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Dollar falls against its major rivals ahead of EU Summit

Monitoring Desk

LONDON: The dollar edged lower against its major rivals on Thursday, hovering around its lowest level in eight weeks as investors set aside trade concerns for now.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.15% at 93.97 by 3:45AM ET (0845GMT), not far from Tuesday’s low of 93.88, which was the weakest since July 26.

Global markets appear to be shrugging off concerns over and escalating trade war between the U.S. and China.

On Monday, the U.S. slapped tariffs of 10% on $200 billion in Chinese goods, before they rise to 25% by the end of 2018, rather than an outright 25%.

China retaliated by putting tariffs on $60 billion in U.S. goods. However, China will put a 10% tariff on some goods it had previously earmarked for a 20% levy.

The Australian dollar, seen as a proxy for China-related trades as well as a barometer of broader risk sentiment, held near three-week highs of 0.7265.

Meanwhile, in Europe, attention will be focused on an informal summit of European Union leaders in Austria on Thursday.

Brexit and immigration are set to be the main points of discussion. U.K. Prime Minister Theresa May, under pressure at home and abroad to achieve a workable Brexit deal, has called for “goodwill” and flexibility from her EU counterparts. The future of the Irish/Northern Irish border remains a stumbling block in talks.

The British pound was up 0.25% at 1.3175, within sight of a two-month high of 1.3215 reached in the previous session.

The euro traded at 1.1700, up 0.2% and not far from peaks in August and September around 1.1730.

Elsewhere, the New Zealand dollar jumped to three-week highs after strong domestic GDP data showed the country’s economy grew at the fastest pace in two years in the second quarter.

The kiwi rose as much as 0.6% to a three-week high of 0.6654 and last stood at 0.6650.

 

 

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U.S.-China trade war stops 1 million U.S. jobs promise: Jack Ma

BEIJING (Agencies): Alibaba Chairman Jack Ma said the company can no longer meet its promise to create 1 million jobs in the United States due to U.S.-China trade tensions, Chinese news agency Xinhua reported on Wednesday.

Ma has already warned that the trade war between the world’s two largest economies could last decades and that China should focus exports on the “Silk Road” trade route, citing Africa, Southeast Asia, and Europe.

Ma met U.S. President Donald Trump two years ago and laid out the Chinese e-commerce giant’s plan to bring one million small U.S. businesses onto its platform to sell to Chinese consumers over the next five years.

“This commitment is based on friendly China-U.S. cooperation and the rational and objective premise of bilateral trade,” Ma told Xinhua on Wednesday.

“The current situation has already destroyed the original premise. There is no way to deliver the promise.”

While Ma had not detailed how he would add those jobs, he has said that he wanted to encourage American small businesses to sell on Alibaba marketplace Tmall and Taobao, reasoning that every new business that joined the platform would have to hire a person to manage the extra sales.

Investors seemed unfazed by Ma’s comments, with Alibaba shares closing up 3.8 percent on Wednesday. They have declined 5.7 percent so far this year, including those gains.

Trump on Monday imposed 10 percent tariffs on about $200 billion worth of imports from China and threatened duties on about $267 billion more if China retaliated.

China responded a day later with tariffs on about $60 billion worth of U.S. goods as planned, but reduced the level of tariffs it will collect on the products.

Ma’s latest comments come on top of others he recently made about the escalating trade skirmish and show his support for Beijing’s stance on how additional tariffs will affect businesses and the country’s cornerstone One Belt One Road foreign policy initiative.

“The US like competition, China likes harmony, they’re two different cultures,” Ma said at an investor conference in Shanghai on Tuesday.

Ma, expected to step down as Alibaba chairman in a year, predicted on Tuesday that trade frictions would lead to “a mess” for all parties involved.

He added US tariffs on hundreds of billions of dollars of Chinese products could prompt the country to export elsewhere.

“We should work more in Africa, SEA (South East Asia), Europe,” he said.

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Hackers steal $60 million from Japanese Crypto exchange

Monitoring Desk

TOKYO: A Japanese digital currency exchange has been hacked, and $60 million worth of cryptocurrencies have been stolen.

