WEDNESDAY, OCTOBER 5, 2016
business@tribunemedia.net
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$3.98
$4.02
‘Agents’ pledged PM help for LOI group By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net Government “agents” allegedly promised the group at the centre of the Renward Wells’ Letter of Intent (LOI) controversy that the Prime Minister would arrange a $40 million guarantee for them, adding: “We hold the key to the kingdom.” Stellar Energy, in legal documents detailing its claim for $727.364 million in damages, alleged that ex-Cabinet minister, Algernon Allen, and businessman Frank Forbes, “were irrefutably agents acting” on the Government’s behalf in See pg b4
Allen, ‘chairman’ said PM to aid $40m guarantee Stellar: ‘Clear Govt intent to sabotage’ project Well-known QC drafted Wells LOI; ‘forced’ on group
Bamboo Town MP Renward Wells
Financier had ‘close connections’ to DPM
Exuma Chamber chief Building supplier calls fearing ‘one-two year’ police amid Matthew rush setback from Matthew By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net Exuma’s economy could be “set back a year or two” if Hurricane Matthew scores a direct hit on the island, its Chamber of Commerce president said yesterday. Pedro Rolle told Tribune Business that the Category Four storm’s emergence, and projected path, were “devastating” timing for Exuma, given that it coincided with the start of the island’s winter second home/tourism season. “Generally speaking, I think it really can be devastating,” he said of Matthew’s potential impact. “This is about the time of year when a lot of people make a lot of money in Exuma from second homes. “We have a lot of people that come and visit now. Whether it hits or not, the effects of the hurricane are potentially significant in terms of what it can do to our economy for second homeowners and visitors
Timing ‘devastating’ for island’s visitor economy Coincides with second home return, homecoming coming in, not to mention the disruption caused for residents already there. “I am a little bit worried about it, to be honest with you.” Mr Rolle added that local events, such as the Mount Thompson homecoming scheduled for this holiday weekend, have also been disrupted by postponements and cancellations as a result of Matthew. “It was planned to be a significant event, as all the renovations for the community centre have been completed, and there was a huge amount of people coming from Nassau; big families,” the See pg b6
Regulator backs NewCo on 25% higher charges for termination By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net Regulators have backed the new mobile operator’s argument that it should be allowed to charge “asymmetrical” call termination rates that are 25 per cent higher than the Bahamas Telecommunications Company’s (BTC) over the short-term. The Utilities Regulation and Competition Authority (URCA), in unveiling the results statement on NewCo 2015’s significant market power (SMP) on call termination, agreed to the new market entrant’s request despite BTC’s opposition and call for matching charges. Acknowledging that the evidence could be used to support both companies’ arguments, URCA based its decision on NewCo2015’s requirement to gain “efficient scale” and achieve 1520 percent market share. “URCA preliminarily concluded that from the various potential justifications for asymmetric mobile rates, only the need to achieve an efficient scale seemed applicable to New-
URCA rejects opposing arguments from BTC But ‘asymmetry’ to only last until NewCo gains scale ‘Efficient’ benchmark set at 15-20% market share Co,” it found. “URCA remains of the view that NewCo is likely to require time to establish itself, and to reach the 15-20 per cent minimum market share threshold for an efficient scale. “During this interim period, NewCo is likely to face higher unit (Long Run Average Incremental Cost) termination costs than its longer run efficient level of termination costs. As such, URCA sees merits in allowing NewCo to temporarily set termination rates See pg b5
By NATARIO McKENZIE Tribune Business Reporter nmckenzie@tribunemedia.net
A well-known building supply firm was yesterday forced to call the police to address a severe traffic back-up on Prince Charles Drive, after experiencing its typical prehurricane sales rush. Adam Darville, Pinder Enterprises’ general manager, told Tribune Business: “It’s been very busy. We had to call the police to come and sort out the traffic situation. We have got it pretty much under control now. “The rush started since Monday; all day Monday and all day again Tuesday. People are coming mainly for plywood and lumber, as well as all the stuff that goes with that; nails and screws, very little of anything else.” Mr Darville said that depending on the weather, Pinder Enterprises will open today to accommodate customers. “Our other location, Pinder Tile, won’t be open on Wednesday, but
the Enterprise locality we will be openas long as weather permits. It’s an unpredictable storm,” he added. Mr Darville said Pinder Enterprises has seen this type of customer traffic before. “It isn’t the first time,” he added. “Plywood sales are the biggest part of our business. We have pretty much the best prices in town. Every hurricane is very busy for us. This is not anything new for us.” Other lumber distributors and building supply stores told Tribune Business earlier this week that they had seen a pick-up in business due to a spike in plywood sales ahead of Hurricane Matthew. Raymond Collins, manager at Tops Lumber Yard, told Tribune Business yesterday: “We have been pretty busy with plywood sales. It has been a steady flow of traffic. It started a bit on Saturday but today has been pretty busy.” Matthew, is a powerful category four hurricane with maximum sustained winds of 145 miles per hour, with higher gusts. The storm is expected to move north across the See pg b4
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Bahamas’ failure ‘to save for rainy day’ bites back DNA chief: No ‘fiscal headroom’ for Matthew Fears storm will place economy at ‘standstill’ Country yet to recover from 2008 recession By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net The Bahamas’ inability to “save for a rainy day” could come back to haunt it if Hurricane Matthew proves as devastating as forecast, the Democratic National Alliance’s (DNA) leader told Tribune Business yesterday. Branville McCartney said that with a total public sector debt of $7.64 billion, a sum equivalent to 90 per cent of gross domestic product (GDP), the Government lacked the ‘fiscal headroom’ to properly respond if the Category Four storm inflicts severe damage on public infrastructure and society at large. “I think that goes without saying,” the DNA leader responded, when asked by this newspaper whether he was concerned Branville that the Bahamas McCartney lacked the borrowing capability to react in Matthew’s aftermath. “Where we are, our fiscal position is tenuous. It is not good. It’s almost like it could be equated to not saving for a rainy day, and it’s raining. It’s raining and we’ve not saved.” While the cost, time and hardship associated with Matthew’s recovery depends on how much damage the hurricane inflicts across the Bahamas, Mr McCartney said this nation might have to look beyond the multilateral lending institutions “if the worst case scenario materialises”. While seeking financial assistance from the likes of the Inter-American See pg b5
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Our Commitment To Our Customers
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For customer inquiries, call our 24 hour customer support at 356-7764.
PAGE 2, Wednesday, October 5, 2016
THE TRIBUNE
Reduced energy bill secrets come to light When do Bahamians use more electricity than at any other time of year? Summer, obviously. Air conditioning is the single biggest contributor to the light bill in homes that run it, and during this time of year - before the summer lets up - our AC units work the hardest. In our last article, we shared with you some secrets as to how to reduce your dependence on Bahamas Power & Light (BPL) to keep cool, as the summer heat continues into autumn. Well, the secrets keep coming to light. Here are a few more ways you can chill without firing up your electricity bill.
* Solar Air Conditioners All Day
These units are specifically designed to work with solar panels. During the day, they operate above 35 SEER, which means they cost just 51 cents to run all day! That is a month of daytime air conditioning
for about $15, making them ideal for businesses that operate during the day, and residences with people at home. Depending on how much you use your AC, a single one-ton solar unit will save you up to $2,500 every year. Considering that a fully installed solar air conditioning system sells for much less than $10,000, this solution is often worth consideration.
* Solar Air Conditioners All Night
Solar air conditioners can be used to reduce your evening cooling costs even if you are away from home all day. Just let them run during the daylight hours (when it is basically free) and, when the evening comes, the living space is already cooled. This means you do not have to pay for the AC units to work hard at night; the hard work was already done during the day. Since the solar units are highly efficient, they use very little
utility power when the sun is not out, which also helps your electricity bill.
