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UAE’S GDP TO GROW 4.2% IN 2014 AND 4.5% IN 2015, TOTAL EXPORTS TO INCREASE 6% THIS YEAR – EULER HERMES REPORT

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Mahan Bolourchi, Euler Hermes GCC CEO
  • UAE exports to grow 6% in 2014, taking advantage of increasing demand from Asia – particularly in India, Singapore, Taiwan and Thailand
  • 3 out of 4 C-level executives attending the TCI Summit say common regulatory framework for financial disclosure should be mandatory
  • TCI summit survey shows participants are in favour of Chapter 11/insolvency rules for SMEs and corporates

Thanks to the UAE’s strong logistics and infrastructures, the UAE’s GDP is expected to grow at 4.2% in 2014 and 4.5% in   2015; while the country’s exports are expected to grow 6% in 2014 from $379 billion in 2013.

This is according to a report by Euler Hermes, the leading trade credit insurance provider in the world, and also the headline sponsors of the 2nd Annual Trade Credit Insurance Summit, being held at the Address Hotel, Dubai Mall from October 27-29, 2014.

Since 2007, Euler Hermes has been present in the UAE in partnership with Alliance Insurance PSC.

The UAE has generated total exports of $379 billion in 2013 and its exports are expected to grow a further 6% in 2014, taking advantage of increasing demand from Asia – particularly in India, Singapore, Taiwan and Thailand” said Mahan Bolourchi, Euler Hermes CEO for the GCC countries.

Mahan Bolourchi Euler Herme

Mahan Bolourchi Euler Herme

The UAE economy, the second largest in the Arab world after Saudi Arabia and the most diversified in the Middle East, is continuing on a high growth trajectory. Economic growth is expected at 4.2% in 2014 and about 4.5% in coming years.

While the economy grows and new market opportunities increase, so as the market risk factors do, such as higher risk of bad debt, increased payment arrears, fluctuations in cash flow, limited access to funding (SMEs), fast market expansion, and lack of information on financials.

Small Medium Enterprises (SMEs) are particularly at risk because of their limited financial base and liquidity. SMEs need to take short-term credits to meet cash flow requirements, and they also have limited access to finance and quite expensive interest rate. SMEs also face the risks of delayed payment, administrative cost of collecting, limitation of in-house risk management experts, and limited access to reliable information.

Bolourchi highlighted the financial consequences of unpaid debt and the importance of trade credit insurance (TCI) in the economy. “A loss or non-payment event can have a devastating impact on a company’s profits. Depending on profit margins, the additional sales required to offset the loss have the potential to significantly slow future growth” he said.

The importance of trade credit insurance was confirmed when Bolourchi asked the audience, and as many as 73 per cent of the C level executives attending the TCI Summit indicated that trade credit insurance (TCI) contributes towards economic growth and should become and integral part of economic life in GCC and the Middle East region.

Trade credit insurance accelerates economic growth. It helps maintain the cash flow which will lead to growing business and increasing trading activities,” he said, adding that “compared to last year, global insolvency index has decreased by 8 per cent this year. However it is still 13 per cent above the pre-crisis level.”

When asked whether the UAE should activate/implement Chapter 11 or Insolvency rules for SMEs and corporates with immediate effect, 52% of the TCI summit attendees said they strongly agree with the statement.

Almost three-fourths (74 per cent) of the survey participants think it should be mandatory to have common regulatory framework for financial disclosure, which would attract more investors to the region, especially in light of economic developments towards Expo 2020.

With regard to Saudi Arabian economy, Euler Hermes forecasts that the kingdom’s GDP is projected to grow at 4.5% in both 2014 and 2015.Total exports of $376 billion in 2013 are expected to grow by more than 4.5% in 2014.

Trading activities in fertilizers, gas, organic chemicals, petroleum and related materials, and plastics connect the Kingdom to global markets. In 2015 China, India, Japan, South Korea, Taiwan and the USA are expected to remain its largest trading partners.

Business

Alibaba’s Jack Ma makes first live appearance in three months in online meet

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Alibaba's Jack Ma makes first live appearance in three months in online meet 1

SHANGHAI (Reuters) – Alibaba Group founder Jack Ma met 100 rural teachers in China via a live video meeting on Wednesday morning, in the businessman’s first appearance since October, triggering a sharp jump in the Hong Kong listed shares of the e-commerce giant.

