Focus: Will China save the day?

Medical staff takes care of a Corona patient at the intensive care unit of the University Hospital in Essen, Germany, 21 October 2020. (EPA)
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Updated 23 October 2020
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Focus: Will China save the day?

Globally, the number of coronavirus disease (COVID-19) cases moved past the 41 million mark, while cases grew exponentially in Europe.
The US Food and Drug Administration (FDA) approved biopharmaceutical company Gilead’s antiviral drug remdesivir for the treatment of COVID-19.
US first-time jobless numbers came in at 787,000 for the week ending Oct. 17, still hovering around the 800,000 mark. One important point here is that many of the jobless have transitioned from unemployment benefits to funds provided by the rescue/stimulus packages.
The UK signed its first post-Brexit trade deal with Japan.
At more than 100 percent, the OPEC+ Joint Ministerial Monitoring Committee (JMMC) reported good compliance with the 7.7 million barrels per day (bpd) production cuts.
However, the consortium of OPEC and its 10 non-OPEC allies is still faced with restricted demand due to the COVID-19 pandemic and increased supply out of Libya. Going forward, the question will be what will happen to Iranian supply in the medium term in the event of a Joe Biden (Democratic Party) victory in the US presidential election.
Investment banking giant Goldman Sachs reached a plea deal with the US Justice Department of $2.3 billion for violating the foreign corrupt practices act in the bribery scandal around Malaysia’s sovereign wealth fund 1MDB, which may bring the total penalties accruing to the company up to $5 billion.
The Tadawul initial public offering (IPO) of Saudi grocery chain Bindawood was 50 times oversubscribed and the stock rose to SR105.60 ($28.16) from an offering price of SR96. The company invested early on in online platforms, which proved beneficial in the context of the COVID-19 pandemic.
The US Justice Department has accused Google of suppressing competition in Internet search in the most pervasive anticompetition case since 1998, when Microsoft was accused of non-competitive behavior. The interesting dimension is that while Google and Co. may demonstrate monopoliztic behaviors, they are doing so amid falling prices, forcing the US Justice Department to disassociate an antitrust case from price action, which is a first.
Meanwhile, the earnings season continued with among others Netflix, Tesla, Ericsson, Huawei, UBS, and Barclays.
Netflix disappointed by only adding 2.2 million new subscribers, which was well below analysts’ expectations of 3.57 million. Revenue stood at $6.4 billion and net income at $790 million. The shares lost 6 percent in afterhours trading.
Meanwhile Tesla shares rose 5 percent on reporting net income of $331 million and revenues of $8.77 billion. This marked the electric car and clean energy company’s fifth consecutive profitable quarter.
Swedish telecoms firm Ericsson benefits from the global roll out of 5G networks and from US sanctions on competitor Huawei. Ericsson reported earnings of 9 billion Swedish krona up 2.4 billion compared to the same quarter in 2019. Revenues stood at 57.5 billion krona.
Huawei’s third-quarter revenues came in at $31.19 billion with a profit margin of 8 percent down from 8.7 percent for the same quarter last year. Revenue growth was down 24.4 percent for the first nine months.
Swiss banking giant UBS’ pre-tax profits were up 92 percent at $2.6 billion after declining 11 percent in the second quarter. Net income stood at $2.1 billion allowing outgoing CEO Sergio Ermotti to bow out with the best quarterly results in a decade.
Barclays also surprised on the upside with a net profit of $797.7 million for the first quarter as loan-loss provisions came in at £608 million lower than the expected £1 billion.
Focus:
The US dollar has come off its highs earlier this year and the yuan has not appreciated this much since 2018, leaving the question open how long the People’s Bank of China (PBoC) will allow for the trend to continue.


This is particularly relevant as only 2 percent of investors in Chinese fixed-income assets are foreign and exchange-traded funds (ETFs) in Hong Kong and Shenzhen having opened to foreign investors, are bound to lead to a future influx of foreign capital over time. 
The International Monetary Fund predicts that China will be the biggest growth engine to the world economy in 2021 outstripping growth of other countries.


