Saturday, March 10th, 2018


Trade war between US and Europe can still be avoided, says Germany

BERLIN, March 10 — A trade war between Europe and the United States can still be averted, German Economy Minister Brigitte Zypries said today, adding she hoped that talks in Brussels this weekend could help to prevent an escalation. US…

Uber calls lenders for US$1.25b in Wall Street shortcut

NEW YORK, March 10 — Inside New York’s St Regis Hotel yesterday, debt investors were given what’s becoming a familiar pitch: A high-flying tech company with a charismatic leader but no real cash flow was asking them to lend it money. This…

Goldman Sachs chief Blankfein seen retiring soon

NEW YORK: Goldman Sachs chief executive Lloyd Blankfein, who led the investment bank through the financial crisis, is eyeing retirement after 12 years atop the company, according to two people familiar with the matter.

Blankfein, 63, one of the most prominent figures on Wall Street, could leave ahead of, or early in 2019 — Goldman's 150th anniversary — the Wall Street Journal reported Friday, citing people close to the situation.

A source familiar with the matter told AFP there was no firm timetable to Blankfein's departure.

“He likes to joke that every day he is a little closer to retirement than the day before,” said another person close to the situation, adding that the timing was fluid.

The company is considering the bank's two co-presidents Harvey Schwartz and David Solomon for the top spot. Blankfein briefed fellow board members on both candidates at a February meeting but did not signal a preference, the Journal reported.

Schwartz and Solomon were tapped as co-presidents in December 2016 when former president Gary Cohn left Goldman for the White House.

Large companies like Goldman do succession planning as a matter of course, but Blankfein himself appeared to throw doubt on aspects of the Journal story.

“It is the Wall Street Journal's announcement … not mine. I feel like Huck Finn listening to his own eulogy,” Blankfein said on Twitter.

Blankfein led Goldman through the financial crisis, which gave him a first-hand taste of the public's disdain for Wall Street following the housing bust. He underwent chemotherapy for a curable form of blood cancer in 2015.

Though still a powerhouse, Goldman Sachs has taken some hits to its financial performance over the last couple of years ago, with low market volatility hitting crucial trading revenue streams.

That has partly been offset by gains in an online consumer lending aimed at the general public in a departure from its history as an elite investment bank.

Goldman reported a rare loss in the fourth quarter of US$2.1 billion due to the hit from one-time charges connected to US tax reform.

Not everyone on Wall Street is sad to see the Goldman chief leave.

“The guy should have been fired a long time ago,” said Richard Bove, an equity research analyst at the Vertical Group, who faulted Blankfein over a number of strategic decisions, from not acquiring a commercial bank or a financial technology company to not readying Goldman for a slowdown in trading.

But Wall Street journalist and former investment banker William Cohan praised Blankfein for better positioning Goldman ahead of the financial crisis, in part by taking bets that housing prices would fall. Goldman also received an infusion of US$5 billion in financing from Warren Buffett's Berkshire Hathaway.

“His biggest achievement was positioning the firm well to survive the financial crisis,” Cohan said. “Basically (Blankfein) sent a message to the world that Goldman was strong and financially sound and hadn't made the mistake many of his competitors made.”

Return of Gary Cohn?

News of Blankfein's impending departure has stoked speculation he could be succeeded by former Goldman president Gary Cohn, who stepped down this week from the Trump administration amid a dispute over trade policy.

But Cohan dismissed that outcome, in part because Cohn had been rebuffed in efforts to succeed Blankfein, an impetus for Cohn's decision to join the Trump administration.

“I don't see that happening,” Cohan said of a Cohn return. “That would upset the organization in a way that would be a self-inflicted wound that is not necessary.”

Bove agreed, saying “there are enough brilliant people working for this company and they are fashioning a new business role and they don't need Gary Cohn.”

Shares of Goldman Sachs finished up 1.7% at US$270.77, roughly in line with the gain of the broader market following a strong US jobs report. — AFP

US$1 = RM3.91

Brazil feels pain of US steel tariffs

BRASÍLIA: Brazilian iron and steel shares took a hit Friday, as markets weighed a potential trade war in response to Washington's decision to impose hefty tariffs on foreign steel and aluminum.

Brazil is the second biggest steel exporter to the United States after Canada — and the government is deeply worried about US President Donald Trump's imposition of 25% tariffs on steel and 10% on aluminum.

Foreign minister Aloysio Nunes and foreign trade minister Marcos Jorge shot back with a statement Thursday warning that Brazil “will resort to all necessary steps … to protect its rights and interests.”

Nunes said Brazil was “greatly concerned” by the measure which would “bring severe damage to Brazilian exports and have a negative impact on the flow of bilateral trade.”

On the Sao Paulo stock exchange Friday, Vale was down 1.33% in late-morning trading, Gerdau was down 1.72% and Usiminas 1.8%. Shares had already taken hefty hits the previous day after Trump's announcement.

US NAFTA partners Canada and Mexico are being exempted from Trump's tariffs, but Brazil will be left wide open to the measures. Brazilian steel accounts for nearly 14% of US steel imports by volume, the US commerce department says.