Tech Bureau Corp. said Thursday a server for its Zaif exchange was hacked for two hours last week, and some digital currencies got unlawfully relayed from what’s called a “hot wallet,” or where virtual coins are stored at such exchanges.

It added that the virtual currencies stolen were bitcoin, monacoin, and bitcoin cash.

“We decline to comment on the details of how this illegal access occurred, as it is a crime and we’ve already asked the authorities to investigate,” Tech Bureau said in a statement.

“We will prepare measures so that customers’ assets will not be affected” by the hack, it said, adding it would receive financial support from major shareholder Fisco Group.

Tech Bureau said about $40 million worth of the stolen currency was its own, and about $20 million belonged to customers.

Japan has been bullish on virtual money and has set up a system requiring exchanges to be licensed to help protect consumers. The system is also meant to make Japan a global leader in the technology.

Bitcoin has been a legal form of payment in Japan since April 2017, and a handful of major retailers here already accept bitcoin payments.

But the recurrence of cryptocurrency heists shows problems persist.

The incident follows the high-profile theft of $530 million earlier this year at Tokyo-based cryptocurrency exchange Coincheck Inc in one of the world’s biggest cyberheists that forced regulators to order stepped-up risk management protocols.

Coincheck has since been taken over by Japanese online brokerage Monex Group Inc.

Also, Bithumb, ranked by Coinmarketcap.com as the world’s seventh-largest crypto exchange by traded value, in June this year was hacked also.

 

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Marubeni to slash coal-fired power capacity

Tokyo (AFP): Japanese conglomerate Marubeni has unveiled plans to halve its coal power generating capacity and stop investing in new coal-fired power plants.

Marubeni’s decision comes amid mounting pressure on businesses to shift investment away from fossil fuels to combat climate change.

“As a global player in the power business, Marubeni will reduce its greenhouse gas emissions volume from its power generation portfolio,” the major coal power operator.

Under the plan, Marubeni will halve its coal-fired power net generation capacity of three gigawatts by 2030.

 

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Pakistani companies showcase products at Texworld

F.P. Report

Paris: Twelve Pakistani textile companies participated at Texworld, the bi-annual International textile exhibition held in Paris from 17th to 20th September, 2018.

The Ambassador of Pakistan to France Moin-ul-Haque visited the Pakistan Pavilion established at the exhibition and met various companies and thanked them for their participation showcasing a wide range of their quality textile and leather products.

The Ambassador noted with satisfaction that the Pakistan’s exports to France are following an upward trajectory since the launch of economic diplomacy initiated by the Embassy in 2016. In the year 2017, total bilateral trade increased to US$1.58 billion compared to US$1.467 billion in 2016. He added that the data for first months 2018 reflected 8% increase in the bilateral trade, which was a welcoming trend.

Some of the major Pakistani textile groups/exporters namely Nishat Mills, Kohinoor, Sapphire, Kamal Limited, Siddique Sons and Master Textile had also established their theme based customized pavilions which attracted large number of potential buyers.

The Texworld held twice every year is a popular trade fair exclusively for professionals from the textile and fashion industry. It is a valuable and efficient gateway to the European market for international textile manufactures. Each year, a number of Pakistani textile companies participate in the exhibition with support of Trade Development Authority of Pakistan (TDAP).

 

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EU: Passenger car demand surges 6.1 pct in Jan-Aug

Monitoring Desk

ANKARA: Demand for passenger cars in the European Union in January-August this year surged 6.1 percent year-on-year, the European Automobile Manufacturers’ Association (ACEA) reported on Wednesday.

In the eight-month period, passenger car registrations in the 28-member EU bloc totaled 10.8 million units, “largely boosted by the unusually strong performance during the summer months,” the association noted.

“Looking at the major markets, demand went up in Spain [14.6 percent], France [8.9 percent] and Germany [6.4 percent], while car sales remained stable in Italy [down 0.1 percent] and contracted in the United Kingdom [down 4.2 percent],” the ACEA said.

This January to August, the lion’s share — 25.1 percent in passenger car sales in the EU — was held by the VW Group, of which major brands are Volkswagen, Audi, Skoda, Seat and Porsche.