* Make Money in 15 Minutes
When you turn off the air conditioner some 15 minutes before you are ready to leave your home or business, the room will stay cool and you will save money. Over the course of a month, that can save you 15 hours of power. That is a lot of money if you are running a regular AC.
* Get smart
One of the most elegant solutions for cutting your cooling costs is to add a smart retrofit, such as a Smartcool, to your current central air unit. Smartcool retrofits already save an average 15-25 per cent on air conditioning energy costs in Bahamian homes and businesses. These intelligent automators add a brain to your system so that your air con-
ditioner runs far more efficiently than it would on its own. This saves you money while maintaining the cool temperature you want.
* No Leaks Allowed
Check your walls and windows for leaks to ensure your compressor is not fighting the full force of the Bahamian sun. Leaks can be stopped with a good sealant or IndowWindow.
* Shut that Door
In the rooms that you are cooling, be diligent to keep windows and doors shut whenever they are not being used. Simple steps such as this can save a tremendous amount on the electricity bill.
* Hot and Cold Do not Mix
When I was growing up, our kitchen had our oven beside our fridge. Big mistake. You do not want your fridge to have to fight a 400 degree force every day.
Bahamas recreates presence in Chicago Travel Agents braved the wet weather and traffic congestion to welcome the Bahamas back to Chicago after almost a decade out of the market. A Ministry of Tourism office that had been located in Chicago for decades closed its doors almost 10 years ago, but physical representation has returned to Chicago and began with a recent series of trade shows and dinner presentations in the area. These started with the event at the Grand Hyatt in O’Hare, where travel agents were provided with information on activities and developments in the Bahamass. Presentations featured information on developments such as The Pointe; The Warwick all-inclusive ‘Adult Only’ resort on Paradise Island; Hilton Resorts World Bimini; and the
Baha Mar project that is expected to open at Cable Beach next spring. The Bahamas’ Chicago trade and sales mission was led by general manager Edward Archer, based in Atlanta. Other members of the Bahamas’ team included Mikala Moss, area manager, New York; Jeannie Gibson, manager, global communications and LaBronze Williams, global communications. They were supported by a number of private sector partners, including representatives from the Grand Bahama Island Tourism Board, Donna Munroe and L’Oreal Sweeting, and the Bahamas Out Island Promotion Board. Other representatives included Sandals, the Grand Lucayan and Apple Vacations.
Agents at Bahamas Trade Show
If you can arrange your kitchen so that your fridge and freezer are not next to the stove and oven, you will save money on the electricity bill. Perhaps you will want to keep that in mind the next time you remodel.
* Ventilate
Speaking of stoves, you can use a ventilation passage above the stove to get the heat outside quickly. If your home does not have this, be sure to include it the next time you update your kitchen. If you own a restaurant, check to ensure the exhaust fans are working as they should. Proper exhaust for excess heat makes it less costly to cool inside and more comfortable. This summer, why sweat if you do not have to? Make use of these insider secrets to stay cool and pay less for it. Perhaps we will even be able to dig up a few more for our next article. Not sure where you should start? Call up your energy
Joshua key SuperGreen Solutions
efficient product specialist to customise the best solution for your home or business. • NB: Joshua Key is general manager for SuperGreen Solutions Bahamas, located on Wulff Road next to FYP. SuperGreen Solutions is one of the premier advisors, suppliers and installers of domestic and commercial energy efficient solutions.
THE TRIBUNE
Wednesday, October 5, 2016, PAGE 3
Matthew sparks $1.8m cruise spending losses
By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
Tourism officials yesterday estimated that $1.8 million in revenue has been lost as a result of cruise cancelllations related to the threat of Hurricane Matthew. Geneva Cooper, a senior Ministry of Tourism director, and co-ordinator with the ministry’s emergency committee, said all hotels and resorts throughout the Bahamas have activated their hurricane readiness programmes and are taking all necessary precautions to protect visitors and residents. “Arrangements have been made in all of our is-
lands to evacuate visitors desiring to return home. There are some visitors who opt to stay with us even through the storm. For those who wish to stay, every measure is being taken by hotels and our tourism offices throughout the islands to ensure their safety and security,” said Mrs Cooper. “We are leaving it up to individuals, but certainly we would encourage those who are here to leave.” Ms Cooper said about 1,600 guests were evacuated from Grand Bahama yesterday, with its airport closing today at noon and reopening on Saturday at 6am. “There are 593 visitors
scattered throughout the Family Islands,” she said. “There are seven visitors on Abaco; two on Eleuthera; two on North Andros; 21 on San Salvador; eight on the Berry Islands; 153 on Bimini, and 400 in the Exumas. Here in New Providence and on Paradise Island there are over 3,000 visitors. We expect that number to diminish during the week. “All cruise ships have now re-routed away from ports in the Bahamas to other destinations. With regards to the cruise figures, we have estimated about $1.8 million in lost revenue. For the hotels we would have those figures within a few days.”
cruise ships docked in in Nassau Harbour.
URCA rejects NewCo’s ‘interventionist’ demand By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net Regulators yesterday rejected calls by the new mobile operator to take an interventionist approach to regulating the Bahamas Telecommunications Company’s (BTC) mobile voice and data pricing. NewCo 2015 had argued that such an approach would prevent BTC from behaving in an anti-competitive manner that would undermine consumer welfare and the benefits flowing from its entry. However, the Utilities Regulation and Competition Authority (URCA) has decided to shift to an ‘ex-post’ approach to regulation when it comes to potential predatory pricing and margin squeezes by BTC, meaning it will only take action when distortions or anti-competitive behaviour are identified. Although URCA will now require BTC to declare that a price change to its mobile voice and data services is not anticompetitive, with the lat-
New entrant fears BTC anticompetitive behaviour BTC says rival trying to ‘tilt playing field’ Would ‘do nothing to benefit Bahamas consumers’ ter having to prove every six months that there is no margin squeeze, NewCo 2015 had pushed hard for an interventionist or ‘exante’ stance. “BTC’s underlying assertion; that the mobile market will be competitive immediately and hence the controls proposed by URCA are unnecessary, is incorrect and self-serving,” NewCo 2015 had argued. “Ex-ante rules to ensure BTC does not behave in an anti-competitive manner are needed now more than ever.”
The new entrant added: “In many jurisdictions, the launch of the second mobile operator has led to the rapid development of competition. However, this has usually taken place when the mobile market had a low level of penetration, and many new users could be attracted by imaginative marketing and lower prices. “In the Bahamas, the market is already mature. As URCA’s own statistics show, the penetration of mobile subscribers has been static since 2011 at around 84–86 per cent of the population. This means that in order to succeed commercially, NewCo must persuade large numbers of BTC’s existing customers to change suppliers (a more difficult task than recruiting new mobile customers). “BTC has a strong incentive to retain these customers, for example through discriminatory pricing. BTC is likely to retain its significant market power in the mobile retail market for a number of years (using URCA’s definition of a market share of 40 per cent or greater), and URCA
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needs to design its retail price regulation accordingly.” NewCo2015, which is 48.75 per cent owned by Cable Bahamas, the entity with Board and management control, added that BTC was “highly incentivised” to exploit its large customer base with pricing that discriminated in favour of its customers. “It is NewCo’s position that competition should take place on the basis of quality of service, innovation and price, and not on the relative size of the customer bases of the operators in the market,” the new operator said. “Ex-ante controls to prevent discriminatory pricing by BTC should therefore remain in place. There is a significant risk of margin squeeze while BTC’s mobile termination rate remains above efficiently incurred costs. Margin squeeze tests should remain in place at least until the interim MTR (mobile termination rate) proposed by URCA has been replaced by an MTR based on ‘Pure LRIC’ (long-run incremental costs).”
