Archives for June 2016

“Britain is an important trade partner for Germany, and significant changes in the economic relationship between the two countries will have repercussions for Germany,” the IMF’s mission chief for Germany Enrica Detragiache was cited by Reuters. “In terms of the new forecast, of course we are thinking of a downward revision,” she added.

German bond yield goes negative as Brexit fears swell

She also said the IMF didn’t know what the “new relationship will look like for some time,” but the uncertainty alone would hurt growth prospects.

Prior to the UK’s referendum, the IMF slightly raised its 2016 forecast, predicting the German economy would grow 1.7 percent, compared with 1.5 percent. For 2017 it lowered the growth outlook to 1.5 percent from 1.6 percent.

Last year Germany’s economy expanded by 1.7 percent which was its strongest rate in four years.

“We expect this growth to be led by domestic demand rather than foreign demand, supported by good wage growth, low energy prices and expansion of fiscal and monetary policies,” said Detragiache.

The IMF called on the German government to implement various structural reforms in order to address the growing challenges of the country’s rapidly ageing society. It should set more incentives for women to work full time and for older workers to retire later, according to the IMF which added that migrants also should be integrated into the labor market.

This week the Fitch international rating agency compiled a list of EU countries that would be most affected by Britain’s exit from the European Union. The list includes Ireland, the Netherlands, Belgium, Malta, Cyprus and Luxembourg – mainly due to weaker exports. Experts also warn that Germany, Luxembourg, Belgium and Malta, with a large stock of FDI and financial assets in Britain, may suffer losses in the euro value of those equities due to a sterling depreciation.

Article source: https://www.rt.com/business/349010-imf-germany-risk-brexit/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“When Britain leaves the EU, we will see a triangle that covers a large part of the globe: Greenland, Iceland, the Faroe Islands, Norway – and now the United Kingdom,” said Iceland’s President Olafur Ragnar Grimsson.

The countries do not belong to the European Economic Area (EEA) or any part of the EU.

Grimsson suggests that after Brexit, the countries will potentially play a big role.

“It is about trade, diplomacy, commodities and several other fields,” Grimsson said, stressing that the Arctic, or the far north, would become more important not only in a European, but in a global context as well.

Our least bad #Brexit option is the EEA: the EU, Norway, Iceland and Liechtenstein would need to agree.

We have no Liechtenstein embassy.

— (((Douglas Dowell))) (@dijdowell) June 29, 2016

The European Free Trade Association (EFTA), made up of Iceland, Liechtenstein, Norway, and Switzerland, will also become much more relevant after UK’s escape from the European bloc, according to the president.

“It is of course up to the British to decide what to do, but this could give the EFTA partners a more important role than in previous decades,” he said, adding that it would be a chance for Norway and Iceland to improve the working of the organization.

However, Norway’s Prime Minister Erna Solberg does not share the same enthusiasm about the idea.

“Do we want Britain to be involved in dictating what EFTA negotiates with third countries? Will our key national interests be benefited by that? That is the discussion we need to have,” she told the Norwegian News Agency, pointing out that the organization could have good ties with Britain through other agreements.

Even if the trade bloc were probable, it was ”not nearly as desirable as what we are just giving up,” says Michael Dougan, Professor of EU law at Liverpool University as quoted by The Independent.

He added that to become a member of the EEA, Britain would need unanimous accord of all 27 member states, the European Parliament as well as the four European Free Trade Association countries.

Article source: https://www.rt.com/business/349008-iceland-uk-northern-union/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The 1,109-carat diamond Lesedi la Rona was expected to fetch about $70 million which could have made it the most expensive rough gem on record, however, the highest bid was well shy at $61 million.

Largest diamond found in 100 years

A video posted by RT (@rt) on Jun 14, 2016 at 12:40pm PDT

“Sotheby’s orchestrated a worldwide marketing campaign that ‎garnered huge levels of interest, but the auction just seemed to stall,” Edward Sterck, an analyst with BMO Capital Markets in London was cited by Bloomberg. “It’s unclear what happens next. We would see the potential for a private sale,” he added.

