Business

SAN FRANCISCO — PayPal on Monday launched a stablecoin digital currency backed by US dollars to be used for transactions at its global online payments platform.

PayPal USD is issued by Paxos Trust Company and backed by dollar deposits and similar cash holdings, the online payments giant said in a release.

It comes as the cryptocurrency industry is suffering hard times after the spectacular collapse of FTX and various legal cases against the sector's biggest players.

As the biggest cryptocurrencies are famously volatile, entrepreneurs invented a theoretically more reliable alternative known as stablecoins.

These coins are pegged to the US dollar or other fiat currencies, but still come with concerns their value can tank.

"The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar," said PayPal Chief Executive Dan Schulman.

PayPal USD is designed to make payments on across the global platform easier and open a door to more big brands getting involved with digital assets, according to the Silicon Valley-based company.

PayPal planned to soon make the stablecoin available at Venmo, its peer-to-peer payment service.

PayPal's decision to accept bitcoin in late 2020 helped kick off a precipitous rise in the value of crypto assets, driven partly by a sense that the digital tokens could potentially function like currencies one day.

However, scandals have rocked the cryptocurrency market and made regulators wary.

Financial regulators in the United States have argued that cryptocurrencies are securities and should face strict rules.

The debut of PayPal USD came two weeks after OpenAI Chief Executive Sam Altman and other co-founders unveiled a Worldcoin crypto project that relies on an eye scan to verify a user's identity.

Worldcoin said it will provide users with a private digital identity — a "World ID" — after they register in person using an "Orb" imaging device that scans their eye's unique iris pattern.

This was to help solve one of the main challenges facing the crypto industry that largely relies on pseudonyms to operate, leaving it vulnerable to spam bots and scams.

The company also launched its Worldcoin token, a cryptocurrency now tradable in certain locations and platforms, to millions of users who participated in early tests, the statement said.

In a sign of increased caution by regulators in treating crypto, Worldcoin wasn't available to trade in the US, where enthusiasm for the sector is significant, because of restrictions.

RIYADH — Oil firm Saudi Aramco on Monday announced profits of $30.08 billion for the second quarter, a sharp fall from the same period last year when prices surged after Russia invaded Ukraine.

The 38-per cent year-on-year decline "mainly reflected the impact of lower crude oil prices and weakening refining and chemicals margins", the largely state-owned company said in a statement published on the Saudi stock exchange.

The decline followed a drop of 19.25 per cent in first-quarter net profit.

Aramco's CEO Amin Nasser said in a separate statement that "our strong results reflect our resilience and ability to adapt through market cycles".

The firm's "mid to long-term view remains unchanged", he added.

"With a recovery anticipated in the broader global economy, along with increased activity in the aviation sector, ongoing investments in energy projects will be necessary to safeguard energy security."

Production from the world's biggest crude exporter was down after Riyadh in April announced cuts of 500,000 barrels per day, part of a coordinated move with other oil powers to slash supply by more than one million bpd in a bid to prop up prices.

In June, the Saudi energy ministry announced a further voluntary cut of 1 million bpd which took effect in July and has been extended through September.

The kingdom's daily production is now approximately 9 million bpd, far below its reported daily capacity of 12 million bpd.

Aramco is the main source of revenue for Crown Prince Mohammed Bin Salman's sweeping economic and social reform programme known as Vision 2030, which aims to shift the economy away from fossil fuels.

Analysts say the kingdom needs oil to be priced at around $80 per barrel to balance its budget.

Prices are now above that threshold, a sign that the recent supply cuts are starting to have the desired effect.

The US benchmark West Texas Intermediate crude for September delivery traded on Monday at $82.54 and European benchmark Brent crude futures were just below $86.

Following Russia's invasion of Ukraine in February 2022, oil peaked at more than $130 dollars per barrel.

'Phenomenal figures' 

The cuts "show the lengths to which the kingdom will go to defend oil prices, as a slumping market for its lifeblood commodity is damaging to its ambitious economic diversification efforts", said Herman Wang, associate director for oil news at S&P Global Commodity Insights.

Aramco is undertaking investments to ramp up national production capacity to 13 million bpd by 2027.

"It's an expensive proposition for Aramco to hold production capacity offline in the name of OPEC+ cuts, but the hope is that the sacrifice being made now will pay off in the end with higher prices," Wang said, referring to the Organisation of the Petroleum Exporting Countries, headed by Riyadh and their 10 allies led by Moscow.

Aramco reported record profits totalling $161.1 billion last year, allowing the kingdom to notch up its first annual budget surplus in nearly a decade. 

Yet, those "were phenomenal figures driven by a very particular set of geopolitical factors and Saudi Arabia's leadership can't have been predicating Vision 2030 spending on such results", said Jamie Ingram, senior editor at the Middle East Economic Survey.

"Higher revenues would of course be favoured by officials, but Saudi Arabia still has very low debt levels and strong reserves that it can tap into," Ingram added.

Nasser told reporters on Monday that global demand was "expected to grow by about 2.4 million barrels [per day] in the third quarter 2023 compared to the same period last year", an increase mainly led by China where demand has been "stronger than expected".

Saudi Arabia owns 90 per cent of Aramco's shares.

Aramco's base dividend for the second quarter will be $19.5 billion, the same as for the first quarter, the firm said.

It will also distribute a new performance-linked dividend of $9.9 billion in the third quarter, and expects to make similar dividend payments over the next six quarters, it said.

