FinancialMirror OREN LAURENT
MOHAMED EL-ERIAN
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Issue No. 1176 €1.00 March 16 - 22, 2016
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No new chapters for Turkey CYPRUS SHOULD NOT BE COUPLED WITH MIGRATION CRISIS PAGE 3
What are the 25 best-paid jobs in America? SEE PAGES 10-11
March 16 - 22, 2016
2 | OPINION | financialmirror.com
FinancialMirror Time to stand firm on Turkey Published every Wednesday by Financial Mirror Ltd.
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Would it be selfish if Cyprus vetoed the EU-Turkey agreement, especially now that Ankara is pressing for a migrants-for-accession deal? Considering the solidarity that Cyprus has received from northern European states, which is the primary destination of every migrant from the Middle East, central Asia, Syria and even Turkey, it is about time that President Anastasiades stood firm and did not give in to pressure, as has been the case in the recent past with the bailout/bail-in experiment that was tested on Cyprus and failed to a larger extent. Cyprus has been called to give its consent to unfreezing five major chapters in the EU-Turkey negotiation process. But Ankara’s insistence that it wants to have the cake and eat it as well is already playing into the hands of dissenters within the EU who are opposed to the uncontrolled flow of migrants, most of whom are not even refugees from Syria. It is clear that Turkey wants more money, which, as usual, will be used for anything but housing, integrating or repatriating refugees, which was part of the plan that Angela Merkel tried to push through last week’s meeting, effectively sidelining European Council President Donald Tusk. However, the German Chancellor’s “open doors” policy, as humane as it may seem, has upset the core of the country’s society, with many voting with their feet on Sunday and showing their objection to Merkel’s policies, that seem to take Turkey’s needs more into consideration
than the EU’s. It is high time that Cyprus told its EU partners that Turkey must show genuine respect for Cyprus and that it must practically contribute to resolving the fivedecades old problem, with talks currently underway between the two community leaders reaching an unprecedented hiatus, alas undermined by Ankara. Western powers forget that Turkey chose to take sides in the Syria conflict, simply to have its say and control its border (or even expand it), with the underlying purpose of dealing a blow to the Kurdish minority. Soon after that it opened the floodgates allowing thousands of Syrian refugees onto its soil, and pointed them in Europe’s direction, tolerating the traffickers and hoping that it could thus exert leverage on its EU and US allies to rush to its aid. The bluff paid off and the EU was unable to handle the rush, as it was too busy deciding what to do with the boat-loads of migrants who were drowning by the thousands and did not see the new threat coming from the south eastern front. As a result, the pressure has been redirected from the shores of Spain, Italy and Greece to Greece alone, with western leaders demanding, even, that Athens “deal with the problem” on its own, as long as it was not on Europe’s doorstep. The refugee problem will not go away in a week and it will not be resolved unless a proper peace effort gets underway and holds in Syria. And this is where the EU should play a key role, as is Russia and the now-beloved Iran, to solve the problem on the ground and rebuilt Syria, but not to the advantage of Turkey that simply wants to exert its hegemony in the region.
THE FINANCIAL MIRROR THIS WEEK 10 YEARS AGO
New HB in the making, growth at 3.8% Hellenic Bank is undergoing changes with a new restructuring and strategy plan to be announced in April, while latest stats showed that the economy saw a 3.8% growth rate in 2005, according to the Financial Mirror issue 662, on March 15, 2006. New HB: Recently recruited CEO Makis Keravnos said that Hellenic Bank is undergoing a major transformation with a shake-up of procedures and culture as part of a comprehensive restructuring plan in compliance with Basel II, the CySE Corporate Governance code and Central Bank directives, some
20 YEARS AGO
Offshores earn $357 mln, Feta name saga hits Cyprus exports The number of offshore registrations exceeded 23,000 with the sector contributing USD 357 mln to the economy, while a European Commission decision to allow only Greek dairy producers to use the name ‘feta’ will hurt Cyprus exports, according to the Financial Mirror issue 153, on March 13, 1996. Offshore boom: Foreign exchange earnings from
of which have already been implemented in the bank’s network in Greece. The plan is subject to board approval in April. Ermes to list: Ermes Department Stores [plans to list on the CSE once the offer of CTC shares to FW Woolworth shareholders is completed. The Group includes Ermes and Debenhams stores, DIY Home Centre, Zako, Next, Adams, Peacocks and Miss Sixty, with Debenhams holding a 10% stake in Ermes since December 2004. Growth in 2005: Real GDP growth reached 3.8% in 2005, according to Cystat, the offshore industry rose 20% to USD 357 mln in 1995. From the 83 registrations in 1976, the sector had grown to 23,000, said Interior Minister Dinos Michaelides. Feta decision: The European Commission proposal that the name “feta” apply only to cheese made in Greece will affect all Cyprus dairy exports that include feta, said Panicos Hadjicostas of Christis Dairies. However, he admitted that ‘feta’ or ‘fetta’ exports were far less than the primary sales of halloumi
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exactly in line with Financial Mirror projections made a year earlier. The rate was marginally lower than the 3.9% recorded in 2004. Financial Mirror projections suggested that growth would slow in Q4 as higher oil process took their toll on household budgets. Defence reform: The Democratc Rally party (DISY) commissioned a study by S Platis Economic Research that found that a defence reform, including cutting military service to 14 months and introducing a professional army, would have a positive impact of CYP 1.1 bln on GDP or CYP 57 mln a year up to 2025. Milosevic dies: Former Yugoslav dictator Slobodan Milosevic died in his cell in The Hague and took the secrets of the millions he and his cronies laundered through Cyprus companies and banks, to his grave. cheese in overseas markets. Blakeney bullish: Blakeney Management, the UK specialist on emerging markets, continues to remain bullish on Cyprus and said gains can still be recorded in several sectors, but also called investors to diversify into other low-performing stock titles as well, according to Miles Morland, who said that the market stood at 34% above the 1990 peak.
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March 16 - 22, 2016
financialmirror.com | OPINION | 3
No new chapters for Turkey Unacceptable to shift burden of migration crisis on Cyprus shoulders The European Union should not shift the burden of responsibility for the migration crisis on the shoulders of Cyprus, President Nicos Anastasiades told European Council President Donald Tusk, who was on a whistle-stop tour to the region prior to the EU–Turkey Summit on the migration crisis on Thursday and Friday, “The Republic of Cyprus will not consent to the opening of any (of the five) chapters, if Turkey does not fulfil its obligations as per the Negotiating Framework and the Ankara Protocol,” President Anastasiades said after meeting Tusk in Nicosia. “It is unwarranted, counter-productive, not to mention unacceptable, not by President Tusk, to shift the burden of responsibility for the migration crisis on my shoulders or on the shoulders of the Republic of Cyprus,” he said. This was a clear reference to Tusk trying to reassert his position in EU affairs, having been sidelined last week by Angela Merkel, who wanted to push her own agenda to appease Turkish concerns in the EU accession-for-migrant-aid deal. Responding, Tusk said that he was not in Nicosia to exert pressure on Cyprus. “I am here to listen to your positions ahead of the EU Council this week,” he noted. He stressed that when it comes to accession, “I want to make it clear that the rules have not changed. The same strict conditionality applies and moving forward will still require the agreement by all 28.” “No third country can ever be more important to me than any of our member states,” Tusk declared. Furthermore he expressed his full support to the ongoing efforts for a settlement in Cyprus. In his statements, Anastasiades expressed his satisfaction for the objective stance he adopted both during the recent European Councils and during Tuesday’s meeting. “A stance that corresponds with the President’s institutional capacity as the guardian of the EU’s principles and values,” he added. He said that during the meeting, they exchanged ideas and concerns as regards the upcoming European Council. Anastasiades noted that Cyprus, “as Turkey’s EU closest neighbour, has always been a strong supporter of Turkey’s full accession to the EU, on the condition of course that Turkey fulfils its obligations.” “We fully understand the problems EU member states face as a result of the unprecedented flow of migrants, and in particular the serious problems faced by Greece following the closure of routes to
Europe,” he said. “In this regard - and despite the fact that the migration crisis is not connected to the discussion on the re-energisation of Turkey’s accession process - Cyprus has maintained a very constructive stance”. He recalled that Cyprus consented to the opening of Chapter 17, accepted Turkey’s participation in informal summits on migration and consented to the Action Plan. Turkey’s main demand at present is to conclude the chapter on Energy, while MEPs want Ankara to show progress on human rights, especially after the recent closure of liberal media groups and the imprisonment of journalists. “At this critical phase of the negotiations for a solution of the Cyprus problem such a proposal leads me – without my intention – to come to a confrontation with Turkey. In fact, any confrontation with the Turkish Government, particularly at this critical phase, is the last thing we want.” “The Republic of Cyprus does not intend to consent to the opening of any chapters if Turkey does not fulfil its obligations,” he stressed. On his part, Tusk said that “at our EU summit last week, we discussed a further strengthening of our cooperation with Turkey,” noting that “this is an important pillar of our common and comprehensive European strategy. But it is never wise to build a plan on one pillar only. We should
not, and we will not. The other pillars of our common European strategy consist of getting back to Schengen, ending the wavethrough-policy, including along the Western Balkans route. And also massively stepping up humanitarian assistance to the most affected countries, not least Greece,” he noted. “Last week, I was mandated to prepare an agreement between Turkey and the EU on further strengthening our cooperation in the migration crisis. I am now working on the details. This is why I am here today in Nicosia. And this is why I will continue to Ankara this evening,” Tusk went on. He said that the Turkish proposal worked out together with Germany and the Netherlands still needs to be re-balanced so as to be accepted by all 28 member states and the EU institutions. The objective is to conclude the negotiations on Thursday and Friday. “One of the issues to be sorted out is the key question of legality. We need to ensure that any new large-scale return scheme between Greece and Turkey fully complies with EU law and our international commitments. This means that we must ensure that all get an individual assessment in Greece before a decision to return them to Turkey. And it also means that we must ensure that those in need of international protection receive appropriate protection in Turkey. Another issue to be addressed is that
of possible alternative routes from Turkey to other EU countries such as Bulgaria. This also has to be factored in for the agreement to be effective,” he noted. “But our cooperation with Turkey goes much beyond migration. The current dynamics offers an opportunity to reenergise the relations between the European Union and Turkey”, he said. At the same time, he stressed that “the European Union is a Union of 28 Member States. Cyprus is as important as Germany, France, the Netherlands or any other member state. No third country can ever be more important to me than any of our member states. We should use this opportunity, and make sure that all benefit from this new dynamics, also Cyprus.” Tusk also said that he and Anastasiades discussed the ongoing efforts in the Cyprus settlement negotiations. “A successful outcome, with support from both sides of the island, would give a fresh start not only to Cyprus, but to the whole of Europe and the wider region,” he noted. Referring to the economic recovery, he noted that “only three years ago, you were standing on the brink of a financial abyss. Today, you are standing on your own feet again, without having used all the resources made available to you by your eurozone partners and the IMF. This success is a result of your own efforts. It is a good sign for Cyprus, the euro zone and Europe.” Meanwhile, Foreign Minister Ioannis Kasoulides reiterated during the EU General Affairs Council in Brussels the Cyprus position that the opening of negotiating chapters can harm the Cyprus settlement talks and that the two procedures should be synchronised. “Cyprus”, he said, “respects those partners who believe that Turkey plays an important role in the migration issue and therefore accepted the cooperation between EU and Turkey on the matter.” He stated, however, that “opening accession chapters in the current phase of the Cyprus problem would only harm the ongoing talks.” “Turkey’s demand to open accession chapters does not contribute positively to the Cyprus settlement efforts,” he said. Noting then that neither the opening of chapters nor denying to do so, helps in this case, the Foreign Minister pointed out that since last December, he has raised “the notion of the synchronisation between the two procedures, provided that with a Cyprus settlement, we will overcome any problems in the Turkish accession process.”