Sales of the VW Group saw an annual hike of 12.9 percent, reaching 2.7 million units in first eight months of the year.

The VW Group was followed by the PSA Group — which owns the Peugeot, Citroen, and Opel brands — and the Renault Group with 15.9 percent and 10.9 percent of total passenger car sales, respectively.

In 2017, over 15 million new passenger cars were sold in the EU, up 3.4 percent from the previous year.

The EU is the main automotive export market for Turkey, where the world’s prominent automotive manufacturers including Fiat, Ford, Honda, Hyundai, Renault and Toyota are operating.

Last year, nearly 80 percent of Turkey’s total automotive exports were made to EU countries amounting to $22 billion, marking a 17 percent year-on-year rise. (AA)

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Trade war with China to hit US economy: Russian expert

Monitoring Desk

MOSCOW: The U.S. economy will lose because of its actions against China, the chairman of the government spending watchdog, the Russian Accounts Chamber, Alexey Kudrin said on Wednesday.

Although the trade war between China and the U.S. will not hit severely the Chinese economy and the volume of world trade, actions by U.S. President Donald Trump undermine the World Trade Organization (WTO) system, create uncertainty and mistrust of the investors, the former Russian finance minister wrote on Twitter.

On the horizon of 10-15 years this will cause the decline of the U.S. economy, Kudrin predicted.

The economist said it was not correct to compare U.S. tariffs against China with the U.S. sanctions against Russia.

“Trade measures against China are easily reversible — it is enough for Trump to cancel several decrees. And sanctions against Russia are initiated by the Congress, it will be very difficult to get rid of them,” Kudrin wrote.

Washington said Monday it would begin imposing 10 percent tariffs on Chinese goods worth $200 billion starting next week, adding the rate of tariffs will rise to 25 percent on Jan. 1.

Beijing quickly retaliated by announcing it would implement 5-10 percent tariffs on $60 billion worth of American goods, which also will go take effect next week.

China said it has filed a complaint to the World Trade Organization (WTO) against the U.S.

Beijing will look for permission from the WTO to impose additional sanctions against the U.S. on Friday. (AA)

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Protectionism harmful in long term: Vakif bank CEO

Monitoring Desk

ISTANBUL: Protectionist trade policies may seem lucrative in the short term, but in the long run, they are damaging, Mehmet Emin Ozcan, the CEO of state lender Vakif Bank, warned on Wednesday.

“It is not conflicts that enhance the welfare of humanity, but cooperation,” he told the 9th Istanbul Finance Summit’s (IFS’18) opening session.

“The best example of this cooperation is international trade, which is not only trade in goods, but also cultural exchanges,” he added.

He also underlined that unilateral determinations on international trade are contrary to its nature.

“I hope all parties, especially the U.S., will end the process called trade wars,” he said.

Meliksah Utku, the CEO of private participation bank Albaraka Turk, stressed that trade wars are expected to affect he U.S. and China hardest.

Turkey will not be affected by them due to its flexible and wide-ranging export structure, he stressed.

“Some studies show that trade wars may even affect Turkey positively,” he added.

Touching on currency fluctuations in Turkey, Utku said the bad effects of this would be temporary due to the wise economic course of the country’s administration.

Ali Fuat Taskesenlioglu, the head of Turkey’s Capital Markets Board (SPK), said that unfortunately, the top issue this year is the problem of trade wars.

“History has seen several trade wars, and currently, there is a global trade war with diplomatic and economic effects,” he stated.

Trade wars raise of local firms’ input costs, and Turkey needs to develop domestic industry and provide sustainable growth, he underlined.

During the two-day IFS’18, which kicked off on Wednesday, 19 sessions will be held on a range of issues under the general theme “Trade Wars and Financing Industries.”

The summit will be attended by a host of officials, economists, businesspeople, bankers, and academics. (AA)

 

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Govt may levy custom duty on luxury items: FPCCI

F.P. Report

Lahore: “The increase in customs duty on more than 5,000 items and in regulatory duty of over 900 items should have been levied on luxury items and not on imported raw materials and capital goods which are not produced locally”.