NewCo 2015 also argued that BTC, with its significant market power (SMP), “has both the incentive and the ability to engage in anti-competitive bundling of services. Again, ex-ante controls should remain in place to prevent BTC from acting on this incentive”. URCA at least agreed with NewCo 2015 on the latter issue, agreeing that bundling needed to be dealt with via the interventionist approach. However, BTC accused NewCo2015 and Cable Bahamas of asking URCA to “tilt the playing field” in their “favour for an indefinite period of time by demanding an interventionist
regulatory approach. This, BTC argued, would enable NewCo2015 to “more rapidly and profitably establish itself in the market”. “Acquiescing to these requests would no doubt benefit their shareholders, but they would do nothing to benefit consumers in the Bahamas,” BTC argued. “Moreover, their proposals are inconsistent with URCA’s goal of ensuring a ‘level playing field’ in the mobile market, and are also out of step with regulatory practice in other jurisdictions, including the Caribbean, and therefore should be rejected.”
NOTICE Notice is hereby given that BGRS Certificate No.98799 at a rate of 0.0625%APR in the amount of $1,400.00 is lost and due to mature 2033. If this certificate is found, please write to P.O.Box N-4868 Nassau, Bahamas.
PAGE 4, Wednesday, October 5, 2016
‘Agents’ pledged PM help for LOI group From pg B1 facilitating the proposed waste-to-energy plant deal. The group’s statement of claim, filed with the Supreme Court yesterday and obtained by Tribune Business, sheds further light - at least from one side’s perspective - on the murky controversy that forced Mr Wells’ to step down as parliamentary secretary. In particular, Stellar’s allegations place Prime Minister Perry Christie, and Deputy Prime Minister Philip Davis, at the centre of events leading up to the LOI’s disclosure and subsequent political firestorm. And the group, which was seeking the Government’s agreement and approvals to construct a $600-$650 million waste-to-energy plant at the New Providence landfill, is claiming that the LOI’s July 2014 ‘leaking’ showed “clear intent at the Government level to sabotage” the proposed project. Stellar’s legal filings allege that Mr Allen, the Urban Renewal co-chair, and Mr Forbes, who is also described as an accountant operating under the corporate name, Sigma Holdings/ Management, were “two of the private individuals who claimed to be representatives of the Bahamas government and/or agents acting for and on behalf of the Bahamas government.” Seemingly believing the duo’s representations, Stellar hired Mr Allen and his
firm, Allen & Co, in October 2013 as its attorney, paying him a $15,000 retainer to help obtain the necessary project approvals. “At the time, the fourth defendant [Mr Allen] assured the plaintiffs [Stellar] that they would have no problem in acquiring the contract,” Stellar alleged. It then claimed that, following Mr Allen’s advice, it appointed Mr Forbes as honorary chairman, with the latter starting to represent Stellar in all matters relating to the waste-toenergy project’s necessary permits. “The fourth and fifth defendants (Messrs Allen and Forbes) both operated a close business connection, and the two acted in unison,” Stellar alleged. “Further, the plaintiffs were advised, and verily believe it to be common knowledge, that both Algernon Allen and Frank Forbes belong to the very inner circle of Prime Minister Perry Gladstone Christie.” Stellar’s apparent belief that these links would smooth the path to a government agreement appear to have been reinforced by a late October 2013 meeting that the duo purportedly arranged with Mr Christie. There is nothing to suggest the Prime Minister (nor the Deputy Prime Minister) did anything wrong in meeting them, and he appears to have been conscious of the implications, given that Stellar was also participat-
ing in the ongoing tender to reform the Bahamas Electricity Corporation (BEC) and wider energy sector. The group was advised that the Prime Minister “could not speak with them in any detail”, given that he did not want to “contaminate the process” associated with the BEC reform search. Nevertheless, Stellar alleged: “Notwithstanding this, the Prime Minister spent quite a long time with [Messrs Allen and Forbes] discussing the plaintiffs’ project. “During their negotiations, in order to induce [Stellar] to enter into the LOIs, the fourth and fifth defendants made.... the following representations to the plaintiffs jointly and severely.” Messrs Allen and Forbes allegedly assured Stellar that they would “have no problem” in gaining approval for the project, and that the LOI and all associated documents would be executed by the Government. “The fourth and fifth defendants [Messrs Allen and Forbes] used certain expressions like: ‘We hold the keys to the kingdom’,” Stellar alleged. “The fifth defendant [Mr Forbes] told the plaintiffs that the Prime Minister would arrange for a government guarantee, direct or via the Inter-American Development Bank (IDB), to support funding of Front End Loading (FEL) studies for the amount of $40 million procured by the plaintiffs.” These studies were criti-
cal to determining the feasibility of the proposed Stellar project, particularly whether there was sufficient - and the right type of - waste at the New Providence landfill to generate the energy the group was projecting. Several industry observers have privately questioned to Tribune Business both the price tag and technology proposed by Stellar, but the LOI controversy likely means the Bahamas will likely never know whether it was feasible, creating an opportunity cost or loss. Meanwhile, Stellar’s legal filings yesterday alleged that it was Mr Forbes who “caused” Michael Halkitis, minister of state for finance, to send the May 26, 2014, letter to the IDB seeking its guarantee/financing support for the Stellar project. If true, this raises further questions as to how, and why, a person outside the Government was purportedly telling a Cabinet minister what to do. Mr Forbes also claimed that “the Prime Minister, and Mr Halkitis and his staff, were speaking with the IDB in this regard”. However, the IDB’s thenBahamas country head, subsequently told Stellar in June 20, 2014, that the bank had “no intention” in providing financing or a guarantee. She followed that up with a July 10, 2014, e-mail “disclaiming any part in the proceedings or any consent to “financial support”. Stellar’s latest legal filings allege that Mr Forbes was behind the LOI’s creation,
THE TRIBUNE
with the document prepared by Maurice Glinton QC, his attorney. Stellar’s documents suggest there was one LOI, but two versions, with the first dated June 30, 2014, and supposed to be signed by Mr Davis in his capacity as minister of works and urban development. However, the group alleged that it was eventually summoned to Mr Forbes’s office at the British Colonial Hilton’s Centre of Commerce on July 7, 2014, whereupon it was presented with the version signed by Mr Wells some three days’ earlier. “The plaintiffs found the LOI suspicious for three reasons,” Stellar alleged. “It was not signed in the plaintiffs’ presence by [Mr Wells], who was seen leaving [Mr Forbes’s] office immediately before the plaintiffs’ arrival.” Stellar also complained that the document was not on Ministry of Works letterhead or stationary, and that it was both “heavily edited” compared to the June 30 version and attached to a ‘compliment slip’ from Mr Allen’s law firm. Then came the LOI’s ‘leaking’ to the media, which Stellar acknowledged as creating “a large storm” that brought the group’s integrity into question. They were advised by Mr Forbes to ‘keep a low profile’ and “let the storm go away”. “It would appear to the plaintiffs that, at the Government level, there was a clear intent to sabotage the issuance of the LOI and the related financing,” Stellar alleged, adding that it sought to hold Mr Forbes to a joint venture agreement where he had purportedly promised to secure the project’s financing. Stellar alleged that it finally managed to obtain a $40 million loan from a UKbased hedge fund, Greensill Capital, but no guarantor emerged. “The plaintiffs were put in a conundrum, particularly since [Mr Forbes] advised them in clear and certain terms that, under no circumstances, would the Prime Minister and Deputy Prime Minister agree to provide the plaintiffs with a more comprehensive LOI,
including the assurance that the plaintiffs would be granted the permission to build the waste-to-energy plant and move to the point that BEC would enter into a 25-year (power purchase agreement)PPA after satisfactory completion of the FEL studies,” Stellar alleged. It then pressed Mr Forbes to live up to the terms of their joint venture by providing his own guarantee or arranging his own financing, alleging that the accountant was now “very careful, cagey at times and very secretive”, appearing to avoid Stellar. Mr Forbes then said he was in talks with an unnamed Canadian group that “could not be named because of his close connections with the Bahamas Government and the Deputy Prime Minister”. Stellar also claimed Mr Forbes divulged that Mr Davis had, “for a long time”, been opposed to its project because he was “supporting an alternative project led by a company called Renew Bahamas, who were already the waste and recycling managers on the local landfill”. Stellar, which is headed by Dr Fabrizio Zanaboni, said that by late 2014/early 2015 it had “began to suspect that there was a conspiracy” against it. “The plaintiffs have reasons to believe that [Mr Forbes] and his political partners intended to disregard their contractual arrangements, which the plaintiffs feel were forced upon them in the first place, including the LOI, for the benefit of third parties close to the Government and, in particular, to the Deputy Prime Minister and other local business group(s) close to him,” Stellar alleged. As a result, Stellar is demanding that the Supreme Court award damages, and seeking declarations that the Government both “honour” the LOI contract and not award a waste-to-energy contract to any other company until damages are paid.
