Business

LONDON — Global stock markets marked time on Wednesday against a backdrop of recent massive gains, growing China-US tensions, fresh virus flare-ups and signs of a possible breakthrough in deadlocked US stimulus talks, dealers said.

Oil was in focus ahead of US stockpiles data and a virtual meeting of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies to discuss their recent output cuts after crude prices were shattered by a coronavirus-driven plunge in energy demand.

The dollar, which on Tuesday hit the lowest level against the euro in more than two years on the prospect of more huge US stimulus, was little changed as the market waited on the Federal Reserve's minutes from its latest policy meeting.

"As for the oil market, traders are a bit cautious today because of the US crude inventory data" amid a supply glut, noted Naeem Aslam, chief market analyst at Avatrade.

"Traders are also keeping an eye on the OPEC+ gathering."

Wall Street highs 

On Tuesday, upbeat US data helped drive the S&P 500 to another record while the Nasdaq also pushed to an all-time high thanks to a surge in demand for tech stocks that are benefiting from lockdowns.

After Asian markets were mixed overnight, European markets were slightly firmer as Wall Street opened little changed.

Democrats and Republicans remain stalemated over what should go into another virus stimulus package but House Speaker Nancy Pelosi provided a ray of hope by saying her party could be willing to make cuts to its offer to seal a deal, then return to thrash out other issues after November's elections.

The $3.5 trillion package agreed earlier this year, combined with a wall of cash and loose monetary policies from the Federal Reserve (Fed), have helped US stock markets soar from their March troughs.

US-China woes 

Souring US-China relations remain a concern, with the latest salvo out of Washington coming in a warning to colleges and universities to sell any Chinese holdings in their endowments owing to proposed new rules that could see these firms de-listed. 

The announcement comes with the two superpowers locked in several stand-offs ranging from Hong Kong, trade and the coronavirus, and US accusations of digital espionage.

There is also some trepidation about a trade pact signed between the two in January, which observers say is the crucial issue, with any sign that it could be in peril likely to spark another sharp market drop.

But while talks on the deal were called off last weekend, there is a general feeling that both sides still want to keep it in place.

PARIS — With the race on to find a coronavirus vaccine, the biotech sector — from an investor's point of view — appears to be the new gold rush, promising often giddy returns, but analysts warn that the exuberance could be exaggerated.

According to the World Health Organisation, some 168 potential vaccines are currently in development, with countless billions of dollars both public and private money being pumped into the research. 

As a result, the share prices of small, innovative biotech startups — competing with pharmaceutical giants to develop a substance that will inoculate the world against COVID-19 and allow life for billions of people across the globe to return to some semblance of normality — have reached dizzying heights in recent months. 

US company Moderna, for example, whose vaccine candidate is in so-called Phase III of clinical trials — the last stage before regulatory approval — has seen its shares soar by 250 per cent since the start of the year.

Other, less well-known names such as Inovio or Novavax are doing even better, with their shares rocketing by a dizzying 350 per cent and even 3,500 per cent, respectively.

A small company like Germany's CureVac, which made its debut on the US Nasdaq stock exchange last week, has seen its valuation balloon to currently more than $10 billion. 

But analysts warn that such investments remain high risk and, like other stock market bubbles before them, could soon burst.

"When you buy biotech, you buy a kind of lottery ticket," said Gregori Volokhine, portfolio manager for Meeschaert Financial Services in New York.

"There will always be investors who try to win big. It was the same thing with the Internet bubble, with solar power, with electric cars, and now with COVID," he said.

Overheated expectations? 

With more than 21 million infections worldwide, 770,000 dead and the global economy turned upside down, the stakes for finding a vaccine could not be higher. 

As governments plough billions into smaller biotech companies and the reservation of advance doses of potential vaccines, it is little wonder that investors see the pharmaceuticals sector as some sort of El Dorado. 

Nevertheless, analysts warn that the market is in danger of overheating.

Many share prices "have gone above where they should be", said Chris Redhead, healthcare analyst at Goetzpartners 

Daniel Mahony, healthcare fund manager at Polar Capital, agreed. 

