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HALF OF EXPORTERS YET TO REVAMP FUTURE TRADING PLANS AFTER EU REFERENDUM

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HALF OF EXPORTERS YET TO REVAMP FUTURE TRADING PLANS AFTER EU REFERENDUM
  • Almost half of British exporters surveyed are yet to review their international trade plans a year after the UK’s decision to leave the EU
  • 85 per cent of exporters trade with the EU and 54 per cent say it is their main foreign market
  • One in four of those who have reviewed their strategies are looking beyond Europe for opportunities
  • But nearly one in three have decided to focus on domestic growth instead

Almost half (48 per cent) of Britain’s exporters surveyed haven’t reviewed their exporting strategies as a result of the UK’s decision to leave the European Union last year, new research from Lloyds Bank Commercial Banking has found.

That’s despite the fact that the EU is a trading partner for 85 per cent of firms that have exported in the past year, and is the region they have exported to the most in the last 12 months for 54 per cent.

Of those that have reviewed their strategies since the referendum, more than a quarter (27 per cent) said they planned to look further afield to take opportunities outside the EU.

But almost a third (30 per cent) planned to focus on domestic opportunities instead. This creates a greater concentration risk on the UK economy, and exposes companies to UK economic cycles.

Clive Higglesden, head of trade & supply chain product for Lloyds Bank Global Transaction Banking, said: “With a year since the vote and negotiations to leave the EU now underway, it’s concerning to consider that almost half of British exporters have yet to assess what changes may occur and what action needs to be taken.

“Wait-and-see is not really an adequate strategy for exporters, and businesses should be acting now to manage any risks on the horizon and possibly explore new opportunities. However it is comforting to see that a quarter of firms are already looking at new markets beyond the European Union , which is important for ensuring reduced impact from any loss of access to the EU Single Market.

“For companies that have elected to focus on the UK, they need to be conscious that they will be more greatly impacted by UK business cycles. Diversification into new markets is an important way of managing this risk”

Lloyds Bank Commercial Banking questioned more than 1,000 exporting businesses of all sizes across the UK about the challenges and opportunities they currently face.

It found that volatility in exchange rates was exporters’ biggest fear in the next five years, with a quarter (25 per cent) of those who have exported in the last 12 months rating it as their top challenge, closely followed by the potential introduction of trade tariffs, chosen by 19 per cent.

Even among businesses that have exported to non-EU markets in the last 12 months, half (51 per cent) said they would be negatively affected if the UK left the EU without a replacement trade deal, the survey found.

Yet even considering these challenges, businesses expect to become more competitive during the next five years.

Almost half (45 per cent) of exporters who would seek any support or advice if they were to encounter any market access barriers expect their businesses will be more competitive internationally by 2022, compared with just 17 per cent who think they will be less competitive.

While traditional partners in Europe and in English-speaking regions remain popular destinations for those looking to export, one in eight (13 per cent) of those who haven’t exported in the last year but think they might in the future would like to trade with Japan, and a similar number (12 per cent) want to trade with the Middle East.

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FTSE Russell to include 11 stocks from China’s STAR Market in global benchmarks

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FTSE Russell to include 11 stocks from China's STAR Market in global benchmarks 1

SHANGHAI (Reuters) – Index provider FTSE Russell will add 11 stocks from China’s STAR Market to its global benchmarks, according to a post on its website from Friday.

The move marks the first time shares from Shanghai’s Nasdaq-style STAR Market for stocks in China have been included in a global index.

The 11 stocks include Raytron Technology Co Ltd, Zhejiang HangKe Technology Co Ltd, Montage Technology Co Ltd, Advanced Micro-Fabrication Equipment Inc China.

(Reporting by Josh Horwitz and Samuel Shen in Shanghai; Editing by William Mallard)

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UK insurers estimate to pay up to 2.5 billion pounds for coronavirus claims

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UK insurers estimate to pay up to 2.5 billion pounds for coronavirus claims 2

(Reuters) – The Association of British Insurers (ABI) said on Saturday insurers are likely to pay up to 2.5 billion pounds ($3.50 billion) for UK’s COVID-19 insurance claims incurred in 2020.

The latest estimates include 2 billion pounds for COVID-19 business interruption claims and 500 million pounds for COVID-19 related protection insurance claims, travel insurance claims and other general insurance products.

ABI’s Director General Huw Evans said in a release that the pandemic illustrated some uncomfortable gaps between what people expected to be covered for and what their policy was designed for.

“We need to learn lessons from this unprecedented event and redouble our efforts to improve consumers’ trust in insurance products,” he added.

The insurance trade body said 123,000 claims have been settled with payment so far and a further 9,000 have received partial payments as of mid-January 2021.

($1 = 0.7139 pounds)

 

(Reporting by Maria Ponnezhath in Bengaluru; Editing by Marguerita Choy)

 

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Oil extends losses as Texas prepares to ramp up output after freeze

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Oil extends losses as Texas prepares to ramp up output after freeze 3

By Devika Krishna Kumar

NEW YORK (Reuters) – Oil prices fell for a second day on Friday, retreating further from recent highs, as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather and power outages.

Brent crude futures ended the session down $1.02, or 1.6%, at $62.91 a barrel while U.S. West Texas Intermediate (WTI) crude fell $1.28, or 2.1%, to settle at $59.24.

For the week, Brent gained about 0.5% while WTI fell about 0.7%.

This week, both benchmarks had climbed to the highest in more than a year.

“Price pullback thus far appears corrective and is slight within the context of this month’s major upside price acceleration,” said Jim Ritterbusch, president of Ritterbusch and Associates.

Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude production and 21 billion cubic feet of natural gas, analysts estimated.

U.S. energy firms this week cut the number of oil rigs operating for the first time since November, according to Baker Hughes data.

Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.

Companies were expected to prepare for production restarts on Friday as electric power and water services slowly resume, sources said.

“While much of the selling relates to a gradual resumption of power in the Gulf coast region ahead of a significant temperature warmup, the magnitude of this week’s loss of supply may require further discounting given much uncertainty regarding the extent and possible duration of lost output,” Ritterbusch said.

Oil prices fell despite a surprise drop in U.S. crude stockpiles last week, before the big freeze hit. Inventories fell 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday. [EIA/S]

“Vaccines and the impressive rollouts we’ve seen have delivered strong gains, as have the efforts of OPEC+ – Saudi Arabia, in particular – and the big freeze in Texas, which gave oil prices one final kick this week,” Craig Erlam, senior market analyst at OANDA, said.

“With so many bullish factors now priced in, it seems we’re seeing some of these positions being unwound.”

The United States on Thursday said it was ready to talk to Iran about returning to a 2015 agreement that aimed to prevent Tehran from acquiring nuclear weapons. Still, analysts did not expect near-term reversal of sanctions on Iran that were imposed by the previous U.S. administration.

“This breakthrough increases the probability that we may see Iran returning to the oil market soon, although there is much to be discussed and a new deal will not be a carbon-copy of the 2015 nuclear deal,” said StoneX analyst Kevin Solomon.

(Additional reporting by Ahmad Ghaddar in London and Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; Editing by Marguerita Choy, David Gregorio and Nick Macfie)

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