This was said by Regional Chairman and Vice President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Ch. ArfanYousaf in his reaction to the amended Finance Bill 2018 for remaining months of the financial year,

He urged that corrective measures may be taken against the smuggling of those items to safeguard the local industry against the influx of smuggled items.

He said that the massive increase in the gas tariff would hurt the exports as it would the jack-up cost of doing business manifold and expel the Pakistani products from the international export market. Such anti-business measures would hamper the growth of the manufacturing sector, he added.

He termed it a moderate budget as it would generate additional revenue for the cash-starved country for economic recovery.

He argued that the reduction in public sector development programme from Rs725 billion to Rs 475 billion would hurt the development of infrastructure projects, a pre-requisite of industrialization.

In his mixed reaction, he also appreciated the government moves to ensure uninterrupted supply of fertilizer to the farmers at an affordable rate for which a subsidy of Rs 6 to 7 billion has also been approved.

Arfan hailed the decision of the government to absorb the impact increase in petroleum levy from Rs185 billion to Rs300 billion and not passing the same to the masses.

 

 

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Danske Bank boss quits over €200bn money-laundering scandal

ESTONIA (Reuters): The chief executive of Danske Bank has resigned in the wake of a money-laundering scandal involving its Estonian operation.

Thomas Borgen stepped down following an investigation into payments of about €200bn (£177bn) through its Estonian branch.

The Danish bank said many of those payments were suspicious.

Mr Borgen said it was clear Danske had failed to live up to its responsibilities, which he regretted.

“Even though the investigation conducted by the external law firm concludes that I have lived up to my legal obligations, I believe that it is best for all parties that I resign,” he said.

The bank said it was unable to determine how much money was believed to have been laundered through its Estonian branch between 2007 and 2015.

Shares in Danske fell 7% in Copenhagen following Mr Borgen’s resignation and a lowering of its outlook for the full year.

Estonia’s Financial Supervision Authority (FSA) said it was now examining the findings of Danske’s internal investigation.

“The report describes serious shortcomings in the organisation of Danske Bank, where risk-appetite and risk control were not in balance,” said the Estonian FSA’s chairman, Kilvar Kessler.

The watchdog and Denmark’s financial supervision authority will now consider taking action.

The FSA said that it had carried out thorough inspections of Danske Bank’s Estonian branch in 2014.

The following year the FSA said it ordered the bank to rectify flaws in its risk control organisation. That resulted in Danske’s Estonian branch no longer serving customers who did not live in the country.

‘Massive tax scam’

The branch’s handling of Russian and former Soviet money has also been the focus of an inquiry in Estonia itself.

International financier Bill Browder is one of Russian President Vladimir Putin’s most public critics.

He has long alleged that Danske’s Estonian branch was “one of the main conduits related to the fraud”.

In July 2017, he gave evidence to the US Senate Judiciary Committee pertaining to allegations that Russia interfered with the 2016 US presidential elections.

Mr Browder set up and ran Russia’s most successful hedge fund, Hermitage Capital Management, from 1995 to 2005.

In 2005, he claims that the Russian government took over his firm and used it to claim a $230m tax refund.

Mr Browder was refused entry into the country for “national security” reasons, so he moved to London and asked his staff to move with him.

Magnitsky Act

Mr Browder said his lawyer, Sergei Magnitsky, refused to leave as he wanted to investigate evidence of what he said was a massive tax scam by Russian government officials. Mr Magnitsky died in 2009 while in Russian custody.

After Mr Magnitsky’s death, Mr Browder embarked on a worldwide campaign asking governments to pass legislation to freeze the assets involved and deny visas to human rights abusers.

In the US, this law was passed in 2012 and is known as the Magnitsky Act. The UK passed a similar bill in February 2017, updating its existing Proceeds of Crime Act.

In 2013, Mr Browder was tried in absentia in Russia and sentenced to nine years in prison for tax fraud.

Russia asked Interpol to arrest Mr Browder, but the international policing agency rejected the claim.

In May, Mr Browder was arrested and detained for two hours in Spain. He was released after Interpol announced that the arrest warrant was politically motivated.