"What I worry about for the moment is that the market implies a really high percentage rate of success and each of these companies are going to sell billions of dollars worth of products," the expert said. 

"That just seems unlikely to me."

Adam Barker, analyst with Shore Capital, pointed out that, on average, a drug costs $2-3 billion to develop and bring to market.

And "the chance of any drug or any vaccine to be successful from Phase I all the way to the end of Phase III is about 10 per cent," he said. 

The shares of pharmaceutical majors such as Pfizer, Sanofi or GlaxoSmithKline have also performed well since coronavirus first emerged in China at the end of last year. 

But they have not risen quite as fast as those of their smaller rivals. 

That is because of the pharmaceutical sector's commitment to distribute an eventual vaccine at cost price and not to make a profit out of a global tragedy, analysts said.

 Market distortion 

The current appetite for biotech stocks is also attributable to the changed dynamic of vaccine development, analysts said.

"Historically, it would take 10 to 15 years to develop a new vaccine and now you have companies in Phase III [trials] six months after the pandemic hit the US," said Andy Acker, a biotech specialist with Janus Henderson. 

Analysts suggested that government cash could be distorting the market. 

"What the governments have done by putting all the money is that they make the small companies... able to compete with the big ones, they begin to manufacture risk," said Mahony at Polar Capital.

In Moderna's case, the US government has stumped up nearly $2.5 billion to support its research and to reserve vaccine doses.

Barker Shore Capital agreed.

"If the government comes and gives $100 million, it sort of makes it more feasible for small ones to compete with the big ones," he said.

Nevertheless, Chris Redhead at Goetzpartners also saw positive aspects. 

The injection of public money into smaller, innovative companies would not only help in the development of coronavirus programmes, he said.

It would "also support other programmes for infectious disease, or the next-generation vaccines. They will get more experience on how to produce vaccines for other diseases", he said. 

LONDON — Global stock markets were mainly firmer on Monday, extending gains as investors kept a wary eye on simmering US-China tensions and continued Democrat-Republican wrangling over a US coronavirus stimulus package.

Wall Street opened slightly higher after positive housing data and as the tech-rich Nasdaq continued to lead the market but then slipped back.

Dealers said the latest figures for new-build single-family homes hit an all-time high, highlighting one of the strongest parts of the US economy despite the upheaval caused by the coronavirus pandemic.

"The demand for new single-family homes continues to be strong, as low interest rates and a focus on the importance of housing has stoked buyer traffic to all-time highs," said National Association of Home Builders Chairman Chuck Fowke.

The data offset concerns about US-China relations after high-level talks between Washington and Beijing on the status of their "phase one" trade agreement did not take place Saturday, with no new date set.

US President Donald Trump has continued to ratchet up tensions with Beijing ahead of the November election in the face of opinion polls showing him trailing Democrat Joe Biden in key battleground states.

China on Monday slammed Washington for using "digital gunboat diplomacy" after Trump ordered TikTok's Chinese owner ByteDance to sell its interest in the Musical.ly app it bought and merged with TikTok.

Uncertainty over the status of the trade talks "has added to the frosty situation", noted David Madden, analyst at CMC Markets UK. 

"The lack of agreement between Republicans and Democrats in relation to the stimulus deal remains a concern too."

US stimulus deal expected 

Hopes for any movement before the end of the month are slim, but the consensus opinion is that a deal will eventually be struck.

"Despite the stimulus package appearing to be in a standstill, the markets appear to be taking the view that major fiscal legislation is inevitable," said AxiCorp's Stephen Innes.

While the coronavirus continues to flare up around the world, forcing the reimposition of containment measures, analysts said stocks will likely continue rising thanks to unprecedented backing from central banks.

In Asia, Tokyo's main stocks index closed down 0.8 per cent after data showed a record contraction of the Japanese economy in the second quarter.

"Investors cashed in on recent gains," said Toshikazu Horiuchi, a broker at IwaiCosmo Securities.

