Month: March 2020

Asian financial markets have shown rising stocks and oil amid expectations of additional stimulus measures to fight the coronavirus pandemic after US unemployment data rose to a record high. About this writes Reuters.
The MSCI index for shares of the Asia-Pacific region outside Japan grew by 1.2%, the Japanese Nikkei – by 1.44%. However, Australian stocks gave way to a fall of 1.09%.

E-Mini futures on the S&P 500 fell 0.95% in Asia after a three-day rise in the S&P 500 on Wall Street.

China stocks, hit hard this month, were up 0.8%. Shares in South Korea, also hit hard by the pandemic, jumped 1.62%.

 

 

Dollar

The dollar is rapidly falling compared to major currencies, as central banks are gaining momentum in resolving the dollar deficit in financial markets.

“The insane rush to buy dollars because of liquidity problems is starting to fade,” said Yukio Ishizuki, currency strategist at Daiwa Securities in Tokyo.

It is noted that a similar reaction of the markets to the dollar was noted after a statement by Fed Chairman Jerome Powell that the United States “may well be in recession” and the subsequent information about the rapid increase in unemployment in the United States.

As a result, in the foreign exchange market, the US dollar fell 0.89% to 108.64 yen in Asia, with a weekly decline of 2%.

The dollar also showed a weekly decline in relation to the Swiss franc, pound and euro.

At the opening of Asian markets, WTI crude oil rose 2.08% to $ 23.07 per barrel, Brent – 1.14% to $ 26.64 a barrel. By 8:10 in Kiev, WTI is trading at $ 23.02, Brent – $ 26.50 per barrel.

 

 

Gold

Valuable metal fell 0.44% to $ 1,626.16 an ounce. It is noted that market participants are concerned about the reduction in supply after a sharp dissonance between prices in London and New York. Due to the spread of the coronavirus, airplanes that transport gold do not fly, and precious metal processing plants are closed.

On March 23, 2020, an official message appeared in the official Telegram channel of the Ministry of Health of Ukraine that the Minister of Health Ilya Yemets called on deputies of Ukraine to vote for a state of emergency throughout Ukraine because of the threat of the further spread of COVID-19.

One of the grounds for introducing a state of emergency on the territory of Ukraine (or in its individual localities) is the occurrence of particularly serious technological and natural emergencies, namely natural disasters, catastrophes, pandemics, panzootias, etc., which pose a threat to the life and health of significant segments of the population . Is the COVID-19 pandemic dangerous to the health and life of Ukrainians? Unquestioningly.

 

 

There are grounds for imposing a state of emergency. What’s next?

A state of emergency in Ukraine or in certain localities is introduced by decree of the President of Ukraine, subject to approval by the Verkhovna Rada of Ukraine within two days from the date of the appeal of the President of Ukraine. At the same time, proposals for its introduction are submitted by the Cabinet of Ministers. As of March 23, 2020, there is no draft law on the official web portal of the Verkhovna Rada of Ukraine providing for the approval of the Decree of the President of Ukraine on the introduction of emergency situations. On the website of the Cabinet of Ministers of Ukraine there are also no proposals for the introduction of emergency situations. At the moment, one can only guess why the Minister of Health is now urging the deputies of Ukraine to vote on the introduction of a state of emergency in Ukraine. Perhaps the Cabinet of Ministers is already preparing proposals and introducing an emergency, this is a matter of time.

 

 

What does the introduction of emergency for business mean?

The current legislation of Ukraine provides for a number of measures that can be introduced by decree of the President of Ukraine on the introduction of a state of emergency for the period of its validity. If the National Assembly is introduced throughout Ukraine, according to such measures they will apply throughout its territory. Such measures, in particular, may include:

1) a temporary ban on the construction of new, expansion of existing enterprises and other facilities whose activities are not connected with the liquidation of an emergency or the provision of vital functions of the population and emergency rescue units;

2) the introduction of a special procedure for the distribution of food and basic necessities;

3) the mobilization and use of resources of enterprises, institutions and organizations, regardless of ownership, to prevent danger and liquidate emergencies with mandatory compensation for losses incurred;

4) a change in the operating mode of enterprises, institutions, organizations of all forms of ownership, their reorientation to the production of products necessary in a state of emergency, other changes in production activities necessary for emergency rescue and restoration work;

5) establishment of apartment service for legal entities for temporary accommodation of evacuated or temporarily resettled population, emergency rescue units and military units involved in overcoming emergency situations;

6) forced alienation or seizure of property from legal entities and individuals.

