Kuwait posts budget deficit
Kuwait posted a budget deficit of US$18.2 billion in the fiscal year that ended on March 31, as lower crude prices slash into government revenue, Kuwaiti acting oil minister Anas al-Saleh said. The state-run Kuwait News Agency on Sunday quoted al-Saleh as saying the deficit was nearly US$9 billion less than budgeted for. The budget deficit reflects the impact lower oil prices have had on crude exporters, particularly Gulf Arab monarchies that rely on oil revenues to support generous subsidies, welfare benefits and public sector wages.
UK to cut corporate tax
British Chancellor of the Exchequer George Osborne plans to slash corporation tax to less than 15 percent to tempt businesses to stay following the nation’s shock vote to leave the EU, the Financial Times reported on Sunday. Osborne plans to create a what he called a super-competitive economy, cutting corporation tax by more than 5 percentage points from 20 percent to the lowest for any major economy, it said. The move, which would bring the tax close to Ireland’s 12.5 percent rate, follows concern companies could flee the uncertainty after Brexit.
Venezuela revenues fall
Venezuela’s oil revenues plummeted 40.7 percent last year due to sinking global oil prices, the nation’s state-owned Petroleos de Venezuela SA (PDVSA) said in its annual report released on Sunday. PDVSA — the world’s fifth-largest oil company — earned US$72.2 billion in revenues last year, a sharp drop from 2014’s US$121.9 billion. Its net profit fell 19 percent to US$7.3 billion. The first half of this year saw the value of Venezuela’s crude oil tumble to an average of US$31.15 per barrel, the Ministry of Petroleum and Mining said on Friday last week. The sector’s nose-dive has exacerbated the nation’s already dire economic situation in which 80 percent of basic consumer products, including food and medicine, are in short supply. Soaring prices and shortages have, in turn, led to riots, looting and vigilante justice.
Japanese firms cut forecasts
Japanese companies cut their forecasts for inflation for five years’ time, dimming the prospects for Bank of Japan (BOJ) Governor Haruhiko Kuroda meeting the 2 percent inflation target set for the next fiscal year. Companies expect 1.1 percent of inflation in five years, the lowest estimate since the survey began in 2014, according to a report by the BOJ yesterday. In three years, companies also expect 1.1 percent price growth and 0.7 percent in one year. The price outlook among companies illustrates a stark contrast with the BOJ’s projection of reaching the 2 percent inflation target by March 2018.
Kier plays down Brexit
Kier Group PLC, a construction and support services firm, said the UK’s decision to exit the EU had not impacted its business to date due to the resilience afforded by its strong order books and wide range of activities. The company, whose activities range from building power stations to outsourcing work for local councils, said that although the EU referendum results had created some uncertainty, its underlying trading had been in line with its own expectations. The property unit had a pipeline in excess of ￡1 billion, consisting of projects that were being built non-speculatively, and the residential unit’s mixed tenure business had a ￡600 million-plus (US$796.1 million) pipeline, Kier said.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to
The US stock market has been on a tear, yet the country’s economy is in the dumps. So why do so many people believe — undoubtedly incorrectly — that the stock market has decoupled from reality? The economy many people experience, while bleak, is local, personal and, for the most part, either not publicly traded or plays only a small part in the stock market’s moves. To explain why these personal experiences have so little effect on equity markets, we must look more closely at the market role of the weakest industry sectors. The surprising conclusion: The most visible and economically vulnerable