Business

AMMAN – Jordan's industrial production saw a decline in the first quarter of this year, except for phosphate production, which increased slightly by 1.6 per cent, the Finance Ministry announced Saturday. Ministry data said potash production fell by 14.5 per cent and fertilisers by 31.5 per cent. 

The Kingdom's electricity generation also dropped by 39.1 per cent, the ministry said in a statement carried by the Jordan News Agency, Petra. 

AMMAN — The Jordan Phosphate Mines Company's board of directors re-elected Amer Majali as chairman for the next term, the Jordan News Agency, Petra, reported Saturday. 

LONDON — European stocks and oil prices snapped a four-day losing streak and a rally in bond markets fizzled out on Thursday, as investors began to position themselves for US jobs data.

The pan-European FTSEurofirst 300 index, which had fallen 1.2 per cent to its lowest level in nearly a month in the previous session, rebounded 0.2 per cent as firmer oil prices helped the region’s big producers.

Wall Street was expected to start modestly higher too though trading was likely be low key given payrolls data on Friday, viewed as having the most direct influence on potential US interest rate moves.

There was a stark warning from Japan’s Prime Minister Shinzo Abe that the global economy could end up “plummeting into crisis”.

It came after Asian shares has seen a seventh straight day of falls overnight albeit tempered by relief that at least the yen appears to have stabilised having torn to an 18-month high this week.

Abe had said on Wednesday that Japan could act to weaken the yen if necessary. At the same time the dollar has been supported by optimism that the US economy could be finding some traction again having nearly stalling at the start of the year.

The dollar had climbed to 107.20 yen ahead of US trading, above the recent 18-month trough of 105.55 but a long way from last week’s peak of 111.88.

The euro changed hands at $1.1454, having been as high as $1.1614 this week from a low of $1.1213 in April. Against a basket of currencies the dollar was up 0.4 per cent at 93.573.

In commodity markets, industrial metals including copper and iron ore nursed more losses. Oil bounced as a huge wildfire in Canada disrupted oil sands production and escalating fighting in Libya threatened the North African nation’s output.

Brent crude was quoted 71 cents higher at $45.33 a barrel, while US crude added 89 cents to $44.67.

Bond markets had noticeably cooler feel, having seen one of their sharpest rallies of the year so far over the last week.

Yields on 10-year German Bunds and US Treasury notes hovered at 1.179 and 0.193 per cent, having both just hit their lowest in two weeks .

The gap between Italian and German government borrowing costs hit its widest level in nine weeks however, after Rome announced an unscheduled bond exchange and investors readied for a potentially sweaty series of political events in Europe.

Stalled talks between Greece and its international creditors over financial aid, as well as Spanish elections and Britain’s referendum on EU membership next month have led investors to reduce their exposure to riskier assets.

“We are cautious on the direction for the periphery and expect more volatility,” Mizuho strategist Antoine Bouvet said.

Talking Turkey

Turkish stocks fell and bond yields jumped after officials said overnight the ruling party was set to replace Prime Minister Ahmet Davutoglu at an extraordinary congress in coming weeks.

The decision came after a meeting of more than one-and-a-half hours between Davutoglu and President Tayyip Erdogan that followed weeks of public tension between the two men.

The lira then bounced over 2 per cent to 2.8975 per dollar in volatile deals in Istanbul as Davutoglu called for the ruling AKP Party to remain “strong”. That was preceded by a three-day pounding that was one of its worst in decades.

“The political environment is very unpredictable, and this will certainly have negative repercussions for Turkey’s risk premium, financial volatility and macroeconomic outlook,” Finansbank said in a note.

The seventh straight dip for Asian shares overnight followed mixed economic data that did nothing to assuage concerns about global growth.

The latest survey from China showed the service sector expanded at a slower pace in April, though firms did resume adding staff.

The Caixin/Markit services purchasing managers’ index (PMI) dropped to 51.8, from 52.2 in March, but at least stayed in growth territory. Hong Kong’s version of the PMI slid into a deeper contraction to touch an eight-month low.

The patchy outcomes left Shanghai stocks flat while trade across the region was stifled by a holiday in Japan.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.3 per cent, and has now shed 5 per cent in just two weeks.

