Qatar's Wealth Fund interested in Glencore Agriculture sale

The sovereign wealth fund of Qatar has joined investors expressing an interest in buying a minority stake in Glencore Plc's agriculture business, according to three people familiar with the conversations. 

PHOTO: REUTERS

OCT 8, 20159:34 PM

[TORONTO] The sovereign wealth fund of Qatar has joined investors expressing an interest in buying a minority stake in Glencore Plc's agriculture business, according to three people familiar with the conversations.

The talks are preliminary and a sale would take as long as six months, said the same people, who asked not to be identified because the matter is confidential. Qatar Holding LLC, the direct investment arm of the Gulf state's sovereign wealth fund, is already the largest investor in the Swiss-based commodities trader-cum-miner, with an 8.9 per cent stake, people said earlier this week.

Others involved in preliminary talks with Glencore include the sovereign wealth fund of Singapore, Japanese trading house Mitsui & Co and Canada Pension Plan Investment Board, the country's largest pension manager.

Citigroup Inc, one of the banks hired to run the sale alongside Credit Suisse Group AG, said earlier this month that the whole business could be worth as much as US$10.5 billion. Glencore is seeking to sell a minority stake in the unit, which deals in commodities from wheat to cotton, soybeans to sugar.

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As part of negotiations with potential buyers, the Swiss- based commodities trader is considering a plan that will carve out its agriculture business as a stand-alone company with its own capital structure, incorporating the unit in Singapore, the same people said. Under the island state's rules, commodity trading houses can benefit from tax rates as low as 5 per cent.

Glencore, Qatar and Canada Pension Plan Investment Board declined to comment. Singapore's GIC Pte declined to comment when Bloomberg first reported its interest on Oct 2, while a Mitsui spokesman said the company was "aware of Glencore's plan to sell certain businesses, but we have not come to a decision at the present." The sale of the agriculture business is part of a debt- cutting program that Glencore Chief Executive Officer Ivan Glasenberg announced in early September. The plan includes selling US$2.5 billion of new stock, asset sales, spending cuts and suspending the dividend. Taken together, the measures aim to reduce debt from US$30 billion nearer to US$20 billion.

Glencore became a major agriculture player when it bought Canadian grain handler Viterra Inc for C$6.1 billion (US$4.6 billion) in 2012.

On top of helping to reduce its debt pile, bringing in a group of investors could provide the company's agricultural unit with the funding to grow further, especially in the US, where it still has no major presence. That's something Glencore would find harder to do alone after the price of key commodities such as coal and copper plunged.

Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a senior independent non-executive director at Glencore.

BLOOMBERG

    
 

ECB policy setters warned of uncertain economic outlook due to China

European Central Bank policymakers were warned in September of risks to the euro zone economy from a slowdown in emerging markets led by China, seen until recently as the world's main economic engine. 

PHOTO: AFP

OCT 8, 20159:22 PM

[FRANKFURT] European Central Bank policymakers were warned in September of risks to the euro zone economy from a slowdown in emerging markets led by China, seen until recently as the world's main economic engine.

The concerns were expressed at the ECB's Sept. 2-3 policy meeting, minutes of which were published on Thursday, days after the International Monetary Fund cut its global growth forecasts, pointing partly to China.

ECB chief economist Peter Praet told the meeting in Frankfurt that "challenges facing emerging market economies were clouding the global outlook and were unlikely to recede quickly," the minutes said. "Although it was still premature to conclude whether these developments could have a lasting impact on euro area output and ... inflation, downside risks had intensified." That may indicate that the ECB will not rush into further money-printing stimulus.

Speaking at a conference on Thursday, Mr Praet struck a similar tone, cautioning that "the economic environment is characterised by seeping pessimism about the prospects for long-term growth".

The Bank of England, which also published the minutes of its latest rate-setting meeting on Thursday, was more upbeat.

Although policymakers conceded that problems in emerging markets could worsen, they said China appeared to be on a largely steady course. However, Britain does less trade with China than Germany, the euro zone's biggest economy.