It is worth noting that legal entities whose property and resources were used to prevent or eliminate situations that caused the state of emergency are reimbursed for their full cost. In this case, if the property that was forcibly alienated from legal entities and individuals remained after the lifting of the legal regime of the state of emergency, the former owner or a person authorized by him has the right to demand the return of such property in court or to demand the provision of other property in return, if possible.

 

 

And why be prepared for citizens?

First of all, it is a restriction of freedom of movement in the territory where a state of emergency is introduced. This also applies to the movement of private vehicles. So, perhaps, a trip to relatives on Easter will have to be canceled. In addition, it is possible to introduce a special distribution of food and essentials. We hope this will not come to this, and we will not return to the time of Sovietization.

It is worth noting that in exceptional cases related to the need for urgent emergency rescue operations, temporary transfer or voluntary employment of the able-bodied population and vehicles of citizens for the performance of these works is allowed. Such involvement shall be carried out with the permission of the appropriate emergency rescue operations manager, provided that labor safety is mandatory.

 

 

How long?

A state of emergency in Ukraine can be introduced for a period of not more than 30 days and not more than 60 days in some of its localities. If necessary, the state of emergency may be extended.

In Ukraine, agricultural and food industry enterprises will continue to operate during quarantine, said Deputy Minister of Economic Development, Trade and Agriculture Taras Vysotsky.
About it writes propozitsiya.com with reference to the Ministry of Economy press service.

 

 

“Enterprises working in the agriculture and food industry are of particular importance for ensuring food security, so their activities will not be limited,” – said T. Vysotsky.

 

According to the Deputy Minister, the activities of livestock complexes and processing enterprises, which should be open around the clock, have developed guidelines for the detection of a coronavirus patient to be discussed with profile associations.

 

“We are developing the idea of ​​introducing a temporary biosecurity facility at such facilities and other recommendations to allow us to work, because we need to continue fattening animals, we also need to produce food, etc.,” T. Vysotsky explained.

 

He also informed that today there are no prerequisites for limiting the export of agricultural products.
 

In January-February 2020, 25,755 thousand tonnes of Ukrainian sugar was shipped to foreign markets. Of these, 17,312 thousand tons were exported in January, the rest in February.

 

 

According to information from the State Customs Service, during this period, the proceeds from the export of sugar amounted to $ 9.39 million. Therefore, in terms of the overall structure of domestic exports, the share of these products is 0.12%.

 

 

In the mentioned period, most of the Ukrainian sugar was exported to the following countries: Poland – 25.4% (amounting to $ 2.381 million); Lebanon – 21.3% ($ 1,997 million); Romania – 19.8% ($ 1.86 million). According to statistics, sugar production in Ukraine has decreased by almost 20%, and its export in the current marketing year is 10 times lower than last year

 

 

Meanwhile, last year, Ukraine exported 236,807 thousand tons of sugar. Last year, exports of this product from our country decreased: in 2018, 584,854 thousand tons of sugar were sent to foreign markets. In 2019, sugar exports amounted to $ 85.181 million, while in 2018 it amounted to a much larger amount – $ 216.503 million. The decline in sugar production in Ukraine is associated with a decrease in acreage under sugar beet. Accordingly, the volume of production of these products is reduced.

 

 

Last year, most of Ukrainian sugar was imported: Azerbaijan – 22.65% (by $ 19.297 million); Tajikistan – 8.75% ($ 7.455 million); Georgia – 6.25% ($ 5.327 million). Meanwhile, in 2018, the leaders in terms of purchases of Ukrainian sugar were: Uzbekistan (47.56%), Azerbaijan (8.07%), Libya (8.06%).

During the period from March 14 to 20, Ukrainian seaports exported 1.18 million tons of major crops. If we compare this indicator with the previous week, then it is more by 26% (933 thousand tons, taking into account the actualization of the data). At the same time, it is noted that the supply of wheat has increased most of all.

 

 

If we consider this indicator in the context of crops, the seaports shipped: 284 thousand tons of wheat, which is 67% more than last week; 835 thousand tons of corn, which is 26% more than last week; 59 thousand tons of barley, which is 40% less than last week.

