Focus: Has the April rally ended?

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Updated 04 May 2020
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Focus: Has the April rally ended?

 

What happened:

As economies come out of lockdown, economic numbers are still dire. The latest Purchasing Managers Index (PMI) numbers are an omen of worse things to come.

A PMI above 50 denotes economic expansion and below 50 contraction. Europe’s numbers for April were dire: Spain came in at 30.8 while Italy, Germany and France reported 31.1, 34.5 and 31.5 respectively. The US did not fare much better, at 36.1.

Asia looked a little bit better with China, Japan and Korea standing at 49.1, 41.9 and 41.6 respectively. The numbers reflect that East Asia has started to emerge from lockdown earlier. The region’s worst months were February and March, whereas Europe and the US were worst hit in March and April.

Nothing can detract from the difficulties of emerging from lockdown, which may be harder than shutting the economy in. It involves weighing up priorities of public health versus economic activity, particularly in democracies where there are strong and vociferous lobbies on both sides. The danger of going too fast is that the course may be reversed, which would be economically costly. 

Meanwhile, as Lufthansa edged closer to reaching a rescue deal with the German government, Berkshire Hathaway sold all investments in the US’s four major airlines. The company is sitting on a cash pile of $137 billion. Its chairman, Warren Buffet, explained that this downturn was different from other recessions, and that he saw fewer attractive investments than during the 2008 financial crisis, particularly because the actions of the US Federal Reserve removed the need for many companies to seek a lifeline in the short run.

Background: 

Sell in May and go away is a famous bon mot amongst investors. It also seems to hold true in these unusual times. 

All markets came down sharply on Friday and the STOXX 600 continued the descent into Monday, as European stock markets, which were closed for the May 1 holiday, caught up.

April saw a big rally after share prices had fallen off a cliff in March. The Nasdaq gained 21 percent and the Dow Jones was up in the double digits as well. There was a big disconnect between equity markets and what happened in the real world. Most economies in Europe and North America were in lockdown during April and unemployment numbers skyrocketed, with first time unemployment claims in the US alone surpassing 30 million over the last six weeks. What saved equity markets were unprecedented stimulus packages, exceeding a total of $8 trillion globally.

Even a swift reaction from governments and central banks cannot mask the shocking economic data hitting us day after day and week after week — especially as the worst is still to come for the second quarter, and uncertainty remains as to how we will emerge from the pandemic.

Where we go from here:

The belligerent trade rhetoric between the US and China is picking up. 

In keeping with the sell in May and go away traders’ proverb, May has always been a challenging month for emerging markets with stocks, currencies and local currency bonds declining 8 out of 10 years over the last decade.

We can expect emerging markets to be hard hit going forward as the virus spreads, and some health care systems may find it hard to cope. Investors’ portfolios have been hit by the pandemic. They may seek to preserve wealth and behaviors may become more risk averse, resulting in a preference for safety. 

Emerging markets warrant a lot more attention than they are currently getting and future issues shall address this.

 

— 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


Russia’s nuclear threats ‘irresponsible’: EU’s Borrell

Updated 1 min 29 sec ago
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Russia’s nuclear threats ‘irresponsible’: EU’s Borrell

“It is not the first time that Putin plays the nuclear gamble,” the outgoing foreign policy chief told reporters
“Russia has subscribed to the principle that a nuclear war cannot be won, and so must never be fought,” he said

