1 Sliding oil fails to tighten Gulf oil taps (Gulf
News) Saudi-led Gulf Opec members will reject pressure to shoulder the cost of
cutting oil production alone despite warnings that prices risk sliding further,
officials and analysts say.
Saudi Arabia, Kuwait, the UAE and Qatar, which pump
more than half of Opec’s 32 million barrels of daily output, want a solid
commitment from all other producers, especially non-Opec member Russia, to
agree to production cuts across the board. “Gulf states will not undertake a
unilateral output cut. They need strong cooperation from other producers,
mainly Russia, to cut,” Kuwaiti oil analyst Kamel Al Harami said.
The Organisation of the Petroleum Exporting
Countries is to hold a crucial meeting on December 4 to study prices, which
have fallen around 60 per cent since mid-2014. A senior Gulf oil official said
nothing has changed to alter Gulf states’ oil policy. But another Gulf official
hinted at some flexibility in case of cooperation.
Opec heavyweight Saudi Arabia said last week it was
ready to cooperate with other producers to stabilise the oil market and support
prices. The Opec meeting comes at a time of a massive production glut, with
oversupply continuing and inventories at almost record levels of more than 3
billion barrels, triple the normal rate.
Opec member Venezuela and some international economic
reports have warned that the oil pirce could slide to the range of $20-$30 a
barrel from around $42 now if output is not trimmed. The International Energy
Agency said this month that growth in demand for crude is set to slow next year
as the allure of cheap oil fades.
2 The grim realities facing StanChart shares (Matein
Khalid in Khaleej Times) Standard Chartered has been the most spectacular
international banking meltdown since the failure of Lehman Brothers in
September 2008. I had recommended a strategic short on StanChart shares at
1,500 pence since I thought the bank's foray into global investment banking was
a flawed strategy, given its DNA as a stodgy old British colonial bank with a
penchant for falling for banking snake pits.
StanChart's loan underwriting and risk management
culture was a disaster, as evidenced by $4 billion in provisions and successive
earnings misses since 2014. Temasek, the Singapore sovereign wealth fund that
is the bank's largest shareholder, reportedly forced out CEO Peter Sands and
approved ex-JPMorgan investment banking head Bill Winters as the new CEO. Yet
the share price collapsed 70 per cent amid one of history's greatest bank bull markets.
StanChart was mired in an ugly Iran sanctions
violations spat with Uncle Sam. China's hard landing means even world trade is
shrinking, hitting the bank's core trade finance franchise. The bank will face
significant loan losses in the Middle East, Africa, India, China, at least 40
per cent of its global loan book.
The new strategy attempts to focus on recurrent fee
businesses such as private banking and wealth management. This strategy is
doomed to failure in a world where Chinese growth scares will devastate Asian
wealth creation.
There is no immediate turnaround in StanChart's
future. The bank is now valued at only £15.8 billion in London, a disgrace for
the world's largest pure-play emerging markets bank with a 160-year pedigree.
StanChart has lost 34 per cent of its value in 2015. The bank trades at 0.8
times tangible book value.
Yet StanChart is a potential banking turnaround
story in the long run, though 2016 will see a rise in non-performing loans in
its core banking markets, a fall in fees/commissions, compression in net
interest rate margins and (billion-dollar) Uncle Sam regulatory fines.
3 Europe’s walls are going back up (Timothy Garton
Ash in The Guardian) The walls are going up all over Europe. In Hungary, they
take the physical form of razor and barbed wire fences, like much of the old
iron curtain. In France, Germany, Austria and Sweden, they are border controls
temporarily reimposed, within the border-free Schengen area.
And everywhere in Europe there are the mind walls,
growing higher by the day. Their psychological mortar mixes totally
understandable fears – after massacres perpetrated in Paris by people who could
skip freely to and fro across the frontier to Belgium – with gross prejudice,
stirred up by xenophobic politicians and irresponsible journalists.
What we are seeing in 2015 is Europe’s reverse 1989.
Remember that the physical demolition of the iron curtain started with the
cutting of the barbed wire fence between Hungary and Austria. Now it is Hungary
that has led the way in building new fences, and its prime minister, Viktor
Orbán, in stoking prejudice. Europe must keep out Muslim migrants, Orbán said
earlier this autumn, “to keep Europe Christian”.
He is joined in this chorus by such exemplary
Christians as France’s Marine le Pen, the Front National politician who has
been making the running in French politics, and Kelvin MacKenzie of the Sun.
Brother MacKenzie used that newspaper’s grossly misleading presentation of its
opinion poll among British Muslims to write a column under the headline: “This
shocking poll means we must shut door on young Muslim migrants”.
As if Britain’s already 2.7 million Muslims were not
going to have any more children. As if Europe’s tiny but deadly minority of
Islamist terrorists were not here already, many of them born, brought up and
radicalised on the back streets of Britain, Belgium and France.
Three distinct developments have led to the return
of the walls. First, in Britain – and to a lesser extent in other parts of
northern Europe – is the sheer scale of the movement of people inside the EU. Second,
there is the refugee crisis. Ever more people have fled the wars, terror and
economic misery that have replaced old-fashioned dictatorships (also providing
terror and economic misery) across much of the wider Middle East and Africa.
Third, there are Islamist terrorists, most recently
mowing down innocent concert-goers and diners-out in Paris. Most of them are
homegrown in Europe, though some learn their murderer’s skills in Syria or
Afghanistan. At the moment, all we can say with certainty is that Europe used
to be known as the continent where walls come down and is now the one where
they are going up again.
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