Sunday, July 22nd, 2018

 

Iran warns Trump not to threaten country’s oil exports

TEHRAN, July 22 — Iran’s president warned his US counterpart Donald Trump not to threaten the Persian Gulf nation’s oil exports and called for improved relations with its neighbours, including arch-rival Saudi Arabia. Trump is reimposing…


G20 draft calls for greater dialogue on trade tensions

BUENOS AIRES, July 22 — Finance ministers and central bankers from the world’s largest economies meeting in Argentina said heightened trade and geopolitical tensions risk derailing global growth and called for greater dialogue, according to a…


Flailing euro is unlikely to find any succour from ECB meeting

LONDON, July 22 — The euro has been treading water. It is unlikely to find a rescuing hand from the European Central Bank, whose policy makers meet this week. While analysts expect the shared currency to strengthen as the year progresses,…


US courts allies with free trade offers at G20 meeting, France resists

BUENOS AIRES: The United States sought to woo Europe and Japan with free trade deals on Saturday to gain leverage in an escalating tariff war with China but its overtures faced stiff resistance from France at a G20 finance ministers meeting dominated by trade tensions.

US Treasury Secretary Steven Mnuchin told reporters at the gathering of the financial leaders of the world's 20 largest economies in Buenos Aires that he was renewing President Donald
Trump's proposal that G7 allies drop trade barriers between them.

“If Europe believes in free trade, we're ready to sign a free trade agreement,” Mnuchin said, adding that such a deal would require the elimination of tariffs, non-tariff barriers and subsidies. “It has to be all three issues.”

Trump has angered European allies by imposing import tariffs of 25% on steel and 10% on aluminium, causing the European Union (EU) to retaliate with similar amounts of tariffs on Harley-Davidson motorcycles, Kentucky bourbon and other products.

Trump, who frequently criticises Europe's 10% car tariffs, is also studying adding a 25% levy on automotive imports, which would hit both Europe and Japan hard.

French Finance Minister Bruno Le Maire said the EU would not consider launching trade talks with the United States unless Trump first withdraws the steel and aluminium tariffs and stands down on a car tariff threat.

“We refuse to negotiate with a gun to our head,” Le Maire told reporters on the sidelines of the G20 meeting.

Mnuchin's offer to the EU and Japan – along with a renewed effort to jump-start stalled talks with Mexico and Canada to modernise the North American Free Trade Agreement – come as the US and China are at loggerheads in an escalating trade dispute with no talks in sight.

The world's two largest economies have slapped tariffs on U$34 billion (RM138 billion) worth of each other's goods so far. Trump on Friday threatened to impose tariffs on all US$500 billion of Chinese
exports to the United States unless Beijing agrees to major structural changes to its technology transfer, industrial subsidy and joint venture policies.

Mnuchin is not meeting formally with any Chinese officials at the G20 meeting, but said that was because his normal counterpart, top Chinese economic adviser Liu He, is not
attending.

The International Monetary Fund (IMF) also warned that the recent wave of trade tariffs would significantly harm global growth.

IMF managing director Christine Lagarde presented the G20 finance ministers and central bank governors meeting here with a report warning that existing trade restrictions would reduce global output by 0.5%.

In the briefing note prepared for G20 ministers, the IMF said global economic growth may peak at 3.9% in 2018 and 2019, while downside risks have increased due to the growing trade conflict.
Lagarde's presentation came shortly after Mnuchin said there was no “macro” effect yet on the US economy.

Mnuchin said that, while there were some “micro” effects such as retaliation against US-produced soybeans, lobsters and bourbon, he did not believe that tariffs would keep theUS from achieving sustained 3% growth this year.

“I still think from a macro basis we do not see any impact on what's very positive growth,” Mnuchin said, adding that he is closely monitoring prices of steel, aluminium, timber and soybeans.

The US dollar fell the most in three weeks on Friday against a basket of six major currencies after Trump complained again about the greenback's strength and about Federal Reserve interest rate rises, halting a rally that had driven the dollar to its highest in a year.