 

 

The main directions of supplies of Ukrainian grain during this period were such countries: Egypt (272 thousand tons), South Korea (110 thousand tons) and China (91 thousand tons).

 

 

As for ports, the port of Nikolaev (13.94 million tons) occupies the first place in terms of grain exports in 2019/20 MY. In second place is now the port of Chernomorsk (10.08 million tons), in third – the port of Pivdenny (7.95 million tons).

 

 

Meanwhile, the Dnieper began to establish seasonal navigation. It is reported that the state agency “Hydrography” has begun a seasonal replacement of coastal and floating signs. 120 buoys have already been fully deployed at the Kakhovsky reservoir. Also, the installation of aids to navigation on the Dnieper reservoir is completed, where a total of 143 buoys will be.

The spreading of the coronavirus more widely throughout the Asia-Pacific region, Europe, and North America is hitting consumer confidence hard, sees oil and stock prices drastically fall, and weakens the development prospects of an already fragile economy.

“Global growth could drop to 1.5% in 2020, half the rate projected prior to the virus outbreak,” said Laurence Boone, Chief Economist at the Organisation for Economic Co-operation and Development (OECD) in a press conference Mar 2, giving an interim economic outlook, before the WHO called the outbreak a pandemic on Mar 11.

Four days later on Mar 6, the Asian Development Bank said the global economic impact of the COVID-19 could range from $77 billion to $347 billion.

After the outbreak was called a pandemic by the WHO, on Mar 16, Nigel Green, the chief executive officer of deVere Group, a Dubai-based independent financial consultancy with more than $10 billion under advice, paints an even grimmer picture.

“It’s now almost certain that there will be a coronavirus-triggered recession as both global supply and demand are impacted,” he said in a press release.

A global downturn will hit the countries of the Organisation of Islamic Cooperation (OIC) particularly hard as their markets were already weak before the health crisis.

According to the OIC Economic Outlook 2019 by the Statistical, Economic and Social Research and Training Centre for Islamic Countries (SESRIC), OIC nations produced $20.6 trillion GDP in 2018, 15.2% of the total world output.

However, growth slowed by over 18% to 3.1% in 2018 and was expected to decline further to 2.4% in 2019. It is not likely to top that number in 2020.

The financial sector development remained shallow and unemployment at an average of 6.0% is higher than the rest of the world.

OIC member states saw a sharp deterioration in their fiscal balance, with only eleven of the 56 countries in the alliance recording a budgetary surplus in 2018.

 

 

GREASY OIL PRICES

For four of the top ten OIC countries by GDP, fuel remained the primary source of export earnings— Saudi Arabia, Iran, the United Arab Emirates (UAE), and Nigeria, according to SESRIC. For example, the UAE recorded $39.9 billion Crude Petroleum and $21.2 billion of Refined Petroleum export revenues in 2018.

The 2020 account balances of oil-exporting countries will be adversely affected, as crude oil prices slumped by over 15% within three months to $53.3 per barrel in February 2020, according to the Organization of the Petroleum Exporting Countries (OPEC).

Rates fell further in March — OPEC’s daily basket price stood at $27.31 a barrel on March 18.

 

 

IMPACT ON AVIATION

Airlines won’t benefit from reduced fuel costs as they either dramatically reduce operations or ground fleets entirely because of the COVID-19 travel bans.

The International Air Transport Association (IATA) on Feb 21 said its initial assessment of the impact of COVID-19 shows a potential 13% full-year loss of passenger demand for carriers in the Asia-Pacific region. This would translate into a $27.8 billion revenue loss in 2020 for the region’s airlines. Outside the Asia-Pacific, carriers could lose up to $1.5 billion, said the IATA, which would take global lost revenue to $29.3 billion.

The number is significant but only the beginning, bearing in mind that IATA’s assessment comes before WHO called the COVID-19 a pandemic on Mar 11 as the virus raided Europe, and other travel bans were put in place in later February and March. In OIC member states with typically high outbound and inbound numbers, key states are Saudi Arabia (critically where umrah was put on hold from Feb 27), Kuwait, and Malaysia, and other nations such as New Zealand, and Singapore.

Most recently, Dubai’s Emirates reversed its decision announced on Sunday (Mar 22) to suspend all passenger flights from Mar 25 after lobbying from governments working to repatriate citizens. The airline said it will continue to operate passenger flights to 13 destinations, down from its usual 159.

