Archives for August 2016

AI cruise control: China wants high-level artificial intelligence for next-gen missiles

“We will try to find a path along which we can make independent innovation in conducting fundamental research, making breakthroughs in key technology and producing strategic aircraft engines,” said Liu Tingyi, President of the Chinese Aeronautical Establishment, as quoted by Chinese state media.

China’s cabinet, Beijing municipal government, along with the state-owned Aviation Industry Corporation of China and Commercial Aircraft Corp of China has invested into the new Aero-Engine Corporation of China (AECC).

The new enterprise, which will reportedly have 50 billion yuan ($7.5 billion) in registered capital and 96,000 employees, will focus on developing both military and commercial jet engines.

Founding the company was a “strategic move” to make China an aviation power, according to President Xi Jinping.

China is manufacturing planes, but has been struggling for decades to build its own jet engines that could meet global requirements and increase China’s military power.

READ MORE: Weak trade data from China adds to concerns over global economy

China’s air force imports Russian-made engines. Chinese commercial aircraft, the narrow-body C919, is powered by engines produced by a US-French joint venture, while engines for the ARJ21 airliner are made by General Electric.

The establishment of AECC will help China reduce its reliance on foreign producers and potentially develop a self-sufficient aerospace sector to meet the requirements of domestic commercial and military aviation.

Article source: https://www.rt.com/business/357531-china-aircraft-engine-maker/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

World seeing ‘greatest monetary policy experiment in history’ – Rothschild

“This could mean triggering Article 50, a referendum in other European nations leading to a break-up of the euro or sterling hitting below $1.20 or lower. The banks are ready for anything now,” the source in the bank told the broadcaster.

After the United Kingdom voted to leave the European Union in June, there have been talks a similar referendum may be held in France, the Netherlands and other countries.

“Markets hate uncertainty and the events this year have unfortunately created a lot of mystery around what is going to happen next,” the source added.

Shares in the biggest banks have been plummeting. Deutsche Bank has lost almost 45 percent, Credit Suisse has lost 41 percent and the Royal Bank of Scotland went down 35 percent in 2016. Uncertainty and volatility has been spotted in all areas of the economy from mining to car production.

READ MORE: Portugal to bail out its biggest bank to the tune of €5bn

By far, Brexit has been the biggest uncertainty on the global financial agenda, but analysts urge companies to keep on working despite the unclear future and make steps to “de-risking and simplifying their businesses.”

“I think the main problem for the second half of the year is the uncertainty caused by Brexit, though that’s likely to persist for two years or more, so I suspect companies are likely to roll up their sleeves and get on with their business,” Laith Khalaf, senior analyst at Hargreaves Lansdown told CNBC.

Article source: https://www.rt.com/business/357510-banks-economic-nuclear-winter/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Russian Prime Minister Dmitry Medvedev signed the decree changing laws surrounding chartered air transportation between Russia and Turkey on Sunday.

READ MORE: Putin: Russia ‘sincerely seeking’ to restore relations with Turkey

“Airline carries have started submitting requests to Rosaviatsiya (the Russian Federal Air Transport Agency) for carrying out on-demand operations to the Turkish Republic. Thus, Russian air authorities are ready to provide necessary conditions for charter flights to Turkey, including issuing all relevant permissions,” Russia Transport Minister Maksim Sokolov said, according to the Transport Ministry website.

Erdogan says talks with ‘friend’ Putin to start new page in Russia-Turkey relations

Russia’s decision has been welcomed by Turkish tourism representatives who hope to recover some 15 percent in losses which they suffered after the flow of Russian tourists had been shut down.

“With a number of steps taken by the Turkish and Russian leaders, we have started to see the inflow in Russian arrivals, although the [high] season is about to end. As the charter flights have not resumed yet, the arrivals are still in low figures. Around 200,000 Russian tourists are estimated to have visited Turkey through the scheduled flights, which had already resumed… This figure may reach 700,000 after the charter flights restart,” Cem Polatoglu, spokesperson of the Tour Operators Platform, said, according to Anadolu Agency.

Charter flights to Turkey, a popular holiday destination among Russians, were subjected to limitations in November 2015 after Turkey’s military shot down a Russian Su-24 air force jet near the border with Syria, killing two pilots.

Russia-Turkey relations deteriorated after the incident but thawed in June after Turkish President Recep Tayyip Erdogan expressed regret about the incident to Russian President Vladimir Putin and offered his condolences to the families of the deceased pilots.