EP: Cooperation on migration should not to be linked with Turkey-EU accession Cooperation with Turkey on the migration crisis should be decoupled from the EU accession negotiating process, the European Parliament’s Foreign Affairs Committee members said, after a vote on the Kati Piri resolution on the accession progress of Turkey that remains to be voted by the full House in Strasbourg in April. On Cyprus, the committee members welcomed “the considerable progress made in the Cyprus reunification talks,” pledged support for the evolution of the Republic of Cyprus into a bi-communal, bi-zonal federation with political equality between the two communities and equal opportunities for all its citizens, and urged both parties to implement all agreed measures without further delay. The MEPs are concerned by the backtracking in the internal justice and rule of law and consequently “urge Turkey to act against intimidation of journalists in all its
forms, condemn its violent and illegal take-over of several newspapers and highlight its serious backsliding, over the past two years, on freedom of speech, expression and opinion, both on-line and off-line”. “The overall pace of reforms in Turkey has not only slowed down but in some key areas, such as freedom of expression and the independence of the judiciary, there has been a regression, which is particularly worrying”, said rapporteur Kati Piri (S&D, NL). “In this resolution “we also express our concern about the escalation of violence in the south east of Turkey, which caused almost 400,000 people to leave their houses”, she added. “To match the EU’s commitment to the rule of law, fundamental values and freedoms, which are core European values, reforms of the judiciary, justice, freedom and security are urgently needed in Turkey”,
said the text. They also called for an “immediate ceasefire in south east Turkey and the resumption of the peace process”. They urged the Turkish government to shoulder its responsibility to resume negotiations for a negotiated, comprehensive and sustainable solution to the Kurdish issue. The Kurdistan Workers’ Party (PKK), should lay down its arms, abandon terrorist tactics and use peaceful and legal means to voice its expectations, they added. On the migration issue, the members of the committee praise Turkey for hosting the largest refugee population in the world, and noted that it remains a “key strategic partner for the EU” but nonetheless called for progress on rule of law and fundamental values and “a more structured and frequent political dialogue, on key thematic issues”.
March 16 - 22, 2016
4 | CYPRUS | financialmirror.com
Cyprus-Armenia to enhance regional ties President of Armenia Serzh Sargsyan arrived on a two-day visit on Tuesday during which bilateral agreements were signed with Cyprus officials, and he will be the keynote speaker at a lecture at the University of Cyprus on Wednesday. Sargsyan, who was received by President Anastasiades and attended a banquet where former President George Vassiliou and Demetris Christofias were also present, reasserted his country’s support to a just solution to the Cyprus issue on the basis of UN resolutions. In statements after the meeting with President Anastasiades and the expanded talks between the delegations of the two countries, the President of Armenia expressed the hope that the efforts of President Anastasiades in Cyprus in solving the Cyprus issue, will be completed successfully. Sargsyan said that the friendship between Armenia and Cyprus is strong and that the two countries not only have historical and cultural similarities but also universal values on which, he said, “we will build the future.” “We talked about the developments that open up new avenues in expanding our economic relations. This includes the fact that the economy of Cyprus is now able to contribute, within the framework of the Eurasian economic cooperation, relations with the EU and the new situation created after the lifting of sanctions on Iran, allowing for new opportunities and possibilities”, said the President of Armenia. On his part, President Anastasiades praised the excellent bilateral relations and good cooperation between Cyprus and Armenia. He noted that during the meeting they exchanged views on the latest developments on the Cyprus issue and on Nagorno Karabakh.
Three short-listed for casino The three short-listed bidders for the casino resort licence, announced on Tuesday by the government, are Bloomberry Resorts Corporation, Melco - Hard Rock Resort Cyprus Consortium and NagaCorp Ltd. According to an announcement, the Ministry of Energy, Commerce, Industry and Tourism proceeded with the authorisation procedure for the only casino resort in Cyprus, with the publication on 18 September 2015 of the invitation for bidders. The three short-listed bidders will now have to submit a final bid. The procedure consisted of two phases. During the first phase, a total of eight candidates which expressed interest were assessed based on the criteria set, which included, the economic displacement, experience in the development and casino resorts operation, understanding of the Cyprus market and their vision for the Cyprus integral resort casino. The Council of Ministers decision on March 2, ratified the final list of three qualified bidders who will operate a super-casino license and resort, and have gaming permits for up to 1,000 machines, as well as the right to subcontract licenses to satellite operators in other towns.
Job vacancies up in 4Q The number of job vacancies for the fourth quarter of 2015 was 2,049 and the corresponding job vacancy rate is 0.7%. According to the Statistical Service, the number of job vacancies increased significantly (92.4%) compared to the same quarter of the previous year when it was 1,065, but decreased (-13.3%) compared to third quarter of 2015. The highest job vacancy rate for the fourth quarter was in accommodation and food service activities.
Public sector employment down Employment in the general public sector decreased by 1,144 persons or -1.7% to 64,526 persons in the fourth quarter of 2015, compared to the same quarter of the previous year. According to the Statistical Service, the highest decrease is in public owned enterprises and companies (-13.3%), while slower decreases are in Central Government and Local Authorities, with -0.2% and -2%, respectively. Compared to the third quarter of 2015, the employment in the General Public Sector increased by 1,020 persons or 1.6%.
They both underlined the significance of the armenian community in Cyprus. “Our Armenian compatriots are an important link between the two countries,” President Anastasiades remarked. He also referred to the unanimous decision of the Cyprus House of Representatives to criminalise denial of the Armenian Genocide, noting that Cyprus was the first country in 1982 to recognise the Armenian genocide. Anastasiades attended the Genocide centennial event in Yerevan last April.
Sargsyan will also visit the Nareg Armenian elementary school and meet with community representatives. The Ministers of Education and Culture of the two countries signed an agreement on mutual recognition of diplomas, a cooperation programme in the areas of education and science and a cooperation programme in the field of culture. Before arriving in Cyprus, Sargsyan was visiting Greece where he had similar meetings with Prime Minister Alexis Tsipras and other government officials.
President says government committed to shipping sector President Nicos Anastasiades has expressed his government’s determination to protect and further develop the shipping sector, in his address at an event in Limassol to mark the 25th anniversary of a Russian shipping company. “Over the past decades Cyprus has built up an exceptional maritime infrastructure and high level of expertise,” he pointed, recalling that “the Cypriot maritime registry is today one of the largest in the EU and the tenth largest worldwide.” Furthermore, he noted, “our country is considered to be one of the largest third party ship-management centres globally”, adding that “this is largely due to the contribution of companies like Unicom.” President Anastasiades added that despite the international adverse economic conditions and the financial difficulties that our country faces in the last years, the Cyprus shipping sector managed to maintain its competitiveness and perspectives as a result of combined efforts from the public and private sectors. Shipping, he added, “has in fact evolved in recent years as one of the leading sectors of our economy and has proven to be an invaluable asset in our journey to recovery.” At the same time he assured that the government “acknowledges now, more than ever, the important role that the shipping sector plays in the Cyprus economy.”
We are well aware of the fact that the shipping sector operates in a continuously evolving and highly competitive global environment, he said. That is why, he stressed, “we are determined to introduce the necessary mechanisms to protect and further develop the shipping sector, to further improve the overall shipping infrastructure in Cyprus and our services in the shipping industry.” Addressing the event, Deputy Minister of Transport of the Russian Federation Viktor Olersky said the presence of both Cyprus President and Transport Minister Marios Demetriades at the event shows how much attention the government of Cyprus gives to the development of the shipping sector of this country. “We believe that our relations with Cyprus, especially in the shipping industry sector can develop even more and can be deeper,” he said. Referring to the a meeting he had with Demetriades he said he had expressed the view that Russian presence in Cyprus and our cooperation can be more practical and that it should “develop more into shipmanagement and ship-ownership.” I believe the government of Cyprus will provide more assistance to the Russian companies that would like to have deeper roots in this wonderful land, he concluded.
Only 25% of young voters registered for May The majority of new voters who have the right to vote in the upcoming parliamentary elections in May, have not yet registered, probably frustrated by the bickering of politicians, the ongoing economic crisis and the constant revelation of scandals involving public figures. Interior Minister Socrates Hasikos said, after meeting the Ministers of Defence and Education and the Deputy Government Spokesman on the issue, that out of 32,000 new voters who can
enrol, 24,000 have not done so. The closing date for registering is April 2. “Unfortunately as the years go by, there’s reduced interest on the part of young people”, the Minister said, adding that in past elections only 10% of new voters had not enrolled. He said that his has to do with young people’s contempt of politics and politicians, saying that the decision not to register to vote is wrong because they miss the opportunity to express their
dissatisfaction in the most official way, through the election process. He said that the Interior Ministry, in cooperation with the Defence and Education Ministers, are making a last effort to raise awareness among young people in order to encourage them to vote. The three ministries decided to promote advertising spots in the media and distribute material at army camps and universities, appealing to young people, including soldiers and students.
March 16 - 22, 2016
March 16 - 22, 2016
6 | CYPRUS | financialmirror.com
2013 crisis overhauled mentality of companies, says Infocredit survey The impact of the 2013 financial crisis on Cyprus companies, as well as on the economy in general, has been marked by a rapid fall in the rate of bounced cheques and the rise in liquidations, all benchmarks of a contracting economy, according to an analysis commissioned by the Infocredit Group. The study demonstrates how the mentalities and tactics of companies have changed over the past six years. This is evident from the significant decrease in the Number of Bounced Cheques (down to 1,542 in 2015 from 4,753 in 2012), as well as from the rise in the Number of Voluntary Liquidations, which show a gradual increase over the last six years, reaching a peak in 2015. It is worth noting that the drop in the Value and Number of Bounced Cheques is likely to be attributable to uncertainty and market reluctance to accepting cheques as a means of payment (ref: Infocredit Group analysis). Furthermore, the Number of New Registrations as well as the Number of Additional Registrations of Business Names and Partnerships has increased, despite the drop in the Total Number of Registered Companies since 2014. A decline was also observed in the Number of Additional Registrations of Overseas Companies. From 2010 up to 2013 there was a steady increase of 14.7% in the number of registered companies. Since the events of 2013 there has been a
change in the trend and a decrease of 7.5% in 2014 and 9.5% in 2015. The peak in new registrations of companies appeared in 2011 with new additions of 19,538 companies to the Registrar’s Archive. Even though 2013 was the lowest year, there have been 10,847 new registrations and since then, the number of new
registrations of companies showed a steady increase of 3% and 0.9% for 2014 and 2015, respectively. 2014 was the peak year with regard to the Number of Dissolved/Written-off Companies and during the first two months of 2016, 7,196 companies have already been dissolved/written-off. In addition, 2015
marked the highest Number of Voluntary Liquidations over this six year period. The survey concluded that the higher the number of years the company is in operation, the lower the risk involved when trading with the specific company. Also, 2011 marked the lowest number of additional registrations in Business Names & Partnerships (1,402). Since 2013 we have seen a steady increase of 12.2% and 10.8% for 2014 and 2015 respectively. Additionally, 2015 marked the highest number of new registrations with a total of 1,829 entities being registered. Even though the number of new registrations of Overseas Companies has decreased considerably in the last 15 years, the numbers show a minor increase from 2010 until 2012, reaching 94 additional registrations and then drop again in 2013 to 77. In 2015 the number of new registrations dropped even further to a record low of only 71 new registrations. The majority of companies registered at the Registrar of Companies and Official Receiver have been in operation for more than ten years. Also, more than 30% of registered companies have been in operation for more than 25 years.