Wall Street also slipped amid mixed data. The vast US services sector expanded in April as new orders and employment accelerated, offering hope that economic growth would rebound after a sluggish first quarter.

But other figures showed private employers hired the fewest workers in three years, sparking concerns the payrolls report might also disappoint. Friday’s jobs figures are forecast to show a solid gain of 202,000 in April with unemployment steady at 5 per cent.

“I think what has taken place more than anything else over the past 48 hours is the questioning of the reflation trade that was starting to be latched on by many, especially when you consider the recent price action in the USD, commodities and equities,” CitiFX analysts said in a note.

BERLIN/LONDON — European airports are racing to redesign terminals and offer new services to pull more passengers into their stores, in the face of online competition and militant attacks that have kept away some big-spending Asian travellers.

Seeking to boost the key measure of retail sales per passenger, airports are expanding and refurbishing shopping areas and ensuring routes to gates steer customers past — or through — as many stores and restaurants as possible.

Vienna airport, for example, plans to expand the shopping and food area in its Terminal 2 by about 50 per cent — including a duty-free store positioned right after security, which passengers must pass through.

London's Stansted has just completed an £80 million ($116 million) makeover that increased space in the departure lounge by 60 per cent, providing more room for shops.

"Airports now are basically shopping malls with runways," said John Jarrell, head of Airport IT at Amadeus, which supplies technology systems to the industry.

Retail accounts for almost a fifth of airports' revenue, a proportion that has grown steadily in the past decade, according to airports association ACI Europe, and is increasingly relied upon to help fund infrastructure and services.

But the lucrative business has been hit by falling numbers of Asian travellers, traditionally the biggest spenders. Major European airlines have reported falling demand from passengers from China and Japan this year as a result of the attacks in Paris and Brussels.

Airport retailers' advantage of a captive audience of travellers has also been undermined by people being able to shop and compare prices at will on mobile devices, so they are being forced to employ new strategies to court customers.

"Air travellers have become very discerning price-wise and impulse buying at the airport is becoming rarer," said ACI Europe spokesman Robert O'Meara.

Frankfurt Airport is trialling a scheme where passengers in the Lufthansa lounge can shop on their tablets and have goods brought to them, and another where passengers can order food from tablet-toting staff to be brought to the gate and eaten there or on their plane.

Stansted, Britain's fourth-busiest airport, is offering hand massages at the Jo Malone area in its duty-free store, while its bigger London rival Gatwick and Copenhagen Airport have thrown up temporary "pop-up" shops to tempt passengers into spending there and then, rather than waiting.

Many European airports, including Copenhagen, Gatwick, Stansted and London Heathrow, also now offer "collect on return" services that allow customers to buy goods and pick them up when they return from their trip.

Stansted launched the service at the beginning of the year and customers are leaving about 3,000 bags a week full of airport-bought goods and collecting them upon their return.

'They will spend more'

Heathrow, Europe's busiest airport, offers passengers not flying via Terminal 5 the chance to order items from the Chanel store there — a service much used by high-net worth customers flying to the Middle East from Terminal 4.

"If you give passengers good service, put them in control of their time, they will spend more with you," Heathrow CEO John Holland-Kaye told Reuters.

His airport completed a 40 million pound revamp of its luxury shopping area last year that added more shops, including Louis Vuitton and Bottega Veneta.

While the concept of duty-free was invented in Shannon, Ireland in 1947, it has since lost meaning for European travellers, which do not get the tax-free prices that passengers from outside the European Union enjoy.

Frankfurt Airport operator Fraport illustrated the importance of Asian travellers when it said that passengers from China, Russia, South Korea, Japan and Vietnam made up just 7 per cent of passengers in 2015, but 31 per cent of retail revenue.

Both Fraport and fellow operator Aeroports de Paris said this week that retail sales per passenger had dropped in the first quarter of 2016, partly due to the impact of the Paris attacks.

Faced with such hurdles, airports are trying to maximise the time available to customers to shop by reducing times spent queuing at security checks and giving people better directions via apps or touch-screens to find their way around often sprawling terminal buildings.

Fraport's app, for example, allows passengers to take a picture of a sign at Frankfurt Airport and have it translated into Chinese.