BRUSSELS: EU top diplomat Josep Borrell accused Russia on Tuesday of issuing “completely irresponsible” nuclear threats, after President Vladimir Putin broadened the scope for Moscow’s use of atomic weapons.
“It is not the first time that Putin plays the nuclear gamble,” the outgoing foreign policy chief told reporters following defense minister talks in Brussels on the 1,000th day of the conflict.
“Russia has subscribed to the principle that a nuclear war cannot be won, and so must never be fought,” he said, warning that “any call for nuclear warfare is an irresponsibility.”
The EU talks — dominated by the need to ramp up support for Ukraine’s fight — came as Kyiv confirmed it had fired US-supplied long-range missiles into Russian territory, in what Russia said marked “a new phase” in the war.
Borrell had pressed member states ahead of time to align with Washington in allowing Ukraine to strike inside Russia using donated missiles — something France appears to be considering.
Addressing reporters afterwards, Borrell gave no indication of a shift on the sensitive issue.
But he said EU states had agreed “by an overwhelming majority” that “the fate of Ukraine will determine the destiny of the European Union.”
“If Putin could be successful in Ukraine, we will pay a very high bill, much more expensive than any kind of military support that we could provide today,” he said.
Borrell said a “big majority” of EU member states had shown “their determination to continue supporting Ukraine” — with Donald Trump’s imminent White House return throwing US support for Kyiv into question.
“Certainly we are in a different scenario with a different president in the White House, which seems to have ideas about how to end the war,” he said.
Ministers were joined by NATO chief Mark Rutte who warned that Putin must not be allowed to “get his way” in Ukraine and reiterated his call for Europe to “ramp up the defense industry.”
More than two and a half years after Moscow’s 2022 invasion of Ukraine, now 23 of the 32 NATO members reach the target of spending two percent of gross domestic product on defense — up from just three a decade ago.
But the growing consensus is that Europe will have to do more to make sure it can stand on its own.
Borrell said it was made clear by Rutte that given “the challenges we are facing, this landmark, this mythic figure of two-percent will not be enough, and we need to take more action.”
“Europeans have to do more and quicker in order to increase their defense capacity, not just to support Ukraine, but for our own security,” said the EU top diplomat, who hands over next month to his designated successor Kaja Kallas.

IDEAS 2024: Haider tank in spotlight on first day of Pakistani mega defense expo

Updated 54 sec ago
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IDEAS 2024: Haider tank in spotlight on first day of Pakistani mega defense expo

  • IDEAS has been held biennially since 2000 and has since grown into a key event for the Pakistani defense sector
  • Second day of the exhibition, Wednesday, will see launch of new medium-altitude long-endurance Shahpar III drone

KARACHI: The third-generation Haider tank was in the spotlight on Tuesday as Pakistan’s premier defense exhibition, IDEAS, kicked off in Karachi, hosting 550 exhibitors, including 340 international defense companies, as well as 350 civilian and military officials from 55 countries.

IDEAS has been held biennially since 2000 and has since grown into a key event for the Pakistani defense sector. 

This year’s exhibition, running from Nov. 19-22 at the Karachi Expo Center, is showcasing a wide range of modern and traditional defense equipment, weapons systems and vehicles.

“This tank is locally produced in Pakistan at the Heavy Industry Taxila in collaboration with our local and international technology partners,” Anza Aqeel, Assistant Director Heavy Industry Taxila, told Arab News, explaining that Haider had auto-tracking, a remote-control weapon system and a 470-kilometer cruising range.

“It has the capability of firing in both the day and night. It can fire up to eight rounds per minute due to its autoloading capability.”

Aqeel said the Haider tank was of export quality, with production currently underway.

 “This tank has an auto tracker installed and both the gunner and commander can fire using the auto tracker,” he added.

The second day of the exhibition, Wednesday, will see the launch of the Shahpar-III drone, the third generation of the GIDS Shahpar unmanned aerial vehicle (UAV) built by Global Industrial Defense Solutions of Pakistan and used by the Pakistani military.

Speaking at the inauguration ceremony, Defense Minister Khawaja Muhammad Asif said Pakistan’s volume of defense exports was not yet aligned with its potential.

“Though Pakistan is now exporting some high-tech products to more than 60 countries, the volume of exports is not at par with its actual potential,” Asif said.

“A crucial factor, however, has been the limited involvement of the private sector in defense production and activity.”