The US market accounted for 32.9% of all Brazil's steel exports last year, the Brazilian government says.


Brazil's National Confederation of Industry (CNI) has gone further, blasting Washington's “unjust, illegal” move which it says will cost Brazil some US$3 billion a year in lost steel exports and US$144 million in aluminum trade losses.

Diego Bonomo from the CNI says the United States will get blowback because Brazil is the main importer of US carbon steel. Also, 80% of Brazilian steel exports to the United States are semi-finished products used by US industry, then sold on.

Trump's tariffs, due to take effect in 15 days, “will have two negative effects: first on exports of Brazilian steel to the North American market and secondly on US exports to Brazil,” Bonomo said.

The fact that Brazil's exporter rivals Canada and Mexico will not be under the same tariffs will further hurt Brazilian competitiveness, said Jose Augusto Coelho Fernandes, policy director at the CNI.

“Brazilian industry regards this measure of President Trump with great worry. Firstly, since he excluded the NAFTA countries from the initial impact, it leaves Brazil as the most-affected country,” he said.

“If Brazil doesn't manage to get an exemption it will certainly file a formal complaint at the WTO along with the European Union and China,” Risk Brief consultancy said in a note to clients. — AFP

EU hopes for clarity from crunch US trade talks

BRUSSELS: Top EU trade officials will hold crunch talks with their US counterparts in Brussels on Saturday hoping to get “clarity” on President Donald Trump's controversial new steel and aluminium tariffs.

Trump's announcement of duties of 25% on imported steel and 10% on aluminium has stung the European Union and triggered warnings of an all-out international trade war.

Brussels has prepared a list of US products to hit with countermeasures if its exports are affected by the tariffs but says it hopes to join Canada and Mexico in being exempted.

The EU's top trade official Cecilia Malmstroem will meet US Trade Representative Robert Lighthizer in Brussels from 9:00 am (0800 GMT) along with Japanese Economy Minister Hiroshige Seko.

The talks have long been in the diary but after Trump's dramatic announcement they are now a de facto crisis meeting.

“Dialogue is always the prime option of the European Union,” Malmstroem told reporters on Friday, saying Brussels was “counting on being excluded” from the new duties.

She predicted a “long day” of talks on Saturday, while European Commission Vice-President Jyrki Katainen sought to play down expectations, saying it was “a meeting, not THE meeting”.

Katainen said Brussels wanted “clarity” on how the tariffs will be implemented and was ready to enforce retaliatory measures to protect European interests if needed.

“We are prepared and will be prepared if need be to use rebalancing measures,” Katainen said.

Along with a huge range of steel products, the EU's hit list of flagship American products lined up for countermeasures include peanut butter, bourbon whiskey and denim jeans.

Germany — singled out for particular criticism by Trump — accused Washington of protectionism, calling the tariffs an “affront to close partners”.

German Chancellor Angela Merkel urged dialogue and warned that “no one can win in such a race to the bottom”.

French President Emmanuel Macron on Friday warned his US counterpart Trump against forging ahead with the planned tariffs, saying they risked provoking a mutually destructive “trade war”.

Trump said the tariffs, which will come into effect after 15 days, will not initially apply to Canada and Mexico. He also added Australia to the list of likely carve-outs.

The EU exports around five billion euros' (US$4 billion) worth of steel and a billion euros' worth of aluminium to the US each year, and the European Commission, the bloc's executive arm, estimates Trump's tariffs could cost some 2.8 billion euros.

Brussels is also looking at “safeguard” measures to protect its industry — restricting the bloc's imports of steel and aluminium to stop foreign supplies flooding the European market, which is allowed under World Trade Organisation rules. — AFP

US$1 = RM3.91

US stocks rally after strong jobs report; Nasdaq ends at record

NEW YORK: Wall Street stocks surged Friday, with the Nasdaq ending at a record following a strong US jobs report and the announcement of a summit between the US and North Korea.

However, uncertainty surrounding US President Trump's tariffs plans and fears of a trade war kept a lid on gains in other markets, dealers said.

The agreement by Trump and North Korean leader Kim to hold talks “boosted risk sentiment … encouraging investors to buy into riskier assets such as shares”, noted Fiona Cincotta, senior market analyst at traders City Index.

The tech-rich Nasdaq Composite Index jumped 1.8% to 7,560.81, besting the prior record in late January by 55 points.

The gains were similar for both the Dow and S&P 500, with analysts pointing to Labor Department data that showed employers added 313,000 jobs in February, far above analyst expectations.

The closely-watched monthly US payrolls report also revealed moderating wage growth compared with the January report, mitigating concerns the Federal Reserve will speed its pace of interest rate hikes.

The report was “a perfect combination for Wall Street,” said Jack Ablin, chief investment officer of Cresset Wealth Advisors.

“It gives the Fed some room to not have to be too aggressive,” Ablin said. “That's good for risk takers. Money will stay cheap.”

Meanwhile, US officials vowed there would be no let-up on pressure on North Korea ahead of the summit on the nuclear program.

South Korea, where the main stocks index closed up 1.1% Friday, said the two leaders would hold an unprecedented summit by the end of May, raising hopes they can broker an agreement on Pyongyang's nuclear program that has fueled tensions on the peninsula.