March 16 - 22, 2016
COMMENT | 7
Iran after the elections By Dr Andrestinos Papadopoulos Ambassador a.h. The recent elections in the Islamic Republic of Iran could be considered a turning point in the history of the country. The elections unhesitatingly approved President Rouhani’s moderate policy which achieved the lifting of the sanctions after the conclusion of the agreement with the EU3+3 over its nuclear programme. The resounding victory of the reformists was a vote of confidence in his vision of a great Iran, after years of pressures and tough sanctions. In a twin election for the parliament and the Assembly of Experts, a legal body who elect the Supreme Leader, Ruhani and his allies won 16 out of the 16 Tehran seats in the 88member assembly, while candidates on the reformist list took all 30 parliamentary seats in the Tehran constituency. It is worth mentioning that the chairman of the Assembly of Experts, Mohammad Yazdi, lost his seat as did Mohammad Mesbah, the spiritual mentor of former conservative President Ahmadinejad. Among the elected MPs, there are some women as well, even though this could not be good news for certain ultra-conservatives in the political spectrum. In an election of high stakes, the huge turnout, including many young voters, is a significant sign of the wish for change. These young people expect in the post-sanctions Iran that foreign investment will bring more jobs and better living standards as a result of economic growth. The challenge now is internal liberalisation which is sought by reformists through social and economic freedoms. I was recently in Tehran. Talking to people directly, I felt such a demand by the young generation. However, they have no problem to express their opinion freely, and this was interesting and important. For example, they were not happy with the process of vetting electoral candidates that has led to the exclusion of a good number of candidates, mostly claimed to be reformists. Prominent conservatives oppose the economic reforms proposed by the government and the opening up to the west. On the other hand, the highly educated Iranians, their hospitality and openness to the foreigners left me greatly impressed. This was the case when I delivered a speech at the
Where the most U.S. foreign aid will be spent in 2016 This year, the Obama administration has requested Congress allocate $37.9 billion to foreign assistance funding. Even though the final appropriation could differ significantly from the requested amount, the majority of it is set to go to governments in the Middle East. The president requested the largest amount for Israel, $3.1 billion. According to the U.S. government, this funding is distributed for strategic, economic and moral reasons and especially to support global peace, security, and development efforts, as well as providing humanitarian relief during times of crisis. (Source: Statista)
Institute for Political and International Studies on “Middle Eastern developments and the Cyprus problem”. Members of this high-calibre think thank put pertinent questions and made comments to the point. The standard of journalism was also impressive. I visited some of the media including the English TV channel called Press TV, News Agency and a newspaper. I was touched when I was given a copy of the newspaper for the blind (Iran sepid) and I was told that this is a daily newspaper. In the magnificent building of the Foreign Ministry I had meetings with the Regional Director and other seasoned diplomats, exchanging views on our bilateral relations which is on the right track. Already, our Foreign Minister Ioannis Kasoulides and Trade Minister Georgios Lakkotrypis visited Tehran, while the Iranian Minister of Justice and high ranking officials from the Foreign Ministry, the ministries of Finance, Higher Education and Social Welfare of Iran have visited Nicosia. It is my educated guess that the visit of President Anastasiades
will not be long. Coming now to the political dimensions of the outcome of the first election since the nuclear deal, we observe that a strong and reformist Iran will adopt a more dynamic foreign policy in the region, where it could antagonise Saudi Arabia even more. Supremacy in the Middle East is the apple of discord. Acceptance of Iran by the West as well as the East will make life difficult for Turkey and Saudi Arabia, as they support opposing sides in Syria’s civil war. Moreover, Saudi Arabia fears being replaced by Iran as the US primary Persian Gulf ally. Obama’s statement that the nuclear agreement is “a very good deal that achieves one of our most critical security objectives” points to this possibility. We should be assured of one thing. In the years to come, the region and the world will feel the impact of the recent elections in Tehran, especially if the existing trend could be continued up to the Presidential elections of 2017 in Iran.
March 16 - 22, 2016
8 | COMMENT | financialmirror.com
CATCHING UP WITH THE KETCHUP My earliest memories of food are of my mother preparing her own vegetable soup. No food processors in those days – it was hard work. Vegetables were peeled, washed and chopped and cooked in a large pot of stock. They were then separated from the liquid and pressed by hand through two sieves, a coarse one first and then a fine one. Nowadays, we have all kinds of equipment to peel, chop, dice and cook soup. A good lunch it can make, too. Other memories of my childhood are of being allowed, aged four, to accompany my older brother (then rising fourteen) on a camping expedition to a field a mile or so from our house. My mother packed our supper: slices of cooked ham, with bread and butter. A small bottle of Heinz tomato ketchup went along too, for added flavour. I was in heaven, watching my older brother heat up his supper in a “Billy Can” over a fire he’d made of sticks and drift wood and cried loudly when my father came to take me home. My brother stayed the night in his tent. Ever since – many years! – I have enjoyed ham with tomato ketchup. Our years in Cyprus were no exception – the country has one of the best pork industries in the world and the ham and bacon products are second to none. So, thinly sliced Lountza and locally made ketchup were regularly on our table. And none better than the locally made stuff.
FOOD, DRINK and OTHER MATTERS with Patrick Skinner 1 tbsp flour 12.5 cl milk 75 cl of hot chicken or light meat stock
Method 1. Melt butter in a large thick saucepan. 2. Fry leek/onion, bacon, mushrooms and celery for around 5 minutes stirring regularly. 3. Add root vegetables, stir and cook on medium heat for around five minutes, stirring now and then. 4. Remove pan from cooker, stir in flour and cook gently for a couple of minutes, stirring the while. 5. Add milk, stir in carefully, and cook a minute or two. 6. Add tomatoes and stock, slowly, stirring carefully. 7. Bring slowly to boil, turn down heat and simmer for around 30 minutes. If you like thick soup, use a little more flour. If you like it thinner, add more stock at the simmering point. Serve with croutons, if you like, and sprinkle mint and parsley about with gay abandon if you choose, but for me some crunchy, crispy fresh baked village bread is the only accompaniment necessary.
My Cook Book
At first this lovely red goo came in posh glass bottles, like this one on the left. Then, the profitmotive kicked in and cheaper plastic packs came in. Yes, the red goo was the same, but it didn’t feel like it. I would happily have paid more to continue with the glass bottles!
Tomato ketchup is a great thing in the kitchen as well as on the table. It will enliven a meat sauce made from cooked beef or lamb. Added to a Bolognese sauce (“Ragu”), it gives it a little extra lift. A spoonful or two enhances soups, too. Like this one, for example.
Potage Paysanne This is a sturdy soup for colder days. It can use a variety of vegetables, according to availability.
Ingredients (4-6 plates) 150 g butter 2 large carrots, 2 small turnips and 2 small parsnips, finely diced, or an equal volume of any root vegetables (except beetroot) 2-3 sticks celery, finely sliced 2 smallish leeks and 1 medium (or 2 largish onions) finely chopped 150 g mushrooms, finely chopped 3 rashers streaky bacon, cut into thin slivers 3 medium tomatoes, skinned and de-seeded and a squirt or two of tomato ketchup to add richness
When “Patrick Skinner’s Cyprus Kitchen” was published in 1998, it was fortunate that it spent some weeks in the Cyprus best-selling books (non-fiction) list, because I prevailed upon the publisher to print 5,000 copies – a very optimistic number at that time for the Cyprus market. But, with the aid of several thousand sold at the donkey sanctuary in Vouni which Mary and I were running, it sold out. I believe Ruth Keshishian at Moufflon book shop still has one or two, if anyone is interested! Over the years I have been asked now and then if I am going to update it. The answer is “yes”, but it will not be a printed edition. So, old Patrick will be publishing a Kindle E-book this summer. You will be the first to know when it’s available! Since the brilliant Ms Cazalet cartooned me for the cover, above, not a lot has changed, except my hair’s a bit whiter now!
Calling all Wineries! I am planning to produce a new survey of the wines and winemakers of Cyprus, for international distribution, and in coming months intend to contact/visit all those commercially operating to gather information and photographs. The first step will be to Email all winemakers with details of the project and to seek their cooperation. Go to www.eastward-ho for recipes, food and wine news and notes.
March 16 - 22, 2016
financialmirror.com | COMMENT | 9
Cyprus CEOs more confident than global counterparts PwC survey says they expect an increase in revenues CEOs in Cyprus are more confident about their company’s prospects for revenue growth, according to the local findings of PwC’s 19th Annual Global CEO Survey, “Redefining business success”. Eighty business leaders of some of the largest organisations in Cyprus participated in the fifth consecutive local survey, while the global survey sample consisted of a total of 1,409 CEOs in 83 countries. According to the local survey, even though CEOs in Cyprus share the concerns of their counterparts as regards the outlook of the global economy, the vast majority remain confident about their own company’s prospects for revenue growth over the next 12 months. More specifically, 20% said they were very confident and 65% somewhat confident, compared with 14% of the CEOs who said they are not confident. As regards the global economic growth, 49% of CEOs in Cyprus expect that it will remain the same, while 19% anticipate that it will decline, in contrast to 33% who believe that it will improve over the next 12 months. On a global level, CEOs are less optimistic about the future of the global economy compared to 2015. The same applies to prospects for revenue growth, with just 35% saying they are very confident, as opposed to last year’s 39%. Another key factor is that 53% of Cyprus CEOs see opportunities for growth, whereas CEOs globally with a percentage of 66% see more threats than opportunities than
three years ago. When it comes to the threats, 76% of Cyprus CEOs are
concerned about the geopolitical uncertainty in the region, while 70% are equally concerned about the Eurozone debt crisis. The state’s response to fiscal deficit and debt burden is also a source of concern for 69% of participants in Cyprus, while an equal number of participants are concerned about the over-regulation affecting their field of activity. Furthermore, 65% of CEOs consider bribery and corruption a major threat to their companies’ future, when the corresponding figure in the Eurozone is just 38%. “The confidence expressed by CEOs comes at a time of positive developments for the Cyprus economy, such as the return to growth, the upgrading of credit ratings and the exit from the three-year bailout programme, as well as the progress in doing business recorded in international reports,” said PwC Cyprus CEO Evgenios Evgeniou. “Even though there is still a lot to be done the survey findings affirm that our country is entering a new era. The aim of viable growth, both for the businesses that are the backbone of economic activity in Cyprus and the economy as a whole, is today more feasible and realistic than ever.” The local findings of the 19th Annual Global CEO Survey were presented by Philippos Soseilos, Partner in charge of consulting at PwC Cyprus, during an event in Nicosia, joined on the panel by Bank of Cyprus Group CEO John Patrick Hourican, Dr. Andreas Pittas, Executive Chairman of Medochemie, and Constantinos Petrides, Under Secretary to the President. The findings are available on the PwC website www.pwcceosurvey.com.cy
U.S. CEO economic forecast remains near 3-year low Chief executive officers of large American companies are not becoming more upbeat on the U.S. economy in 2016 than they were in the fourth quarter of 2015. The Business Roundtable CEO Economic Outlook Index rose slightly from 67.5 in the fourth quarter of 2015 to 69.4 this year. The long-term average for the index is 79.9. While not exactly a ringing endorsement of the direction of the U.S. economy, the slim improvement does bring to an end three consecutive quarters of a declining index. The figure is calculated based on sales, hiring and capital spending forecasts for the next six months. According to the fourth-quarter data, over the next six months, CEO expectations for sales increased by 8.5 points and their plans for capital expenditures increased by 7.1 points. The group’s second GDP forecast for 2016 indicated expected growth of 2.2%, down from the prior estimate of 2.4%. Hiring plans fell by nearly 10 points compared with the prior quarter. In the fourth quarter of last year, some 35% of CEOs had plans to increase hiring; that number has slipped to 29%, while the percentage expecting to reduce employee
counts rose from 34% to 38%. Doug Oberhelman, chairman of Business Roundtable and chairman and CEO of Caterpillar, said: “Mixed expectations for near-term sales, investment, hiring and growth point to an economy that continues to lack momentum. These results only reinforce the need for Congress and the Administration to act this year to enact policies that boost job creation and economic growth, such as quickly ratifying the TPP [Trans-Pacific Partnership], modernising America’s outdated business tax system, and embracing a smart regulatory environment.” The first quarter 2016 survey was completed between February 10 and March 2. Responses were received from 141 member CEOs. The data are used to create the Business Roundtable CEO Economic Outlook Index and sub-indexes for sales, capex and hiring expectations, where readings at 50 or above indicate an economic expansion and readings below 50 indicate an economic contraction. The survey has been conducted quarterly since the fourth quarter of 2002. (Source: 24/7 Wall St.com)
March 16 - 22, 2016
10 | COMMENT | financialmirror.com
What are the 25 highest-paying jobs in America? By Thomas C. Frohlich The technology and health sectors are two of the most vibrant, highly innovative, and ultra competitive industries in the U.S. economy. To maintain relevance, companies in these industries require highly skilled and often highly educated employees. Such employees do not come cheaply and to attract them, companies offer large compensation packages. 24/7 Wall St. reviewed the 25 highest paying jobs in America ranked by median annual base salary. Employee experience review company Glassdoor identified the jobs based on salary reports employees in these jobs shared on glassdoor.com over the past year. Physicians and lawyers are the highest and second highest paying professions in the United States, with salaries of $180,000 and $144,500, respectively. The majority of the 23 other highest paid occupations are — like physicians — in the health sector but also in the technology sectors. The highest paying jobs are concentrated in these sectors largely because they are in high demand. These professions also frequently require skills that are exceedingly difficult to automate. In an email with 24/7 Wall St., Dr. Andrew Chamberlain, Glassdoor chief economist, explained that many of these health sector and technology jobs involve a level of judgment and creativity that is impossible to automate at present. “The urgency of many healthcare scenarios requires snapdecisions or creative solutions to existing medical conditions,” Chamberlain gave as example. Similarly, in the technology sector, a degree of flexibility and creativity in these highly paid jobs is required that is very difficult to automate. Fifteen of the 25 highest paying jobs are management positions. While Glassdoor’s data do not suggest that managerial positions are on the rise, managers in any given industry are often better paid. “The manager skill set that requires maintaining a working team in a fast-paced, highly-educated industry like tech, finance or healthcare is also something that employers find difficult to automate, and will invest in with higher employee salaries,” said Chamberlain. By contrast, the typical receptionist, server, leasing consultant, or office assistant — to give just a few examples — earn starting salaries between $30,000 and $35,000. The relatively low salaries for these jobs can be at least partially attributed to the fact that, unlike the highest paid occupations, they do not typically require high levels of education, technical skills. In some cases, automation of these jobs is also partially to blame. Pay is among the most important factors for individuals looking for a job. According to a recent Glassdoor survey, more than two-thirds of people consider compensation one of their primary considerations when accepting a job. While a high salary may attract job-seekers to particular positions, once they are in the job, pay is by no means the primary driver of employee satisfaction. “When we dig deeper into what keeps employees satisfied once they’re in a job and with a company, we find that culture and values, career opportunities, and trust in senior leadership are the biggest drivers of employee satisfaction,” Chamberlain said. 24/7 Wall St. reviewed Glassdoor’s 25 Highest Paying Jobs in America report, according to which: “For a job title to be considered for Glassdoor’s 25 Highest Paying Jobs in
America report, job titles must receive at least 75 salary reports shared by U.S.-based employees over the past year (1/24/15 – 1/23/16). The number of job openings per job title represents active job listings on Glassdoor as of 2/23/16. If job titles have the same median base salary, the job title with the higher number of job openings receives higher rank. This report takes into account job title normalisation that groups similar job titles. C-suite level jobs were excluded from this report.” In addition to data from Glassdoor, we reviewed job outlook for jobs listed in the Bureau of Labor Statistics Occupational Outlook Handbook. These are the 25 highest paying jobs in America.