"GDP figures were largely within expectations" but reconfirmed the sizable impact of the coronavirus pandemic on the Japanese economy, Horiuchi told AFP.

The April-June GDP figures showed that the economy shrank a record 7.8 per cent quarter-on-quarter.

WASHINGTON — The US administration on Monday expanded its sanctions on China's Huawei, a move aimed at further limiting the tech giant's access to computer chips and other technology.

A Commerce Department statement added 38 Huawei affiliates around the world to the "entity list", claiming that the company was using international subsidiaries to circumvent the sanctions which prevent export of US-based technology.

Commerce Secretary Wilbur Ross said Huawei and its affiliates "have worked through third parties to harness US technology in a manner that undermines US national security and foreign policy interests".

US officials have argued Huawei poses a security risk because of its links to the Beijing government, a claim denied by the company.

The toughening of sanctions comes amid heightened US-China tensions and claims by Washington that Chinese firms are being used for spying, despite repeated denials.

President Donald Trump has sought to ban the wildly popular mobile application TikTok if it is not divested by its Chinese parent firm ByteDance.

Speaking on Fox News Monday, Trump claimed that Huawei "comes out and they spy on our country — this is very intricate stuff, you have microchips, you have things that you can't even see".

Huawei did not immediately respond to a request for comment.

Battle for 5G 

The Trump administration has banned Huawei from 5G wireless networks in the United States and has pressed allies to do the same.

In the meantime, Huawei became the largest global smartphone manufacturer in the past quarter, largely due to sales in the Chinese market, even as Washington moves to deny the company access to much of the Google Android system.

Secretary of State Mike Pompeo said in a separate statement that the Trump Administration "sees Huawei for what it is — an arm of the Chinese Communist Party's surveillance state".

Pompeo said the new sanctions were imposed "to protect US national security, our citizens' privacy, and the integrity of our 5G infrastructure from Beijing's malign influence".

The Commerce Department action affects Huawei affiliates in 21 countries including China, Brazil, Argentina, France, Germany, Singapore, Thailand and Britain.

The order blocks any of the companies from acquiring US-based software or technology used in products or components.

"The new rule makes it clear that any use of American software or American fabrication equipment to produce things through Huawei is banned and requires a license," Ross told Fox Business Network.

"So it's really a question of closing loopholes to prevent a bad actor from access to US technology, even as they try to do it in a very indirect, very tricky manner."

US officials said there would be no further extensions for the sanctions waivers from the Commerce Department which had been allowed to minimise disruptions.

That could mean Huawei handset owners might not be able to get updates to the Google Android operating system, nor would updates be allowed for wireless networks using Huawei equipment. Google did not immediately respond to a request for comment.

A Commerce Department official told reporters the only exception would be for updates related to cybersecurity vulnerabilities.

But the official offered no details on specific equipment or software updates.

The Commerce Department will review any request for a licence or waiver and that this "would be reviewed to determine whether it would advance our national security interests", the official said.

MUMBAI — Jewellers in the traditionally lucrative Indian gold market are struggling — even while the metal's value skyrockets — as coronavirus fears keep sales down, craftsmen at home and shops shuttered.

Months after India lifted its strict lockdown, the country's biggest gold market Zaveri Bazaar remains desolate, with most stores closed and no customers in sight.

"We have been running this shop for the last 40 years and I have never seen the business hit such lows," said 75-year-old Madhubhai Shah, one of only a handful of jewellers who decided to reopen.

The Mumbai market was hit hard by the March lockdown, which saw millions of migrant workers — including many gold craftsmen — flee India's cities as their income dried up.

"Seventy per cent of our artisans have left for their villages and manufacturing units are all closed," Shah told AFP.

With gold prices hitting record highs after soaring around 30 per cent this year, there is little incentive for customers to splash out on jewellery.

Even the impending wedding season, which traditionally kicks off in October and sees families spend a small fortune, has failed to buoy spirits or boost spending as India braces for its first recession in four decades.

Chiranjeevi Ahire and his fiancee decided to break with tradition for their December wedding by choosing not to buy any gold jewellery, even though it is considered auspicious and a status symbol.