In the technology sector, the MSCI Information Technology Index for China has outperformed the Nasdaq. This brings a new perspective to the US-China trade wars. In the same vein, the tech wars may explain why US multinational Nvidia’s proposed acquisition of UK chip maker Arm Holdings from SoftBank may not be viewed positively by the Chinese antitrust authorities.

Where we go from here:
GCC bond offerings reached a high with $102 billion this year and Oman proposed $2 billion sovereign bonds split into 7- and 12-year maturities. According to S&P global, the deficit for Oman’s 2020 budget could reach 18 percent. Oman also does not benefit from the same implicit support by its GCC neighbors as Bahrain does, which will be reflected on pricing.
The UK-EU Brexit negotiations look set to continue, with fisheries remaining the last sticking point.
The latest US rescue package is still held up between the House of Representatives and the Senate. It looks increasingly unlikely that it will be passed before the US presidential election.

— Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources. Twitter: @MeyerResources


Trump blasts Biden in rare day on campaign trail

Updated 51 sec ago
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Trump blasts Biden in rare day on campaign trail

WAUKESHA, US: Donald Trump used a break in his hush money trial to stage back-to-back appearances in two Midwestern battleground states Wednesday — but kept his legal woes front-and-center as he accused President Joe Biden of weaponizing the courts against him.
The former Republican president, who is running for a return to the White House, rallied supporters in Wisconsin and Michigan, among the most hotly contested states in his expected rematch with Democrat Biden in November.
The speeches featured all of Trump’s go-to set-pieces, from complaints about environmentally friendly household appliances to apocalyptic warnings of a looming world war — but his evening speech in Michigan was notable for its vitriol.
“Every single thing he touches turns to shit,” Trump said of Biden in a speech in Freeland, Michigan peppered with profane language about his criminal charges, his 2020 election defeat and his determination to win reelection in November.
Trump had already spoken in an afternoon rally in the Wisconsin town of Waukesha, where he railed against Biden’s handling of the economy and immigration.
In both appearances he accused Democrats of “executing” newborn babies as he turned to the deeply divisive issue of abortion rights, and in both he revived baseless claims that Biden is behind the 88 felony charges he is facing.
“I’ve got to do two of these things a day,” he told a sea of red hats at his Michigan rally.
“You know why? Because I’m in New York all the time with the Biden trial — a fake trial that all of the legal scholars say is a disgrace,” he said in Michigan.
Trump regularly claims that his indictments — three for alleged cheating in elections and one for hoarding classified documents — are being orchestrated as part of a political witch hunt, but never offers any evidence.
The 77-year-old tycoon used his rare day on the stump to project his preferred image as a confident, seasoned campaigner, far from the Manhattan courtroom where he is accused of covering up payments to a porn star before the 2016 presidential election.
Trump is the first former US president to face criminal charges, and the trial appears to have annoyed him to no end.
For two weeks he has been sitting through long hours of witness testimony, visibly bored and angry at no-nonsense Judge Juan Merchan, who required him to be present — and then imposed a gag order prohibiting Trump from publicly attacking witnesses, jurors or court staff.
Before and after each day’s proceedings, Trump has been addressing journalists outside, venting about his legal problems, the US economy, his wife’s birthday and the “freezing” temperature inside the courtroom.
“He hates being there in court, where he is just another criminal defendant,” political expert Larry Sabato from the University of Virginia told AFP. “He has no control and is not in charge.”
Biden’s campaign has not missed a chance to bait his opponent over his legal troubles — referring to Trump as “Sleepy Don” after reports from the courtroom that the Republican was nodding off during the proceedings.
The nickname evoked the “Sleepy Joe” taunt Trump has long used for Biden.
Biden has advanced in the polls since March, with the two candidates now running neck and neck.
But Trump and his supporters hope to harness the media attention surrounding the trial to fire up his base, and push his message that Democrats are destroying the country through negligence on border security and poor economic stewardship.
In Waukesha, the former president accused Biden of being too passive on the pro-Palestinian student demonstrations that have convulsed college campuses nationwide, and of allowing the country to be “invaded” by migrant hordes.
Although Trump is energized by his campaign rallies, he had not held a single one since the start of his trial on April 15, with the only planned event canceled due to weather.
“I have come here today from New York City where I’m being forced to sit for days on end in a kangaroo courtroom with a corrupt and conflicted judge enduring a Biden Sideshow trial at the hands of a Marxist district attorney,” he complained in Michigan.