“In order to achieve this objective, I will stress upon the integration of public and private defense industry to achieve maximum results,” Asif added. “New ideas, entrepreneurship and management skills mastered by the private sector need to be co-opted with the public sector defense industry.”

This year’s event also features a “Startups Pavilion” designed to offer international exposure to young Pakistani entrepreneurs and give them an opportunity to showcase new projects and technologies.


Pakistani police arrest man accused of insulting Qur’an, save him from being lynched by mob

Updated 24 min 26 sec ago
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Pakistani police arrest man accused of insulting Qur’an, save him from being lynched by mob

  • Khan said man allegedly made derogatory remarks about Qur’an during heated argument with brother 
  • Demonstrators threw stones at police station, threatened to burn it if the man was not handed over to them

PESHAWAR: Police arrested a man accused of insulting Islam’s holy book, the Qur’an, in northwestern Pakistan on Tuesday after being alerted that a mob wanted to lynch him, police said.

The man, identified as Humayun Ullah, was arrested in Khazana, an area on the outskirts of Peshawar, the capital of Khyber Pakhtunkhwa province, police officer Nasir Khan said.

He said the man was arrested as a mob was trying to grab him in a street.

Video posted on social media showed hundreds of people blocking a road near a police station and demanding the man be handed over to them. Gunshots were also heard near the police station, where the man was being held for questioning.

Police officers beat an angry protestor who with others blocked a road near a police station and demanding to handover them an arrested man, accused of insulting Qur’an in Peshawar, Pakistan, on November 19, 2024. (AP)

Khan said the man allegedly made derogatory remarks about the Qur’an during a heated argument with his brother at the family’s home. He said some of the demonstrators threw stones at the police station and threatened to burn it and harm officers if the man was not handed over to them.

Police officers fire tear gas shells to disperse angry protestors, who blocked a road near a police station and demanding to handover them an arrested man, accused of insulting Qur’an in Peshawar, Pakistan, on November 19, 2024. (AP)

Under Pakistan’s blasphemy laws, anyone found guilty of insulting Islam or Islamic religious figures can be sentenced to death — though authorities have yet to carry out a death sentences for blasphemy.

The arrest Tuesday came two months after the government said police had orchestrated the killing of a doctor who was in custody after being accused of blasphemy in southern Sindh province. The doctor had voluntarily surrendered following assurances from officers that he would be given a chance to prove his innocence.

In November 2021, a mob burned a police station and four police posts in northwestern Charsadda district after officers refused to hand over a mentally unstable man accused of desecrating the Qur’an.


Saudi Arabia’s World Cup hopes dented in Indonesia

Updated 23 min 3 sec ago
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Saudi Arabia’s World Cup hopes dented in Indonesia

  • Depressing outcome for Herve Renard 

JAKARTA: Saudi Arabia lost 2-0 in Indonesia on Tuesday to leave hopes of automatic qualification for the 2026 World Cup in serious doubt.

Just six points in six games in Group C and no goals in the last four matches makes for depressing reading for head coach Herve Renard. 

A goal in each half from Marselino Ferdinan had 60,000-plus fans in Jakarta on their feet and it will not have gone unnoticed by Renard — in his second game back in charge — that this creative talent made a difference just as his, Salem Al-Dawsari, was missing through injury.

And he was missed. Without the 2022 Asian Player of the Year, Saudi Arabia may have had the majority of the ball, but they created little going forward and were hit multiple times by the rapid counters of Indonesia.

Renard said: “Indonesia deserved to win this game. We now have four games and it will be tough and it will be tough for everybody. I accept the challenge to take Saudi Arabia to the World Cup; it doesn’t matter which way but we have to go to the World Cup.”

In the opening exchanges there was a white wave and Saudi Arabia could count themselves lucky that they were not at least a goal down inside the first 10 minutes.

Indeed, the hosts hit the post in the opening minute as Marselino could not quite connect with a right-sided cross from Ivar Jenner and all watched as the ball came back off the woodwork. 