The last G20 finance meeting here in late March ended with no firm agreement by ministers on trade policy except for a commitment to “further dialogue”.

Brazilian Finance Minister Eduardo Guardia said participants agreed the risks to the global economy had increased since their last meeting, citing rising trade tensions and higher interest rates by major central banks.

He said the final communique would reflect the need for members, particularly in emerging markets that have been roiled by currency weakness, to undertake reforms to protect themselves against volatility.
German Finance Minister Olaf Scholz said he would use the meeting to advocate for a rules-based trading system, but that expectations were low.

“I don't expect tangible progress to be made at this meeting,” Scholz told reporters on the plane to Buenos Aires.

The US tariffs will cost Germany up to €20 billion (RM94 billion) in income this year, according to the head of German think-tank IMK.

Bank of Japan Governor Haruhiko Kuroda said he hoped the debate at the G20 gathering would lead to an easing of retaliatory trade measures. “Trade protectionism benefits no one involved,” he said. “I think restraint will eventually take hold.” – Reuters


China’s luck on yuan devaluation risks running out on Trump ire

HONG KONG, July 22 — For more than a month, China seemed to be enjoying the advantage of exchange-rate depreciation without the global backlash and panicky capital outflows that accompanied the bout of yuan weakening in 2015. Then Donald Trump…


Fiat Chrysler’s new CEO shows company’s future is all about Jeep

MILAN, July 22 — The company is called Fiat Chrysler. But its success depends on another iconic brand: Jeep. That explains why Mike Manley, a 54-year-old Briton, was picked to replace Sergio Marchionne, the automotive icon who was forced to…


German industry groups warn US on tariffs before Trump-Juncker meeting

BERLIN, July 22 — German industry groups warned today, before European Commission President Jean-Claude Juncker meets US President Donald Trump this week, that tariffs the United States has imposed or is threatening to introduce risk harming…


AirAsia X’s expanded order for A330 ‘sends positive signal to investors’

PETALING JAYA: MIDF Research is positive on AirAsia X Bhd’s (AAX) recent commitment to expand its fleet size with the addition of 100 A330neo long-haul aircraft, making it the first Asian airline to operate the model.

Initial deliveries expected to begin in fourth quarter next year.

Last Thursday, AAX announced that it has ordered 100 A330neo from Airbus in a deal worth US$30 billion (RM121.8 billion). The airline previously had an existing order for 66 A330neo, but then changed its mind to add 34 more.

In its report last Friday, MIDF said it believes that the airline’s new aircraft deployment will send a positive signal to investors on its confidence for the value based long-haul model.

“While the company had to weather some bumpy rides previously, the management is optimistic that it will be able to find the right tune in the long-haul market.

“With more new generation aircraft expected to fill up its fleet, we expect further reduction on cost per available seat kilometres across the group,” MIDF added.

Furthermore, the research firm opined that AAX likely benefited from hefty mark down due its large order.

According to the management, the deal is worth US$30 billion for 100 units of A330neo with a sticker price of US$296.4 million per unit.

The new units will be operated out of its bases in Malaysia, Thailand and Indonesia.

Given the potential economic benefit, MIDF anticipates new opportunities emerging for an ultra-long-haul flight by AAX with potential for the Kuala Lumpur-London Gatwick route.

However, it said that while the introduction of the European route is possible, it is inclined to believe that ultra-long flights are likely to be shelved at this juncture.

“This is stemming from the unfavourable oil price trend this year which has averaged at US$68.81 per barrel, an increase of 25.7% since the beginning of the year,” it added.

Nevertheless, given its positive view on the new development, MIDF maintained its positive stance on the stock.

Moving forward, MIDF opined that AAX is expected to see further cost reduction following its gradual shift to modern fleet operation.

MIDF said this is taking into account its ability to induce higher cost-saving in comparison with the older AAX’s A330-300 models.

It said the model is able to bring significant reduction in fuel consumption by 25% than the older generation aircraft of similar size. Coupled with 5% saving in maintenance cost, A330neo is able to reduce cost by 11-12%, it added.