Building supplier calls police amid Matthew rush From pg B1 heart of the Bahamas from Wednesday into Thursday. Hurricane force winds extend outward up to 45 miles from the centre, and tropical storm force winds extend outward up to 175 miles.
Matthew is expected to produce total rain accumulations of eight to 12 inches over the southeastern Bahamas, with isolated maximum amounts of 15 inches. Residents have been urged to take all the necessary precautions to prepare for the passage of the storm.
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THE TRIBUNE
Wednesday, October 5, 2016, PAGE 5
Regulator backs NewCo on 25% higher charges for termination From pg B1 above those of BTC.” However, URCA said these ‘asymmetrical’ termination rates will only be implemented for the shortterm, and the regulator can reassess the situation any time after six months should mobile competition in the Bahamas develop more quickly than expected. Taking NewCo’s proposal as the benchmark, the communications industry regulator said the new entrant’s termination rates will be a 25 per cent ‘markup’ to those charged by its
BTC rival. As a result, the second mobile operator cannot charge more than 3.10 cents per minute for terminating domestic calls on its network, and 5.76 cents per minute for terminating an international call. NewCo’s message termination charge will be fixed at 1.75 cents per minute. BTC, in its second response to URCA’s original consultation, again said NewCo had failed to make any economic arguments that would support asymmetrical termination rates. “BTC reiterates that the
Bahamas’ failure ‘to save for rainy day’ bites back From pg B1 Development Bank (IDB, Caribbean Development Bank (CDB), World Bank and International Monetary Fund (IMF) was fine, the DNA leader suggested that Bahamas may “have to look to our big brother to the north for some type of assistance”. “There’s no if’s, and’s and but’s about it,” Mr McCartney told Tribune Business. “We can’t do anything to help ourselves because of our financial position. We are struggling as it is. We don’t seem to be able to see the light of day as it is now.” Nassau has traditionally served as a hub for getting aid and materials to stormhit Family Islands, but that trend is likely to be disrupted if Matthew stays on its forecast track and makes a direct hit on New Providence. And Mr McCartney warned that the hurricane could create an economic “standstill” for the Bahamas, wiping out the projected 0.5 per cent GDP growth for 2016 and sending this nation back into recession. “We don’t need this in this country right now,” the DNA leader told Tribune Business. “We haven’t re-
covered from the recession of 2008. Last year this time, we had Joaquin. We’re still feeling the effects of Joaquin in the islands that were hit. “It’s [Matthew] not going to help us grow. It’s going to cause us to not grow. The bottom line is that this puts a standstill on any type of growth, and the concentration will be on rebuilding. “It’s going to put us in a state of repair, not a state of growth, and that puts us back. There’s nothing we can do about this. It will be money coming out, not going in.” In fact, the Bahamas could see substantial foreign currency inflows associated with reinsurance monies to pay Matthew-related claims,
setting of symmetric call termination charges provides predictability and promotes competition,” Nicole Watkins, its vice-president of legal, regulatory and carrier services, wrote. “Conversely, asymmetrical termination rates lead to distortions in the market and sub-optimal outcomes. Reciprocal termination rates will ensure both allocative and productive efficiencies in the market, and prevent distortions like excessive wholesale charging, high or inefficiently structured retail rates and inefficient market entry.” However, NewCo’s inhouse counsel and company secretary, Felicity Johnson, argued that BTC’s concerns had missed the mark. In the new mobile operator’s response to URCA, she wrote that its rival’s
arguments applied to the fixed-line, as opposed to the mobile, business, and were related to long-term asymmetrical rates - not the short-term ones being discussed for the Bahamian market. “BTC’s argument that asymmetric termination rates do not lead to allocative or productive efficiencies may be correct if asymmetric rates are allowed to persist in the long-term,” Ms Johnson said, “but in the short-term, if asymmetric rates reflect real differences
in the cost of termination between operators better than symmetrical rates, they will give more accurate price signals to customers who will be able to allocate their resources accordingly, leading to greater, not less, allocative and productive efficiency.” NewCo and Ms Johnson added that “predictability, stability and transparency” were produced by a “clearly defined regulation regime on termination rates”, not matching charges or costs. They said unequal termi-
nation rates were justified for new entrants “where the existing operator has achieved its economies of scale from an early market entry that has been protected by limits placed by the Government on the entry of competitors. “In the Bahamas, BTC has enjoyed a mobile monopoly for at least 20 years, and NewCo will require time to build up the traffic on its network, and hence to bring its cost per minute down to an efficient level,” NewCo added.
should there be widespread damage. Still, Mr McCartney acknowledged: “It seems like every island in this country is going to be impacted. It’s certainly a daunting prospect. “This hurricane is predicted to be more devastating than Joaquin; I pray that things change. We saw what happened with the homes and houses then, and we have similar in New Providence. I’m thinking about the devastation to people’s homes if it comes the way it’s supposed to come.” The DNA said widespread, extensive damage to people’s homes would negatively impact businesses and the wider economy, as staff would be more concerned with restoring their lives than coming to work. As a result, workplace productivity will suffer.
NOTICE
NOTICE is hereby given that VALICIA BENNETT of House #23, St. Lucia St., Elizabeth Estate, P.O.Box EE-15818, New Providence, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for registration/naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 28th day of September, 2016 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, Bahamas.
