Ray S. Eñano, Editor business@manilastandardtoday.com extrastory2000@gmail.com
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MONDAY, OCTOBER 10, 2016
Business
Traders skeptical of pound’s recovery AFTER a dramatically dismal week for the pound punctuated by a flash crash in Asia, traders doubt it will shake off its tag of the worst-performing major currency in 2016. They’re negative because sterling is held hostage by the prospects of a hard Brexit and its impact on the UK economy. That adds to concern over how the third-most traded currency pair, the pound-dollar, could crash and bounce back with no apparent explanation beyond speculation that computerdriven trading was to blame. The pound’s weekly decline against the euro was the worst since 2009, beating the 3.4-percent drop during the week when Britain voted to leave the European Union this past June. The selloff Friday, when investors were spooked by a 6.1-percent plunge in two minutes, only hastened a decline that kicked off earlier in the week when Prime Minister Theresa May signaled a crackdown on immigration should take precedence over access to the bloc’s single market. “There’s not a lot of upside” for sterling, said Ryan Myerberg, a portfolio manager at Janus Capital in London. “Extreme moves like the one we had overnight on Friday are obviously surprising, but there is a context of a country that is having a lot of political issues. We have a lot of uncertainty around what’s going to happen with Brexit and the relationship with Europe.” Sterling slid 1.4 percent to $1.2434 on Friday. The drop of 4.2 percent in the week was the most since that ending June 24, when the Brexit vote results were published. The pound weakened 3.8 percent to 90.01 pence per euro since Sept. 30, its largest weekly depreciation versus the single currency since January 2009. Hedge funds and other large speculators increased their netshort futures positions in the pound to a record, according to data going back to 1992, the Commodity Futures Trading Commission said this week. A short futures position profits from a decline in the currency. Bloomberg
ANNUAL MEETING. IMF director of research Maurice Obstfeld (from left), Central Bank of Colombia Governor Jose Uribe, Bank of Russia First Deputy Governor Ksenia Yudaeva, South African Reserve Bank Governor Lesetja Kganyago and Banks of Thailand Governor Veerathai Santiprabhob participate in a panel discussion on emerging markets’ response to recent exchange rate pressures at the 2016 Annual Meetings of the International Monetary Fund and the World Bank Group at The World Bank Building on October 8, 2016 in Washington, DC. AFP
Japan may still cut rates, says Kuroda J
APAN’S central bank still has room to increase monetary stimulus and doesn’t intend to reduce its bond-buying program soon, Governor Haruhiko Kuroda said in an interview. “For the time being, we keep the long-term interest rate around zero. If necessary, we could reduce the target rate of the 10-year Japanese government bond even lower than zero percent,” Kuroda said on Saturday, speaking with Bloomberg Television’s Francine Lacqua. “If necessary, we can reduce both the short end and long end of interest rates.” Kuroda spoke weeks after he led the Bank of Japan to shift its stimulus program away from pre-set government bond purchases to a yield-targeting approach, officially known as quantitative and qualitative monetary easing with yield curve control. Taking a page out of the 1940s US Federal Reserve’s playbook, the bank now targets 10-year bond yields,
fixed at about 0 percent. Speaking later on Saturday at the Brookings Institution, Kuroda said by committing to continue expanding the monetary base until inflation stabilizes above 2 percent, the BoJ “aims to work on people’s perceptions of inflation in a more forceful manner.” Asset purchases could go up or down to manage the yield curve, he said. The remarks come as top global finance officials meeting in Washington repeated their call for governments to unleash new spending and push through reforms to reinvigorate world growth amid signs that the impact of monetary policy is waning. While Kuroda said he’s confident the policy to control the yield curve will succeed, there may be times when rates miss the target. “I don’t say that we can completely control the 10-year interest rate,” he said in the Bloomberg interview. “But from our experience, we can basically influence and manage the long-term interest rate to be around zero percent.” If the bank achieves its 2 percent inflation target, “then gradually the 10-year JGB rate would go up.” “If necessary, we can make new measures
to cap the long-term interest rate to go beyond our current target,” he said. “We even have new measures to introduce, which could avoid interest rate to go beyond the level we are targeting.” Japan’s central bank also built on its record of pioneering new strategies by pledging to overshoot its 2 percent inflation target before it ever stops increasing the supply of money. Kuroda has repeatedly painted the Sept. 21 decision as a strengthening in monetary easing. Even so, one former BoJ official who has been a close adviser to Prime Minister Shinzo Abe criticized last month’s move away from quantitative expansion as a setback, given continuing deflationary pressures. Another senior Abe aide, Etsuro Honda, has applauded the new approach, though days ago called on the BoJ to expand easing at the next meeting, which ends Nov. 1. Kuroda has characterized the new framework as a more sustainable one, suggesting to some analysts that BoJ easing is set to stay for years to come, and potentially beyond his tenure. The 71-year-old governor has about 18 months left in his term. Bloomberg
