Saturday, May 26th, 2018


Returning to 2016 oil output levels is an option, says Russia's Novak

MOSCOW, May 26 ― Russian Energy Minister Alexander Novak said oil-exporting nations were discussing returning to production levels that were in place prior to the 2016 deal to cut output as one of the options for easing curbs, RIA news agency…

Trump metals tariffs make Granite City great again, but at what cost?

GRANITE CITY (Illnois), May 26 ― After Donald Trump was elected president in 2016 on a pledge to “Make America Great Again” and revive the country's old industrial heartland, Dave Chrusciel hoped someday to return to his previous job at the…

Wall Street sees split finish amid energy dip, political uncertainty

NEW YORK: Wall Street had a split finish on Friday, as energy shares slid and continued whiplash from geopolitical headlines weighed on the Dow and S&P 500 while the Nasdaq rose.

The lackluster finish came amid light trading volume ahead of a three-day holiday weekend, the traditional start of the US summer when many market players are on vacation.

Despite suffering a string of highly volatile sessions, all three major indices managed to end higher for the week thanks the rally Monday.

The benchmark Dow Jones Industrial Average fell 0.2% to close the week at 24,751.44, and broader S&P 500 lost the same amount to end at 2,721.26.

But chipmakers, including Broadcom Inc., which gained 2.7 percent, lifted the Nasdaq by 0.1% to finish at 7,433.85, putting the tech-heavy index up 0.7% for the week.

Some of Friday's declines were driven by falling energy stocks, dragged lower on reports Saudi Arabia and Russia could increase production to replace falling output in Venezuela and Iran.

Exxon Mobil fell two percent while Chevron lost 3.5%.

“The OPEC members and their partners are beginning to discuss the possibility to increase their production which is quite bearish for oil prices and the energy sector,” Peter Cardillo of Spartan Capital told AFP, referring to the Organization of the Petroleum Exporting Countries.

But Quincy Krosby, chief market strategist at Prudential Financial, said that more than reacting to oil's woes, traders were seeking to reduce their exposure to global uncertainties ahead of the holiday weekend.

“Energy stocks are much smaller in the S&P 500 than they have been in the past,” he told AFP.

“You don't want to stay in the market for a long weekend with the uncertainties surrounding North Korea as well as the situation in the middle-east with Iran,” he said.

“You don't want to be vulnerable.”

President Donald Trump on Friday raised the possibly of pressing ahead after all with a June summit with North Korea, barely 24 hours after abruptly calling the meeting off.

That news followed quickly on the Trump administration's announcement it was considering imposing duties on auto imports, which threatens to disrupt a crucial North American industry and anger major US trading partners who are already in fraught trade talks with Washington.

Markets will be closed on Monday in observance of Memorial Day. — AFP

New US tariffs a headache for foreign automakers

NEW YORK: US President Donald Trump's threat to impose steep tariffs on auto imports will hit foreign automakers that export a large number of vehicles to the US market, but many also manufacture cars domestically.

Most of these brands, such as Mercedes and BMW as well as Nissan, Honda and Volkswagen, have at least one auto plant on US soil, where they employ tens of thousands of workers.

These automakers have invested billions of dollars in their US facilities. Toyota and Mazda announced at the start of the year plans to build a US$1.6 billion joint facility in Alabama that will be capable of producing 300,000 vehicles a year.

Volvo Cars, which plans to open a plant in South Carolina by the end of the year, has warned that new import duties would affect its investment plans.

US auto market

In 2017, about 17.2 million vehicles were sold in the United States, according to AutoData, which compiles figures from manufacturers and dealers.

Nearly 8.7 million of these were imports, according to the Center for Automotive Research, mostly from Mexico and Canada — partners in the North American Free Trade Agreement — as well as from Japan, Germany and South Korea.

Since the start of this year, the share of domestically-manufactured autos sold in the US has fallen to 50.1%, down from 51.1% over the same period in 2017, according to

At least 82% of Volkswagens sold in the US were imports, according to Edmunds, as well as 55% of Toyotas, 57% of Hyundais, 70% of Mercedes-Benz and 68% for BMW.

On the other hand, more than half the cars sold in the US by the “Big Three” in Detroit were made locally: 80% for Ford, 60% for General Motors and 55% for Fiat Chrysler.

Honda is the sole foreign automaker manufacturing a large majority of its locally-sold cars in the United States.

Major exporter

The US auto industry is the largest US manufacturing sector which employs about eight million workers, directly or indirectly through related industries.

It also is one of the largest export sectors, according to the American Automotive Policy Council, an industry body representing the major US manufacturers, General Motors, Ford and Fiat Chrysler, and foreign automakers.