The tennis ball-sized Lesedi la Rona was found in Botswana in November by Canadian mining company Lucara Diamonds. It is the biggest diamond discovered in more than 100 years and is believed to be about three billion years old.

READ MORE: Tennis ball-sized diamond may fetch over $70mn at auction

When unearthed, the size of the gem amazed the experts. Sotheby’s called the discovery “the find of a lifetime,” and said “every aspect of the auction was unprecedented.” It was the first time a rough diamond of such a size has gone on public sale.

Lucara Diamonds CEO William Lamb said the rough stone could become a gem of about 400 carats once cut and polished but the company decided there was less risk and more immediate value to shareholders by selling it in its rough form.

After the failed sale on Wednesday Lucara stock fell as much as 18 percent in Toronto, the biggest intraday decline since September 2013. At the end of trading company shares were down 15 percent.

Lesedi La Rona is second in size to the Cullinan Diamond, which was discovered in 1905 in South Africa and weighed more than 3,000 carats. It was later cut into nine major gemstones and 96 smaller stones. One of them, the Great Star of Africa gem, now adorns the British Royal Scepter which is on display at the Tower of London.

Article source: https://www.rt.com/business/348970-biggest-diamond-auction-failure/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“However, it is advisable for Turkish authorities to take further steps to ensure security of Russian citizens in the country,” the Kremlin quotes the Russian president.

Turkish economy in hard times with bad debt and bankruptcies

Relations significantly deteriorated last November when Moscow introduced sanctions against Turkey in response to the death of a Russian pilot who was shot down in Syria last year.

READ MORE: Turkey wants Russian tourists back amid ‘sudden’ industry decline – PM

They included introducing a visa regime, a permanent ban on charter flights to Turkey, as well as an embargo on agricultural products and the hiring of Turkish nationals. At the request of the Kremlin, Russian travel agencies stopped selling package tours to the country.

READ MORE: Russian sanctions hit Turkey’s tourism industry

As a result, Turkey’s once booming tourism industry was heavily hit by the sharp drop in visitors. A series of terrorist attacks fuelled a further decline, as the holiday makers from Europe stayed away due to security concerns.

In the first quarter of the year tourism to Turkey fell by more than 16 percent. Bookings for this summer plunged 40 percent and hotel occupancy rates more than halved compared to 2015.

Tourism is the lifeline of the Turkish economy. It accounts for 11 percent of the country’s gross domestic product. More than a million registered workers are employed in the tourism industry.

Earlier this week, the Kremlin said the Turkish president had sent a letter to Vladimir Putin offering “his deep sympathy and condolences to the relatives of the deceased Russian pilot.”  Erdogan described Russia as Turkey’s “friend and a strategic partner,” which Ankara didn’t want to lose.

Article source: https://www.rt.com/business/348877-turkey-russia-restrictions-lift/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Gazprom ready to restart Turkish Stream dialogue after Erdogan apology

“The Turkish Stream project has been meticulously worked out. The cost of the four lines was estimated approximately at €11.4 billion… The level of readiness to attract project financing is very high,” said Gazprom’s deputy head of finance Igor Shatalov.

On Monday, Gazprom announced it was “open for dialogue” and ready to resume talks with Ankara on the construction of the Turkish Stream gas pipeline.

The announcement came after Russia received an apology for the downing of its warplane from Turkish President Recep Tayyip Erdogan.

One of the major projects between Moscow and Ankara, Turkish Stream was stuck in limbo after the incident in which a Russian pilot was killed.

Gazprom and Turkey’s Botas signed a memorandum of understanding to construct the pipeline two years ago. It aims to deliver Russian natural gas to Turkey via the Black Sea, and then further to Southern Europe.

Russia halts Turkish Stream project over downed jet

The 1,100km pipeline was planned to have four lines with a capacity of up to 63 billion cubic meters (bcm) of gas annually. About 16 bcm was supposed to be supplied to Turkey while the remaining 47 bcm was to go to a hub on the Greek-Turkish border to be transported onwards to Europe.