The Emirates Group has already implemented a temporary reduction of basic salary from 25% to 50% for three months, and other cost-cutting measures include postponement or cancellation of discretionary expenditure, and encouraging employees to take paid or unpaid leave.

Boasting a 31-year track record of making money and recording a 2.3 billion dirhams ($0.63 billion) profit for the year 2018-19, puts Emirates financially in a more durable position than other carriers. The 2019-20 six months results show a net profit of 1.2 billion dirhams ($0.33 billion).

However, the group will be off to a rocky start for its new fiscal year beginning April 1, 2020.

In the Middle East’s biggest economy, Saudia suspended all domestic flights for 14 days starting Mar 21 after all international flights from and into the Kingdom were halted, also for two weeks, starting Mar 15.

Malaysia Airlines is operating a reduced service from Mar 22 to June 30.

 

 

PRIVATISATION TIPPING POINT TO COME?

With oil prices collapsing, the finances of the Gulf States come under pressure, predicts analytics company GlobalData. A quicker realization of power and water privatisation plans may help fill the monetary hiatus.

A case in point is Oman’s deal with China’s State Grid Corporation. For $1 billion, the world’s largest utility company took over a 49% government stake in the Oman Electricity Transmission Company in December.

The financial injection mends the 2020 budget deficit of 2.5 billion rials ($6.5 billion), at least partially, and reduces electricity subsidies.

 

 

TOURISM TRAUMA

Reflecting on the effect of the oil price fall Dr. Vasileios Pappas, Senior Lecturer in Finance at the University of Kent Business School told Salaam Gateway: “The Gulf Cooperation Council (GCC) states have taken significant steps to diversify their income streams away from oil into tourism and financial services”.

Indeed, many Middle East and North Africa (MENA) countries deliberately centered tourism in their long-term visions as Saudi Arabia’s Vision 2030, Oman’s clustering system to 2040, and Sharjah’s Tourism Vision 2021 show.

MENA’s tourism grew by 10% in 2018, recording 87 million international tourist arrivals, equivalent to 6% of the world’s total, according to the World Tourism Organisation (UNWTO).

In North Africa, Tunisia recorded eight million international arrivals in 2018. The lift of negative travel advice post Arab Spring and the return of European tourists accounted for Tunisia’s recent double-digit growth rates, reports UNWTO.

Morocco, the largest destination in North Africa, posted an 8% increase in arrivals in 2018, exceeding the 12 million mark. The country’s inbound tourism benefited from a surge of Chinese travelers following the introduction of new air routes, visa exemptions, and targeted digital campaigns.

But “travel and tourism is uniquely exposed”, warns the CEO of the World Travel & Tourism Council, Gloria Guevara.

“Up to 50 million jobs in the sector are at risk due to the global COVID-19 pandemic,” she said in a mid-March press release.

In the Middle East, Travel & Tourism sustained a total of 5.4 million direct, indirect, and induced jobs in 2018. The number surpassed the impacts of the financial services, banking, mining, and automotive manufacturing sectors, according to WTTC’s 2019 Middle East Benchmark Report.

Saudi Arabia, MENA’s largest destination, accounts for about one-fifth of the $92 billion regional Travel & Tourism GDP. The country cashed in on the ease of visa requirements and the improvement of hotel capacity as well as service and air transport infrastructure.

With the pandemic closing tourist sites, whole borders and even limiting domestic movement in some countries, tourism is guaranteed to suffer significantly.

In Islamic countries outside MENA, Brunei barred citizens from leaving from Mar 16, and Malaysia is not letting in any foreign visitors at least from Mar 18 to Mar 31. Malaysia also, on Mar 18, cancelled its ongoing Visit Malaysia Year 2020 campaign effective immediately. Indonesia on Mar 17 called for the suspension of meeting, incentive, convention and exhibition (MICE) activities, with the government calling for a limit on activities that “promote tourism and the creative economy”.

 

 

SAUDI ARABIA AUSTERITY MEASURES

The loss of oil revenue and the 20 billion riyals ($32 billionn) announcement recently to mitigate the COVID-19 impact on the economy, requires Saudi Arabia’s austerity measures elsewhere.

According to the consulting firm GlobalData, the kingdom’s ministries have been instructed to cut budget spending by 20%.