1. Physician - Median base salary: $180,000 - Number of job openings: 2,064 Like law professions, doctors and physicians have been among the most highly-paid and respected occupations for
A wide range of organisations in many industries require some research and development, and the individuals capable of managing such projects do not necessarily have the same set of skills and educational background. The profession will likely remain relatively invulnerable to offshoring and automation, and the starting base salary of $142,120 is among the highest in the country. On the other hand, Glassdoor estimates just 112 job openings, one of the lower such figures of any U.S. occupation.
4. Software development manager - Median base salary: $132,000 - Number of job openings: 3,495 Automation and offshoring are among the most prominent forces impacting U.S. industries and employment. Much of the automation trend is fueled by software and other technological advancements. Since humans will likely continue to design and construct this software into the foreseeable future, software development managers will likely remain in high demand. Not only are such workers highly paid, but they are also in high demand — Glassdoor estimates close to 3,500 current job openings, above average.
5. Pharmacy manager some time. A typical U.S. worker starting out as a physician earns $180,000 annually. The growing population of elderly Americans is expected to only accelerate in coming years, a trend that will increase the demand for physicians and other medical practitioners.
- Median base salary: $130,000 - Number of job openings: 1,766 The pharmaceutical and health care industries in the United States are closely interlinked. Like many other health professions, pharmacy managers are largely protected from competition and automation. Pharmacy managers are often trained pharmacists, another one of the highest paying jobs.
2. Lawyer
6. Strategy manager
- Median base salary: $144,500 - Number of job openings: 995 The value of a law degree has been recently questioned due to the high number of law school graduates relative to job openings. Perhaps as a result, law school enrollment has fallen in recent years. Still, the demand for legal services will likely remain steady in the future, as the BLS projects growth for lawyer occupations in line with the national average. Due to the high level of education required, lawyers are also very well paid, trailing only doctors in starting salary.
- Median base salary: $130,000 - Number of job openings: 701 Strategy managers frequently consult companies charged with complex problems and large management teams. Strategy managers are usually relatively well educated, but perhaps more importantly, most positions call for many years of experience.
3. Research & development manager - Median base salary: $142,120 - Number of job openings: 112
7. Software architect - Median base salary: $128,250 - Number of job openings: 655 The increased use of technology guarantees at least steady demand for many technology-related jobs. In particular, demand for software developers and architects will continue to rise with the increased use of computerised applications, which further drives up wages. The base salary of a software
March 16 - 22, 2016
financialmirror.com | COMMENT | 11 Compared with many other wellpaying jobs, which tend to be in high demand, there are relatively few openings for actuary positions. Just 175 actuary jobs are currently listed, according to Glassdoor. The relatively low number is likely due to the very high level of specialisation required as well as the relatively few industries in which actuaries are needed. The job offers a very high base salary at an estimated $115,000.
20. Data architect
architect in the United States is $128,250 a year, one of the highest — even among technology jobs.
8. Integrated circuit designer engineer - Median base salary: $127,500 - Number of job openings: 165 Integrated circuits, chips, microchips, or semiconductors are essential component of virtually all computing products and processes. Anything from an automobile’s electric windows to a computer’s operating system requires chips of some kind. Designers and engineers of these products spend many years learning the necessary knowledge and skills, and are therefore in high demand. While the pay is high, Glassdoor estimates a relatively low number of current job openings.
9. IT manager - Median base salary: $120,000 - Number of job openings: 3,152 Information technology managers are needed to manage IT infrastructures, especially in expanding organisations. Not only do these workers require knowledge of computer systems, but also management skills.
10. Solutions architect - Median base salary: $120,000 - Number of job openings: 2,838 Solutions architects deal primarily with data-related projects and often work in consulting and technology firms that offer data storage products and services. The typical pay for a starting worker in the occupation is $120,000.
11. Engagement manager - Median base salary: $120,000 - Number of job openings: 1,452 Like a number of other high-paying jobs, as well as management occupations more specifically, engagement managers employ skills not easily automated or deliverable from overseas. This particular management position is applicable to a wide a range of organisations and industries. Engagement managers often deal with complex and unique client relationships, a set of skills that, like in other jobs on this list, are not easily automated by technology.
12. Applications development manager - Median base salary: $120,000 - Number of job openings: 263 Application development managers typically require a degree in computer science. Like many of the nation’s highest-paying jobs, employees in this professions almost always work for technology companies.
13. Pharmacist - Median base salary: $118,000 - Number of job openings: 4,502 Pharmacists dispense prescribed medications and frequently offer advice to consumers. The profession is in
particularly high demand in the United States, which is the world’s largest consumer of pharmaceuticals as well as a leader in industry research. Like other health-related fields, trends such as the rapid aging of the U.S. population will continue to drive up pharmacist employment.
- Median base salary: $113,000 - Number of job openings: 762 Due to technological developments, increasingly massive quantities of data are collected and stored, driving up demand for people capable of maintaining and organising databases. Employment in this field and other similar professions will likely grow considerably faster than most occupations. The high demand also largely explains the high average base salary of $113,000.
14. Systems architect
21. Tax manager
- Median base salary: $116,920 - Number of job openings: 439 Systems architects require a computer science background as well as knowledge in other fields. These professionals are required to integrate both software and hardware components. For a given project, a systems architect is also frequently responsible for taking into account cost, space, the positions of stakeholders, and user preferences.
- Median base salary: $110,000 - Number of job openings: 1,495 Taxes have some impact on practically all adults, companies and industries in the United States. The U.S. tax code may also be as complex as it is ubiquitous. For these reasons, tax-related employment will likely remain stable. Tax managers are also very well paid, earning an average base salary of $110,000 annually.
15. Finance manager - Median base salary: $115,000 - Number of job openings: 2,582 Finance manager jobs are high paying and in relatively high demand. The average base salary of $115,000 is higher than that of other U.S. occupations, and the 2,582 current open positions exceed most other jobs in the industry. Finance managers are responsible for the financial health of an organisation.
16. Data scientist - Median base salary: $115,000 - Number of job openings: 1,985 The rising demand for data analysis not only helps explain the high wages for data scientists, but also makes the occupation one of the most indispensable professions available today. The occupation offers an estimated starting salary of $115,000, and close to 2,000 job openings are currently listed on Glassdoor.
17. Risk manager - Median base salary: $115,000 - Number of job openings: 1,137 Risk managers are frequently employed in the insurance and financial sectors. Hedging risks properly is essential to both of these industries. Also, like most other professions on this list, risk management may require a level of discretion not currently available from automated processes.
18. Creative director - Median base salary: $115,000 - Number of job openings: 696 Automation of simple and even complex tasks is making an increasing number of occupations obsolete. As Chamberlain explained, managerial jobs such as the creative director often require a very high level of judgement and creativity which is at present impossible to automate. The flexibility required to manage a team of workers or unique client relationships is also virtually immune to competition from automated techniques.
19. Actuary - Median base salary: $115,000 - Number of job openings: 175
22. Product manager - Median base salary: $107,000 - Number of job openings: 7,758 The skills associated with product management — guiding a team and developing sales strategies, for example — are relatively broad and apply to companies in nearly all industries. Like most of the top-paying jobs, product management employment is also not as vulnerable to offshoring as employment in other U.S. industries. There seem to be many available product management positions, as 7,758 openings are currently listed. This could suggest high demand for the job.
23. Design manager - Median base salary: $106,500 - Number of job openings: 510 Depending on the employer, design managers work on a wide range of projects, from interior decorating to engineering projects and many others. Design managers create new user interfaces and graphic designs for the projects.
24. Analytics manager - Median base salary: $106,000 - Number of job openings: 988 Due to technological advances, data collection is far easier than it once was. But all this data needs to be analysed in a useful manner. This analysis often helps organisations improve decision-making and efficiency. With improved data collection, analytic manager employment is expected to grow by 30% through 2024, considerably faster than the average growth for all U.S. occupations.