European airports relied on non-aeronautical revenue — sales earned from retail and car parking — for 40 per cent of their revenues in 2013, the most recent year for which data is available, according to ACI Europe.

Of that revenue, retail — including food and drinks sales — accounted for 46 per cent, up from just 28 per cent in 2008. That equates to about 18 per cent of airports' total revenue.

Typically, airports receive fees from retailers comprising of rent and royalties from sales. Citi analysts said of the airports they covered, Heathrow had the highest per passenger retail revenues.

The British hub increased its retail revenue by 9 per cent in 2015, about a fifth of its total annual revenues, representing per passenger retail revenue of £7.58, up from £7.14 the previous year.

ISTANBUL — After years of growth fuelled by credit and domestic consumption, bad debts and bankruptcies are rising in Turkey, squeezing banks and exposing a fragile real economy which risks denting support for the ruling AK Party.

In its first decade in power, the AKP, founded by President Recep Tayyip Erdogan, built its reputation on growing Turkey's wealth, overseeing a sharp rise in incomes and providing new roads, hospitals and airports in what was long an economic backwater.

But as he seeks support for an executive presidency to replace Turkey's parliamentary system, a decision that could be put to a national vote later this year, Erdogan may no longer be able to count on Turkey's rising prosperity to win him votes.

Growth is expected to cool to 3.5 per cent this year, the World Bank said last week, well below peaks of near double digits in the early AKP years. A sharp drop in tourism after a spate of bombings this year and unrest in the largely Kurdish southeast are also taking their toll.

Foreign investors are wary and banks are increasingly reluctant to extend new credit, squeezing the most indebted firms. So far in 2016, 240 companies have requested temporary relief from creditors, almost as many as in the whole of last year, according to sirketnews.com, which compiles the data.

Istanbul-based pulses producer Sezon Pirinc filed for bankruptcy postponement at the end of last year, hit by souring consumer sentiment at home and difficulties in some Middle East export markets.

"The main reason behind our bankruptcy postponement was banks calling their loans earlier than their maturities," Mehmet Erdogan, the company's chairman, told Reuters. "2016 will be another tough year."

Erdogan forged the AKP as Turkey slid into financial crisis in 2001. It won a growing share of the vote in three successive parliamentary elections as incomes rose sharply, winning loyal support from a class of industrialists whose businesses thrived.

The government has vowed reforms to boost productivity and investment in industry as the economic headwinds build. But many economists say they are too slow coming.

Bankruptcies jump

Dairy firm Aynes Gida, a household name for two decades, went to court in January for bankruptcy postponement after defaulting on payment of its 50 million lira ($18 million) bond, it said in a stock exchange filing.

Earlier this year supermarket chain Begendik was bidding to buy 10 stores from the Turkish unit of Britain's Tesco. It not only failed to do the deal, but later applied for bankruptcy postponement. And in April, a century-old clothing retailer, Atalar Giyim, applied for bankruptcy.

Smaller firms, long the engine of the Turkish economy, are also struggling to cope after the government hiked the minimum wage by 30 per cent this year.

In January, the number of registered workers dropped by 379,000 or 2.7 per cent, according to think tank TEPAV, with two-thirds of that decline at small and medium-sized companies.

Iron and steel companies as well as food and technology retailers are at particular risk, said Ozlem Ozuner, chief executive of credit insurance firm Euler Hermes Turkey, citing the impact of low commodity prices and recent over investment.

Ozuner believes around 14,800 companies will go bankrupt this year, an 8 per cent increase on last year.

Bad loan boom

The average NPL ratio rose to 3.3 per cent in the first quarter from 2.8 per cent a year ago, regulatory data showed, while the biggest jump in bad loans was those to small and medium-sized businesses, which rose to 4.4 per cent.

Fahrettin Yahsi, chief executive of Islamic lender Albaraka Turk, said he expects the sector average could rise to up to 4.8 per cent this year.

But some bankers and analysts think the actual rate of non-performing loans could be double that, as banks sell some of their bad portfolios, restructure loans and lengthen the maturities of some debt to keep the loans alive.

"My calculations show that the NPL ratio is more than 6 per cent," said one banking analyst, who declined to be named. "That creates a profitability problem for banks and reduces their appetite for new loans."