Georgian police disperse protesters as parliament approves ‘foreign bill’ on second reading

Updated 8 min 54 sec ago
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Georgian police disperse protesters as parliament approves ‘foreign bill’ on second reading

  • 11 people, including six police officers, were injured after Wednesday’s altercations, say health ministry officials
  • Critics have dubbed the bill “the Russian law,” saying it is inspired by laws used to suppress dissent in Vladimir Putin’s Russia

TBILISI: Georgia’s parliament on Wednesday approved the second reading of a bill on “foreign agents” that has been criticized as Kremlin-inspired, as police fired tear gas and stun grenades to clear a large crowd of protesters opposed to the draft law.

The bill, which would require organizations receiving more than 20 percent of their funding from abroad to register as agents of foreign influence, has sparked a rolling political crisis in the South Caucasus country.
Ever-growing numbers of protesters have been taking to the street nightly for almost a month, with a heaving crowd tens of thousands strong shutting down central Tbilisi on Wednesday, the largest anti-government demonstration yet.
Georgia’s Health Ministry, in a bulletin quoted by Georgian media, said 11 people, including six police officers, had received hospital treatment after Wednesday’s altercations.
Deputy Interior Minister Aleksandre Darakhvelidze, quoted by Georgian media, said protesters had tried to push their way into parliament using various objects and were attacking policemen.
Darakhvelidze said police action on Tuesday resulted in 63 arrests and six police officers injured.

President says to look to the election
Georgian President Salome Zourabichvili, who opposes the bill but has only largely ceremonial powers, told protesters in a video posted on social media to show restraint. The real task, she said, was to oust the government in an October election.
“Our fate will not be determined by this law,” she said in comments quoted by media. “This fight will take place in the forthcoming parliamentary election after which (this) law and many others will be rescinded.”
Georgian media cited the country’s Orthodox Church, one of its most respected institutions, as calling for the government and protesters to hold talks to resolve a “political crisis.”
Protester Sergi Kapanadze said that for him the protest movement amounted to a struggle for Georgia’s national survival.
“What are we afraid of more?” he told Reuters. “Being gassed, being beaten up, or losing the country?“
Georgian critics have dubbed the bill “the Russian law,” saying it is inspired by laws used to suppress dissent in Vladimir Putin’s Russia. Russia is unpopular among many citizens of Georgia, which lost a brief war with Moscow in 2008.
Both the head of the European Commission, Ursula von der Leyen, and the EU’s foreign policy chief, Josep Borrell, condemned the violence. The EU gave Georgia candidate member status in December but has said the bill could halt its integration into the bloc.
Police cleared the crowd by the parliament building using tear gas and stun grenades fired from within the fortress-like complex. Water cannon were also deployed.
Protesters regrouped, with some lighting a bonfire outside parliament, and others attempting to build makeshift barricades to block key roads. A Reuters eyewitness saw at least one man carried away from the action, his face bloodied.
The protests have pitched the ruling Georgian Dream party against a coalition of opposition parties, civil society groups, celebrities and the president.
Parliament, controlled by Georgian Dream and its allies, voted to advance the bill, prompting a boos from protesters outside. The bill must pass one more vote before becoming law.
Wednesday’s parliamentary debate was tense, with opposition members expelled and scuffles between legislators, a not uncommon occurrence in Georgia’s often-rowdy parliament.
One pro-government deputy was seen throwing a book at opposition legislators, while others shouted and physically confronted opponents.
Levan Khabeishvili, leader of the United National Movement party, Georgia’s largest opposition bloc, spoke in parliament with his face heavily bandaged. His party said he was beaten by police at the previous day’s protest, leaving him with concussion, broken facial bones, and missing four teeth.
The bill’s supporters, including Bidzina Ivanishvili, the billionaire founder of Georgian Dream and former prime minister, say the law would bolster sovereignty amid what he said were Western attempts to pit Georgia against Russia.