25. Information systems manager - Median base salary: $106,000 - Number of job openings: 147 With a median base salary of $106,000, information systems managers are some of the highest paid workers in the country. Like many other high-paying jobs, the high level of education necessary for this job partially explains the high pay. On the other hand, there are only 147 information systems manager job openings currently listed on Glassdoor, relatively few compared to other top-paying professions in the technology industry. (Source: 24/7 Wall St.com)
March 16 - 22, 2016
12 | PROPERTY | financialmirror.com
Higher regulation of BTL is credit positive for UK banking Recent measures to cool the buy-to-let (BTL) mortgage market will support the creditworthiness of the UK banking system by helping to ensure robust lending standards, according to Moody’s Investors Service. “Once implemented, the UK government’s tax and stamp duty initiatives should help to temper the growth of the BTL sector,” said Riccardo Rinaldini, an analyst at Moody’s. “This should reduce the tail risk of a sharp decline in house prices from a concentrated market sell-off when interest rates eventually rise.” While the current favourable economic environment — including low unemployment and low interest rates — has helped keep BTL mortgage arrears low, the BTL sector could negatively affect UK banks if things change. “We consider BTL mortgages to be inherently riskier than owner-occupied mortgages,” explained Rinaldini. “If borrowing costs rise and rental income no longer covers landlords’ interest payments, a broad based sell-off of BTL properties could fuel a fall in house prices, negatively affecting all banks and building societies in the UK.” The rating agency says the initiatives help ensure robust lending standards, which supports the creditworthiness of banks and building societies, even if they reduce a source of revenue for some banks by slowing the growth in BTL origination. “The Treasury’s Autumn statement announcements have cost implications that will hamper growth in the BTL market. These cost implications could deter new borrowers from entering the market, thereby dampening the demand for BTL loans in the medium term,” said Greg Davies a Moody’s Assistant Vice President in Structured Finance. “However, securitised transactions backed by BTL mortgages will benefit from the UK’s stable housing market and strong underwriting criteria. Therefore, the decrease in BTL loan origination will not have a negative impact on the performance of transactions backed by BTL mortgage loans,” added Davies The volume of outstanding BTL mortgages in the UK has more than doubled since 2007 to GBP 176 bln at year-end 2015 (15% of residential mortgage loans) from GBP 85 bln in 2007 (9%). Greater harmonisation of the treatment of the BTL mortgage market segment with that of the owner-occupied sector will also be credit positive for the UK’s banking sector, in Moody’s view. The rating agency notes that — from a conduct point of view — 98% of outstanding BTL mortgages were not under the Financial Conduct Authority’s scope in September 2015. Of the 2% that were in scope, most included loans secured on the property of a borrower’s close relative. Recent actions from the Treasury and the PRA include the Treasury Tax Relief Cuts, the Treasury’s Consultation to grant the Financial Policy Committee (FPC) powers of direction on the BTL sector; the PRA review of BTL underwriting standards; and implementation of the EU Mortgage Directive.
That house prices are extremely high in London is by now no secret. But recent figures from the National Housing Foundation show that the gulf between average earnings and average house prices in the British capital is perhaps even larger than some would have suspected. Assuming the average Londoner would like to buy a house in the borough they currently reside in, the percentage increase in earnings required to get an 80% mortgage range from 105% in Bexley to a completely unattainable 653% in Kensington and Chelsea. Even for those who are realistic enough to have given up on the dream of owning a piece of prime real estate in Kensington, the average earning London resident (GBP 32,838) would need a pay increase of 266% to get a
mortgage on the average abode - priced at GBP 526,085. The situation isn’t helped by the fact that there are 48,000 second homes in London, with more than 5,000 in each of Kensington and Chelsea, Westminster, Camden, and Tower Hamlets. David Orr, chief executive of the National Housing Federation, said: “A secure and affordable home should be available to everyone. Living in London doesn’t have to mean living in cramped, overpriced, insecure accommodation; the housing crisis is not inevitable. Housing associations know how to tackle the crisis and provide quality homes which suit all Londoners.” This infographic featured recently on the Independent’s i100. (Source: Statista)
March 16 - 22, 2016
financialmirror.com | PROPERTY | 13
A dangerous development µy Antonis Loizou Antonis Loizou F.R.I.C.S. is the Director of Antonis Loizou & Associates Ltd., Real Estate & Projects Development Managers
On January 25, the local chapter of the Royal Institute of Chartered Surveyors (RICS) hosted a public session on the subject of valuations with the main speakers being John P. Hourican, CEO of Bank of Cyprus, and Pavlos Loizou, Chairman of RICS Cyprus. During the discussion, the main issue raised was about the inequality of valuations with relatively large differences for the same property by different valuers. This is partly understandable as we are in a bear market that has limited sales (or not at all in some areas) and therefore it is difficult to base an estimate on data that do not exist. So, in most cases appraisers adopt data from previous years and reach a conclusion by deducting various rates that, for example, depending on the date of the existing sale,
etc. The fact that there are no sales or sales are limited, does not necessarily mean that the property in question has no value. All properties have a certain value, but the question is how much of this is based on the lack of information. This is a difficult case to resolve, even impossible, to determine the value under such conditions (in the absence of several comparative sales in the last 2-3 years). The situation gets worse in rural areas especially where sales are almost zero. This problem is particularly obvious in the Cypriot market as this is one which should not only take into account the current economic situation (which is unprecedented), but also the seizure of deposits and the fear that exists in the general public, of a new haircut on deposits being repeated (right or wrong, this is the opinion that prevails). Now, the lenders have started to take as collateral against debt various properties and the debt exchange of properties (swap deals) and disposals of property have begun. It is assumed that under the above conditions the prices declared to the Land Registry under such circumstances would be at forced-sale levels, or around 70% -75% of the market value regardless of where this is. As these transactions will dominate in the coming years, the prices that will be recorded in the Land Registry records and available to valuers will be these discounted prices. As a result and following the best known, comparative estimation method (ie. how much similar properties were sold for based on the Land Registry data) it is clear that valuers will adopt these forced-sale prices as the going market value and will further reduce them by 20% -25% to reach forcedsale value that is usually adopted by the lenders. Therefore, at the end of the “new” forced-sale estimation the value will be 75% of 75%, or around 55%. So, if your plot for reasons of example is worth EUR 100,000, in
the end it will end up at EUR 56,000. This level will affect most borrowers, it will affect the broader market (of free transactions) as the data will indicate prices being 20%-30% lower, and will also affect the lenders themselves – as based on the above, the value of their collateral and even those that will be required in the future will be greatly reduced. So, we will have a self-destructive cycle that impacts everyone. Our firm suggested, at the meeting, that “the forced-sale” transactions receive some sort of clarification in the Land Registry files (eg. with an asterisk) so that the estimator / owner / lender knows where this valuation came from. This may be difficult, though, not only because it may violate the privacy rights of the original owner, but the market will have two valuations, one for the forced-sale transaction and the other from an openmarket transaction. As boring as this article may be, as it involves certain technical issues, rest assured that it is very important not only for the public to know, but also for the lenders themselves and even the Ministry of Finance,
which might, in the case of a new reassessment, be surprised as regards the quality / value of their collateral, causing degradation and perhaps (God forbid) a new haircut. Despite my years of experience on the issue of the real estate and property valuations for more than 36 years and despite all our concerns, I have not yet managed to find a solution to this problem. Perhaps a joint meeting with the Land Registry and lenders, appraisers, the Privacy Commissioner and Attorney General can help with some new ideas. As it is known, under the ECB directives property should be reassessed every 2-3 years depending on the type of property. Now, massive revaluation are underway by lenders to conform with the new guidelines – we will wait and see the results – while in forthcoming years and with the foreclosures, we might find ourselves before new major surprises. I appeal to the Minister of Finance, despite the many that he certainly has to deal with, to consider this matter very seriously. www.aloizou.com.cy ala-HQ@aloizou.com.cy
Property sales up 54% y-o-y in February Property sales were up 54% year-onyear in February, according to the Land Registry. The data which relate to sales contracts submitted to the Registry rose to 501 in February compared to 325 in February 2014. January saw an increase of 2% compared to a year earlier. In the first two months of the year the contracts submitted increased by 28% to 828 compared to 646 in the first two
months of 2015. In Nicosia district, property sales contracts were up by 76%, for a total of 79 compared to 45 in February 2015. In Limassol the increase was 85%, to 179 compared to 97 last February and in Larnaca property sales were up 52% to 108 in February this year compared to 71 in February 2015, reversing a drop of 13% in January. In Famagusta district property sales were up by 30% and in Paphos by 18%.
Leptos Estates reports successful shows in London, Moscow, Kiev, Dubai, Tehran and Beijing Success continued for Leptos Estates at international real estate and investment exhibitions over the last few weeks in the UK, Russia, Ukraine, UAE, Iran and China. A large number of buyers and investors were attracted by the company’s latest coastal line projects “Adonis Beach Villas” in Paphos and “Limassol Del Mar”, two of the most luxurious modern seafront home developments in Cyprus at present. Leptos Estates sales and marketing teams are promoting not only the company but the towns of Paphos and cosmopolitan Limassol as well and will continue this particular exposure during the months of March and April in Germany, Jordan, Lebanon, South Africa and Egypt expecting to meet and attract high quality investors.
March 16 - 22, 2016
14 | MARKETS | financialmirror.com
What’s all the hullabaloo about ECB announcements? By Oren Laurent President, Banc De Binary
The president of the European Central Bank (ECB) recently announced the decisions of the Governing Council. Various monetary policy decisions have been taken, and will be implemented in the European economic area. These include a total of 6 points, all of which are aimed at combating deflation, maintaining the value of the euro, accelerating the velocity flow of money through Europe to increase wages, production capacity and the like. The 6 points include the following: - The ECB will increase its asset repurchases program by EUR 20 billion per month, up from EUR 60 billion per month. This will commence in April 2016. The goal of this policy is to flood the market with greater access to capital, to increase spending, raise investment and allow inflation to gradually rise. Presently, one of the major problems with the European economy is deflation and Mario Draghi is intent on using all available resources to combat this problem. - On Wednesday, 16 March – the same day as the Fed announces its interest rate decision – the ECB will implement a 10-basis point decline in the deposit rate to 0.40%. Negative rates are already in effect in countries like Japan, Switzerland and Denmark, and the goal is to discourage commercial banks from ‘parking’ excess funds with the central bank. The theory is that banks will then make additional funds available to borrowers, thereby spurring economic activity. - The Re-Fi rate of the Eurosystem will decline by 5-basis points to 0% as from 16 March, 2016. - 4 long-term Re-Fi operations known as (TLTRO II) with 4-year maturities will be operational within 3 months. The ECB announced that borrowing conditions on these TLTRO II operations will be as low as the prevailing interest rates at the deposit facilities. - Also on Wednesday, 16 March the rate on the MLF (Marginal Lending Facility) will decline by 5-basis points to a level of 0.25%. - Among others, investment-grade bonds (denominated in euros) which are issued by non-bank corporations in the European economic area will also be included in the available assets that will be eligible for regular purchases by the ECB.
Takeaways from the ECB Policy Measures One of the most curious of Mario Draghi’s comments was when he intimated that he does not foresee additional rate hikes given the current economic assessment. However, the aggressive measures which have been adopted by the ECB are part and parcel of a much broader strategy set forth by
Mario Draghi a while back when he said he would use all powers at his disposal to prevent the collapse of the euro and of the European economy. Several years ago, Draghi said the following: ‘Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me it will be enough.’ Back in 2012 at the height of the debt crisis, Mario Draghi promised to do ‘whatever it takes’ to save the eurozone from collapsing. There is a great degree of sensitivity vis-a-vis the economic realities and challenges of the region. Even though Draghi made the comment about not anticipating future rate hikes, the truth is that the ECB will do whatever is needed if economic conditions warrant additional action. If growth targets and the targeted 2% inflation rate are not being attained, the ECB will act. The big issue however is precisely how efficacious central banks are nowadays when it comes to dealing with major economic crises. The recent equities rout that has rocked major averages around the world is due in no small part to the loss of confidence in central banks. Traders, investors and financial analysts have all but lost confidence in the ability of central banks to stem the economic rout that is taking place. This rejectionist movement has manifested itself in a groundswell of support for anti-establishment political candidates contending the US presidential elections. Candidates like Ted Cruz and Marco Rubio have lost support to antiestablishment candidates like Donald Trump. Much the same is happening on the Democratic side with a relative unknown in Bernie Sanders posing a considerable challenge to the nomination of Hillary Clinton as the Democratic front-runner. The establishment represents government and all governing bodies, and the populace is quickly tiring of their ability to effectively deal with the socio-economic challenges faced around the world. It is for these reasons that a sharp selloff in banking stocks took place in January and February 2016.
low for a period of time. The ECB chief believes that this is a necessary condition to maintain, since the European economic area growth appears to have a strong negative bias. It is interesting to point out that the interest-rate decisions in the 6 points listed by the ECB will come into effect on the same day that the Fed will be announcing its interest-rate decision. The current rate in the US is 0.50%, and while there is a 0% likelihood of a rate hike at this juncture (according to market analysts) the timing of the ECB announcements is curious. The Fed and the BOJ will be announcing their monetary policies this coming week, and like it or not, central banks in the Bank of Japan, European Central Bank, Federal Reserve Bank, Bank of Canada and the Bank of England remain the major drivers of economic activity in the global economy. The outcome of the March 15/16 FOMC meeting of the Fed is already known; what isn’t known is what the minutes of the meeting will say – the statement that follows. That is the nugget that traders will be acting on as it gives an indication of what the Fed is likely to do in upcoming meetings.