Social media speculation over the whereabouts of China’s highest-profile entrepreneur swirled this month after news reports that he missed the final episode of a TV show featuring him as a judge, amid a regulatory clampdown by Beijing on his sprawling business empire.

Ma had not appeared in public since Oct. 24, where he blasted China’s regulatory system in a speech at a Shanghai forum that set him on a collision course with officials, leading to suspension of a $37-billion IPO of Alibaba’s financial affiliate Ant Group.

Tianmu News, a news portal under Zhejiang Online, which is backed by the provincial Zhejiang government, first reported that Ma had met with the teachers via a live video conference on Wednesday.

The Jack Ma Foundation said that Ma participated in the online ceremony of the annual Rural Teacher Initiative event on Wednesday. Alibaba Group also confirmed that Jack Ma attended the online event.

Alibaba’s Hong Kong-listed shares jumped more than 6% after the reports of his reappearance, compared with a 0.64% rise in the Hang Seng index.

Ma’s public appearance comes as Alibaba plans to raise at least $5 billion through the sale of a U.S. dollar-denominated bond this month. Reuters reported the bond proceeds could reach $8 billion, which the e-commerce leader was likely to use for general corporate expenditure.

Alibaba is also the target of an antitrust investigation launched last month by Chinese authorities, who have in recent months accelerated a crackdown on anticompetitive behaviour in China’s booming internet space.

In the 50-second video, Ma, dressed in a navy pullover, spoke directly to the camera from a room with grey marble walls and a striped carpet. It was not clear from the video or the Tianmu News article where he was speaking from.

He addressed teachers receiving the Jack Ma Rural Teachers Award, who in previous years would have attended a ceremony organised by the Jack Ma Foundation in the Chinese seaside city of Sanya.

“We cannot meet in Sanya due to the epidemic,” he said in the speech, which did not discuss his whereabouts. “When the epidemic is over, we must find time to make up for everyone’s trip to Sanya, and then we will meet again!”

Xie Pu, founder of Chinese tech website Techie Crab, said the media and public had over-interpreted Ma’s move to lay low and that his step away from the public spotlight should not have been seen as a problem for Alibaba.

“We shouldn’t over-interpret his reappearance into public view this time, said Xie Pu, founder of Chinese tech website Techie Crab. “Alibaba still has a good governance structure — there are partners and a board of directors.”

(Reporting by Brenda Goh in Shanghai, Kane Wu and Sumeet Chatterjee in Hong Kong, Yingzhi Yang in Beijing; Editing by Tom Hogue and Gerry Doyle)

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Banking

‘Act big’ now to save economy, worry about debt later, Yellen says in Treasury testimony

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'Act big' now to save economy, worry about debt later, Yellen says in Treasury testimony 2

By David Lawder and Andrea Shalal

WASHINGTON (Reuters) – Janet Yellen, U.S. President-elect Joe Biden’s nominee for Treasury Secretary, urged lawmakers on Tuesday to “act big” on coronavirus relief spending, arguing that the economic benefits far outweigh the risks of a higher debt burden.

In more than three hours of confirmation hearing testimony, the former Federal Reserve chair laid out a vision of a more muscular Treasury that would act aggressively to reduce economic inequality, fight climate change and counter China’s unfair trade and subsidy practices.

Taxes on corporations and the wealthy will eventually need to rise to help finance Biden’s ambitious plans for investing in infrastructure, research and development, and for worker training to improve the U.S. economy’s competitiveness, she told members of the Senate Finance Committee.

But that would only come after reining in the coronavirus pandemic, which has killed over 400,000 in the United States, and the economic devastation it brought.

Yellen, who spoke by video link, said her task as Treasury chief will be to help Americans endure the final months of the pandemic as the population is vaccinated, and rebuild the economy to make it more competitive and create more prosperity and more jobs.

“Without further action we risk a longer, more painful recession now and longer-term scarring of the economy later,” she said.

Yellen said pandemic relief would take priority over tax increases, but corporations and the wealthy, which both benefited from 2017 Republican tax cuts “need to pay their fair share.”

She raised eyebrows of some senators and Wall Street when she said that Treasury would consider the possibility of taxing unrealized capital gains – through a “mark-to-market” mechanism – as well as other approaches to boost revenues.