EMPLOYMENT OPPORTUNITY
Restaurant Managers
A food service industry leader is seeking to employ Experienced Managers for its restaurants. The successful candidates must possess effective leadership skills and will be expected to work closely with the Restaurant Manager in managing the overall restaurant operations. The individuals should have a solid understanding of the food and beverage industry and possess a minimum of 3 to 5 years experience in the related field with a proven track record of exceptional customer service. Primary Duties and Responsibilities: • Ensures the company’s customer service excellence standards are exemplified consistently and that all team members are held accountable to same • Facilitate a high level of customer satisfaction by obtaining regular customer feedback • Identifies and resolves “bottlenecks” in food preparation and delivery to increase speed of service without sacrificing accuracy of orders • Ability to maintain a safe, clean and high quality restaurant operation at all times • Supervises and trains team members on all restaurant systems • Ability to effectively communicate, both orally and in writing, on a consistent basis with Restaurant Management team, superiors and support staff • Practical knowledge of inventory control management • Ability to coach, train and develop team members as well as delegate work in a way that encourages teamwork during shift to ensure smooth restaurant operations • Proven ability in handling of customer complaints, ensuring speedy and satisfactory resolution • Ensures the awareness and knowledge of all of the company’s systems, policies, procedures and operations through training and development • Provides productive direction to team members in a clear and concise way, and sets an example for team members by working hard to ensure swift and smooth food production and quality service • Sets challenging goals for self and team, provides timely performance feedback and ensures accountability Qualifications and Experience • Minimum of three to five years experience in the food and beverage and hospitality industries in a managerial or supervisory role • Working knowledge of computerized information systems used in restaurant operations, e.g. Point of Sales (POS) systems • Proficiency in various software applications, e.g. Microsoft Word, Excel, PowerPoint Salary will be commensurate with qualifications and experience. Interested candidates should submit their resumes in confidence to the following email address:
submityourform@gmail.com
PAGE 6, Wednesday, October 5, 2016
THE TRIBUNE
As demand for cars falters, auto prices are poised to fall
Meredith Havens looks at cars at a dealership in Richardson, Texas. As the U.S. inched its way out of the Great Recession, consumers went car shopping in droves. As sales rebounded, the price of cars and trucks rose to record highs. Now the pricing trend is about to reverse itself. (AP Photo)
TEMPORARY ADMINISTRATIVE ASSOCIATE The Bahamas Country Office of the Inter-American Development Bank (IDB), wishes to contract the services of a temporary Administrative Associate. The IDB is a regional multilateral development Bank seeking to contribute to the social and economic development of 26 member countries in Latin America and the Caribbean through lending and non-reimbursable grants. The objective of the contract is to provide assistance to the Operations team in diverse corporate and operational areas, to assist with optimal resource utilization and the adaptation of administrative processes so as to meet program requirements in a highly complex working environment. Duration: Four months. Requirements: A certificate or Associates Degree in Business Administration or Management, Accounts, Human Resources, or a related field and a minimum of two years of relevant professional experience or the equivalent combination of education and experience. Knowledge of Spanish would be an asset. All candidates must be citizens of The Bahamas or of an IDB member country in possession of a valid work permit providing eligibility to work in The Bahamas. For more information about this position and to apply, please refer to the following link before October 11th, 2016: https://iadbcareers.taleo.net/careersection/jobdetail.ftl?job=1600003523&lang=en
DETROIT (AP) — While the U.S. inched its way out of the Great Recession, consumers went car shopping in droves. As sales rebounded, the price of cars and trucks rose to record highs. Now, the price trend is set to reverse itself, partly because some buyers are unwilling or unable to pay the high prices and instead are opting for used cars. Although overall industry sales are tracking last year's record 17.5 million, many automakers are selling more cars to rental companies to maintain the momentum. Sales to consumers are declining, so companies are ramping up incentives. Discounts in September hit a level not seen since automakers were desperate for sales during the financial crisis in late 2008. "Inherently, you're seeing a price war," says John Mendel, executive vice president of Honda North America. "You're already seeing the pricing pressure." Analysts say the deals will only get better during the next two years as millions of leased cars flood the usedcar market and pull new-car prices down. Auto prices have risen every year since the Great Recession, hitting a record average of $31,825 in December of 2015, according to J.D. Power. The average price in September was $30,862, an all-time high for the month. Prices have remained elevated largely because buyers are still paying top dollar for redhot segments such as crossovers and big SUVs, which
From pg B1 Chamber of Commerce president added. “It was going to be a very big event this weekend.” Mr Rolle praised island administrator, Neil Campbell, for sending out alerts to Exuma residents on Matthew’s progress, and organising all relevant agencies
PREFERENCE SHARES 1000.00 1000.00 1000.00 1000.00
1000.00 1000.00 1000.00 1000.00
1.00 106.00 100.00 106.00 105.00 105.00 100.00 10.00 1.01
1.00 105.50 100.00 100.00 105.00 100.00 100.00 10.00 1.01
SECURITY AML Foods Limited APD Limited Bahamas Property Fund Bahamas Waste Bank of Bahamas Benchmark Cable Bahamas CIBC FirstCaribbean Bank Colina Holdings Commonwealth Bank Commonwealth Brewery Consolidated Water BDRs Doctor's Hospital Famguard Fidelity Bank Finco Focol ICD Utilities J. S. Johnson Premier Real Estate
t. 242.323.2330 | f. 242.323.2320 | www.bisxbahamas.com
SYMBOL AML APD BPF BWL BOB BBL CAB CIB CHL CBL CBB CWCB DHS FAM FBB FIN FCL ICD JSJ PRE
LAST CLOSE 4.06 15.85 9.09 3.50 1.96 0.12 6.47 8.50 5.83 10.44 14.00 2.27 1.53 5.80 8.78 10.95 8.26 6.61 11.93 10.00
CLOSE 4.06 15.85 9.09 3.50 1.96 0.12 6.47 8.50 5.83 10.44 14.00 2.27 1.53 5.80 8.78 10.95 8.26 6.61 11.93 10.00
CHANGE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
CAB6 CAB8 CAB9 CAB10 CHLA CBLE CBLJ CBLK CBLL CBLM CBLN FBBA FCLB
1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.00 100.00 100.00 100.00 10.00 1.01
1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.11 100.00 100.00 100.00 10.00 1.01
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
SECURITY Fidelity Bank Note 17 (Series A) + Fidelity Bank Note 18 (Series E) + Fidelity Bank Note 22 (Series B) +
SYMBOL FBB17 FBB18 FBB22
LAST SALE 100.00 100.00 100.00
CLOSE 100.00 100.00 100.00
CHANGE 0.00 0.00 0.00
Bahamas Note 6.95 (2029) BGS: 2014-12-3Y BGS: 2015-1-3Y BGS: 2014-12-5Y BGS: 2015-1-5Y BGS: 2014-12-7Y BGS: 2015-1-7Y BGS: 2014-12-30Y BGS: 2015-1-30Y BGS: 2015-6-3Y BGS: 2015-6-5Y BGS: 2015-6-7Y BGS: 2015-6-30Y
BAH29 BG0103 BG0203 BG0105 BG0205 BG0107 BG0207 BG0130 BG0230 BG0303 BG0305 BG0307 BG0330
115.43 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
115.04 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