READ MORE: Moscow to consider lifting Turkish food embargo

On June 30, President Putin responded with a decree ordering the government to take steps to drop restrictions on travel to Turkey. However the ban on charter flights was still in place due to recent instability in the country.

After the meeting of the two leaders on August 9, Putin announced Moscow’s decision to resume charter flights to Turkey.

Article source: https://www.rt.com/business/357469-turkey-charter-ban-lifted/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

TTIP ‘doesn’t respect EU interests’: French PM Valls says ‘non’ to transatlantic treaty

“In my opinion the negotiations with the United States have de facto failed, even though nobody is really admitting it,” the minister told ZDF broadcaster, according to a written transcript of the interview to be aired on Sunday.

“[They] have failed because we Europeans did not want to subject ourselves to American demands.”

He noted that throughout 14 rounds of talks the two sides have not been able to find common ground on a single chapter of the deal being discussed. Among the stumbling blocks is a US objection to opening public tenders to European companies.

“For me, that goes against free trade,” Gabriel previously commented regarding the issue.

Washington has been insisting that the free trade deal be signed before the end of 2016, but it has encountered strong opposition from a number of European nations, not only Germany.

Critics claim that TTIP is dangerous as it could place the interest of international corporations above those of the nations they operate in, and undermine European standards for labor and environmental protections.

Gabriel compared TTIP with the Comprehensive Economic and Trade Agreement (CETA), a free-trade treaty that the EU and Canada have been negotiating, which he said was fairer on the parties involved.

The European public has also been unhappy with TTIP as the contents of the deal are secret. However, recent leaks suggest that it will affect food safety laws, environmental legislation, banking regulations and open the EU for GM crops. Opponents of the deal have been staging protests in a number of European cities. The most recent one took place in Berlin last weekend, with activists calling for a nationwide demonstration on September 17.

Article source: https://www.rt.com/business/357454-ttip-talks-failed-eu/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Sterling pounded in market bloodbath as UK votes to leave EU, Cameron quits

The value of the fund’s assets dropped $1.3 trillion last quarter, wiping out all the gains GPIF made since October 2014, when it revised its investment strategy and put more money into stocks and foreign bonds.

The decline is another disappointment for the fund after a reported annual loss of 3.8 percent for the year ended in March, the worst performance since the financial crisis in 2008.

Concerns over the US economic outlook as well as UK’s vote to quit the European Union significantly hurt global equity markets, boosting demand for Japanese currency which was seen as a haven for investors in a time of economic uncertainty.

As a result, the yen surged against other currencies, reducing the value of overseas assets by 7.8 percent.

“The results of the UK’s referendum turned out to be different from what the market expected. And US unemployment data in May was much worse than forecast,” said Norihiro Takahashi, the president of GPIF in a statement.

Japan’s central bank shocks markets by keeping stimulus on hold

Moreover, the fund’s domestic shares dropped 7.4 percent in the same period as the Topix index, the leading Japanese stock benchmark, faced a 7.5 percent decline.

Domestic bonds became the only asset with a profitable performance as the Bank of Japan’s negative interest rates sent yields lower.

As for the current quarter, strong US jobs data for June boosted the markets while Brexit turmoil calmed down, according to Shinichiro Mori, the GPIF’s deputy director-general of investment strategy.

“The markets have since restored stability, and I believe stock markets are on a recovery trend. In the meantime, the exchange rate, the dollar/yen rate, is still flat. We are going to carefully monitor its movements going forward,” Shinichiro Mori said, as quoted by WSJ.com.

As of June, 21 percent of the fund’s investments were held in local stocks with 39 percent in domestic bonds. Overseas equities totaled 21 percent of assets, while foreign debt accounted for 13 percent. GPIF targets allocations of 25 percent each for Japanese and overseas stocks, 35 percent for local bonds and 15 percent for foreign debt.

READ MORE: Brexit fears grim US data push Asian shares to 1-yr high

“We invest with a long-term view. Even if market prices fluctuate in the short-term, it won’t damage pension beneficiaries. We are also strengthening risk management and continuing to hire experts,” said the fund’s president.

Article source: https://www.rt.com/business/357310-biggest-pension-fund-billions-loss/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

‘Basic income’ poll: 64% of Europeans would vote in favor, 4% would stop working

The experiment aims to show if the measure can simplify the welfare benefits system and lower unemployment in the country.