DEBT BURDEN

She also that the value of the dollar should be determined by markets, a break from departing President Donald Trump’s desire for a weaker U.S. currency.

“The United States does not seek a weaker currency to gain competitive advantage and we should oppose attempts by other countries to do so,” she said.

Wall Street stocks rose on Tuesday in reaction to Yellen’s call for a hefty stimulus package, as well as to positive bank earnings updates. Oil prices also rose, while Treasury yields fell slightly on her comments that parts of the 2017 tax reform should be repealed.

Biden, who will be sworn into office on Wednesday, outlined a $1.9 trillion stimulus package proposal last week, saying bold investment was needed to jump-start the economy and accelerate the distribution of vaccines to bring the virus under control.

Asked what outlays would provide the biggest “bang for the buck,” Yellen said spending on public health and widespread vaccinations was the first step. Extended unemployment and nutrition aid, better known as food stamps, should be next, she said.

“Neither the president-elect, nor I, propose this relief package without an appreciation for the country’s debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big,” Yellen said.

She said even though the amount of debt relative to the economy has risen, the interest burden – the amount the Treasury pays to service its debt – has not, due to lower interest rates. She said she will watch that metric closely as the economy recovers.

NEW CLIMATE POST AT TREASURY

Yellen also called climate change an “existential threat” to the U.S. economy and said she would appoint a senior official at Treasury to oversee the issue and assess systemic risks it poses to the financial system.

She added investment in clean technologies and electric vehicles was needed to cut carbon emissions, keep the U.S. economy competitive and provide good jobs for American workers.

Yellen said China was the most important strategic competitor of the United States and underscored the determination of the Biden administration to crack down on what she called China’s “abusive, unfair and illegal practices.”

Asked whether China had committed “genocide” in its treatment of Muslim Uighurs as the Trump administration declared in a last-minute proclamation, Yellen said China is “guilty of horrendous human rights abuses, yes.”

Biden’s transition team urged the Senate to move swiftly to confirm Yellen. Democratic Senator Ron Wyden, who will lead the Finance Committee after Biden’s inauguration on Wednesday, said he would push for a confirmation vote on Thursday. Republican Senator Mike Crapo said he would work towards an “expeditious” confirmation for Yellen.

She also received the endorsement of all former Treasury secretaries, from George Schultz to Jack Lew, who urged senators in a letter to swiftly confirm Yellen’s nomination to avoid “setting back recovery efforts.” A spokeswoman for Treasury Secretary Steven Mnuchin, who steps down on Wednesday, did not respond to a request for comment.

(Reporting by David Lawder, Andrea Shalal, Ann Saphir and David Shepardson; Additional reporting by Trevor Hunnicutt; Editing by Heather Timmons, Andrea Ricci and Kim Coghill)

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UK finance sector revives, cuts staff, reviews office space – survey

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UK finance sector revives, cuts staff, reviews office space - survey 3

By Huw Jones

LONDON (Reuters) – Business volumes in UK financial services grew for the first time in two years during the final quarter of 2020 when firms shed staff and remote working in the pandemic spurred reviews of office space, a survey showed on Wednesday.

The latest Financial Services Survey published by employers’ body CBI and compiled by consultants PwC, was completed before a third lockdown was introduced in England from January.

“Unfortunately, the health and economic picture has sadly deteriorated since with restrictions tightening again,” said Rain Newton-Smith, chief economist at the CBI.

A trade deal with the European Union came into effect on Jan. 1 but does not cover financial services, which is being handled separately by Brussels under its “equivalence” system.

The EU was the City of London’s biggest customer.

“Meanwhile, work must continue on using existing pathways with the UK Trade and Cooperation Agreement to reach better outcomes for the financial services, particularly on equivalence,” Newton-Smith said.

Firms expect business volumes to grow at a slightly quicker rate in the first three months of 2021, the survey said.

They also expect to cut headcount further this year, with remote working prompting them to consider redefining, reconfiguring or cutting existing office space.

Many financial firms in London have opened hubs in the EU as they don’t expect the bloc to grant much direct access under equivalence.

Consultants EY has said that over 7,500 financial jobs have already left Britain for the EU.

“More work is yet to be done on the movement of people into roles in the EU and the migration of client contacts,” the survey said.

(Reporting by Huw Jones; editing by David Evans)

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