Japanese stock market’s wild week | Authers' Note - YouTube: ""
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Friday, 22 January 2016
Austerity, Saudi-style: cheap oil nudges Riyadh toward economic reform | World news | The Guardian
Austerity, Saudi-style: cheap oil nudges Riyadh toward economic reform | World news | The Guardian:
"In the Faisaliya mall in central Riyadh, the call to midday prayers brings down the shutters on shops selling luxurious global brands and the basement mosque fills up. Customers are routinely searched at the entrance – a woman guard in a niqab, black abaya and white gloves sits by the metal detector. Cafes and restaurants have mixed “family sections” to ensure privacy. Harvey Nichols is having a holiday sale.
Business seems slow, though visitors look in vain for any serious sign of Saudi Arabia’s gathering economic crisis, born of the lowest oil revenues in decades and subsidy cuts to reduce a $98bn budget deficit – 15% of the country’s GDP. The price of petrol has just gone up by 60%, though it is still dirt cheap, and VAT and other taxes are planned – significant novelties in a country where most people have not known such things in their lifetimes.
“There isn’t much economic pressure here because we deal with rich people,” laughs Tamer, an affable Egyptian who lost his clerical job with a Saudi construction company and now sells timeshares in Dubai. Beyond the Faisaliyah’s marbled halls, however, many government projects have stopped, expenditure has been slashed and rents have risen sharply. The housing shortage is a major preoccupation.
"
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"In the Faisaliya mall in central Riyadh, the call to midday prayers brings down the shutters on shops selling luxurious global brands and the basement mosque fills up. Customers are routinely searched at the entrance – a woman guard in a niqab, black abaya and white gloves sits by the metal detector. Cafes and restaurants have mixed “family sections” to ensure privacy. Harvey Nichols is having a holiday sale.
Business seems slow, though visitors look in vain for any serious sign of Saudi Arabia’s gathering economic crisis, born of the lowest oil revenues in decades and subsidy cuts to reduce a $98bn budget deficit – 15% of the country’s GDP. The price of petrol has just gone up by 60%, though it is still dirt cheap, and VAT and other taxes are planned – significant novelties in a country where most people have not known such things in their lifetimes.
“There isn’t much economic pressure here because we deal with rich people,” laughs Tamer, an affable Egyptian who lost his clerical job with a Saudi construction company and now sells timeshares in Dubai. Beyond the Faisaliyah’s marbled halls, however, many government projects have stopped, expenditure has been slashed and rents have risen sharply. The housing shortage is a major preoccupation.
"
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Saudi Arabia's Secret Holdings of U.S. Debt Are Suddenly a Big Deal - Bloomberg Business
Saudi Arabia's Secret Holdings of U.S. Debt Are Suddenly a Big Deal - Bloomberg Business:
"It’s a secret of the vast U.S. Treasury market, a holdover from an age of oil shortages and mighty petrodollars: Just how much of America’s debt does Saudi Arabia own?
But now that question -- unanswered since the 1970s, under an unusual blackout by the U.S. Treasury Department -- has come to the fore as Saudi Arabia is pressured by plunging oil prices and costly wars in the Middle East.
In the past year alone, Saudi Arabia burned through about $100 billion of foreign-exchange reserves to plug its biggest budget shortfall in a quarter-century. For the first time, it’s also considering selling a piece of its crown jewel -- state oil company Saudi Aramco. The signs of strain are prompting concern over Saudi Arabia’s outsize position in the world’s largest and most important bond market."
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"It’s a secret of the vast U.S. Treasury market, a holdover from an age of oil shortages and mighty petrodollars: Just how much of America’s debt does Saudi Arabia own?
But now that question -- unanswered since the 1970s, under an unusual blackout by the U.S. Treasury Department -- has come to the fore as Saudi Arabia is pressured by plunging oil prices and costly wars in the Middle East.
In the past year alone, Saudi Arabia burned through about $100 billion of foreign-exchange reserves to plug its biggest budget shortfall in a quarter-century. For the first time, it’s also considering selling a piece of its crown jewel -- state oil company Saudi Aramco. The signs of strain are prompting concern over Saudi Arabia’s outsize position in the world’s largest and most important bond market."
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Saudi Arabia says $30 oil is ‘irrational’ - FT.com
Saudi Arabia says $30 oil is ‘irrational’ - FT.com:
"Saudi Arabia has described the collapse in oil prices to below $30 as “irrational” and expects the market to recover in 2016 even as the country continues to keep production high.
Khalid al-Falih, chairman of state oil company Saudi Aramco, told the World Economic Forum in Davos that current prices could not last, with many smaller producers facing financial difficulties.
“The market has overshot on the low side and it is inevitable that it will start turning up,” said Mr Falih, predicting higher prices by the end of the year."
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"Saudi Arabia has described the collapse in oil prices to below $30 as “irrational” and expects the market to recover in 2016 even as the country continues to keep production high.
Khalid al-Falih, chairman of state oil company Saudi Aramco, told the World Economic Forum in Davos that current prices could not last, with many smaller producers facing financial difficulties.
“The market has overshot on the low side and it is inevitable that it will start turning up,” said Mr Falih, predicting higher prices by the end of the year."