ECB won’t be displaced from Pole Position in News Headlines As for the Bank of Japan, no surprises are expected. And the governor of the Bank of Japan recently announced that he will not enforce additional interest-rate cuts at this point. There have been several positive developments taking place in the global economy (increasing prices of iron ore, crude oil and a rush back to equities) and in the Japanese economy will likely stave off any further talk of deposit rate decreases in March 2016. Policymakers in Japan will want to take a long and hard look at the impact of negative rates on the Japanese economy, notably production and manufacturing and the services sector. Since there is a considerable time lag between the implementation of policies and the full effect of those policies to work their way through the economy it is still early days. Policy experts are expecting the Bank of Japan to cut rates further in April if conditions don’t improve. For now, it’s all eyes on the ECB and the impact of EUR 20 billion additional quantitative easing and a 10-basis point reduction in the deposit rate to -0.40%. Please note that this column does not constitute financial advice.
Central Banks are Drivers of Market Sentiment Nonetheless, the ECB will maintain accommodative monetary policies. This means that interest rates will remain
The Financial Markets Interest Rates Base Rates
LIBOR rates
CCY USD GBP EUR JPY CHF
0-0.25% 0.50% 0.00% .-0.10% -0.75%
Swap Rates
CCY/Period
1mth
2mth
3mth
6mth
1yr
USD GBP EUR JPY CHF
0.44 0.51 -0.31 -0.06 -0.80
0.52 0.55 -0.27 -0.02 -0.78
0.64 0.59 -0.24 0.00 -0.75
0.91 0.75 -0.13 0.02 -0.67
1.23 1.02 -0.01 0.11 -0.56
CCY/Period USD GBP EUR JPY CHF
2yr
3yr
1.00 0.84 -0.14 -0.09 -0.73
1.14 0.93 -0.10 -0.10 -0.71
4yr
5yr
1.26 1.37 1.02 1.11 -0.02 0.08 -0.09 -0.06 -0.64 -0.55
Exchange Rates Major Cross Rates
CCY1\CCY2 USD EUR GBP CHF JPY
Opening Rates
1 USD 1 EUR 1 GBP 1 CHF 1.1116 0.8996
100 JPY
1.4250
1.0147
0.8846
1.2819
0.9128
0.7958
0.7121
0.6207
0.7018
0.7801
0.9855
1.0955
1.4043
113.05
125.67
161.10
0.8717 114.71
Weekly movement of USD
CCY\Date
16.02
23.02
29.02
08.03
15.03
CCY
Today
USD GBP JPY CHF
1.1096
1.0984
1.0883
1.0965
1.1047
0.7692
0.7779
0.7844
0.7695
0.7748
127.14
123.42
122.92
123.95
125.17
GBP EUR JPY
1.0955
1.0933
1.0833
1.0881
1.0896
CHF
1.4250 1.1116 113.05 0.9855
Last Week %Change 1.4250 1.0965 113.04 0.9923
-0.00 -1.38 +0.01 -0.69
7yr
10yr
1.57 1.78 1.29 1.50 0.31 0.65 0.02 0.15 -0.34 -0.08
March 16 - 22, 2016
financialmirror.com | MARKETS | 15
The end of the road... Marcuard’s Market update by GaveKal Dragonomics
By Nick Andrews The European Central Bank pulled the trigger, but the bazooka misfired. European stocks peaked half an hour after last Thursday’s new easing measures were announced, but rather as with Japan’s embrace of negative rates in late January, investors quickly focused on the broader significance of the action; equities sold off from their intraday high and the euro surged 3.5% against the US dollar, having initially declined -1.5% after the ECB release. Even 10-year bund yields reversed the initial rally, ending the day at 0.33%. Such moves may just reflect extreme investor positioning, but the more worrying question is whether investors in the coming weeks take fright in the same way that they did after the Bank of Japan decision. The new ECB policies were certainly bold. Monthly asset purchases were upped to EUR 80bn from EUR 60bn, with their scope expanded to cover investment grade non-bank
corporate bonds. The deposit and main refinancing rates were both cut to -0.40% and 0%, from -0.30% and 0.05%, respectively; most importantly, a new Targeted Long Term Repurchasing Operation was introduced. The TLTRO is the ECB’s attempt to offset the squeeze on banks’ net interest margins due to its imposition of a negative deposit rate on excess reserves. The hope is to boost private sector lending with the sweetener that if the rise is big enough, the interest charged on this funding will fall below zero, potentially as far as the deposit rate. So what went wrong? If the policy works, banks will get paid to lend to private entities which amounts to a subsidy to offset the costs of policies such as negative rates with its flattening (and profit dampening) impact on the yield curve. Mario Draghi showed that the ECB shares market concerns that negative rates could hit bank profits. He also implied that the deposit rate was now at its lower limit. The corollary is that the ECB has been forced to shift tack from targeting a weaker euro (through a lower deposit rate) to accepting that interest rate policy has reached its limits. Hence, the new policy settings, with their implicit rejection of further depreciation of the euro, will have implications for the single currency. While further rate cuts seem to have been ruled out, interest rates will be kept at their current low level for a long time as the last TLTRO will mature in 2021. Hence, in the absence of the eurozone falling back into crisis conditions, the euro will largely be driven by US monetary policy. Thursday’s ECB move also reinforces the gathering market meme that monetary policy has run out of road. The suggestion from Draghi was that Europe’s politicians have been granted a breathing space and must step up with more structural reform policies. He characterized such growthboosting measures as having been “fairly limited”, adding that they “need to be stepped up in the majority of eurozone countries.” It is also important to put TLTRO negative rates in some kind of historical context. For decades central banks propped up their commercial brethren in times of low growth and rising bad debt by cutting short term interest rates and steepening the yield curve. The problem today is that with long rates having fallen far faster than short rates, and in many economies being negative out to eight year maturities, that game no longer works. By paying banks to lend, the ECB
is attempting to recreate this dynamic, but the effect will likely resemble a group of teenage friends meeting in late middle age and trying to reproduce the wild times of their youth. Hence, bank stocks are probably still not worth buying and there remains the non-material risk that the next subsidy for banks could actually be an outright nationalization. Even more of a worry is a potential resumption of the centrifugal forces that a few years ago were pulling the eurozone apart. In the absence of a fiscal union and with rising political stress in light of the migration crisis, the main unifying dynamic in the single currency area has been monetary policy and crossborder financial flows. One worrying tail risk would be the realization that this policy has run out of road, resulting in the eurozone again facing an existential threat—a Brexit vote in June could be one such trigger.
WORLD CURRENCIES PER US DOLLAR CURRENCY
CODE
RATE
EUROPEAN
Belarussian Ruble British Pound * Bulgarian Lev Czech Koruna Danish Krone Estonian Kroon Euro * Georgian Lari Hungarian Forint Latvian Lats Lithuanian Litas Maltese Pound * Moldavan Leu Norwegian Krone Polish Zloty Romanian Leu Russian Rouble Swedish Krona Swiss Franc Ukrainian Hryvnia
BYR GBP BGN CZK DKK EEK EUR GEL HUF LVL LTL MTL MDL NOK PLN RON RUB SEK CHF UAH
20650 1.425 1.7592 24.3197 6.7089 14.0738 1.1116 2.335 278.65 0.63216 3.1059 0.3861 19.8 8.5048 3.858 4.0176 70.5455 8.341 0.9855 26.2279
AUD CAD HKD INR JPY KRW NZD SGD
0.7466 1.3342 7.7598 67.315 113.05 1187.35 1.505 1.3783
BHD EGP IRR ILS JOD KWD LBP OMR QAR SAR ZAR AED
0.3770 8.9238 30191.00 3.8925 0.7065 0.3009 1513.00 0.3850 3.6413 3.7498 15.6556 3.6729
AZN KZT TRY
1.6075 343.12 2.8810
AMERICAS & PACIFIC
Australian Dollar * Canadian Dollar Hong Kong Dollar Indian Rupee Japanese Yen Korean Won New Zeland Dollar * Singapore Dollar MIDDLE EAST & AFRICA
Bahrain Dinar Egyptian Pound Iranian Rial Israeli Shekel Jordanian Dinar Kuwait Dinar Lebanese Pound Omani Rial Qatar Rial Saudi Arabian Riyal South African Rand U.A.E. Dirham ASIA
www.marcuardheritage.com
Disclaimer: This information may not be construed as advice and in particular not as investment, legal or tax advice. Depending on your particular circumstances you must obtain advice from your respective professional advisors. Investment involves risk. The value of investments may go down as well as up. Past performance is no guarantee for future performance. Investments in foreign currencies are subject to exchange rate fluctuations. Marcuard Cyprus Ltd is regulated by the Cyprus Securities and Exchange Commission (CySec) under License no. 131/11.