Hilmi Guvener, CEO of Turkasset, which buys distressed debt from banks, said he expects sales of bad loan portfolios to triple to 6 billion lira this year. Non-performing loans rose mainly in construction and tourism, he said.

While no-one is expecting a deep crisis in the financial sector, analysts say the debt problems will slow growth, as the economy has largely relied on domestic demand since 2012.

AMMAN – Investors from Gulf countries have offered to inject "unprecedented" large investments in Jordan, according to Jordan Investment Commission (JIC) President Thabet Al Wir. 

Wir was quoted by the Jordan News Agency, Petra, as saying on Wednesday that the commission received offers by Gulf investors, particularly from Saudi Arabia, to bring in "interesting and unprecedented" investments to the Kingdom in various sectors. 

Speaking at a meeting with investors from the industrial sector, he said the recent Royal visits to Saudi Arabia and the UAE resulted in "unprecedented" investment offers in several economic sectors.

Wir said the JIC is studying the priorities of these offers and their benefits, partciularly in the sectors of services, education, medicine, agriculture and industry, noting that the commission is concerned with involving the representatives of the industrial sector to draw visions, plans and strategies related to the investment process. 

The JIC president said the Investment Council has recently recommended several investment opportunities in the industrial sector by directing the investments to areas that still in need of development, adding investors will benefit from tax incentives and other benefits related to the labour force, Petra reported. 

"The Investment Law was made to meet the demands of growth and development," Wir said, indicating that the government appreciates the industrial sector's role and its contributions to the national economy.

DUBAI –– For more than 10 years Dubai property prices have been on a roller coaster, creating and wiping out fortunes, but recently they appear to have run out of steam.

The Gulf emirate shot to prominence as an attractive real estate market after opening up special freehold zones for foreign buyers in 2002.

Prices peaked in 2008, driven mainly by speculative investments, but later nosedived as finances dried up because of the global financial crisis, shedding half the sector's value.

Renewed demand boosted values and rents at breakneck speed between 2012 and 2014, stirring fears of yet another bubble until prices headed south again, though more slowly this time.

Last year, prices fell by an average of 12 per cent, according to Craig Plumb, head of MENA research at property consultancy Jones Lang LaSalle.

"The market is having something of a soft landing at the moment, so the prices have been now falling for over a year... We think the market will continue to drop a little bit more, but not as much as it already has," he said.

"We think that most of the decline we've already seen."

Dana Salbak, the head of MENA research at Knight Frank property consultancy, put the 2015 drop in residential prices at 10 per cent.

"We saw a slowdown in the residential sector. We saw prices dip about 10 per cent over 2015. Not so much in the first quarter of the year," she said.

Dubai's market is driven by overseas demand which has fallen as currencies weakened against the US dollar to which the UAE dirham is pegged, pushing up prices, Plumb said.

"Real estate in Dubai is now more expensive for buyers holding other currencies," Knight Frank said in its 2015 report.

Indians top the list of foreign investors in Dubai property. In 2015, they spent more than 20 billion dirhams ($5.4 billion) out of a total of 135 billion dirhams.

British and Pakistani buyers followed with 10.8 billion dirhams and 8.4 billion dirhams respectively. Iranians spent 4.6 billion dirhams, Canadians 3.7 billion dirhams and Russians 2.7 billion dirhams.

Indirect pressure from oil

The Indian rupee, the euro and the Russian ruble have all dropped significantly against the dollar.

Dubai property has also been affected by a slowing economy that has created fewer jobs, which in turn means not as many people arriving to demand housing, Plumb said.

And although its economy does not rely on Dubai's dwindling resources of oil, the plunge in oil revenues for the UAE and other Gulf states has exerted indirect pressure.

The drop in oil prices and the economic slowdown have "impacted investors' sentiment, their willingness and appetite to invest", said Salbak. "They adopted a cautionary approach."

But a collapse like the 2009 crash is probably not on the cards.

"We don't think there is very much likelihood of the market collapsing in a spectacular sense. Our forecast is for another decline of between five and 10 per cent in 2016," said Plumb.

He said the market would bottom out by the end of 2016.

"We see them [prices] stabilise at these new rates, which is a good sign, a sign that the market has reached the bottom of the cycle," said Salbak, adding that prices should pick up next year.