Trump calls judge ‘crooked’ after facing a warning of jail time if he violates a trial gag order

Updated 30 min 48 sec ago
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Trump calls judge ‘crooked’ after facing a warning of jail time if he violates a trial gag order

  • The former president is trying to achieve a balancing act unprecedented in American history by running for a second term as the presumptive Republican nominee

WAUKESHA, Wisconsin: Donald Trump returned briefly to the campaign trail Wednesday and called the judge presiding over his hush money trial “crooked” a day after he was held in contempt of court and threatened with jail time for violating a gag order.
Trump’s remarks at events in the battleground states of Wisconsin and Michigan were being closely watched after he received a $9,000 fine for making public statements about people connected to the criminal case. In imposing the fine for posts on Trump’s Truth Social account and campaign website, Judge Juan M. Merchan said that if Trump continued to violate his orders, he would “impose an incarceratory punishment.”
“There is no crime. I have a crooked judge. He’s a totally conflicted judge,” Trump said speaking to supporters at an event in Waukesha, Wisconsin, claiming again that this and other cases against him are led by the White House to undermine his campaign.
The gag order bars him from making public statements about witnesses, jurors and some others connected to his hush money case. Trump is still free to criticize Merchan.
The former president is trying to achieve a balancing act unprecedented in American history by running for a second term as the presumptive Republican nominee while also fighting felony charges in New York. Trump frequently goes after Merchan, prosecutors and potential witnesses at his rallies and on social media, attack lines that play well with his supporters but that have potentially put him in further legal jeopardy.
Trump insists he is merely exercising his free speech rights, but the offending posts from his Truth Social account and campaign website were taken down. Merchan is weighing other alleged gag-order violations and will hear arguments on Thursday.
Trump has often called this case and other criminal cases against him “election interference,” saying they keep him from campaigning for the presidential election in November.
Attendees agreed he is being unfairly prosecuted, contending the trial and gag order were designed to distract him .
“It’s a trial looking for a crime,” said Ray Hanson, of Hartford. Hanson said he expected Trump’s lawyers would “keep him in line” so he doesn’t violate the gag order, as much as he likely wants to talk about the trial.
Manhattan prosecutors have argued Trump and his associates took part in an illegal scheme to influence the 2016 presidential campaign by purchasing and then burying negative stories. He has pleaded not guilty.
Trump’s visits to Wisconsin and Michigan mark his second trip to the swing states in just a month. For the previous rallies, the former president largely focused on immigration, referring to people who are in the US illegally and who are suspected of crimes as “animals.”
Meanwhile, Democrats are hoping to remind voters ahead of these visits about Trump’s position on abortion, which Trump has been openly concerned about being a political liability for him and Republicans.
Democratic Gov. Gretchen Whitmer of Michigan met on Wednesday with half a dozen women, including a family doctor, and warned that a second Trump term would threaten abortion rights even in her state, which enshrined those rights in its state constitution after the Supreme Court overturned national rights to the procedure.
Whitmer appeared with the women at a bookstore in Flint surrounded by signs that read “Stop Trump’s Attacks on Health Care” and “Stop Trump’s Abortion Ban.” She told reporters not to believe Trump’s contention in a Time Magazine interview that Republicans would never have enough votes in the US Senate to pass a national abortion ban.
“We cannot trust anything that Donald Trump says when it comes to abortion. So no one should take any comfort in the fact that, yes, he wants an abortion ban, but he won’t get it because he doesn’t think we’ll have 60 votes in the Senate. Baloney,” she said. “No one would have imagined we’d be here in this moment.”
Wisconsin and Michigan are among a handful of battleground states expected to decide the 2024 election.
For Trump to win both states, he must do well in suburban areas like the areas outside of Milwaukee and Saginaw, Michigan, where he will hold Wednesday’s events. He underperformed in suburban areas during this year’s primary even as he dominated the Republican field overall.
Trump has repeatedly falsely said that the 2020 election was stolen from him. Trump’s losses in battleground states in 2020 have withstood recounts, audits and reviews by the Justice Department and outside observers.