Auto exports virtually doubled between 2009 and 2015 to US$137.7 billion from US$74.1 billion, according to AAPC, supporting 771,000 US jobs.

BMW and Daimler, maker of the Mercedes-Benz, notably send US-built cars to the European Union and China.

BMW, which says its Spartanburg, South Carolina plant is the world's largest, exported 70% of the 371,284 autos manufactured at the site last year, or about 272,346, representing about US$10 billion in total exports.

Domestic manufacturing

Toyota, which employs more than 36,000 people, has 10 factories at locations in Alabama, California, Mississippi and Texas. It produces 1.2 million cars and sells 2.4 million, according to 2017 figures, with the difference made up by imports.

Honda, which employs 4,000, has factories in Alabama, George, Indiana and Ohio and produces 1.2 million, selling 1.6 million.

German giant Volkswagen, which has a Tennessee factory with the capacity to produce 150,000 units annually, did not disclose production figures but sold 339,679 autos. It employs 2,444 workers.

Daimler maintains auto plants in Alabama, Indiana, and South Carolina and has 4,900 local workers. In 2017, it produced more than 286,000 cars and sold 337,246.

BMW, which employs nearly 9,0000 workers, produced 371,284 automobiles in 2017 in the US, and sold 305,685.

Nissan maintains two factories in Mississippi in Tennessee and produced 930,000 autos, selling US$1.6 million. It employed 14,400 workers.

Auto imports

Volkswagen luxury brands Audi and Porsche have no US factories and as a result import all the vehicles sold in the US market. In 2017, Audi sold 226,511 units while Porsche brought 55,420 to market. — AFP

S&P drops debt downgrade warning for Catalonia

WASHINGTON: Ratings agency S&P on Friday dropped the downgrade warning for the debt of the Catalan region of Spain, saying the provincial government's financial situation was stable even while the political confrontation persists.

S&P Global Ratings also affirmed Catalonia's B+/B rating and maintained the negative outlook given the “deterioration of the relationship” between Madrid and the new provincial government, elected last week.

While political tensions remain a “major hurdle” to debt payments, S&P removed the region's debt from the CreditWatch negative, which was imposed in early October, meaning a downgrade was now no longer seen as an imminent threat.

The ratings agency Fitch had also put a warning on Catalan government debt in October as tensions with Madrid escalated amid the region's push for independence.

“Despite continued political tension, Catalonia's budgetary execution continues to improve and the region continues to receive liquidity support from the central government to service long-term debt, while rolling over its short-term debt as it comes due,” S&P said in a statement.

But the agency cautioned that the outlook remained negative, reflecting “the possible adverse impact on Catalonia's ability to fully and timely service its debt because of ongoing political tension.”

S&P said it saw no indication of how the impasse could be resolved and that the situation was likely to “drag on in the medium to long term.”

Catalonia's new separatist leader, Quim Torra, was sworn in last week ending nearly seven months of political limbo in the northeastern Spanish region.

The region had been under direct rule from Madrid since the central government deposed Catalan president Carles Puigdemont following a failed declaration of independence on October 27.

Catalonia is a major engine for growth, accounting for around 19 percent of the country's GDP, and the confrontation was Spain's worst political crisis in decades. — AFP

Pakistan seeks economic lifeline with fresh China loans

ISLAMABAD, May 26 — Pakistan expects to obtain fresh Chinese loans worth US$1-2 (RM4 -8 billion) billion to help it avert a balance of payments crisis, Pakistani government sources said, in another sign of Islamabad’s growing reliance on Beijing…

Ringgit to extend downward momentum

KUALA LUMPUR, May 26 — The ringgit will likely extend its downward trend against the US dollar next week to between 3.96 and 4.00, mainly driven by external factors, said analysts. OANDA Head of Trading in Asia-Pacific Stephen Innes said the…

Bursa Malaysia to trend higher towards 1,800-1,820 level next week

KUALA LUMPUR, May 26 — Bursa Malaysia is expected to trend higher towards the 1,800-1,820 level next week, after retreating back to 1,750 level this week on heavy selling in the heavyweights due to overreaction to the debt level announcement,…

US reaches deal to keep China’s ZTE in business -congressional aide

WASHINGTON, May 26 — The Trump administration told lawmakers the US government has reached a deal to put Chinese telecommunications company ZTE Corp back in business, a senior congressional aide said today. As with a similar announcement earlier…

Canada’s Trudeau raises US auto import probe concerns with Trum

OTTAWA, May 26 — Canadian Prime Minister Justin Trudeau spoke with US President Donald Trump today and raised “strong concerns” about a US probe into car and truck imports that was launched this week, the prime minister’s office said. The…