She argued that government pledges to maintain increased investments in infrastructure construction send "positive signs for the market that the government is still committed to this sector, to the real estate sector, to construction".

Mohamed Alabbar, the chairman of Emaar Properties which developed major Dubai projects including Burj Khalifa, the world's tallest tower, also sounded optimistic.   

"We are in the long-term business. Cycles come and go," he told AFP, adding that the current drop in prices is "OK".

"We are in business, it is not that bad," he said after unveiling plans to build an even taller tower.

Alabbar argued that it was good prices did not experience a "drastic [and] crazy 2007 increase" during post-crisis recovery.

"Everybody wants prices to increase, but I think they have to be affordable," he said.

"I think the balance between supply and demand... is very encouraging."

Salbak also said supply is "currently being controlled", with developers "more cautious and wary of the need to phase out their delivery of projects, in line with demand".

DUBAI — Saudi Arabia announced a string of reforms to its stock market that could attract billions of dollars of fresh foreign money and smooth sales of state assets as the kingdom grapples with damage to its finances caused by low oil prices.

When Riyadh opened its bourse to direct foreign investment last June, it took a cautious approach, imposing tight ownership limits and minimum qualifications for overseas institutions to reduce the risk of them destabilising the market.

Reforms announced on Tuesday suggested authorities are now courting foreign money more aggressively. 

Last week, Deputy Crown Prince Mohammad Bin Salman outlined sweeping plans to cut the kingdom's dependence on oil exports.

Among his plans are a privatisation programme that will include offering a stake of under 5 per cent in national oil giant Saudi Aramco. 

The Saudi stock market could have trouble absorbing the shares without an infusion of foreign money.

"This is a very good piece of news and supportive of the stock market in the medium- to long term," Sebastien Henin, head of asset management at Abu Dhabi's The National Investor, said of Tuesday's announcement.

"It may clear the road for the possible listing of Aramco shares... All in all, this will align the bourse with international markets and encourage foreign investors to allocate funds to Saudi shares."

Each foreign institutional investor will be allowed to own directly a stake of just under 10 per cent of a single listed company, up from a previous ceiling of 5 per cent, the Capital Market Authority (CMA) announced.

Other restrictions were scrapped, including a ceiling of 10 per cent on combined ownership by foreign institutions of the market's entire capitalisation. All foreign investors combined will still be limited to owning 49 per cent of any single firm.

To qualify as a foreign institutional investor in Saudi Arabia, each asset manager will only need to have a minimum of $1 billion of assets under management globally, instead of $5 billion. 

The CMA said it would now accept investments by new types of foreign institution including sovereign wealth funds and university endowments.

The regulator also said it had approved the introduction of securities lending and covered short-selling to the stock market, which would give investors more options to hedge their purchases against market downturns.

Meanwhile, the Saudi Stock Exchange will introduce during the first half of 2017 the settlement of trades within two working days of execution, the bourse said.

At present, trades must be settled on the same day. This has inconvenienced foreign investors in particular as they must have large amounts of money on hand before trading, which can be hard given Riyadh's time zone and its Sunday-Thursday business week. 

Many big emerging markets have settlement after two days.

Saudi Arabia wants to join international index compiler MSCI's emerging markets index as soon as in 2017, because many global funds base their investments on that index. 

Officials have conceded same-day settlement is an obstacle to inclusion.

MSCI is expected to say in June whether it will review Saudi Arabia for possible inclusion in the index, and the reforms announced on Tuesday could help to sway its decision.

Nevertheless, the Saudi stock market did not react positively to the announcement; its index was 1.4 per cent lower in late trade.

One reason is that the reforms will take considerable time to materialise. 

The CMA said its new foreign ownership rules, and a date for them to take effect, would be revealed only by the end of the first half of 2017.

A deeper reason is that despite last June's opening to foreign institutions, overseas funds have so far not been very keen to put their money into Saudi Arabia; total direct and indirect foreign investment accounts for less than 1 per cent of the $408 billion stock market, bourse data shows.

DETROIT — America's love of trucks and SUVs helped push most automakers to healthy sales gains last month as Ford reported record SUV sales and Nissan posted its best April ever.

