging crude prices, as their profits fall. The companies announced massive job and spending cuts, following a serious drop in second-quarter profits.

On Sunday, the world’s largest crude exporter Saudi Arabia announced big cuts in November oil sales to Asia and the US. It wants its production to stay competitive with rival suppliers. In a list of official prices sent to customers, state owned Saudi Aramco cut the price of light crude deliveries to its main market Asia by $1.70 a barrel. The company also cut its prices for heavy oil by $2 a barrel to the Far East and by 30 cents a barrel to the US.

The slash in the oil price followed last month’s cuts by Iran, Iraq and other Middle Eastern countries.

OPEC’s kingpin Saudi Arabia is the main stumbling block for the cartel. Last month OPEC, which is expected to boost crude production despite the glut in the global oil market, said it might cut output. However, the change of policy isn’t possible without key producer Saudi’s approval which has been refusing to cut output ever since.

Global oil prices fell to their lowest level in six years amid a global supply glut, below $50 per barrel in September from over $100 last August. On Monday, Brent futures for November were trading 54 cents higher at $48.67.  Futures for the US West Texas Intermediate (WTI) were also up 51 cent at $46.05.

Article source: https://www.rt.com/business/317663-oil-russia-record-saudi/?utm_source=rss&utm_medium=rss&utm_campaign=RSS