Qatar buys 100 Boeing planes WA S H I N G T O N ― Q a t a r Airways announced a large airplane order with Boeing Friday that includes up to $6.9 billion in single-aisle planes following delays in a rival Airbus offering. Under the agreement, Qatar will buy 30 new-generation Boeing 787s and 10 Boeing 777s, both wide-body aircraft, for $11.7 billion, the companies announced. Qatar Airways also signed a letter of intent to purchase up to 60 narrow-body Boeing 737 aircraft. The deal is worth as much as $18.6 billion all together. The order for the 737s follows unusual public criticism of Airbus earlier this year by Qatar Airways chief executive Akbar Al-Baker over delays in deliveries of the single-aisle Airbus A320neo due to problems with its engine. The order would help meet growing demand for air travel, Al-Baker said Friday. But the decision to go with Boeing was also prompted by “ongoing issues” with Boeing rival Airbus, Al-Baker acknowledged, appearing with Boeing executives and US and Qatar government officials at a news conference in Washington. “Boeing has started building airplanes before everybody else,” he said. “They make the best airplanes, even if their competitors will not like me saying this.” Al-Baker later emphasized that his company would continue to work with Airbus and take delivery of the A320 planes when they are ready. We are not “pointing fingers or trying to embarrass Airbus,” he told AFP. “We have close relations with Airbus and we are continuing to receive aircraft orders.” “The decision for us to buy Boeing airplanes is to get them for certain missions which today Airbus aircraft are not able to do,” he added. “We will maintain all of our commitments to Airbus.” The contract for the 737 marks the first time Qatar Airways has ordered single-aisle planes from Boeing in more than 15 years, the companies said. Al-Baker threatened to cancel the Airbus order in April due to problems with the engine and other difficulties, resulting in an “unacceptable” delay in delivering six planes. “We always in Qatar Airways have a plan B,” he said at the time. Qatar Airways cancelled an order for one of the Airbus planes in June. AFP
South Africa basks in the continent’s first solar-powered airport By Beatrice Debut GEORGE, South Africa―At first glance there’s nothing out of the ordinary about the regional airport in George, a town of just 150,000 residents on South Africa’s south coast. In fact though, the small site is Africa’s first “green” airport to be powered by the sun. The control tower, escalators, check-in desks, baggage carousels, restaurants and ATMs―every service here depends on a small solar power station, located a few hundred meters away in a field of dandelions next to a runway. Its 2,000 solar panels produce up to 750 kW every day, easily surpassing the 400 kW needed to run the airport. The excess is fed back into the municipal power grid, and a computer screen in the terminal informs passengers: “Within this month (September), 274 households were supplied through this system with green electricity.” For environmentally-conscious travelers keen to reduce their carbon footprint, it’s a welcome development. “Planes have such a big carbon print,” said passenger Brent Petersen, 33, in George. “If we compensate, that’s cool.” George Airport was originally built in apartheid-era South Africa in 1977 to make getting home
easier for PW Botha, a government minister at the time and later president. It now serves as a transit hub for shipments of homegrown flowers and oysters, as well as golfers visiting one of the region’s many courses. Some 700,000 passengers pass through its doors each year. The solar plant, launched in September 2015, is the second solar-run airport in the world after Cochin airport in southern India. Nestled between the Indian Ocean on one side and the majestic Outeniqua Mountains on the other, George was a surprising location for the first attempt at a solar-powered airport in South Africa. Ambitious project The town’s weather is unpredictable: in the space of half an hour, the temperature can plummet by 10 degrees celsius, the blue skies quickly replaced by a steady drizzle. But so far, so good: even on overcast days, the plant still produces some power. At night or when necessary, the system automatically switches over to the traditional power grid. “The thinking was if we put (the solar system) in the worst unpredictable weather, it will absolutely work in any other airport in the country,” the airport’s maintenance director Marclen Stallenberg told AFP. The environmental value of
This photo taken on September 26, 2016 at the George airport, South Africa, shows solar panels. Africa gets is first solar-powered airport in George, with a plant that converts solar energy into direct current electricity using solar panels. The operation produces up to 750 kilowatts a day and powers 41 percent of the airport, with the aim to convert to 100 percent function by the end of the year. AFP
the ambitious project is already evident. Since solar became the airport’s main source of power, the hub has reduced its carbon dioxide emissions by 1,229 tons―the equivalent of 103,934 liters of fuel. The electricity bill has been cut by 40 percent in the space of a year, “which is a plus for me on the budget,” said airport manager
Brenda Voster. Voster says it will take another five to 10 years to pay off the initial 16-million rand ($1.2 million) cost. Meanwhile, regular power cuts, which in recent years have plagued Africa’s most developed economy, are a thing of the past, she adds. Heavily dependent on coal,
which is the source of 90 percent of the country’s electricity, South Africa is looking to diversify its options to avoid power cuts. Robyn Spence, who works at Dollar car hire company at the airport, said they “had to replace quite a few computers” fried by electricity surges caused by power cuts last year―no longer an issue with the solar system.
Untapped potential But not all the retailers at the airport are feeling the benefits yet. Lelona Madlingozi, a kitchen manager at Illy restaurant in the main terminal, said they had two power cuts lasting about three hours each just a month earlier. “We could not sell anything in the shop,” she said. Restaurants, said the airport, are not one of the essential services prioritized during power cuts. Expanding the use of renewable energy is a key focus for management firm, Airports Company South Africa, said its president Skhumbuzo Macozoma. The company’s goal is to achieve “carbon neutrality,” or net zero carbon emissions, by 2030. In a country with an estimated average of 8.5 hours of sunshine a day throughout the year, solar’s untapped potential looks huge. After the success in George, the airports in Kimberley―South Africa’s diamond capital―and Upington near the Namibian border have also gone green, with three other regional airports next in line. George Airport now plans on increasing the capacity of the small power station by an extra 250 kW and will soon install batteries capable of conserving energy generated during the day for use at night. AFP