Hopes that the two could reach some sort of agreement also led to a plunge in the yen, which is considered a go-to safe currency in times of volatility and uncertainty. The dollar jumped to its highest level in a week against the Japanese unit.

Lingering trade worries

Analysts said investors were somewhat placated by Trump's modified approach to tariffs, which exempted Mexico and Canada making them less severe than initially feared.

However, some observers warned the issue could still blow up down the road and dealers remain on edge on concerns over a possible trade war, which sparked a global sell-off last week.

The tariffs decision, coupled with the departure of market-friendly White House aide Gary Cohn, raises worries “that the nationalist and protectionist views within the White House will have a stronger influence on policy going forward,” said Oxford Economics in a note.

“The steel and aluminium tariffs are symptomatic of this underlying drift. Further, the risks of increased trade tensions with major partners like the European Union, China, Canada and Mexico is real.”

European bourses were mixed, with London rising 0.3% and Paris winning 0.4% and Frankfurt dipping 0.1%.

Key figures around 2140 GMT

New York – Dow: UP 1.8% at 25,335.74 (close)

New York – S&P 500: UP 1.7% at 2,786.57 (close)

New York – Nasdaq: UP 1.8% at 7,560.81 (close)

London – FTSE 100: UP 0.3% at 7,224.51 points (close)

Frankfurt – DAX 30: DOWN 0.1% at 12,346.68 (close)

Paris – CAC 40: UP 0.4% at 5,274.40 (close)

EURO STOXX 50: UP 0.2% at 3,420.54

Seoul – KOSPI: UP 1.1% at 2,459.45 (close)

Tokyo – Nikkei 225: UP 0.5% at 21,469.20 (close)

Hong Kong – Hang Seng: UP 1.1% at 30,996.21 (clos11

Dollar/yen: UP at 106.78 yen from 106.23 yen

Oil – Brent North Sea: UP US$1.88 at US$65.49 per barrel

Oil – West Texas Intermediate: UP US$1.92 at US$62.04 per barrel — AFP

Oil short-selling rears its ugly head as shale boom fears mount

NEW YORK, March 10 — Short-selling is creeping back into the oil market as fears increase that the US will be awash with oil again. Hedge funds boosted bets on falling West Texas Intermediate crude prices by the most this year after American…

MFC to help furniture industry meet RM12b export target

KUALA LUMPUR, March 10 — The Malaysian Furniture Council (MFC) aims to increase furniture exports to emerging markets, including China, in line with the industry’s aspirations to meet an export target of RM12 billion by 2020. In 2017,…

Bursa M’sia will likely trend higher next week

KUALA LUMPUR: Bursa Malaysia will likely trend higher next week, with the benchmark index touching 1,850, driven by improved market sentiment due to declining global geopolitcal tensions and recovering commodity prices.

Affin Hwang Investment Bank Vice-President/Head of Retail Research, Datuk Dr Nazri Khan Adam Khan said there was relief in the market after US President Donald Trump accepted an invitation to meet North Korean leader, Kim Jong-Un by possibly May.

“We can see a steady decline in tensions between North Korea and the United States and this is a big relief for traders and investors all over the world.

“We also see the commodities market recovering now, given that global oil, rubber and crude palm oil prices have started to tick up. This is a good sign,” he told Bernama.

On Friday, Brent crude futures was trading 0.3% higher at US$63.79 per barrel, while the US West Texas Intermediate crude futures rose 0.2% to US$60.24 a barrel.

On the local front, Nazri said election-linked stocks such as DRB-Hicom, Felda Global Ventures and MRCB would gain traction in the near-term with the 14th general elections looming large.

“I think this is a great catalyst for the market to firm up,” he added.

On a Friday-to-Friday basis, the FBM KLCI finished 12.15 points easier at 1,843.92 from 1,856.07 previously.

The FBM Emas Index lost 205.01 points to 12,968.94, the FBMT100 Index depreciated 181.55 points to 12,711.9 and the FBM Emas Shariah Index dropped 249.84 points to 13,122.51.

The FBM 70 dipped 555.21 points to 15,423.27 and the FBM Ace slumped 182.81 points to 5,971.86.

On a sectoral basis, the Industrial Index decreased 33.59 points to 3,181.86, while the Plantation Index lost 35.83 points to 8,044.16 and the Finance Index fell 235.33 points to 17,992.74.

Weekly turnover went down to 12.94 billion units worth RM12.43 billion from 14.37 billion units worth RM14.20 billion.

Main market volume fell to 7.77 billion shares valued at RM11.62 billion from 9.22 billion shares valued at RM13.30 billion.

Warrant turnover fell to 2.35 billion units worth RM354.6 million from 2.44 billion units worth RM439.50 million.

The ACE market advanced to 2.8 billion shares valued at RM435.93 million from 2.67 billion shares valued at RM441.25 million. — Bernama

Singapore to ratify CPTPP agreement soonest, says PM Lee

SINGAPORE, March 10 — Singapore Prime Minister, Lee Hsien Loong said the republic would ratify the newly-signed Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) agreement expeditiously. In his latest Facebook update today, he…