Azerbaijanian Manat Kazakhstan Tenge Turkish Lira
Note:
* USD per National Currency
March 16 - 22, 2016
16 | MARKETS | financialmirror.com
Is the perfect storm over for markets? By Mohamed A. El-Erian Αuthor of When Markets Collide
Earlier this year, financial markets around the world were forced to navigate a perfect storm – a violent disruption fueled by an unusual amalgamation of smaller disturbances. Financial volatility rose, unsettling investors; stocks went on a rollercoaster ride, ending substantially lower; government bond yields plummeted, and lenders found themselves in the unusual position of having to pay for the privilege of holding an even bigger amount of government debt (almost one-third of the total). The longer these disturbances persisted, the greater the threat to a global economy already challenged by structural weaknesses, income and wealth inequalities, pockets of excessive indebtedness, deficient aggregate demand, and insufficient policy coordination. And while relative calm has returned to financial markets, the three causes of volatility are yet to dissipate in any meaningful sense. First, mounting signs of economic weakness in China and a series of uncharacteristic policy stumbles there still raise concerns about the overall health of the global economy. Given that China is the
second largest economy in the world, it didn’t take long for European officials to reduce their own growth projections, and for the International Monetary Fund to revise downward its expectations for global growth . Second, there are still legitimate doubts about the effectiveness of central banks, the one group of policymaking institutions that has been actively engaged in supporting sustainable economic growth. In the United States, doubts focus on the willingness of the Federal Reserve to remain “unconventional”; elsewhere, however, doubts about effectiveness concern central banks’ ability to formulate, communicate, and implement policy decisions. For example, rather than viewing monetary authorities’ activism as an encouraging sign of policy effectiveness, markets have been alarmed by the Bank of Japan’s decision to follow the European Central Bank in taking policy rates even deeper into negative territory. Third, the system has lost some important safety belts, which have yet to be restored. There are fewer pockets of “patient capital” stepping in to buy when flightier investors are rushing to the exit. In the oil market, the once-powerful OPEC cartel has stepped back from the role of swing producer on the downside – that is, cutting output in order to stop a disorderly price collapse. Each of these three factors alone would have attracted the attention of traders and investors around the world. Occurring
simultaneously, they unsettled markets. Intra-day volatility rose in virtually every segment of global financial markets; adverse price contagion became more common as more vulnerable entities contaminated the stronger ones; and asset-market correlations were rendered less stable. All this came in the context of a US economy that continues to be a powerful engine of job creation. But markets were not voting on the most recent economic developments in the US. Instead, they were being forced to judge the sustainability of financial asset prices that, boosted by liquidity, had notably decoupled from underlying economic fundamentals. In the wake of this volatility, markets have recently regained a more stable footing. Yet the fundamental longer-term challenge of allowing markets to re-price assets to fundamentals in a relatively orderly fashion – and, critically, without causing economic damage that would then blow back into even more unsettled finance – remains. Indeed, the more frequent the bouts of financial volatility in the months to come, the greater the risk that it will lead consumers to become more cautious about spending, and prompt companies to postpone even more of their investment in new plant and equipment. And, if this were to persist and spread, even the US – a relatively healthy economy – could be forced to revise downward its expectations for economic growth and corporate earnings. Durably stabilising today’s markets is important, especially for a system that has
already assumed too much financial risk. It requires a policy handoff instigated by more responsible behavior on the part of politicians on both sides of the Atlantic – one that undertakes the much-needed transition from over-reliance on central banks to a more comprehensive policy approach that deals with the economy’s trifecta of structural, demand, and debt impediments (and does so in the context of greater global policy coordination). Should this handoff occur, its beneficial impact in terms of delivering inclusive growth and genuine global stability would be turbocharged by the productive deployment of cash sitting on companies’ balance sheets, and by exciting technological innovations that began as firm/sector specific but are now having economy-wide effects. If the handoff fails, the financial volatility experienced earlier this year will not only return; it could also turn out to have been a prologue for a notable risk of recession, greater inequality, and enduring financial instability. Mohamed A. El-Erian, Chief Economic Adviser at Allianz, is Chairman of US President Barack Obama’s Global Development Council and author of the forthcoming book The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse. © Project Syndicate, 2016. www.project-syndicate.org
OPEC lowers 2016 oil demand estimate, but production still growing By Paul Ausick 24/7 WallSt.com In its Monthly Oil Market Report for March, released Monday morning, the Organisation of the Petroleum Exporting Countries (OPEC) noted that the cartel’s price for its reference basket rose by 8.4% ($2.22 per barrel), the first price increase in three months. OPEC coyly noted the positive sentiment in the oil markets “arising from the efforts of major producers to trim output” along with falling U.S. production and “healthy physical oil markets.” Global demand growth for 2016 remained unchanged from last month’s report at around 1.25 million barrels per day, or a daily average of 94.23 million barrels. In 2015, demand growth averaged 1.54 million barrels a day for a daily average of 92.98 million barrels. The cartel revised its estimate of nonOPEC supply growth for 2015 up by 100,000 barrels a day to 1.42 million barrels, or a daily average of 57.09 million barrels. For 2016 OPEC forecasts non-OPEC supply will drop by 700,000 barrels a day and average 56.39 million barrels a day for the year. The cartel said OPEC production in February, as reported by secondary sources, fell by 175,000 barrels a day to a daily average of
32.28 million barrels. Demand for OPEC crude in 2015 was revised downward by 100,000 barrels a day to 29.7 million barrels. The cartel also lowered its estimate of 2016 demand for OPEC crude by 100,000 barrels a day to a new average of 31.5 million barrels a day. Crude prices have risen sharply over the past two weeks, but when looking over these numbers it’s hard to see why. OPEC estimates its 2016 production will be 1.8 million barrels a day more than a year ago, when global inventories rose dramatically. How a decline in 700,000 barrels a day from non-OPEC producers offsets an OPEC gain of 1.8 million barrels and causes the price to
rise is not something for which we have an explanation, except to say that either OPEC’s numbers are wrong or the market is wrong. The cartel noted: A proposal for a production freeze at January’s level by major oil exporters, and more news about an additional oil producer meeting in March, as well as further layoffs by service companies and related reports about a complete halt of fracking activities by some companies, all lent support to the market. In February, OPEC production of 32.28 million barrels a day was 780,000 barrels more than OPEC’s forecast for demand on its members’ production. Even if global
production falls by the cartel’s estimated 700,000 barrels a day, demand still trails supply. That is not a formula for higher prices. We noted in our report last week on U.S. rig counts that speculators (hedge funds and other managed money traders) have been bailing out of their short positions for the past few weeks. Given these latest OPEC projections, we could see some movement back into speculative short bets on oil. Benchmark West Texas Intermediate (WTI) for April delivery traded down more than 4% Monday morning at $36.88. Brent for May delivery traded down nearly 3% at $39.24. (Source: 24/7 Wall St.com)
March 16 - 22, 2016
financialmirror.com | WORLD | 17
The world according to Trump By Bernard-Henri Levy The word “trump,” according to the dictionary, is an alteration of the word triumph. And because Donald Trump, the US presidential candidate, appears likely to become the nominee of the Grand Old Party of Abraham Lincoln and Ronald Reagan, we owe it to ourselves to ask in what sense and for whom he represents a triumph. One thinks of a segment of the American population angered by the eight years of Barack Obama’s presidency, a group that is now feeling vengeful. And one also thinks of the white supremacist, segregationist, nativist strain represented by former Ku Klux Klan leader, David Duke, whose noisy support Trump was so hesitant to reject last week and for whose constituency Trump may be a make-or-break candidate. One easily gets the sense, when trying to take seriously what little is known about the Trump platform, of a country turning in on itself, walling itself off, and ultimately impoverishing itself by chasing away the Chinese, Muslims, Mexicans, and others who have contributed to the vast melting pot that the most globalized country on the planet has alchemized, in Silicon Valley and elsewhere, into prodigious wealth. But, as is so often the case with the United States, there is in the Trump phenomenon an element that extends beyond the American national scene. So one is tempted to ask whether Trumpism might not also be the harbinger – or perhaps even the apotheosis – of a truly new episode in world politics. I watch the head of this Las Vegas croupier, this kitschy carnival performer, coiffed and botoxed, drifting from one television camera to another with his fleshy mouth perpetually half-open: you never know whether those exposed teeth are signs of having drunk or eaten too much, or whether they might indicate that he means to eat you next. I listen to his swearing, his vulgar rhetoric, his pathetic hatred of women, whom he describes, depending on his mood, as bitches, pigs, or disgusting animals. I hear his smutty jokes in which the careful language of politics has been pushed aside in favor of supposedly authentic popular speech at its most elemental – the language, apparently, of the genitals. ISIS? We’re not going to make war against it, we’re going to “kick its ass.” Marco Rubio’s remark about Trump’s small hands? The rest is not so small, “I guarantee you.” Then there is the worship of money and the contempt for others that accompanies it. In the mouth of this serially bankrupt billionaire and con artist with possible mafia ties,
Trump reigns supreme in book sales Even though Donald Trump’s suitability for presidential office has been criticised from far and wide in recent weeks, his success as an author cannot be disputed. Out of all the 2016 presidential candidates, Trump is leading on book sales by a huge distance. His most recent book, “Crippled America: How to Make America Great Again”, has certainly struck a chord with readers and it has sold over 36,000 hardcover copies this year alone. Since 2015, Trump has sold just under a quarter of a million books. Ted Cruz has managed about 65,000 while Hillary Clinton has sold a mere 23,400. It seems Trump’s fiery rhetoric about the poor state of the nation is being embraced by both voters and readers alike. (Source: Statista)
they have become the bottom line of the American creed – so much mental junk food full of fatty thoughts, overwhelming the lighter cosmopolitan flavors of the myriad traditions that have formed the great American pastoral. In the sequence about small hands, even an ear untuned to the subtleties of that pastoral might have caught (though in a version perverted by the abjectly low level of the exchange) the famous line from e.e. cummings, the American Apollinaire: “Nobody, not even the rain, has such small hands.” Confronted with this leap forward into coarseness and pettiness, one thinks of Silvio Berlusconi, Vladimir Putin, and the Le Pens, father and daughter. One thinks of a new International, not of communism, but of vulgarity and bling, in which the political landscape shrinks to the dimensions of a television stage. The art of debate collapses into catch phrases; people’s dreams become bombastic illusions; the economy takes the form of the grotesquely physical contortions of verbally deficient Scrooges who despise anyone who thinks; and striving for self-fulfillment deteriorates into the petty swindles taught in the nowdefunct Trump University. That’s right: an International with a capital I: Globalised corruption in the mutual admiration society of Putin, Berlusconi, and Trump. In them we see the face of a cartoon humanity, one that has chosen the low, the elemental, the pre-linguistic in order to ensure its triumph. Here is a universe of fakery in which one consigns to the oblivion of a now-obsolete history the precariousness of the exiles, migrants, and other voyagers who, on both sides of
the Atlantic, have built the true human aristocracy. In the United States, it is that great people composed of Latinos, Eastern European Jews, Italians, Asians, Irish, and, yes, Anglos still dreaming of Oxford-Cambridge sculls now cleaving the waters of the Charles River. Berlusconi invented this cartoon world. Putin intensified its macho element. Other European demagogues are hitching it to the foulest forms of racism. As for Trump, he gave us his tower, one of the ugliest in Manhattan, with its clunky, derivative architecture, its gigantic atrium, its 25meter waterfall to impress the tourists – a Tower of Babel in glass and steel built by a Don Corleone from the dregs in which all of the world’s languages will indeed be fused into one. Careful, though. The new language is no longer that of the America we dreamed would be eternal, the America that has sometimes breathed life back into exhausted cultures. It is the language of a country with balls that has said its goodbyes to books and beauty, that confuses Michelangelo with an Italian designer brand, and that has forgotten that nobody, not even the rain, has such small hands. Bernard-Henri Lévy is one of the founders of the “Nouveaux Philosophes” (New Philosophers) movement. His books include Left in Dark Times: A Stand Against the New Barbarism. © Project Syndicate, 2016. www.project-syndicate.org
March 16 - 22, 2016
18 | WORLD | financialmirror.com
Stock markets seek central bank assurance Markets Report b orextime Ltd By Lukman Otununga, Research Analyst at FXTM
The elevated expectations over central banks maintaining their current policy measures to stimulate global growth amid the ongoing financial turmoil have offered a false lifeline to stock markets which concluded mostly positive on Monday. European equities surged with the majority of stocks in Europe venturing into gains as investors shrugged away the post-ECB disappointment and focused on the benefits of the new easing package. This optimism trickled into the American arena with US stocks closing firmly near yearly highs as market participants awaited further confirmation that central banks may quell the financial turmoil. Asian equities quivered during trading on Tuesday following the Bank of Japan’s decision to keep its monetary policy steady in March despite inflation weakening and this sent the Nikkei -0.68% lower. The declines in Asia may trigger a bearish contagion which punishes Europe and America later today as investors question the current health of the global economy. It must be understood that these upswings in the stock markets may be short lived as fears still linger over central banks running out of ammunition to jumpstart global growth while China woes periodically sour risk appetite. Stocks may be poised for further losses if oil prices start to retreat and further data signaling slowing global growth triggers a wave of risk aversion which encourages investors to scatter away from riskier assets.
BoJ keeps monetary policy steady
US Retail sales to provide clarity
The Bank of Japan decided to keep its monetary policy steady in March despite the economy battling painfully low levels of inflation which has shown no signs of improvement at all. Although it was broadly expected that the central bank remains on standby following the souring mood from the negative interest rate cut on the 29th, the ongoing global woes which have exposed Japan to downside risk have left the central bank under immense pressure to take action. While BoJ Governor Haruhiko Kuroda has stated that there is no limit to monetary easing, the negative and inverse reaction from the actions taken in the previous policy meeting should force the central bank to utilize other methods to boost economic growth in its ailing economy. Sentiment remains bearish towards Japan and the eventual risk aversion which may boost the Yen should leave the Nikkei vulnerable in the future.
Investors may turn their attention towards the US retail sales report this afternoon which may provide some clarity on the health of the US economy as personal consumption is a big portion of US GDP. Data from the States have followed a positive trajectory with wages and job creation showing some improvement and such should translate to higher consumer spending. If retail sales meet expectations today then the mounting speculations of further US rate hikes in 2016 should install inspiration on USD bulls across the currency markets.
