Tag Archives: ECONOMY

The London Stock Exchange sells Italy’s only stock market platform to Euronext for $ 5 billion | Instant News

  • The London Stock Exchange agreed to sell the only Italian stock market platform to Paris-based Euronext for about $ 5 billion.
  • LSE said it chose to divest the Milan stock exchange to meet the acquisition requirements of data provider Refinitiv, which are currently being reviewed by the EU executive body.
  • The deal is politically sensitive, as the Italian government is debating whether to regain full control of Borsa Italiana earlier this year.
  • Euronext has partnered with Italy’s largest bank and state agency CDP to secure Italian government support.
  • Visit the Business Insider homepage for more stories.

London Stock Exchange agreed on Friday to sell Milan’s Borsa Italiana to pan-European share operator Euronext for 4.3 billion euros ($ 5 billion).

LSE said it started discussions with Paris-based Euronext last month and a share purchase agreement was signed on October 9.

The sale hinges on the acquisition of potential data provider Refinitiv for $ 27 billion LSE, the terms of which are being investigated by the European Commission.

The LSE said it chose to divest Italian bourses to persuade EU regulators to agree to the Refinitiv takeover.

“We believe the sale of the Borsa Italiana group will make a significant contribution to addressing EU competition concerns,” said LSE CEO David Schwimmer in a statement, adding that the exchange was making “good progress” on the Refinitiv deal.

The Refinitiv transaction is expected to be completed by early next year, while the Borsa Italiana deal will be completed in the first half of 2021.

Read more: Citi’s head of US equities warns of an ‘extreme peak’ in earnings revisions ahead of important reporting season – and explains why that leaves stocks vulnerable to declines in the coming weeks

Euronext, valued at around 7 billion euros ($ 8 billion), will finance the transaction through a combination of increases in debt and equity as well as existing cash.

“Euronext will significantly diversify its revenue mix and geographic footprint by welcoming the market infrastructure of Italy, the G7 nation and Europe’s third largest economy,” said Euronext CEO Stéphane Boujnah. in a statement.

LSE intends to use the proceeds from this agreement to help discharge the debt associated with the Refinitiv agreement.

The Italian coalition government has trying to take complete control againl from Borsa Italiana, which owns 62% of the Italian government bond platform MTS, as part of an effort to limit foreign investment in sectors seen as the main national infrastructure.

Euronext has partnered with Italy’s largest bank, Intesa Sanpaolo, and the state agency CDP to secure Italian government support.

Read more:Self-taught market wizard Richard Dennis took a $ 1,600 loan and turned it into an estimated $ 200 million. He shares 13 trade rules that turn its performance into a satellite dish.


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Australia estimates that the COVID-19 vaccination is still one year away | Instant News

Australia considers launching a coronavirus vaccine as early as mid-2021 to be the best case scenario in planning a pandemic that will save the economy tens of billions of dollars.

The Treasury model does not consider a vaccine available in Australia early next year. The initial vaccine is considered a vaccine launched July 1, providing certainty for households and businesses while promoting consumption and investment.

This reverse scenario also assumes that international students will return to Australian universities late next year because of the vaccine. Hundreds of thousands of students from abroad have made the Australian university sector one of the largest earners of foreign currency in the country.

This scenario would raise Australian economic activity by 34 billion Australian dollars ($ 24 billion) above current estimates in the June 2022 quarter. Economic growth will be 1.5 percentage points higher in fiscal year 2021-22 than currently forecast 4, 75%.

Frydenberg on Tuesday announced a series of pandemic measures that would create a record deficit of AU $ 214 billion ($ 153 billion) in the current fiscal year. Based on the assumption that a vaccine will be available near the end of 2021 rather than July, the annual deficit is expected to shrink in the next fiscal year and beyond.

“We all hope … that we will find a vaccine, and we have made that assumption based on the end of next year, but what is clear is that because there are developments in the field of global health and community, we will continue to update our position,” said Frydenberg, Wednesday.

“There is a lot of uncertainty in this pandemic,” he added.

Australia has allowed early launch of the vaccine at a locally produced dose under agreements with two pharmaceutical companies.

If trials prove successful, the University of Oxford / AstraZeneca and the University of Queensland / CSL will provide more than 84.8 million doses of vaccine to the Australian population, almost all of them produced in Melbourne, with initial access to the University of Oxford’s 3.8 million doses of vaccine in January. and February 2021.

The government has committed to providing any vaccine free of charge to Australia’s 26 million people.


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Australian Finance Minister Mathias Cormann on budget announcements | Instant News

SINGAPORE – After providing initial support for an economy shaken by the coronavirus pandemic, the Australian government is now focusing on the strength of the recovery, Finance Minister Mathias Cormann told CNBC on Wednesday.

Government announced his budget the day before including Billion dollar personal tax cuts for those on middle incomes, programs to create jobs and increase jobs and temporary tax incentives for businesses to start investing again. The Australian budget deficit is estimated at 213.7 billion Australian dollars ($ 151.8 billion), around 11% of GDP, in the current fiscal year and is expected to fall to around 1.6% of GDP in the medium term.