Additionally, AAX is poised to reap the first mover’s advantage in reducing cost and offering more competitive price given its position as the first airline in Asia to operate the A330neo.

“All things considered, we maintain our ‘buy’ call with an unchanged target price of 47 sen pegging its earnings per share (EPS) to PE of 8.5 times,” it added.


AirAsia X’s A330 expanded order a ‘positive signal’

PETALING JAYA: MIDF Research is positive on AirAsia X Bhd’s (AAX) recent commitment to expand its fleet size with the addition of 100 A330neo long-haul aircraft, making it the first Asian airline to operate the model.

Initial deliveries expected to begin in fourth quarter next year.

Last Thursday, AAX announced that it has ordered 100 A330neo from Airbus in a deal worth US$30 billion (RM121.8 billion). The airline previously had an existing order for 66 A330neo, but then changed its mind to add 34 more.

In its report last Friday, MIDF said it believes that the airline’s new aircraft deployment will send a positive signal to investors on its confidence for the value based long-haul model.

“While the company had to weather some bumpy rides previously, the management is optimistic that it will be able to find the right tune in the long-haul market.

“With more new generation aircraft expected to fill up its fleet, we expect further reduction on cost per available seat kilometres across the group,” MIDF added.

Furthermore, the research firm opined that AAX likely benefited from hefty mark down due its large order.

According to the management, the deal is worth US$30 billion for 100 units of A330neo with a sticker price of US$296.4 million per unit.

The new units will be operated out of its bases in Malaysia, Thailand and Indonesia.

Given the potential economic benefit, MIDF anticipates new opportunities emerging for an ultra-long-haul flight by AAX with potential for the Kuala Lumpur-London Gatwick route.

However, it said that while the introduction of the European route is possible, it is inclined to believe that ultra-long flights are likely to be shelved at this juncture.

“This is stemming from the unfavourable oil price trend this year which has averaged at US$68.81 per barrel, an increase of 25.7% since the beginning of the year,” it added.

Nevertheless, given its positive view on the new development, MIDF maintained its positive stance on the stock.

Moving forward, MIDF opined that AAX is expected to see further cost reduction following its gradual shift to modern fleet operation.

MIDF said this is taking into account its ability to induce higher cost-saving in comparison with the older AAX’s A330-300 models.

It said the model is able to bring significant reduction in fuel consumption by 25% than the older generation aircraft of similar size. Coupled with 5% saving in maintenance cost, A330neo is able to reduce cost by 11-12%, it added.

Additionally, AAX is poised to reap the first mover’s advantage in reducing cost and offering more competitive price given its position as the first airline in Asia to operate the A330neo.

“All things considered, we maintain our ‘buy’ call with an unchanged target price of 47 sen pegging its earnings per share (EPS) to PE of 8.5 times,” it added.


Japan urges caution over Trump’s complaint on strong dollar

BUENOS AIRES: Japan should be careful about recent remarks by US President Donald Trump on currencies and might need to convince Washington its monetary easing is not aimed at weakening the yen but beating deflation, a finance ministry official said on Saturday.

The US dollar fell the most in three weeks on Friday against a basket of six major currencies after Trump complained again about the greenback’s strength and about Federal Reserve interest rate rises.

The US president also lamented the strength of the dollar and accused the European Union and China of manipulating their currencies.

Trump is not trying to influence currency markets, Treasury Secretary Steven Mnuchin has said, reiterating that a strong US dollar reflects a strong US economy and is in the United States’ long-term interest.

“This time, the targets are China and the European Central Bank. But the content of criticism is the same so we need to be careful,” the Japanese official told reporters on the sidelines of a G20 meeting in the Argentine capital.

The Bank of Japan has pursued an aggressive monetary stimulus to achieve its elusive 2% inflation target.

Despite five years of massive money printing, inflation has struggled to accelerate but the yen has steadily weakened.

China is the primary target, however, as Beijing accounts for the “bulk of the US trade deficit”, Japanese Finance Minister Taro Aso told reporters on the sidelines of the G20 meeting of finance ministers and central bank governors. – Reuters