"Previously we wanted the wedding to be a grand affair and follow all Indian traditions, just like our parents," the Mumbai-based marketing manager said. 

"But with the pandemic and uncertainty looming in the job market, we decided to cut down on our spending on gold and instead keep the money for a rainy day," the 29-year-old said.

Gold-backed loans

According to the World Gold Council (WGC), India's gold consumption fell by a staggering 56 per cent during the first half of 2020 compared with the same period last year.

Demand during the April-to-June quarter plunged 70 per cent to 63.7 tonnes, the lowest since the 2008 global financial crisis.

The twin blows of the lockdown and high prices meant customers did not empty their pockets even during the Akshaya Tritiya festival in April, considered a lucky time for Hindus to buy the metal.

In addition to jewellery, Indians have traditionally stockpiled gold bars and coins as a hedge against inflation.

Many are now leveraging these to secure credit, exploiting the commodity's high value and securing lower interest rates on personal loans.

Bhadresh Gowda, a farmer in Karnataka state, used his wife's wedding jewellery to secure a 200,000-rupee ($2,670) credit line after huge losses during the lockdown.

"Initially, I was hesitant to use gold as collateral because these jewels are my family's legacy, but times are tough," the 39-year-old said.

In contrast to traditional loans, gold-backed credit "is very easy to access with less paperwork required", he said, making the process much faster.

"Gold offers more value for money right now. Once the economy improves, I'll pay back the loan and retrieve my gold," he added.

Digital gold 

Some tech-savvy consumers are betting on prices rising even further as investors seek safe havens, and are pumping funds into so-called digital gold.

"Consumers are buying digital gold in bits and pieces because it enables you to buy gold for... as little as one rupee," said Rajesh Khosla, spokesman for the India Bullion and Jewellers Association.

"When they... need to convert digital gold to physical gold, it will be delivered to them," he told AFP. 

Gold will eventually make a comeback in India as consumers recover their appetite, said Somasundaram P.R., managing director of WGC's India operations.

"People who saved money because of cancelled holidays or expenditures [will] invest in gold," he noted.

But with the economy still in the doldrums and coronavirus infections approaching three million, would-be consumers like Ahire say they would prefer to wait it out.

"It seems better to hold onto [my] money right now," he said.

"With the global pandemic, economic downturn and weak employment prospects, I will not risk my financial stability for gold. It just seems like a terrible idea." 

ALGIERS — Algeria has launched Islamic finance products in a bid to attract money from the informal market, but bankers warn it will take more to fix the country's economy.

Falling oil prices and the coronavirus pandemic have battered the north African country, triggering alarm bells among officials and experts.

The International Monetary Fund (IMF) forecast that Algeria's economy will shrink 5.2 per cent this year.

Prime Minister Abdelaziz Djerad has warned of an "unprecedented economic situation", and experts have estimated unemployment at nearing 15 per cent.

In Algeria, Africa's largest country and home to 43 million people, most transactions are done in cash circulating outside the formal banking sector, said professor Mohamed Boudjelal, an expert on Islamic finance.

Many Algerians "turn their nose up" at conventional banking, Boudjelal said.

Some Muslims believe that the traditional banking system is incompatible with their faith.

Islamic finance — the provision of financial services in accordance with religious laws — is a fast growing sector that has been adopted in many Muslim countries.

The industry is based on shared profit and loss, while earning interest is banned as "usury".

Funds are also blocked from investing in companies associated with tobacco, alcohol, pork or gambling.

Algeria is hoping the new products could woo new investors into the market, following the success of Islamic finance products over the past decade in other countries, notably in the Gulf and Malaysia.

 No miracle solution 

The country's neighbours have already rolled out similar schemes.

In Tunisia, Islamic finance has operated in the private sector since the 1980s, although the sector remains modest, while in Morocco it began in 2017, though it has recorded net losses it says are due to initial start-up costs.

But Algeria hopes to tap into the significant revenues of the informal market, estimated to be as much as $30-35 billion, according to Abderahmane Benkhalfa, a former minister of finance and ex-head of the banking association.