Iran quells WTI rally The rapidly diminishing expectations of a possible production cut following Iran’s defiance to join the freeze agreement have offered a foundation for WTI bears to send oil prices back towards $36.
This commodity is heavily bearish and the pain over the unrelenting oversupply in the oil markets has periodically diminished investor attraction while fears over a potential decline in demand continue to sabotage any solid recovery in prices. Iran has told OPEC and non-OPEC members to leave them alone until their output has been boosted to 4 million barrels per day and such will intensify the already heightened concerns over the excessive supply in the highly saturated markets. From a technical standpoint, bears need to break back below $35 to retain control for a further decline towards $30.
For information, disclaimer and risk warning note visit: www.ForexTime.com FXTM is an international forex broker regulated by the Cyprus Securities and Exchange Commission (CySEC), nd FT Global Limited is regulated by the International Financial Services Commission (IFSC).
Amazon’s $35.99 drone Amazon.com Inc. (NASDAQ: AMZN) sells drones for up to $9,999, according to a 24/7 Wall St. analysis from earlier this month. Currently, it is promoting one that is much less expensive. At $35.99, the cheap product can actually be called a working drone and not some simple toy. The difference between $9,999 and $35.99 shows what Amazon does across thousands of product categories: setting price points to draw as many customers, and sales, from it as possible. The Eachine H8C Quadcopter with 2.0 MP HD camera 2.4G 6-Axis deadless mode RC quadcopter drone RTF Mode 2 does not qualify for free shipping, which requires an order to total $40. Beyond that, its basic features make it attractive, most especially for the firsttime drone owner. Among its features: 2.0MP built-in camera; headless mode; one key to return; rolling 360 degree; remote controller has the indicator light, low voltage alarm function. In other words, a spy device with helicopter rotors. The device shows how far technology has gone to create a
cheap but powerful product. A 2.0 MP webcam sells for as little as $7.61 on its own. And “headless mode,” according to Drone Arena Knowledge Base: “The functioning of headless mode is pretty simple. The only pre-requisite is that before taking off, you’re required to position the drone in such a way that its front is your front. Since yaw (the left stick on a Mode 2 controller) anyway doesn’t have anything to do with orientation (left is left and right is right all the time, regardless of where your drone is pointing at), it is how the drone reacts to rudder (the right stick on a Mode 2 controller) that changes.” When you take off with the drone pointing in the front, algorithms inside of the drone’s micro-controller ensure that any directional change is compensated. In other words, even when you turn your drone 90 degrees to the left, it’ll still go forward when you push the rudder forward (on a non-headless mode drone, this would make the drone go left). Essentially, this helps keep the operator from losing the drone.
The featured Eachine H8C Quadcopter does have one big drawback. Its battery lasts only six to eight minutes and needs 60 to 80 minutes to recharge. But what can consumers expect for $35.99? (Source: 24/7 Wall St.com)
March 16 - 22, 2016
financialmirror.com | WORLD | 19
Empty promises and dead children By Kevin Watkins Buried among the 169 targets contained in the Sustainable Development Goals (SDGs) – adopted by the United Nations last September amid a blaze of glitzy events, celebrity endorsements, and back-slapping by world leaders, aid donors, and non-governmental organisations – was the vital pledge to eliminate “preventable child deaths” by 2030. It is a cause for our generation – but one that will take a lot more than UN communiqués to advance. The last set of international development targets, the Millennium Development Goals, certainly brought about important progress; the number of children who died before reaching their fifth birthday dropped from ten million in 2000, when the MDGs were adopted, to 5.9 million in 2015. Some of the world’s poorest countries have registered some of the most significant gains. This progress was driven by several factors, including falling poverty and heavy investment in community-based health systems. By deploying nurses, midwives, and other health workers, these systems extended the availability of prenatal care, simple obstetric interventions, clean cord cutting, and post-natal care. Ethiopia, for example, has deployed a small army of some 38,000 health workers over the last decade. International cooperation was also crucial. Aid for child and maternal health has grown dramatically since 2000, and now stands at some $12 billion annually. Development assistance has enabled the creation of community-based health programs, and played a key role in supporting the development and deployment of the vaccines, mosquito nets, and medical treatments that have cut child deaths from the major killer infectious diseases – pneumonia, diarrhea, malaria, and measles – by some 70% since 2000. Now for the bad news. In the time it takes you to read this article, more than 30 children will die from causes that could have been prevented or treated. Every year, more than one million children die the day they are born, and another million die within their first week of life. Almost half of all child deaths occur in the neo-natal period (the first 28 days) – and the share is rising. The vast majority of these deaths could be averted. Yet, if progress continues at its current rate, there will still be some 3.6 million such deaths per year by 2030.
To jump-start progress, we must develop health-care and other interventions that address the poverty, vulnerability, and inequality that place so many children, and their mothers, at risk. Making health services more widely available is a starting point. But, all too often, the poor are excluded, even when the clinics exist. Consider India, which accounts for one-fifth of child deaths worldwide. Nearly all women from the richest 20% of households enjoy prenatal care and skilled attendants at delivery; coverage rates for the poorest are less than 10% – worse than in much of sub-Saharan Africa. Surging economic growth has done nothing to reduce the disparity. And India is just one example. Each year, some 36 million women in low- and middle-income countries give birth without a skilled attendant. An even greater number of children do not receive a postnatal health check. The vast majority of these women and children have one thing in common: they are poor. Indeed, being born to a low-income mother raises the risk of child mortality by a factor of 2-3 in much of South Asia and subSaharan Africa. Wealth-based disparities in health outcomes extend far beyond pregnancy and birth. Children born to poor mothers are less likely to be immunised or taken to clinics for treatment of potentially fatal diseases, such as pneumonia and diarrhea. Survey evidence points to cost as a major barrier excluding poor women and children from health care.
Forcing desperately poor women to pay for maternal and child health care is a prescription for inequality, inefficiency, and child deaths. Publicly financed universal health coverage is the proven antidote. Yet political elites in high-mortality countries like India, Pakistan, and Nigeria – the same elites who have signed up to the SDGs – have conspicuously failed to deliver. If governments are sincere about delivering on the SDGs’ promise on child mortality, they must get serious about ensuring equity in health care. They could start by introducing national targets to halve the difference in death rates between the richest 20% and poorest 20% over the next seven years. But targets not backed by finance aren’t worth the communiqué paper they’re printed on. Developing-country governments should be spending at least 5% of GDP on health, eliminating charges on child and maternal health care, and ensuring that financial resources – and health workers – are allocated in a way that reduces inequalities in care. Foreign aid also has a vital role to play. Here, the emphasis should be shifted from delivering disease-specific interventions to building up health-care systems. We need a global social compact on health to close the financing gap – around $30 billion – for achieving universal health coverage, which requires linking populations to skilled health workers equipped to provide effective care. Sub-Saharan Africa alone will need to recruit and train another one million community health workers to deliver universal coverage. Any strategy for achieving the 2030 target for child mortality must go beyond the health sector and focus on the wider inequalities – for example, in nutrition, education, and access to clean water and sanitation – that fuel child mortality. Girls will need added protection, so that they are not forced into early marriage and child bearing. Children worldwide face a lethal combination of inequality, injustice, and gender discrimination. They deserve better. The promise to eliminate preventable child deaths by 2030 is our chance to ensure they get it. Kevin Watkins is Director of the Overseas Development Institute. © Project Syndicate, 2016. www.project-syndicate.org
Child refugee arrivals increasing rapidly in Greece It is often claimed by those with a cynical view of the refugee crisis in Europe that it is just young men who are arriving in our countries seeking refuge and asylum. In the case of Greece, in June 2015, the majority of arrivals were in fact men (73%). The share of adult males has however decreased almost every month since then. In their place? Children. In February 2016, children outnumbered men for the first time with 40% to 38%. The share of women has also been steadily increasing, making for a marked change in the make-up of those fleeing the war and danger. Further data from the UNHCR shows that in February, over half of Greece’s arrivals were from Syria. A quarter had fled from Afghanistan, hoping for a better, safer life in Europe. The journey across the Aegean is of course highly dangerous itself - 96 refugees died in January this year alone and 34 were recorded missing. (Source: Statista)
March 16 - 22, 2016
20 | BACK PAGE | financialmirror.com
Defeating meningitis in Africa By Chris Elias Africa’s progress in fighting meningitis A is one of the best-kept secrets in global health. Thanks to the development and deployment of a low-cost vaccine, the lives of hundreds of thousands of children have been saved, and communities that might otherwise have been devastated by the illness are thriving. Meningococcal A meningitis is a bacterial infection of the thin lining surrounding the brain and spinal cord, and it can be deadly. For more than a century, epidemics have swept across 26 countries in Sub-Saharan Africa, killing and disabling tens of thousands of primarily young people every year. The disease is highly feared on the continent; it can kill within hours or leave its victims with severe brain damage. Outbreaks usually occur at the beginning of the calendar year, when dry winds from the Sahara Desert begin blowing southward. The 1996-1997 epidemic resulted in more than 250,000 cases and 25,000 deaths in Sub-Saharan Africa, many of them children. Of those who survived, one in four were left with permanent disabilities, including paralysis, blindness, hearing loss, seizures, and brain damage. The impact of meningitis A on families and communities is devastating. In order to pay for treatment, many families are forced to sell the assets they need to sustain their livelihoods: livestock, seed stock, and tools. Furthermore, the disabilities caused by the infection can leave survivors less able to earn income or care for themselves and their families. Whole communities can be plunged into deeper levels of poverty as health-care workers struggle to contain outbreaks. The suffering caused by the disease served as an impetus for action. Sixteen years ago, African health ministers, the international health NGO PATH, the World Health Organisation (WHO), the Serum Institute of India, the Bill & Melinda Gates Foundation, and dozens of other partners formed the Meningitis Vaccine Project (MVP). The mission was simple: to develop an affordable vaccine to fight meningitis A in Africa.
The project was successful. In less than ten years, the MenAfriVac vaccine was launched and has produced an immediate and dramatic break in the cycle of meningitis A epidemics. I was in Burkina Faso for the vaccine’s introduction in December 2010. I was worried whether anyone would show up. But when I met the minister of health the day before the launch and asked him what his biggest concern was, he gave me a surprising answer: “Crowd control.” He was right. Huge crowds formed at every immunization site, standing in line in the hot sun, eager to receive protection against the deadly disease. It was, quite literally, a state event, with the president in attendance. The first vaccination campaign reached virtually everyone in the country aged 1-29. In the five years since then, more than 235 million people have been immunised across Sub-Saharan Africa. By 2020, the vaccine is expected to protect more than 400 million people – preventing one million cases of meningitis A, 150,000 deaths from the disease, and 250,000 cases of severe disability among survivors. The MVP stands as a powerful example of what is possible when African leaders and experts from across the spectrum of global health work together. Strong, temporary partnerships, with a focused goal, can have truly catalytic effects. But the
work is far from over. Last year, the WHO approved MenAfriVac for use in regular vaccine schedules, making it possible for millions more to be protected. The stakes are high. Universal access to immunisation is a cornerstone of health, development, and economic growth. Recognising this, several African countries are already making plans to roll out meningitis – and other – vaccines into routine immunisation systems this year. The task before African leaders is to ensure a smooth and full transition from mass vaccination campaigns to routine immunisation. Last week, government officials assembled in Ethiopia for the first-ever Ministerial Conference on Immunisation in Africa, where they re-committed to ensuring that everyone on the continent has access to the vaccines they need. This will require further investment in immunisation, improved data collection and analytics, new tools and approaches, and most importantly, strong partnerships. We must build on the legacy of the MVP and work toward a world in which every child receives the life-saving vaccines they need to survive and thrive. Chris Elias is of President of Global Development at the Bill & Melinda Gates Foundation. © Project Syndicate, 2016 - www.project-syndicate.org
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