“The primary goal of the basic income experiment is related to promoting employment,” the ministry said.

As part of the testing, which will begin next year, 2,000 randomly selected working-age recipients of unemployment benefit will receive a monthly tax free income of €560 instead of their current payment.

READ MORE: Kiwis consider paying people for doing nothing

The government proposed the project at the beginning of the year with the idea Finland explored the possibility of introducing the basic income nationwide, rather than locally.

“The model that is currently being circulated for comments is considerably less ambitious,” said Olli Kangas, the head of research at the Social Insurance Institution of Finland (Kela), which is responsible for running the experiment.

Finland reportedly wants to be the first country in Europe to try out the project nationwide.

“The government’s decisions will determine whether or not any possible further measures will be introduced and whether or not the experiment will be expanded to also cover other population groups,” says Kangas, as quoted by The Helsinki Times.

The idea was supported by the political left and right with some liberal voices warning that free cash would become a motivation-sapping factor for some unemployed people.

A far more lucrative initiative in Switzerland, to pay a monthly 2,500 Swiss francs ($2,500) to each adult and 625 francs for each child, was voted down earlier this summer.

Article source: https://www.rt.com/business/357283-finland-test-effects-basic-income/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Russia steps up energy cooperation with Venezuela

The deal was curtailed by the US Treasury’s Office of Foreign Assets Control, according to the daily.

In July 2014, the Department of the Treasury included Rosneft on the list of sanctioned Russian companies after Washington accused Moscow of involvement in the military conflict in Eastern Ukraine and of annexing Crimea.

READ MORE: India wants to create state oil company bigger than Chevron and Rosneft

Indian banks, which invested over $5 billion into Essar Oil and currently hold 17 percent, expressed concerns over the deal due to fears of the potential consequences.

“We may have to review our exposure to Essar Oil if Rosneft comes on board,” said a top banker with a state-run lender, as quoted by The Times of India.

However, Essar Oil will reportedly try to push the deal with Rosneft through, allowing the Russian company to enter the Indian energy market.

Searching to expand cooperation with Russia beyond the traditional defense buyer-supplier relationship, New Delhi has invested over $5 billion in the Russian energy sector.

The Essar-Rosneft deal aims to open up India’s retail energy business to the world’s largest oil producer.

The deal was planned to be sealed by June. The Indian company had to reduce the share intended for sale by 25 percent, but the measure failed to change the situation.

Moreover, the sale of a 25 percent stake to the Dutch multinational trader Trafigura Group risks collapse due to the close ties with Rosneft. Trafigura handles much of the crude exported by Russia.

Article source: https://www.rt.com/business/357269-rosneft-india-essar-oil-sanctions/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Daimler inks deal to open Mercedes-Benz plant in Moscow Region

“We need a partner that has an agreement on industrial assembly, and KAMAZ has it,” said Mercedes-Benz Russia CEO Jan Madeja in an interview with Vedomosti daily.

Daimler and the Russian truck maker already have a joint venture Daimler KAMAZ Rus that has a state subsidy on the import of auto components in return for increased capacity and localized production in Russia.

At present, the joint venture produces Mercedes-Benz and Fuso trucks, and is also constructing a factory to make bodies for trucks. Daimler has a 15 percent stake in KAMAZ.

Russian Ministry of Industry and Trade officials have said Mercedes-Benz is to build a passenger car assembly plant in the Moscow region that will start working in 2019. The German company hasn’t officially confirmed the deal yet.

According to Vedomosti, it will be a full-cycle plant with a capacity of up to 25,000 vehicles a year. It’s not yet clear which Mercedes cars it will make, but Madeja said it will represent the most popular models on the Russian market.

Weak ruble reviving Russian exports

The most popular models in Russia are the C and E Class sedans, as well as the GLS, GLA, GLE, GLC models. Last year, 41,614 Mercedes-Benz passenger cars were sold in Russia. This year, the company has sold 22,093 cars in the country through July.

Daimler is one of the few foreign car producers that continue to invest in the Russian market.

“We have recently opened a huge logistics center, a warehouse of spare parts worth €72 million. It was built in a year. We also invested about €11 million on the reconstruction of a three-level showroom Mercedes-Benz Plaza on Leningradsky Prospekt in Moscow,” Madeja told Vedomosti.