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Saudi Arabia's King Salman marks year of change - BBC News
Saudi Arabia's King Salman marks year of change - BBC News:
"Wars in Yemen and Syria, a deadly stampede at the Hajj, mass executions, bombings in mosques, and plunging oil prices - King Salman's first year on the throne in Saudi Arabia has been anything but quiet. So how has he fared and what challenges does his country now face?
When King Abdullah died a year ago and was succeeded by his half-brother, Salman bin Abdulaziz, many predicted there would be little change in policy.
Salman was nearly 80 years old and had spent 48 years of his life as governor of Riyadh, overseeing its transformation from a provincial desert town to the plate-glass metropolis it is today."
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"Wars in Yemen and Syria, a deadly stampede at the Hajj, mass executions, bombings in mosques, and plunging oil prices - King Salman's first year on the throne in Saudi Arabia has been anything but quiet. So how has he fared and what challenges does his country now face?
When King Abdullah died a year ago and was succeeded by his half-brother, Salman bin Abdulaziz, many predicted there would be little change in policy.
Salman was nearly 80 years old and had spent 48 years of his life as governor of Riyadh, overseeing its transformation from a provincial desert town to the plate-glass metropolis it is today."
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Cladding issues could mess with Dubai property market after The Address fire | The National
Cladding issues could mess with Dubai property market after The Address fire | The National:
"How will the fire at The Address affect property prices in Dubai?
Nobody can be exactly sure how The Address fire on New Year’s Eve will affect Dubai property prices. But as high-rise building freehold owners and insurance experts become increasingly nervous about the cost implications of a government survey of all properties to ensure that they conform to the latest fire regulations, the owners of individual units are also worried.
At the very least, it is reasonable to assume that it is going to be more difficult to sell such units in the immediate future, and if they are rented out then they are not going to be as popular."
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"How will the fire at The Address affect property prices in Dubai?
Nobody can be exactly sure how The Address fire on New Year’s Eve will affect Dubai property prices. But as high-rise building freehold owners and insurance experts become increasingly nervous about the cost implications of a government survey of all properties to ensure that they conform to the latest fire regulations, the owners of individual units are also worried.
At the very least, it is reasonable to assume that it is going to be more difficult to sell such units in the immediate future, and if they are rented out then they are not going to be as popular."
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Aviation giants tread carefully in test case for post-sanctions Iran | Reuters
Aviation giants tread carefully in test case for post-sanctions Iran | Reuters:
"Freed from nuclear-related sanctions, Iran has signaled its appetite to buy more than 100 Western planes, a prospect that would usually have the giants of the $130 billion-a-year jet industry scrambling for a piece of the action.
But a muted response from both Airbus and arch-rival Boeing underscores the lingering uncertainty and complications of doing business with Tehran.
Western and Iranian officials say Iran will require at least 400 jets over a decade to replenish its ageing fleet. Of those, 100-200 are pressingly needed, and would be worth over $20 billion at list prices."
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"Freed from nuclear-related sanctions, Iran has signaled its appetite to buy more than 100 Western planes, a prospect that would usually have the giants of the $130 billion-a-year jet industry scrambling for a piece of the action.
But a muted response from both Airbus and arch-rival Boeing underscores the lingering uncertainty and complications of doing business with Tehran.
Western and Iranian officials say Iran will require at least 400 jets over a decade to replenish its ageing fleet. Of those, 100-200 are pressingly needed, and would be worth over $20 billion at list prices."
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Oil Rises in Biggest Rally Since August Amid Volatility Surge - Bloomberg Business
Oil Rises in Biggest Rally Since August Amid Volatility Surge - Bloomberg Business:
"Oil rallied in its biggest two-day advance since August after a slump to a 12-year low prompted some investors to buy back record bearish bets.
Front-month futures have jumped more than 15 percent after sliding to the lowest since 2003 on Wednesday. Earlier this month speculators’ amassed the biggest ever short position in U.S. crude amid concern that turmoil in China’s markets will curb fuel demand while an increase in exports from Iran will exacerbate a global glut. Oil may be the “trade of the year,” if it can weather the surge in the Middle East producer’s shipments, according to Citigroup Inc.
“After large directional movements like those we’ve seen over recent weeks there tends to be a corrective move in the opposite direction,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “It does look like the next couple of months could be some sort of a crunch time for oil, particularly with Iran coming back into the market and disappointing demand growth.”"
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"Oil rallied in its biggest two-day advance since August after a slump to a 12-year low prompted some investors to buy back record bearish bets.
Front-month futures have jumped more than 15 percent after sliding to the lowest since 2003 on Wednesday. Earlier this month speculators’ amassed the biggest ever short position in U.S. crude amid concern that turmoil in China’s markets will curb fuel demand while an increase in exports from Iran will exacerbate a global glut. Oil may be the “trade of the year,” if it can weather the surge in the Middle East producer’s shipments, according to Citigroup Inc.
“After large directional movements like those we’ve seen over recent weeks there tends to be a corrective move in the opposite direction,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “It does look like the next couple of months could be some sort of a crunch time for oil, particularly with Iran coming back into the market and disappointing demand growth.”"
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