-0.39 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Cable Bahamas Series 6 Cable Bahamas Series 8 Cable Bahamas Series 9 Cable Bahamas Series 10 Colina Holdings Class A Commonwealth Bank Class E Commonwealth Bank Class J Commonwealth Bank Class K Commonwealth Bank Class L Commonwealth Bank Class M Commonwealth Bank Class N Fidelity Bank Class A Focol Class B
CORPORATE DEBT - (percentage pricing) 52WK HI 100.00 100.00 100.00
52WK LOW 100.00 100.00 100.00
BAHAMAS GOVERNMENT STOCK - (percentage pricing) 115.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
113.70 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
VOLUME
4,129
VOLUME
EPS$ 0.304 1.351 1.086 0.220 -1.134 0.000 0.185 0.551 0.508 0.541 0.528 0.094 0.166 0.510 0.612 0.960 0.650 0.703 0.756 0.000
DIV$ 0.090 1.000 0.000 0.160 0.000 0.000 0.187 0.260 0.200 0.360 0.610 0.060 0.040 0.240 0.275 0.000 0.280 0.120 0.640 0.000
P/E 13.4 11.7 8.4 15.9 N/M N/M 35.0 15.4 11.5 19.3 26.5 24.1 9.2 11.4 14.3 11.4 12.7 9.4 15.8 0.0
YIELD 2.22% 6.31% 0.00% 4.57% 0.00% 0.00% 2.89% 3.06% 3.43% 3.45% 4.36% 2.64% 2.61% 4.14% 3.13% 0.00% 3.39% 1.82% 5.36% 0.00%
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.00% 0.00% 0.00% 0.00% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 7.00% 6.50%
INTEREST 7.00% 6.00% Prime + 1.75%
MATURITY 19-Oct-2017 31-May-2018 19-Oct-2022
6.95% 4.00% 4.00% 4.25% 4.25% 4.50% 4.50% 6.25% 6.25% 4.00% 4.25% 4.50% 6.25%
20-Nov-2029 15-Dec-2017 30-Jul-2018 16-Dec-2019 30-Jul-2020 15-Dec-2021 30-Jul-2022 15-Dec-2044 30-Jul-2045 26-Jun-2018 26-Jun-2020 26-Jun-2022 26-Jun-2045
MUTUAL FUNDS 52WK HI 1.99 3.90 1.92 167.58 138.35 1.45 1.67 1.55 1.09 6.94 8.65 5.92 9.94 11.15 10.46
52WK LOW 1.67 3.04 1.68 164.74 116.70 1.39 1.60 1.50 1.03 6.41 7.62 5.66 8.65 10.54 9.57
FUND CFAL Bond Fund CFAL Balanced Fund CFAL Money Market Fund CFAL Global Bond Fund CFAL Global Equity Fund FG Financial Preferred Income Fund FG Financial Growth Fund FG Financial Diversified Fund FG Financial Global USD Bond Fund Royal Fidelity Bahamas Opportunities Fund - Secured Balanced Fund Royal Fidelity Bahamas Opportunities Fund - Targeted Equity Fund Royal Fidelity Bahamas Opportunities Fund - Prime Income Fund Royal Fidelity Int'l Fund - Equities Sub Fund Royal Fidelity Int'l Fund - High Yield Fund Royal Fidelity Int'l Fund - Alternative Strategies Fund
NAV 1.99 3.90 1.92 167.58 136.68 1.45 1.67 1.55 1.09 6.94 8.65 5.92 9.59 11.15 9.57
YTD% 12 MTH% 2.33% 4.05% 3.34% 6.09% 1.63% 2.99% 3.41% 5.18% 2.95% -0.58% 2.51% 3.84% 2.48% 4.47% 2.20% 3.79% 5.03% 3.89% 4.05% 8.28% 5.93% 13.53% 2.73% 4.73% 3.97% -3.53% 2.96% 4.33% -4.26% -6.22%
NAV Date 31-Jul-2016 31-Jul-2016 27-Jul-2016 30-Jun-2016 30-Jun-2016 31-Aug-2016 31-Aug-2016 31-Aug-2016 31-Aug-2016 31-Jul-2016 31-Jul-2016 31-Jul-2016 31-Jul-2016 31-Jul-2016 31-Jul-2016
MARKET TERMS BISX ALL SHARE INDEX - 19 Dec 02 = 1,000.00 52wk-Hi - Highest closing price in last 52 weeks 52wk-Low - Lowest closing price in last 52 weeks Previous Close - Previous day's weighted price for daily volume Today's Close - Current day's weighted price for daily volume Change - Change in closing price from day to day Daily Vol. - Number of total shares traded today DIV $ - Dividends per share paid in the last 12 months P/E - Closing price divided by the last 12 month earnings
— LEASES SURGE: Leasing dried up during the financial crisis, cutting off a main supply of used cars. It recovered to 25 percent of new car sales in 2014, and is now over 30 percent. That means many late-model cars in good condition are coming to the market. Kelley Blue
and stakeholders to prepare for the storm. “We cannot say this time that preparations were not made. He’s done a heck of a job in making sure people are aware,” he added of Mr Campbell. Still, Mr Rolle agreed that Matthew, which up to press time last night was
As prices hit record levels and household income grew slowly, many buyers were priced out of new cars. Prices are so high now that the average family in the nation's 50 largest metro areas can't afford to buy a new vehicle, according to a study by Bankrate.com. That hasn't stopped some buyers, who are borrowing larger amounts at longer terms to secure that new car, Bankrate says. "Customers have an affordability problem," says Wes Lutz, owner of a Chrysler-Dodge-Jeep-Ram dealership in middle-class Jackson, Michigan, west of Detroit. About one-third of his customers can't get credit, another third have trouble, and the rest are credit-worthy, he said. Even if prices fall, Lutz expects government safety and fuel economy requirements to push them back up, driving more people from new cars to used. He's adding personnel and square footage to his used-car operation in anticipation.
still producing 140 mile per hour winds, represented a major threat to Exuma’s population and economy. “We’re right in the path of it,” he told Tribune Business. “If it goes through Exuma and has the effect of doing to Exuma what it did to Long Island, I don’t want to throw numbers around, but it can set us back a year or two in terms of projects just getting off the ground or being planned. “This can be really significant in terms of pushing us back if we’re hit as projected.”
INTENT TO CHANGE NAME BY DEED POLL
BISX ALL SHARE INDEX: CLOSE 1,947.39 | CHG -0.45 | %CHG -0.02 | YTD 123.44 | YTD% 6.77 52WK LOW 2.47 17.43 9.09 3.15 1.77 0.12 6.09 7.25 5.50 7.00 13.05 2.25 1.31 5.55 6.00 9.85 6.12 6.21 11.80 10.00
— FAMILY CAR BLUES: Demand for cars has fallen as buyers snap up higher-priced SUVs and pickup trucks. Cars made up only 40 percent of U.S. sales last month, barely above the record low set in July, meaning companies will need to lower prices to move sedans off dealer lots. Analysts say prices of the better-selling vehicles will remain high in the near-term but eventually fall as well.
Book estimates 3.5 million leases expire next year, and as many as 4.5 million expire in 2018. Automakers will offer discounts to move the used vehicles, and prices of new cars will have to drop to stay competitive. "You're going to see greater and greater pressure put on the used-car market, more significant discounting," says KBB senior market analyst Alec Gutierrez.
PUBLIC NOTICE
BISX LISTED & TRADED SECURITIES 52WK HI 4.25 17.43 9.09 3.50 4.70 0.18 8.30 8.50 6.10 10.60 15.50 2.72 1.60 5.80 9.00 11.00 8.26 6.90 12.25 11.00
— SLOWING SALES: It may be high prices or it may be good deals on late-model used cars, but sales of new vehicles have plateaued, and even fallen for the past two months. That is forcing discounts from automakers to keep market share. September incentives hit a record $3,888 per vehicle, beating the old mark set in 2008, according to J.D. Power.
Exuma Chamber chief fearing ‘one-two year’ setback from Matthew
MARKET REPORT TUESDAY, 4 OCTOBER 2016
cost more than sedans. Now, many analysts say the perfect climate is developing to pull prices lower soon:
YIELD - last 12 month dividends divided by closing price Bid $ - Buying price of Colina and Fidelity Ask $ - Selling price of Colina and fidelity Last Price - Last traded over-the-counter price Weekly Vol. - Trading volume of the prior week EPS $ - A company's reported earnings per share for the last 12 mths NAV - Net Asset Value N/M - Not Meaningful
TO TRADE CALL: CFAL 242-502-7010 | ROYALFIDELITY 242-356-7764 | FG CAPITAL MARKETS 242-396-4000 | COLONIAL 242-502-7525 | LENO 242-396-3225
The Public is hereby advised that I, CHARLTONIQUE BROWN of Kingston Street, Kemp Road,New Providence, Bahamas intend to change my name to CHARLTONIQUE KNOWLES. If there are any objections to this change of name by Deed Poll, you may write such objections to the Chief Passport Officer, P. O. Box N-742,Nassau Bahamas no later than Thirty (30)days after the date of publication of this notice.