REUTERS

    
 

Bank of England freezes interest rate

The Bank of England has voted to keep its main interest rate at half a per cent against a backdrop of zero inflation in Britain, it said on Thursday.

PHOTO: AFP

OCT 8, 20157:32 PM

[LONDON] The Bank of England has voted to keep its main interest rate at half a per cent against a backdrop of zero inflation in Britain, it said on Thursday.

The central bank's Monetary Policy Committee (MPC) kept its key interest rate at a record-low 0.5 per cent, where it has stood for 6.5 years, it said in minutes of its latest monthly meeting held Tuesday.

The BoE also left unchanged the level of cash stimulus pumping around the British economy at 375 billion pounds (S$810 billion).

Policymakers "voted by a majority of 8-1 to maintain bank rate at 0.5 per cent", the Bank of England said in the minutes.

The nine-member MPC was meanwhile unanimous in its decision to keep the stimulus, known as quantitative easing, at the same level.

"Twelve-month CPI inflation was zero in August, well below the (Bank's) two percent target rate," the minutes noted.

AFP

    
 

UK think tank sees more poverty

Up to 200,000 households with people in work in Britain will be pushed into poverty by the government's latest welfare reforms, according to a report published a day after Prime Minister David Cameron promised an "all-out assault on poverty". 

PHOTO: REUTERS

OCT 8, 20157:17 PM

[LONDON] Up to 200,000 households with people in work in Britain will be pushed into poverty by the government's latest welfare reforms, according to a report published a day after Prime Minister David Cameron promised an "all-out assault on poverty".

The Resolution Foundation, a think tank focusing on wages, said on Thursday an increase in the minimum wage would not offset the losses for many households caused by cuts to tax credits, which top up the earnings of the lowest paid, and other welfare supports.

The think tank specialises in issues affecting low-earning households, and its research work was cited by finance minister George Osborne when he announced the new minimum wage in July.

The Resolution Foundation said the number of working households in poverty - those who receive less than 60 per cent of median household income - will rise by 100,000 next year as a result of the changes announced in July.

A further 100,000 working households could fall below the poverty line by 2020 after a second phase of cuts, pushing the total number of poor households to around 2 million, it said.

A spokesman for Britain's finance ministry said the changes announced in July were fair and necessary and would only take spending on tax credits back to 2008 levels. "The best route out of poverty is work, not benefits," he said.

Thursday's report will be uncomfortable reading for Mr Osborne, the front-runner to take over from Cameron, who has said he will stand down before the next election in 2020.

Boris Johnson, London's mayor and another potential successor to Cameron, used a high-profile speech at the Conservative Party's annual conference this week to urge the government to protect the most vulnerable, lowest-paid workers.

In his speech to the conference on Wednesday, Mr Cameron said the introduction in April of the higher minimum wage was a"giant leap forward" in the push to help more people get out of poverty by working rather than relying on welfare.

But David Finch, senior economic analyst at the Resolution Foundation, said the government would make it harder for families to earn their way out of poverty by weakening work incentives in the benefits system.

An analyst at the Organisation for Economic Co-operation and Development told Reuters on Wednesday that austerity programmes imposed in a number of countries since 2010 had exacerbated inequality and could harm long-term growth.

REUTERS

      

Most major economies weakening, eurozone stable: OECD

OCT 8, 20156:21 PM

[PARIS] Growth seems to be easing off in most of the world's major economies, including the United States and more notably in China, the Paris-based Organisation for Economic Co-operation and Development said on Thursday.

The OECD said its monthly leading indicator, a synthetic measure that seeks to capture turning points in the economic climate, showed moderating growth generally. However, the eurozone was stable, with growth actually firming up in euro zone countries France and Italy, and also in India.

Taking an index reading of 100 as the long-term average, China slipped further, to 97.2 from 97.6 in its latest update, the OECD said. The US economy dropped to 99.2 from 99.5, Japan to 99.8 from 99.9 and the UK to 99.5 from 99.7.