However, Moscow suspended negotiations on the project as part of other sanctions in response to Turkey’s shooting down of a Russian jet in Syria on November 24, 2015.

READ MORE: Turkish Stream project has potential – Russian energy minister

The Kremlin said on Monday that Russian President Vladimir Putin received a letter in which Turkish counterpart Erdogan expressed his sympathy and condolences to the family of the deceased Russian pilot.

In the letter, Erdogan called Russia “a friend and a strategic partner” of Ankara with whom the Turkish authorities want to mend ties, said the Kremlin.

Article source: https://www.rt.com/business/348872-turkish-stream-project-financing/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

UK stripped of top ‘AAA’ credit rating after voting to quit EU

Ireland, the Netherlands, Belgium, Malta, Cyprus and Luxembourg are the most exposed, mainly due to weaker exports. These countries export goods and services to the UK which make up at least eight percent of their GDP, according to the agency.

A fall in the value of the British pound is likely to have a negative impact on EU exports to the UK because it will reduce Britain’s ability to purchase in euro. At the same time, weaker sterling could boost Britain’s competitiveness by making its exports cheaper abroad.

Fitch adds that the UK’s decision to quit the bloc will increase political risk in Europe as well, encouraging other countries to follow suit.

According to the experts, European countries might gain from some foreign direct investment (FDI) moving from the UK. However, Germany, Luxembourg, Belgium and Malta, with a large stock of FDI and financial assets in Britain, may suffer losses in the euro value of those equities due to a sterling depreciation.

Weaker pound makes Britain more competitive – Murdoch

Fitch analysts also note that the loss of the UK’s contribution to the European common budget means other members will have to pay more or recipients will have to accept lower EU payouts.

Earlier this week, the agency cut Britain’s rating by one notch – from AA+ to AA, forecasting a negative impact of Brexit on medium-term growth. Standard Poor’s lowered UK’s sovereign rating by two notches, predicting a deterioration of the country’s economic performance.

Following the result of the vote, the British pound dropped 10 percent hitting a three-decade low against the US dollar. Stocks on Britain’s premier FTSE 100 index fell more than 10 percent as well.

However, over the last two days, both the British currency and stock markets have made a strong recovery. London’s FTSE was up two-and-a-half percent as of 10:30GMT on Wednesday after posting similar gains a day earlier. The British pound has gained half a percent on the US dollar after recording a one percent gain on Tuesday.

After several days of panic selling, other European stock markets have also rebounded. Indices in Paris and Frankfurt were up around two percent for the second consecutive day of trading.

Article source: https://www.rt.com/business/348840-fitch-brexit-eu-economies/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Russian oil exports to China hit record high in April

Most of China’s crude imports now come from Russia. Saudi Arabia is its second biggest supplier with 21.8 million tons. The kingdom has increased oil exports to China by 3.9 percent in the five months to May.

China’s third major crude supplier is Angola, which exported 18.5 million tons to the country.

Beijing has also ramped up oil imports from Iraq, Iran, Oman, Brazil, Kuwait, Venezuela and the United Arab Emirates.

Russian exports to China have more than doubled over the past five years, up by 550,000 barrels a day. An International Energy Agency report showed that at the end of 2015 Russia also overtook Saudi Arabia as the biggest crude exporter to China.

The Saudi share of Chinese crude imports at the beginning of the decade was about 20 percent, while Russia’s was below seven percent.

READ MORE: Russia to increase oil exports to China

The vice president or Russia’s oil export monopoly Transneft Sergey Andropov said in March that China is ready to import 27 million tons of Russian crude this year via the Eastern Siberia-Pacific Ocean (ESPO) pipeline.

China ups oil imports from Russia

Russia began supplying China with crude through the Skovorodino-Mohe branch of the ESPO pipeline in 2011 after Rosneft, Transneft and China National Petroleum Corporation (CNPC) signed contracts two years earlier.

Energy sales between the two countries have increased significantly. Two years ago Rosneft and CNPC signed a 25-year oil deal worth $270 billion under which the Russian company is expected to supply 360.3 million tons of crude to China.