US accuses Russia of using ‘chemical weapon’ in Ukraine

Updated 40 min 24 sec ago
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US accuses Russia of using ‘chemical weapon’ in Ukraine

WASHINGTON: The US State Department accused Russia Wednesday of having used a chemical weapon against Ukrainian forces in violation of the Chemical Weapons Convention, while also announcing fresh sanctions against Moscow.
In addition to the chemical agent chloropicrin, Russia also used “riot control agents (tear gas) as a method of warfare in Ukraine, also in violation of the CWC,” the department said in a factsheet.
“The use of such chemicals is not an isolated incident, and is probably driven by Russian forces’ desire to dislodge Ukrainian forces from fortified positions and achieve tactical gains on the battlefield,” the State Department said.
Meanwhile the US Treasury Department announced sweeping sanctions aimed at crippling Russia’s military and industrial capabilities — including targeting nearly 300 entities in Russia, China and other countries accused of supporting President Vladimir Putin’s invasion.
The sanctions are meant to punish companies that help Moscow acquire weapons for its war in Ukraine. They also target Russian government entities and companies involved in the country’s chemical and biological weapons programs.
Russia has said it no longer possesses a military chemical arsenal, but the country faces pressure for more transparency over the alleged use of toxic weapons.
According to the US National Institutes of Health, the chemical chloropicrin is used both as a warfare agent and pesticide. If inhaled, it poses a health risk.
“Today’s actions will further disrupt and degrade Russia’s war efforts by going after its military industrial base and the evasion networks that help supply it,” Treasury Secretary Janet Yellen said in a statement.
The accusations and sanctions come a week after US President Joe Biden signed a much-delayed bill to provide new funding for Ukraine as Kyiv’s military struggles to hold back Russian advances.
“Even as we’re throwing sand in the gears of Russia’s war machine, President (Joe) Biden’s recently-passed National Security Supplemental is providing badly-needed military, economic, and humanitarian support to bolster Ukraine’s courageous resistance,” Yellen said.
“Combined, our support for Ukraine and our relentless targeting of Russia’s military capacity is giving Ukraine a critical leg-up on the battlefield.”
As part of the measures, the State Department blacklisted additional individuals and companies involved in Moscow’s energy, mining and metals sectors.
The sanctions also targeted individuals connected to the death of Russian opposition leader Aleksey Navalny who died in a Siberian prison in February.
The almost 300 targets sanctioned included dozens of actors accused of enabling Russia to acquire desperately needed technology and equipment from abroad, the Treasury said.
Some of those targeted were based in countries such as China that have faced increasing pressure from Washington over support for Russia during its 15-month invasion of Ukraine.
“This support enables Russia to continue its war against Ukraine and poses a significant threat to international security,” the Treasury Department said.
Other than China, targeted non-Russian entities were located in Azerbaijan, Belgium, Slovakia, Turkiye, and the United Arab Emirates.
These companies “enable Russia to acquire desperately-needed technology and equipment from abroad,” the statement said.


Saudi king, crown prince offer condolences to UAE president on key official’s death

Updated 19 min 29 sec ago
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Saudi king, crown prince offer condolences to UAE president on key official’s death

RIYADH: Saudi Arabia's King Salman and Crown Prince Mohammed bin Salman on Thursday offered condolences to the ruler of the United Arab Emirates on the death of a key official and a member of the royal family, the Saudi Press Agency reported. 

In a cable to Sheikh Mohammed bin Zayed Al Nahyan, the UAE president, King Salman expressed "our deepest and sincere condolences" on the death of Sheikh Tahnoun bin Mohammed Al Nahyan, Abu Dhabi’s ruler representative in Al Ain, who died on May 1, 2024.

Crown Prince Mohammed bin Salman expressed "my warmest and most sincere condolences" in a separate cable to the UAE leader, the SPA said.