Among bright spots, the euro zone as a whole remained stable at 100.7, with Germany, its largest economy, also steady at 100.0. France's reading rose to 100.8 from 100.7 and Italy's to 101.0 from 100.9.

Among the big emerging market economies, India's reading firmed to 99.9 from 99.8. In addition to China, Brazil and Russia also eased.

REUTERS

    
 

Thai military's plan for 'Great Firewall' risks Internet competition

A proposal by Thailand's junta for a single Internet gateway to allow authorities to monitor content would destroy competition and was reminiscent of the most authoritarian measures to stifle free speech, a former information minister said on Thursday. 

PHOTO: REUTERS

OCT 8, 20154:28 PM

[BANGKOK] A proposal by Thailand's junta for a single Internet gateway to allow authorities to monitor content would destroy competition and was reminiscent of the most authoritarian measures to stifle free speech, a former information minister said on Thursday.

The plan to create a single gateway for all Internet traffic was approved by the military government in August but details remain unclear.

Free-speech activists say the gateway, referred to as a China-style "Great Firewall", is the latest effort by the junta to smother dissent and monitor detractors.

The plan has also triggered concern that Internet speeds would plummet, which would almost certainly hurt online business and anger Internet users. "Once it becomes a single gateway there will be a problem with traffic speeds," said Anudith Nakornthap, a former information minister under the government of ousted Prime Minister Yingluck Shinawatra. "The junta wants to control various websites. This is similar to the control mechanisms of non-democratic countries such as China and North Korea." The junta has ruled Thailand since overthrowing Yingluck's government in May 2014.

Thai politics has been agitated for a decade by a confrontation between the Shinawatras, in particular Ms Yingluck's brother, Thaksin Shinawatra, a populist premier who was himself ousted in a 2006 coup, and the royalist-military establishment, which sees him as a threat.

The military has ruled strictly since taking over, banning protests and not tolerating dissent, and has shut down thousands of websites.

Thailand has 10 Internet gateways run by both private and state-owned companies. The plan would apparently entail merging traffic through one state-run firm.

Prasong Ruangsirikulchai, executive director of the Telecommunications Association of Thailand, said the government would meet fierce opposition from the private companies that would be forced to suspend their lines. "If the government is not so strong they cannot do that,"Prasong said during a talk at the Foreign Correspondents Club of Thailand on Wednesday. "They would have a tough time to convince private companies to cut their lines." The military has said the plan is necessary for national security but Prime Minister Prayuth Chan-ocha told reporters on Thursday it would not go ahead if it violated rights. "If it violates rights we can't do it," he said.

Critics say the plan goes against a digital-economy master plan to encourage online business by attracting investment from companies like Facebook Inc, which opened its first Thai office last month.

The government played down a coordinated attack last week on several state websites in a protest against the plan.

REUTERS

    
 

German exports plunge at fastest pace since global financial crisis

German exports plunged by their largest amount since the height of the global financial crisis in early 2009 and imports also fell sharply in the latest sign that Europe's largest economy lost momentum in the third quarter.

PHOTO: BLOOMBERG

OCT 8, 20152:06 PM

[BERLIN] German exports plunged by their largest amount since the height of the global financial crisis in early 2009 and imports also fell sharply in the latest sign that Europe's largest economy lost momentum in the third quarter.

Data from the Federal Statistics Office showed seasonally-adjusted exports sliding by 5.2 per cent to 97.7 billion euros month-on-month and imports tumbling by 3.1 per cent to 78.2 billion euros, the biggest one month drop since November 2012. The trade surplus narrowed to 19.6 billion euros.

The data follows sharp declines in industrial orders and output in August, suggesting that waning demand from abroad, particularly China and other emerging markets may be leaving its mark on Germany.

Economists polled by Reuters had been expecting much smaller declines in exports and imports of 1.2 per cent and surplus of 22.5 billion euros.

REUTERS