“The Russian car market continues to decline, but we are seeing signs of stabilization. In July, we even saw a one percent growth in sales,” he said. Madeja added that a stable ruble is crucial for Daimler’s business in Russia, and sales can go up 3-7 percent in 2017, if the Russian currency is stable.

Article source: https://www.rt.com/business/357263-mercedes-benz-kamaz-car-production/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Kiev says Europe could do without Russian gas

The talks between the two countries, brokered by the European Union, aim to reduce the risk of a gas shortage this winter.

Earlier this week, Russian energy major Gazprom warned about the risks to the transit of Russian gas to the EU through Ukraine because of the low levels currently being pumped into Ukraine’s underground storage facilities.

The gas Ukraine stores is used in the winter to provide supplies to Europe. According to Gazprom, with the current level of pumping, Kiev will not be able to fill the tanks with 17 billion cubic meters – enough to guarantee the transit.

“We see the risks. Most importantly, the current daily volumes suggest they [Kiev] will not reach the level of 17 billion cubic meters. There is little time left until the autumn-winter season which starts in October,” the company’s spokesperson said, citing Gazprom CEO Alexei Miller.

The Ukrainian side has assured it would fulfill its obligations. Ukraine’s national energy company Naftogaz plans to pump some 14.5 billion cubic meters of gas into the storage facilities before the heating season begins, according to CEO Andriy Kobolev.

EU wants Ukraine to remain key transit country for Russian gas

The Ukraine’s storage facilities were filled with 11,899 billion cubic meters of gas as of August, 22, according to the data from the Gas Storage Europe organization.

Another issue raising concerns in Europe is shortage of funds in Kiev.

“The minimum gas necessary for Ukraine in the winter is 16 billion cubic meters, and the country is able to reach it with the current daily level, but Naftogaz just does not have money to buy it,” said the former spokesman of Naftogaz Valentin Zemliansky.

The Kiev-based company spent $272 million out of $300 million loaned by the European Bank for Reconstruction and Development on buying gas from Europe. Moreover, Kiev’s debt to the State Savings Bank of Ukraine totals some $213 million.

Zemliansky stressed that the possibility of further loans from the EU will become a key issue in the negotiations.

Article source: https://www.rt.com/business/357177-europe-russia-ukraine-gas-talks/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

US trying to thwart Russia’s Nord Stream-2 project – Lavrov

Before the conference, a Swedish daily Svenska Dagbladet said Washington was intending to put pressure on Stockholm over its participation in the project.

According to the report, the US regards Nord Stream-2 as a Russian political tool designed to drive a wedge between European countries with different Russian gas supply needs. In addition, it is seen by Washington as a way to cut off Ukraine from transit revenue for Russian gas.

In May, Russian Foreign Minister Sergey Lavrov accused the US of trying to thwart the gas pipeline. He called America’s attempts to block the project entirely political. Lavrov said Nord Stream-2 will increase Europe’s energy supplies and improve the continent’s energy security.

The pipeline aims to provide an additional direct route for Russian gas to Germany via the Baltic Sea bypassing Ukraine, and be able to deliver up to 55 billion cubic meters of gas per year.

Moscow is seeking alternative ways of pumping gas to Europe as it considers Kiev to be an unreliable partner. The gas transit agreement between Russia and Ukraine expires in 2019 and there’s a possibility it will not be prolonged.

The project will follow the route of the existing Nord Stream, which opened twin pipelines through the Baltic Sea in 2011 and 2012.

Initially, Gazprom intended to hold a 50 percent stake in the project with the other shares divided equally between Royal Dutch Shell, Germany’s E.ON and BASF, Austria’s OMV and France’s Engie. On August 12 the companies left the joint venture under pressure from the Polish Office of Competition and Consumer Protection. A statement on the Nord Stream-2 website said all the participants will “individually contemplate alternative ways to contribute.”

READ MORE: Bulgaria halts Russia’s South Stream gas pipeline project after visit by US senators

Nord Stream-2 is not the first Russian pipeline to face harsh opposition from the US. In 2014, Bulgaria stopped the South Stream pipeline project on the recommendation of the EU, but the decision was announced after the country was visited by US senators John McCain, Chris Murphy and Ron Johnson. This August, Bulgaria changed its position on the pipeline, indicating it is willing to resume talks with Moscow.

Article source: https://www.rt.com/business/357176-nord-stream2-biden-us-russia/?utm_source=rss&utm_medium=rss&utm_campaign=RSS