“After providing initial crisis support to cushion the blow to the economy, jobs and working families, what we are doing now is investing in the recovery forces of our economy moving forward,” Cormann told CNBC.Asian Squawk Box.

“Yes, it’s a pretty big deficit in the Australian context, but we are experiencing this crisis in a relatively stronger fiscal position,” he said, adding that even after planned expenditure and fiscal support measures were announced, Australia’s debt position was part of the GDP remains much lower than other developed countries.

When asked whether businesses, as they face global uncertainty, would accept the government’s offer and start their investment process, Cormann was optimistic. He said Australia’s economic fundamentals were strong before the pandemic hit and the country is in the Asia Pacific, the part of the world that will produce a large part of global economic growth in the coming decades.

“We [an] an internationally competitive, open, trade economy and we provide incentives through the taxation system in a time-limited way to actually trigger business decisions to bring investment decisions forward, to invest in future growth and success, “he said.

One such measure includes instant asset write-off for companies with turnover of less than A $ 5 billion, which comprise about 99% of the business.

“Ultimately, we all want more jobs, but jobs don’t grow on trees, they are created by businesses that are growing profitably and that’s why we want businesses to invest in their future growth and success now,” added Cormann. He also said that the government hopes to get back the money provided in the budget in the medium term through higher taxable profits and income.

Within the size of the announced budget, Australia will provide A $ 4 billion over three years to accelerate job growth. The government will pay companies up to A $ 200 per week if they employ young Australians, whose job prospects have been hit by recession.

Analysts at the National Australia Bank said while there was no problem with the government’s focus on running the economy using fiscal stimulus, “structural reforms would also be useful.” They added that future debt problems were less of a short-term concern because the economy “needs all the help it can get from fiscal policy.”

Interest rates are already at a record low of 0.25% and while the Reserve Bank of Australia may cut fractional rates, it will have a marginal impact at this point, according to NAB analysts. “The cost of credit is not the problem – it’s the lack of demand for credit.”


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China-Pak relations: FTA-II is an important milestone | Instant News


Esar Ali, owner of a garment badge factory in Federal Industrial Zone B, shifted his business to cattle farming as imports grew tighter due to strict government policies to suppress imports and increase exports.

Although government policies help curb imports and boost exports, Pakistan’s trade deficit remains large.

The China-Pakistan Free Trade Agreement (CPFTA) came into effect in 2007 but has been criticized for failing to provide preferential access for Pakistani goods to the large Chinese market. CPFTA phase-II has been negotiating since 2012 and was finally signed in early 2019 and became effective in January 2020.

The objective of the FTA is to increase bilateral trade between the two countries. CPFTA-I serves the purpose of promoting bilateral relations but Pakistan’s exports cannot be increased much.

With reduced tariffs, bilateral trade grew 184% between 2007 and 2019, almost six times faster than Pakistan’s trade growth with the rest of the world in the same period. In this regard, the FTA achieves the goal of enhancing bilateral trade relations.

According to trade figures for the last seven years (2013 to 2019), exports to China decreased by 26% in 2019 compared to 2013 while imports rose 47% in the same period.

“Pakistan’s imports from China are growing more than their exports,” said former president of the Karachi Chamber of Commerce and Industry (KCCI) Agha Shahab Ahmed Khan. As a result, Pakistan’s trade deficit with China has increased.

The business group, which believes that Pakistan is badly negotiating CPFTA-I, both in terms of gaining access to its products and granting access to Chinese goods, blames it for contributing to early deindustrialization, he said.

In CPFTA-I, there are no safeguards for the industry, there is no synergy between related institutions, the impact on the balance of payments is not included and there is no agreed data exchange policy to address the under-invoice problem, said the former KCCI president.

However, the signing of the CPFTA-II is an important milestone in the economic and trade relations between the two countries, which is an effort to repair the agreement in an effort to ease the negative impact on Pakistan.

The impact of change is not just limited to industry but will also help shape government policies that are being framed, including industrial, small and medium enterprise (SME) and textile policies, for the next five years, he said.

Given the balance of payments challenges, limiting the trade deficit with China and increasing export revenues could provide much-needed assistance to the economy.

“CPFTA-II provides a breakdown of the tariffs imposed by China on 8,238 product lines. The most basic benchmark of concessions offered by China is how much of these tariff posts are actually imported from the world, “said Entrepreneur Group Secretary General AQ Khalil.

China has provided direct duty-free access to 3,707 (45%) tariff lines. Furthermore, 30% of tariff lines will have duty free access by 2030. Tariffs for 412 tariff lines will be reduced by 20% in five years while tariffs will remain at base year (2013) levels for 1,867 (20%) tariff lines.

CPFTA-II will significantly increase Pakistani exporters’ access to China’s $ 2 trillion import market and thus help address the country’s trade deficit.

The tariff structure applicable to Pakistan under CPFTA-II shows a marked increase over CPFTA-I. On more than 80% of the CPFTA-II product line imported by China, Pakistan is now offered tariffs that are lower or equivalent to those applied to China’s main trading partners.