Rafael Struick had another great chance in the ninth minute, running on to a Thom Haye ball over the top but with just the goalkeeper to beat, Ahmed Al-Kassar made the save. 

The Green Falcons thought they had an advantage midway through the first half. Justin Hubner’s leaping challenge against Mohammed Al-Qahtani succeeded in getting the ball but also ended with his boot in the face of the young Al-Hilal star. When the referee went to the pitchside monitor, the home fans feared the worst but, in the end, a yellow card was shown.

If that was a little fortunate for Indonesia, the lead they took after 32 minutes was deserved.

Saudi Arabia, already aggrieved at a couple of decisions, felt that they should have been given a penalty and then watched in horror as the hosts broke forward. Ragnar Oratmangoen pulled the ball back for Marselino standing near the penalty spot and the Oxford United player took his time, twisted and turned and then curled home into the top corner.

The referee ignored the protests from the men in green and seconds after the restart, Struick was through on goal again but just could not quite get the final touch. 

Just before the break Indonesia went close again with Calvin Verdonk volleying just wide from the left. Firas Al-Buraikan then had a rare sight of goal but his shot on the turn was blocked.

Renard would have been the happier of the two coaches to hear the half-time whistle, but both he and his opposite number Shin Tae-yong knew there was a long way to go.

Saudi Arabia started brightly after the break and put pressure on the hosts without creating real chances and it was another breakaway that led to Indonesia’s second.

Verdonk broke down the right and fed Marselino inside the area. His first attempt was blocked by Ali Al-Bulaihi but fell kindly for the Oxford star who then lifted the ball over Al-Kassar into the net.

As they had to, Saudi Arabia started to push forward more and more. Al-Bulaihi headed just over from close range and then the lively Abdullah Al-Hamdan nodded just wide with a fine attempt that had goalkeeper Maarten Paes scrambling across his line. Soon after, the same forward headed straight into the arms of the No. 1.

There were not many more chances to come, though Mohamed Kanno shot against the bar, and the game ended with a flurry of cards, including a second yellow for Hubner.

Saudi Arabia will argue that the defender should have seen red long before but, in truth, they were second best for too much of the match.

Now, the race for the second of the automatic places behind leaders Japan, way ahead on 16 points, could not be tighter with four teams on six and one of those sides, Australia, facing Bahrain later on Tuesday.

Saudi Arabia will be hoping for a favor and, with just one win in six, they need all the help they can get.


Forum focuses on women’s role in Saudi economy

Updated 16 min 25 sec ago
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Forum focuses on women’s role in Saudi economy

  • Event features broad participation from experts, officials, academics and professionals, focusing on the women’s business sector
  • Prince Saud bin Naif highlighted the Saudi leadership’s commitment to empowering women across various sectors

RIYADH: Eastern Province Gov. Prince Saud bin Naif inaugurated the Women’s Economic Forum in Dammam on Tuesday.

The event, organized by the Asharqia Chamber through its Women’s Empowerment Center, features broad participation from experts, officials, academics and professionals, focusing on the women’s business sector.

Prince Saud highlighted the Saudi leadership’s commitment to empowering women across various sectors, the Saudi Press Agency reported.

He emphasized the importance of economic programs designed to enhance women’s contributions to the national economy.

The chamber’s chairman, Badr Al-Rizaiza, briefed the governor on the forum’s objectives and the key initiatives supporting Saudi women’s empowerment.

The forum featured four sessions examining the evolving role of Saudi women under Vision 2030.

Topics included women’s contributions to achieving Vision 2030’s goals, opportunities in the entrepreneurship ecosystem, strategies for business sustainability, and the significance of training in preparing women for leadership roles.

On Wednesday, the forum will host four workshops focusing on key areas, including the Dhahran Techno Valley system and its support for entrepreneurship, as well as tourism entrepreneurship.

The workshops will also cover fostering workplace diversity and inclusiveness, and creative leadership as a cornerstone for success in today’s dynamic business environment.