"It is not only necessary to draw these resources, but to inject them into banks in order to bolster the economy," Benkhalfa said.

Earlier this month, state-run National Bank of Algeria offered nine Islamic financial services, receiving a certificate from Muslim clerics ensuring they were compatible with Islamic law.

Only two other private banks, subsidiaries of the Bahrain-based Baraka Bank and Al Salam Bank, offer Islamic finance services in Algeria.

However, Algeria's other banks — all state-run — are now expected to follow suit by the end of the year.

Most foreign banks are also planning to sell Islamic finance products, too.

But Benkhalfa, who is also a member of a panel of African experts tasked by the African Union to mobilise international funds to help the continent combat coronavirus, warned that Islamic finance is not a "miracle solution".

Only a small slice of cash in the informal economy circulates because of people's religious beliefs.

 Create trust in banks 

The solution, Benkhalfa argues, are to make steps to modernise the traditional banking system — to make it more responsive — and develop in parallel with Islamic finance.

Economist Abderrahmane Mebtoul was even more cautious in his assessment.

It is only viable if inflation can be brought under control and if households have faith in the government's management of the economy, Mebtoul said.

According to several studies, Islamic finance products are often more expensive that those provided by the traditional banking sector.

By the end of the year Algeria's state banks are expected to propose several Islamic finance products, including "murabaha", "ijara" and "musharakah".

Murabaha, or cost-plus financing, is among the most popular products, and is used to finance a variety of consumer purchases from cars to houses.

It involves the bank buying on behalf of a client a property or another product, which it sells back to the client at a certain profit that replaces an interest rate.

Ijara is a way of buying a house through a lease and subsequent ownership, rather than through a mortgage.

Musharakah is seen as a way of enabling a buyer to avoid taking an interest-bearing loan, though some Islamic scholars say it is too similar to the charging of interest.

Algerian authorities are also considering issuing Islamic bonds.

MUMBAI — US tech giant Amazon launched its first Indian online pharmacy service on Friday as it attempts to grab more of the country's burgeoning e-commerce market. Amazon is battling Walmart-backed Flipkart and JioMart, owned by Asia's richest man Mukesh Ambani, as well as local companies in the vast market of 1.3 billion people.

India has seen nearly 2.5 million confirmed coronavirus infections — more than any other country besides the United States and Brazil — and healthcare startups are seeing huge demand for services as a result of the pandemic. 

Customers in Bangalore, India's IT hub, will be able to order prescription and over-the-counter medicines and basic health devices from certified sellers, Amazon India said in a statement. 

"This is particularly relevant in present times as it will help customers meet their essential needs while staying safe at home," Amazon said.

The firm owned by Jeff Bezos, the world's richest person, will also conduct pilot projects in other Indian cities, a company spokeswoman told AFP.

Amazon already offers online pharmacy sales in the US and several European countries, and has registered "Amazon Pharmacy" trademarks elsewhere, the spokeswoman added.

India's digital health market is forecast to explode from around $4.5 billion in the current financial year to $25 billion by 2025, according to consulting agency RedSeer.

SAN FRANCISCO — Apple must pay more than $500 million in damages and interest for 4G patent infringements held by intellectual property company PanOptis, a Texas court has ruled.

The US tech giant — now worth almost $2 trillion — will appeal Tuesday's decision, local media said.

PanOptis, which specialises in licensing patents, took Apple to court in February last year, claiming it refused to pay for the use of 4G LTE technologies in its smartphones, tablets and watches.

"The plaintiffs have repeatedly negotiated with Apple to reach an agreement for a FRAND licence to the Plaintiff's patent portfolios which Apple is infringing," the court filing read.

FRAND refers to terms that are "fair, reasonable and non-discriminatory" and is the IT industry standard for technology use.

"The negotiations have been unsuccessful because Apple refuses to pay a FRAND royalty to the Plaintiff's licence."

Apple argued unsuccessfully that the patents were invalid, according to legal publications.