Employment Opportunity
MAINTENANCE WORKERS A leading Fast Food franchise is looking for mature, clean-cut individuals to join its Maintenance (Janitorial) Team. Job Summary To be responsible for the general cleanliness and upkeep of the entire Store and its surroundings, so as to facilitate the smooth, efficient operation of the Store. Requirements • Must be a high school graduate. • Must have excellent inter-personal skills. • Must have excellent oral and written communication skills. • Professionalism required. • Must be able to work flexible hours including early mornings, late nights, weekends and holidays. • A basic knowledge of kitchen equipment and electrical and air conditioning repair skills would be a plus. • Must have a clean police record. McDonald’s offers excellent benefits! Please submit Resume to: Human Resources Department McDonald’s Head Office 111 Market Street North P. O. Box SS-5925 Telephone: 325-4444 Nassau, N.P., The Bahamas
THE TRIBUNE
Wednesday, October 5, 2016, PAGE 7
Call 502-2394 to advertise
Egyptians walk past a currency exchange office in Cairo, Egypt. Egypt held its currency steady against the dollar yesterday, as it moves ahead with a reform program expected to weaken the pound drastically but also hopefully pave the way for sustainable economic growth that creates jobs for a surging population.
Egypt holds pound steady against dollar ahead of reforms CAIRO (AP) — Egypt held its currency steady against the dollar on Tuesday, as it moves ahead with a reform program expected to weaken the pound drastically but also hopefully pave the way for sustainable economic growth that creates jobs for a surging population. The dollar was worth 8.8 Egyptian pounds after the weekly currency auction, although on the black market it trades at over 13 pounds, with some media reporting it had even surpassed the unprecedented 14-pound mark. Several newspapers have carried reports that devaluation was imminent. Just a day earlier, official data showed that foreign currency reserves rose by $3 billion in September. That’s half the figure the International Monetary Fund has said Egypt should raise before its executive board meets to sign off on a bailout package to support the reforms. Cairo has spent billions of dollars in increasingly scarce foreign reserves to prop up its currency due to falling Suez Canal revenues and an ailing tourism sector. It will likely be required to float or devalue the pound in order to secure a three-year, $12 billion loan from the IMF. “They’re moving toward a managed flotation of the currency. I think it’s a matter of weeks until it settles at around 12 pounds to the dollar, once the other $3 billion is raised,” said Angus Blair, the chief operating officer of Pharos Holding in Cairo. Last month, IMF Managing Director Christine Lagarde discussed the reform program with Egypt’s President Abdel-Fattah el-Sissi on the sidelines of a G-20 summit in China, saying the IMF was doing everything it could to help Egypt secure the financing. In a press briefing after the summit, the IMF said there were “very productive discussions with China and Saudi Arabia,” to provide the funding, and that “progress is being made.” Egypt’s economy has been battered in the five years since an uprising toppled longtime ruler Hosni Mubarak, ushering in turbulent rule first by the army,
Egyptian Central Bank Governor Tarek Amer speaks during press conference at the headquarters of the finance ministry in Cairo, Egypt. Egypt held its currency steady against the dollar on Tuesday, as it moves ahead with a reform program expected to weaken the pound drastically but also hopefully pave the way for sustainable economic growth that creates jobs for a surging population. (AP Photos) then an Islamist government, and now el-Sissi, the former general who overthrew his predecessor, the Muslim Brotherhood’s elected but divisive Mohammed Morsi. Egypt’s foreign currency reserves have dwindled as tourism has dried up over fears of terrorism, remittances have dropped because of low oil prices, and Suez Canal revenues have shrunk because of a decline in global trade. Inflation and unemployment rates are in the double digits. While net international reserves rose to $19.59 billion by the end of September, up from $16.56 billion the month before, that still pales in comparison to the roughly $36 billion in reserves Egypt had before the 2011 uprising. As part of its economic reform package, Egypt is expected to gradually lift state subsidies on fuel, basic services and food items, while aiming to support the poor with direct, often army-run welfare to offset the ensuing surge in inflation. Few expect the austerity measures and price hikes to cause street protests. Authorities have jailed thousands of people in a sweeping crackdown on dissent since Morsi’s overthrow in 2013, including many of Egypt’s most prominent activists. But the government
has nevertheless been promoting a message that “difficult” economic decisions lay ahead, vowing to introduce measures to protect the neediest. The economic reforms, if carried out successfully, would eventually help wean Egypt off of billions of dollars in foreign aid — mainly from Gulf countries — which has been the economy’s main crutch since Morsi’s overthrow.
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THE TRIBUNE
Wednesday, October 5, 2016, PAGE 9
UK stock market just shy of record high as pound drops LONDON (AP) — Britain’s main stock market fell agonizingly short of an all-time high on Tuesday amid a groundswell of optimism that exporters and multinationals will benefit from the pound’s woes in the wake of the country’s vote to leave the European Union in June. The pressure on the currency, particularly against the dollar where it is trading at 31-year lows, has mounted this week following comments from Prime Minister Theresa May that suggested the country could be heading for a definitive break from the European Union’s single market. The worry, at least in the currency markets, is that a clean break could threaten the pre-eminent position of London’s financial sector, and see tariffs slapped onto exports and foreign firms like Nissan abandon their British bases. At one point Tuesday, the pound, which traded around $1.50 on the day of the June 23 vote to leave the EU, fell as low as $1.2720, a level not seen since June 1985, when Margaret Thatcher was British prime minister and London was readying for Live Aid. The pound is also suffering against all its major competitors, including the euro, which is used by 19 countries in the EU. The pound’s descent since June means the country is less well-off — British tourists visiting Disneyland in California or Greek islands clearly noticed that their pounds didn’t go as far. That fact hasn’t equat-
ed to lower share prices, though. The main FTSE 100 index, which has enjoyed a sustained rally since the Brexit stage, nearly broke new ground on Tuesday, only to fall around a point short of its record high of 7,122 set in April 2015. The index closed up 1.3 percent at 7,074.34. The rally is due to the fact that the drop in the pound — while a drag on spending abroad — is potentially good for those British firms that already have huge business interests outside the U.K. And there are a lot of them listed on the FTSE 100. Exporters will see their goods become more cost competitive in international marketplaces, especially while the country remains within the EU. And the money they make abroad will be worth more when it is brought back to the headquarters in the U.K.