Nissan's sales rose 12.8 per cent for the month to 123,861, while Fiat Chrysler posted a 6 per cent gain to nearly 200,000 and Ford's sales rose 4 per cent to just over 231,000. General Motors, which is cutting back on low-profit sales to rental car companies, posted a 3.5 per cent decline to just under 260,000.

Ford Motor Co. sold more than 65,000 SUVs, the best April in company history, led by the Explorer with a 22 per cent increase. At Nissan Motor Co., cars and SUVs pushed sales up, while Fiat Chrysler was led by a 17 per cent increase in sales of Jeep SUVs. It was FCA US LLC's best April since 2005.

Analysts expect US sales of new cars and trucks to be up 4 per cent over last April when companies are done reporting figures on Tuesday. Car-buying site Edmunds.com predicts April sales of more than 1.51 million, beating the previous record for the month set in 2005.

Most major automakers were expected to see sales increases except for GM and Volkswagen AG, which is struggling with an emissions cheating scandal.

The strong showing for April — traditionally a month of calm before the hot summer selling season — indicates that 2016 could be another record year for the US auto industry, said Jessica Caldwell, Edmunds' director of industry analysis. US auto sales hit a record of 17.5 million last year.

As sales reach those historic peaks, however, the overall pace of growth is slowing. Two years ago, for example, April sales jumped 8 per cent, or double last month's expected pace. J.D. Power and Associates predicted that April sales this year would run at an annual rate of 17.6 million.

For now, the sales outlook is still mostly sunny. Consumers are on track to spend more than $36.9 billion on new vehicles in April, surpassing the previous record for the month set last year, according to J.D. Power and LMC Automotive.

But there are some worrying trends for the industry.

Buyers are flocking to SUVs and trucks, which might force manufacturers to offer big discounts on cars to move them off lots. That is good for buyers in the short term, but incentives can flood the market with cars and hurt resale values.

At Fiat Chrysler, car sales fell 8 per cent for the month. Sales of the Chrysler 200 midsize car tumbled 60 per cent to around 7,600. Ford's car sales fell 12 per cent.

Sales to individual consumers also appear to be slowing, so automakers are relying more on less profitable sales to rental-car companies and other fleets. J.D. Power expected April sales to individual buyers to rise 4 per cent, while sales to fleets were expected to jump 8.7 per cent.

John Humphrey, senior vice president of J.D. Power, said consumers will spend more on new cars and trucks than any other April on record. But slowing growth, the shift away from cars and rising fleet sales “pose significant challenges to manufacturers as they compete in the marketplace”.

FRANKFURT, Germany — Luxury automaker BMW says net profit rose 8.2 per cent in the first quarter thanks to strong sales in Europe and Asia, but the company gave a restrained outlook for the rest of the year.

Profit rose to 1.64 billion euros ($1.88 billion) from 1.52 billion euros a year earlier. The figure, however, was short of the consensus estimate for 1.68 billion euros as compiled by financial information provider FactSet and BMW was cautious about the months to come.

In its quarterly report Tuesday, it said earnings would "increase slightly" and cautioned that the company faced rising personnel costs and high levels of investment in new projects and technology. Long-term investment is crucial to coming up with top-selling vehicles, but can divert money from earnings in the shorter run.

It predicted it would keep its profit margins — one of the key earnings figures watched by investors — in its target range of 8-10 per cent. The first quarter figure came in at 9.4 per cent, off slightly from 9.5 per cent a year earlier.

BMW shares fell 3 per cent to 78.65 euros in morning trading in Europe.

The Munich-based company said it saw record sales for a first quarter. Numbers were boosted by a jump of 10.5 per cent in China and 9.5 per cent in the recovering European economy. US sales were off 10.8 per cent. Overall, it sold 557,605 vehicles worldwide under its three brands, which also include Mini and Rolls-Royce, an increase of 5.9 per cent.

BMW reported strong demand for its X family of sport-utility vehicles. Sales here rose 24 per cent, with a sharp jump of almost two-thirds for the smallest X1 vehicle. The next largest, the X3, sold 27 per cent more.

Global sales revenue fell 0.3 per cent to 20.85 billion euros, pushed down by shifts in currency exchange rates.