"Lawsuits like this by companies who accumulate patents simply to harass the industry only serve to stifle innovation and harm consumers," Apple said in a statement reported by media outlets.

The case is one of many patent suits from licensing firms that make no products but hold rights to certain technologies. Critics call these firms "patent trolls".

The Texas court has twice ruled against Apple in the past, demanding it pay hundreds of millions of dollars to VirnetX — another company specialising in patent litigation.

On its website, PanOptis offers to manage its clients' patents, allowing them to concentrate on "innovation and new development".

KHARTOUM — Sudan has been a top producer of peanuts for so long that the nutritious variety is called the "Sudani" — but a government export ban has left traders reeling.

Rimaz Ahmed, commercial director of Abnaa Sayed Elobeid, one of Sudan's major agricultural export companies, was stunned by the sudden decision of the trade ministry to ban the export of raw peanuts.

The government says it wants Sudan to process the nuts inside the country to earn more money.

But traders said they were not given time to prepare.

"It's a shock because we were not warned," Ahmed said, of the April 1 restrictions. "Overnight, we lost important markets. Immediately, India replaced us".

The two main customers for Sudan's peanuts were China and Indonesia.

On the wall of Ahmed's office, a poster in English praising the crops — "Peanuts: a Culture with the Flavours of Sudan" — seems to be from another time.

The export ban was a shock for many in the African country, which, according to the UN, is the fifth largest peanut producer, with 14 per cent of world production.

Protein-rich peanuts, which are also called groundnuts, provide rural employment and much needed foreign exchange.

Before the trade ban, peanuts were Sudan's fifth biggest international earner after gold, sesame, oil and livestock.

The decision comes at a tough time for the country.

Sudan has endured years of international isolation and sanctions, and is now emerging from decades of dictatorship.

Longtime strongman Omar Al Bashir was toppled last year after months of mass demonstrations.

For Sudan, peanuts are a flagship product, like another of its major exports, called “Arabic gum”.

"It is as if France banned the export of wine overnight, or if Italy stopped selling its spaghetti abroad," Ahmed said.

Income from the crop was rising.

Sudan produced 1.5 million tonnes in 2019, worth $205 million, according to central bank figures, up from $59 million earned in 2018.

Trade Minister Madani Abbas Madani defended halting exports "to maximise the market value of peanuts and the added value of Sudanese products, in light of climate change which affects the quality" of the product.

For the government, the hope is that Sudan can earn more money through selling products from processed peanuts — such as oil or butter.

Peanuts can also be used in industrial products, including cosmetics.

Critics of the ban on exporting unprocessed nuts have questioned why it was introduced so abruptly, suggesting that it might be a personal whim of the trade minister.

But the minister has insisted his decision was "within the framework of government policy".

He has yet to convince traders, however.

"We agree in principle it may be good for the country, but we are not at all prepared," Ahmed said.

"We have neither the machines nor the know-how. It will take time — and in the meantime we have lost our big customers."

For Sudan, a predominantly agricultural country, the ban could have a major impact on rural employment.

 'Shot itself in the foot' 

The news has not yet reached some farmers.

In Ardashiva, a village 70 kilometres south of the capital Khartoum, Khair Daoud, 31, digs around his peanut plants.

This year, he has planted over 12 acres (almost five hectares) of peanuts, saying that if prices rise as they have done in recent years, he would nearly double his production next season.

"If not, I will rely on okra, cotton or sorghum," the farmer said, dressed in traditional flowing white robes, with a neat skullcap of the same colour.

"I haven't heard anything about exporting. I don't know if my buyers are selling my produce locally, or for export."

Peanuts are well suited to Sudan's climate, growing both under irrigation in the centre and east, or from rainwater in war-torn Darfur in the west, or Kordofan in the south.

At the chamber of commerce in Khartoum, businessman Izzeldin Malik said the government's ban was self-defeating.

"With this decision, Sudan shot itself in the foot," said Malik, owner of the Rubicon peanut export company.

"While the deficit in Sudan's trade balance should be reduced, the minister made a decision to increase it."