Tariffs of nearly 40% of CPFTA-II products imported by China have been lowered compared to CPFTA-I and 45% of tariff posts are now offered duty free access to China. Potential items Pakistan could export to China include seafood, garments, synthetic blankets and knitted shirts.

“A focus on these items in exports to China could give Pakistan an easy advantage in the short to medium term,” Khalil said. In the long term, “Pakistan needs to export goods imported by China but Pakistan is not exporting at this time,” he said.

As a starting point, Pakistan can gain market access for exports of machinery, mechanical equipment, electrical equipment and spare parts, mineral fuels, optical, photographic and surgical equipment, plastics, vehicles and basic necessities.

Domestic industrialization and the production of these goods must be the government’s top priorities in an effort to ease the import burden and gain access to China and other global markets.

Market demand

Given this opportunity, the question arises whether Pakistan can produce goods on demand in the Chinese market?

“In order to evaluate Pakistan’s ability to produce good quality goods at the demand of the Chinese market, it is important to look at it in the context of Pakistan’s general trade performance,” Khalil advised.

Pakistan’s global export performance has declined over the past two decades – reasons including low competitiveness and low value-added and non-unique exports of products.

Apart from the textile sector, Pakistan has lost a large part of the world market over the last five years. Products with low added value are the main obstacle to meeting the demand of the Chinese market.

“Industrialization is a need today to build capacity to produce sufficient goods, which can meet domestic and international demand,” Khalil said.

“There is also a substantial information deficit facing Pakistani businesses. The factors behind this include a lack of research on China, identifying Chinese partners and meeting regulatory requirements, “he said.

“In order to translate increased tariff concessions into sustainable exports, the government must address issues related to capacity building among Pakistani businesses and issues relating to ease of doing business – both of which affect the ability to deliver orders on the scale required in China. within the allotted time, “said the former KCCI official

Pakistan must learn from its mistakes, which exacerbate trade deficits and create hurdles in the domestic manufacturing path. A phase-II FTA could be a failure for Pakistan if the trade deficit does not improve, he added.

“Now that the FTA has been signed, we can now hope that the Ministry of Trade has finished its homework and that the agreement will bring positive results. Trade should not come at the expense of the domestic cottage industry, which provides great employment opportunities. “

Pakistani businessmen often complain of a lack of invoices for goods imported from China.

Unfortunately, the shortage of invoices is rife in Pakistan, ”said Khalil. “There is discrepancy between the trade data reported by Pakistan and China, particularly Pakistani imports from China, due to possible invoice shortages.”

Esar Ali, when remembering the import process, said he once signed a contract with an import-export agent who took care of everything from logistics to documents with Customs.

“This is standard practice and I never know what the company is showing Customs,” he said. “They can play with the government system through false statements.”

The former KCCI president said Pakistan lacked the trained personnel and financial resources to tackle the invoice shortage problem. “It is time for the government and the Federal Revenue Council to look at this manipulation for the sake of industry,” he said.

Previously, goods were smuggled from China through Afghanistan but after the signing of the CPFTA-I in 2007, imports of goods became legally cheaper.

Under invoicing and smuggling of goods poses a number of challenges for the Pakistani economy as well as the business and industrial community, Khalil said.

The main problem is that Pakistan’s tax and customs rates and regulations make the country uncompetitive in the region. High tariffs force some businesses to engage in illegal practices such as under-invoicing and smuggling.

“Businesses that do not engage in such practices cannot then compete, which jeopardizes their growth prospects,” he said.

Naturally, consumers prefer goods with lower prices than to pay higher prices for the same products. This, at times, forces other businesses to use things like smuggling and under-invoicing to stay in the market.

Such practices lower government tax revenue, triggering responses in the form of higher taxes and duties and stricter trade regulations.

Communication link

Exporters can establish good relations with Chinese companies by establishing proper communication links with most businesses. Exporters must also have knowledge of foreign trade regulations in China because lack of knowledge becomes a trade barrier.

“One of the most serious problems facing Pakistan’s exports to various countries including China is unsatisfactory overseas marketing,” said the former KCCI president.

Pakistani companies generally focus on the domestic market. Most of the companies sell local and imported goods in the domestic market.

As a result, exports were limited to certain sectors of the economy, he said. “Lack of interest in exports is deterring foreign interest in Pakistan as a source of imports.”

He said, “Pakistan must invest in marketing in various sectors. If domestic producers and exporters see that foreign companies are interested in various sectors, they will definitely try to take advantage of these opportunities. “

The state must also invest in obtaining good manufacturing capabilities in sectors other than textiles. In this way, Pakistan can rely less on imports and focus on production to meet domestic industrial demand and thus create an exportable surplus for the global market.

the author is a staff correspondent

Published in The Express Tribune, October 5th, 2020.

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How Donald Trump’s virus diagnosis blurs the outlook for the travel industry | Instant News

Financial markets absorbed the news that President Donald Trump contracted Covid-19 with serenity on Friday. The S&P 500 sold off slightly, while bond yields edged up and gold closed. The White House said late in the day that the president was going to the hospital with relatively mild symptoms and receiving experimental antibody treatment. Yet it would be far too premature to give a clear picture of the impact on financial markets and the economy in general. Sure… .

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