Boosted earnings Fashion house Burberry, which sells heavily in the U.S., Europe and Asia, has recently said its earnings have been boosted by the fall in the pound, while warning of challenging times ahead. Pearson, the education publisher, makes a lot of its money in dollars, and was one of the top risers on Tuesday. It’s the same for miners and oil firms like BP and Royal Dutch Shell, whose products are denominated in dollars. And for industrial names like Rolls-Royce. “The reality is the biggest stocks in the index dominate its performance,
A man walks by a screen in a currency exchange showing the latest tourist rates for the British pound sterling against the United States dollar and below pedestrians pass a money exchange bureau in central London, yesterday. The British pound has hit a 31-year low against the dollar amid concern the country is willing to break away definitively from the European Union’s common market. (AP Photos)
and the likes of HSBC, Royal Dutch Shell, and British American Tobacco all have international earnings which are now worth more in pounds and pence thanks to (the pound’s) decline,” said Laith Khalaf, senior analyst at Hargreaves Lansdown. It’s not just the big exporters seeing a rise in their shares this week. Even smaller British companies focused on the local economy are gaining thanks to recent upbeat economic indicators and the central bank’s recent move to cut interest rates. That’s a marked change from earlier this summer, when domestically focused companies saw their shares dive on concern about an economic recession that has not materialized. The latest drop in the pound was triggered by comments over the weekend by May, who replaced David Cameron as prime minister in July. She fleshed out some details over how the country will leave the EU, saying she will invoke by March the so-called Article 50 of the EU treaty, the mechanism by which two years of talks on Britain’s exit offi-
“The reality is the biggest stocks in the index dominate its performance, and the likes of HSBC, Royal Dutch Shell, and British American Tobacco all have international earnings which are now worth more in pounds and pence thanks to (the pound’s) decline.” cially commence. She also appeared to signal that her government would prioritize controls on immigration over access to the European single market, an approach informally called a “hard Brexit.” It remains unclear, however, what the negotiations
will ultimately bring for the British economy, though the International Monetary Fund said Tuesday that growth is set to slow sharply in 2017 to a meager 1.1 percent from 1.8 percent this year. “The truth around Article 50 and a ‘hard Brexit’ is that nobody really has any
idea what the outcome or repercussions will be,” said James Hughes, chief market analyst at GKFX. “So for the markets, it is the utter uncertainty that is causing the volatility and downside movement for the pound, and not any kind of factual information or informed guess work.”
PAGE 10, Wednesday, October 5, 2016
THE TRIBUNE
Stocks fall broadly on Wall Street along with bonds and gold NEW YORK (AP) — Stocks fell broadly on Tuesday, led by sharp drops in utilities and phone companies. U.S. government bond prices also slumped, and gold had its worse day in nearly three years. Investors are nervous about the timing and the pace of any increase in the super-low interest rates controlled by the Federal Reserve, and comments from central bank officials recently have added to their jitters. Stocks rose from the open, but the gains quickly faded and the selling spread across industries. By the end of trading, ten of the 11 sectors of the Standard and Poor’s 500 index were down. It was the second day of broad declines, a weak start to a new quarter after solid returns in recent months. Bank stocks bucked the downward trend in the market and moved higher. Citigroup rose 1.5 percent. Higher interest rates will mean higher profits from lending for banks. The Dow Jones industrial average fell 85.40 points, or 0.5 percent, to 18,168.45. The S&P 500 fell 10.71 points, or 0.5 percent, to 2,150.49. The Nasdaq composite fell 11.22 points, or 0.2 percent, to 5,289.66. A big driver of the day’s trading was rates, with in-
the New York Stock Exchange. Stocks are drifting between gains and losses in early trading Tuesday, Oct. 4, 2016. Nine of the 11 sectors of the Standard and Poor’s 500 index are lower. Utilities and real estate stocks are down the most. (AP Photo) vestors closely watching the yield of the benchmark 10year Treasury note, which has risen as the price of the note has dropped. The yield on Tuesday rose to 1.69 percent, up more than a tenth of a percentage point in less than a week. As the yields have risen, investors who had poured money into steady dividend payers like phone and real estate companies and utilities as alternatives to bonds have been selling because bonds are becoming more
attractive as a source of income. Utilities have fallen 7 percent since Sept. 22, after soaring 21 percent in the first six months of the year. “Some people have gotten into areas of the market that act like pseudo-bonds, stocks masquerading as bonds,” and now are shifting money out, said Tim Courtney, chief investment officer of Excencial Wealth Advisors. “The markets are reacting very badly to the increases.” On Monday, a key man-
ufacturing gauge in the U.S. showed surprisingly strength. Then an official at the Federal Reserve Bank of Cleveland, a “hawk” who believes the central bank should be raising rates, reiterated her position in a Bloomberg interview. Investors are looking ahead to a report on job creation out Friday to better gauge how soon the Fed will act. The Fed is expected by most investors to wait until December to raise rates. Bill Strazzullo, chief mar-
ket strategist at Bell Curve Trading, said investors are hoping for a continued “goldilocks” situation of modest economic growth. “The best thing for the market right now is for the economy to be strong enough to dispel the fear of recession,” he said, “but not too strong that it accelerate the Fed tightening process.” The price of gold dropped sharply as investors anticipated that rates would keep rising. Higher rates diminish the appeal of gold, which investors tend to favor when they fear that low rates will encourage inflation. Gold slumped $43, or 3.3 percent, to $1,269.70 an ounce. Among stocks making news, Newell Brands rose 65 cents, or 1.2 percent, to $51.60 after announcing it will sell 10 percent of its businesses, including part of its outdoor segment and its consumer storage unit. The company owns Mr. Coffee, Paper Mate, Elmer’s and other brands. The U.S.-listed shares of Deutsche Bank rose 35 cents, or 2.7 percent, to $13.33. Germany’s biggest bank has been under pressure since it revealed the U.S. Justice Department had proposed at $14 billion payment to settle an investigation into the bank’s dealings in risky mortgage bonds. Its shares have been rising recently on a news re-
port Friday that a lower fine was in the offing. In overseas markets, Britain’s FTSE 100 jumped 1.3 percent, just shy of its alltime high of 7,122, as the pound continues to sink after the country’s prime minister gave a clear timetable on Sunday for exiting the European Union. The pound is now near a 31-year low of $1.2741. A weaker pound makes the products and services of FTSE-listed multinationals cheaper abroad, boosting earnings. Germany’s DAX was 1 percent higher while the CAC-40 in France rose 1.1 percent. In other metals trading, silver fell $1.09, or 5.8 percent, to $17.78 an ounce and copper fell 3 cents to $2.17 a pound. U.S. benchmark crude oil fell 12 cents to close at $48.69 a gallon. Brent crude, the international standard, slipped 2 cents to close at $50.87 a barrel in London. Wholesale gasoline rose 3 cents to $1.50 a gallon, heating oil was little changed at $1.55 a gallon and natural gas increased 4 cents to $2.963 per 1,000 cubic feet. In currency markets, the euro slipped to $1.1197 from $1.1215 and the dollar rose to 102.81 yen from 101.57 yen.
Deutsche Bank shares up as investors await fine amount
FRANKFURT, Germany (AP) — Deutsche Bank shares rose 1.5 percent on Tuesday as investors sought clarity on how big a U.S. penalty the bank will receive. Shares in Germany’s biggest bank rose, sank and rose again to close at 11.75 euros as trading in Germany resumed after a holiday
Monday. The shares have been under pressure since the bank revealed the U.S. Justice Department was seeking a $14 billion payment to settle an investigation into the bank’s dealings in bonds backed by shaky mortgages. Deutsche Bank shares rallied off record lows Friday on a media report that a lower fine was being discussed.
Low profits have also weighed on the stock, which is off 48 percent this year. But it was speculation that the fine could push the bank to ask investors for more capital that has hurt it most recently, as raising additional capital dilutes the holdings of existing shareholders. Deutsche Bank has said it is not considering a capital increase.
Mortgage-backed securities, the investments Deutsche Bank is being investigated for in the U.S., were a key factor in sparking the 2007-2009 global financial crisis and subsequent Great Recession. Banks bundled mortgages to people with shaky credit into complex bonds that eventually resulted in heavy losses for investors, which
were often other banks. In April, Goldman Sachs agreed to pay $5.1 billion to settle claims it misled bond investors, and other banks have settled similar investigations in the U.S. Shares in Deutsche Bank and other European banks have sagged as low and sometimes negative interest rates erode profits. They are also facing tougher
regulatory requirements for stronger capital buffers against losses. Germany’s Commerzbank said last week it would cut 7,300 jobs as part of a restructuring and Dutch Bank ING said it would drop 7,000 jobs in Belgium and the Netherlands. Italy’s banks are struggling with too many bad loans that aren’t being paid back.
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