Such cuts may delay the start of sizeable tourism development and infrastructure projects like the $500 billion Neom project, a planned 16-district city on the Red Sea coast, and Amaala.

This 3,800 square kilometre venture, promoted by the Public Investment Fund (PIF), is located within the Prince Mohammed bin Salman Natural Reserve.

Already delayed by over a year, the groundbreaking of the development is scheduled for the first half of 2020.

Once finished, Amaala is expected to generate 22,000 jobs across the hospitality, tourism, and retail sectors.

 

 

OUTLOOK

Projecting a positive view, DeVere’s CEO Green goes on to say: “The coronavirus outbreak can be expected to speed up the so-called Fourth Revolution, which is fuelled by new technologies, such as Artificial Intelligence and mobile supercomputing.

“New industries will emerge. This will mean job losses in some sectors and huge, possibly unprecedented, job and investment opportunities in others.”

17% than in the same period last season. In particular, the level of supplies of Ukrainian wheat to Lebanon has increased significantly – by 51% or up to 372 thousand tons.

 

 

At the same time, corn exports in the indicated direction decreased. It amounted to 81 thousand tons (-21%). The level of export of other grain cargo and grain processing products also decreased – it amounted to 6 thousand tons (-68%).

 

 

It is reported that the shipment of grain from Ukraine to Lebanon may be stopped due to the decision on default on the country’s debt, adopted by the government.

Exports of cereals, poultry, sunflower oil, and other important export products will not be restricted under any circumstances. Deputy Minister for Economic Development, Trade and Agriculture informed Taras Kachka.

 

 

According to him, there will be no bans on Ukrainian export goods. According to the analysis of the Government, the goods demanded in Ukraine today – bread, buckwheat, lard – are practically not exported. Accordingly, it is not necessary to impose any restrictions on the export of agricultural products.

 

“Therefore, there is no point in imposing an export ban today. But the issue of availability of products in the domestic market will be solved through a dialogue with producers and retailers, ”said the Deputy Minister of Economic Development, Trade and Agriculture.

 

 

To date, all and major manufacturers claim to be ready to step up product deliveries to the point of sale to avoid food shortages. Therefore, the authorities assure that there will be no hype around the product group in the country’s trade network.

In January-February 2020, Ukraine increased the export of poultry meat and offal by 4.2% compared to the same period in 2019 – up to 66.27 thousand tons, TradeMaster.UA reports citing Interfax-Ukraine.

 

The data of the State Customs Service of Ukraine show that the export of these products decreased by 7.1%, which equals $ 81.9 million in monetary terms. Also, the import of poultry and offal decreased 1.7 times – to 12.76 thousand tons, which is material expressed in 35, 1%, up to 5.56 million

Minister of Foreign Affairs Abdulla Shahid Minister on Saturday requested the assistance of Brunei for the establishment of a halal science laboratory in Maldives.

 

The minister made the request during a meeting with his Bruneian counterpart, Dato Seri Setia Haji Erywan bin Pehin Datu Pekerma Jaya Haji Mohd Yusof, during his ongoing official visit to the country.

 

During the meeting held at the Bruneian foreign ministry, the two diplomats discussed bilateral relations between the two nations, including instituting a ministry-to-ministry level cooperation agreement in order to reinvigorate cooperation.

 

Minister Shahid further explored possibilities for more scholarships to Maldivian students, and thanked the government of Brunei for the existing educational opportunities. He highlighted that supporting and educating people with special needs is an important priority of the Maldivian administration, as well as the development of the country’s social sector.

 

The foreign minister also had audience with the Sultan of Brunei, Haji Hassanal Bolkiah Mu’izzaddin Waddaulah, during which he thanked the Bruneian leader for the full scholarships on human resource development extended by Brunei to Maldivian students.

 

Highlighting the shared membership of both nations in the Commonwealth and Organization of Islamic Cooperation (OIC), and common views across many international issues, Minister Shahid expressed confidence for increased cooperation in the multilateral fora and stronger bilateral ties.

 

Minister Shahid conveyed the best wishes on behalf of President Ibrahim Mohamed Solih, the government and people of Maldives to Brunei, further highlighting Maldives’ keenness to strengthen people-to-people contacts between the two countries.

 

During his visit, the foreign minister also met with the ministers of education and health of Brunei.