Last week during Russian President Vladimir Putin’s visit to Beijing, an oil supply contract was agreed, under which Russia could deliver up to 2.4 million tons of crude oil to ChemChina in a year’s time.

Article source: https://www.rt.com/business/348826-russia-china-oil-exports/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Justice Dept. sues VW for cheating on vehicle emissions tests

This is one of the largest consumer class-action settlements in the United States. It follows the company’s admission in September that its supposedly “clean diesel” cars had been deliberately designed to cheat on emissions tests.

Volkswagen will set aside about $10 billion to cover buybacks and fixes, $2 billion to invest in green energy funds and $2.7 billion to offset diesel emissions.  It will also announce a separate settlement with at least 44 US states, the District of Columbia and Puerto Rico that will cost the company at least $600 million, according to Reuters sources.

Under the agreement, car owners will have the choice of having Volkswagen buy back their vehicles or install whatever pollution-control retrofit is eventually accepted by regulators. Drivers will also get up to $10,000 each in additional cash compensation.

According to the court filings, the automaker cannot resell or export the vehicles bought back unless the US Environmental Protection Agency approves the fix. VW has to repair or buy back 85 percent of the 475,000 vehicles by June 2019 or face penalties of $100 million for every percentage point it falls below that figure.

VW goes green, cutting over 40 car models

“It’s a remarkable deal for Volkswagen owners who were defrauded by the company,” David M. Uhlmann, a former chief of the Justice Department’s Environmental Crimes Section, told the New York Times.

European officials, consumer groups and plaintiffs’ attorneys say Volkswagen should compensate European victims to regain customer trust.  

However, the German automaker insists it sees no reason to compensate European customers since under EU rules it didn’t violate emissions standards.

“Consumers have been massively misled by Volkswagen and this settlement in the US recognizes the damage suffered by car drivers,” said Monique Goyens, general director of the European Consumer Organization, as cited by the Wall Street Journal. ”It is inconceivable that consumers in the EU get treated differently,” he added.

Article source: https://www.rt.com/business/348700-volkswagen-agrees-payment-diesel/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Around $69.2 billion was wiped off their fortune in a single day on Monday. The billionaires from the index have wealth of $3.8 trillion, which is an almost two percent decline from the start of the year.

According to the data, Europe’s rich took the hardest hit. The 92 billionaires lost $29.4 billion, with the two-day decline totaling $81.7 billion.

The net worth of the 150 billionaires from the US and Canada has plunged by $62.5 billion through Monday.

China’s 26 billionaires suffered a $1 billion loss on Monday and a $5 billion loss since Friday. They have lost $18.7 billion since the beginning of the year.

Brexit strips world’s 400 richest people of $127bn – Bloomberg

The worst losses among the European billionaires were seen by Germany’s third-richest person Georg Schaeffler who lost $1.9 billion, and Europe’s richest person, Spanish retailer Amancio Ortega –down by $1.5 billion. Bill Gates and Mark Zuckerberg were the worst-performing US billionaires on Monday – dropping by $1.8 billion and $1.6 billion respectively.

The Bloomberg index showed that there were 69 billionaires on the index who added to their fortunes on Monday, with 19 of them stockpiling more than $100 million.

Global markets collapsed on Friday, with the British pound suffering its biggest plunge in 31 years in the wake of Brexit vote turmoil. As the panic gradually calmed, European indices and the currency started gaining. Sterling was up on Tuesday by almost one percent to above 1.33 against the dollar, while European stock markets gained over two percent.

In a move to reassure investors and calm the markets, UK Chancellor George Osborne said the British economy would need to “adjust” but is strong enough to cope.

READ MORE: ‘The country is going to be poorer’ because of Brexit – Osborne

However, the Chancellor said the UK would be poorer because of Brexit, warning Britons to prepare for cuts in public spending and tax hikes.

“We are absolutely going to have to provide fiscal security to people, we are going to have to show the country and the world that the government can live within its means,” Osborne told BBC Radio on Tuesday.

Article source: https://www.rt.com/business/348684-global-billionaires-losses-brexit/?utm_source=rss&utm_medium=rss&utm_campaign=RSS