LAHORE — Factory worker Lubna Babar was made redundant at the beginning of the year, a victim of a crisis in the Pakistan textile industry that has seen it lose ground to more nimble Asian competitors.

"When you lose your job, your life comes to a close," the 43-year-old from Lahore told AFP.

"We've been working in factories for years... the day you get sacked, the story ends there."

Pakistan's industrial manufacturing sector — like elsewhere in the world — has suffered from the slowdown in global consumption and the rise in energy costs following the outbreak of war in Ukraine.

But the difficulties of the textile sector, which accounts for 60 per cent of Pakistan's exports, are compounded by the critical state of the economy and months of political chaos.

In Pakistan, the industry was buoyed at the tail end of the coronavirus pandemic, when it was freed of restrictions earlier than regional rivals India and Bangladesh and benefited from government financial aid, including slashed energy rates.

In 2022-2023, however, textile exports fell by 15 per cent to $16.5 billion.

"Two years ago, we were on a very high growth trajectory... we were confident that our exports this year would go to $25 billion," said Hamid Zaman, managing director of Sarena Textile Industries.

"Unfortunately, when you have political instability and things are not clear, and the policies of the government are reversed, this whole thing has gone into a tailspin," he told AFP.

The political chaos started in April last year, when Imran Khan was dismissed as prime minister by a vote of no-confidence.

His attempts to parlay popular public support into a movement to force an early election saw him arrested in May, leading to violence that only ended with a massive crackdown on his party and its supporters.

He was convicted of graft on Saturday and sentenced to three years in jail.

Factories shutting down 

The textile and clothing sector employs around 40 per cent of the country's 20 million-strong industrial workforce.

The main export markets are the US, EU, the UK, Turkey, and the UAE, supplying cotton fabrics, knitwear, bed linen, towels, and ready-made garments to global brands such as Zara, H&M, Adidas, John Lewis, Target and Macy's.

But many factories have closed in recent months — at least temporarily — or are no longer running at full capacity.

"Perhaps 25 to 30 per cent of all textile factories have closed. It is estimated that perhaps 700,000 jobs have been lost in the last year or year-and-a-half," said Zaman.

Babar felt this keenly, having looked for work at other factories — but they were also laying off employees.

"They said they were no longer receiving orders from abroad," she said. 

After devastating floods in the summer of 2022, cotton production in Pakistan fell to an all-time low.

The textile industry was unable to compensate by buying from abroad because of a freeze on imports imposed by the government to preserve its forex reserves.

Thousands of containers filled with raw materials and machinery essential for the country's industries were held up for months in the southern port of Karachi.

Textile companies also saw the cost of capital rise significantly, contending with interest rates of more than 20 per cent as the central bank sought to curb record-breaking inflation.

'Not a solution' 

Pakistan finally managed to consolidate its foreign exchange reserves with the approval in mid-July of a $3 billion loan from the International Monetary Fund (IMF) and additional assistance from China, Saudi Arabia and the United Arab Emirates.

"But that's not a solution, it's just getting deeper and deeper into debt," said Kamran Arshad, managing director of Ghazi Fabrics International.

"The only way forward is enhancing Pakistan's exports and creating an environment that is investor-friendly that would incentivise industrial production and activity," he added.

One of the conditions of the IMF bailout was an end to subsidies on energy, leading to a sharp rise in the cost of electricity, which affects the competitiveness of textile companies.

"Our biggest challenge going forward is having energy prices that are substantially higher than those of India, Bangladesh, Sri Lanka, Vietnam and China," said Arshad.

"We're not asking for subsidies. Realistically we are asking for regionally competitive energy prices."

In the face of these challenges, the country's textile manufacturers have lost customers globally.

"Pakistan's overall market share in the textile and garment industry was nearly 2.25 per cent about two years ago. Now it's down to around 1.7 per cent," said Aamir Fayyaz Sheikh, CEO of Kohinoor Mills.

Sheikh sees some hope if the political situation settles following an election due before the end of the year.

"After the elections there will be more political clarity and that will help bring more economic stability," he said.

But for ordinary workers like Babar, there is little light at the end of the tunnel.

"Life is getting harder every day," said the mother of three.

"We cook once and make it last for two days. And if we don't have any food, we make do, without complaining."

SAN FRANCISCO — Amazon and Apple on Thursday reported earnings that topped market expectations, aiming for even better days ahead with the help of artificial intelligence (AI).

"Inside Amazon, every one of our teams is working on building generative AI applications that reinvent and enhance their customers' experience," chief executive Andy Jassy said during an earnings call.

Apple views AI and machine learning as "core fundamental technologies that are integral to virtually every product that we build," company boss Tim Cook told analysts while discussing the iPhone maker's quarterly earnings.

"It's absolutely critical to us," Cook said of AI.

He cited crash detection and other iPhone features as technologies that "wouldn't be possible without AI and machine learning". Crash detection presents a user with a prompt for an emergency call if a handset senses a collision.

"We've been doing research across a wide range of AI technologies, including generative AI for years," Cook said.

"We're going to continue investing and innovating and responsibly advancing our products with these technologies."

Apple reported modestly higher profits in the recently ended quarter despite another dip in revenues, as a record performance in services offset lower iPhone sales.

Executives spotlighted increased sales in China and several key emerging markets that helped to compensate for declines in the United States where the iPhone sales have ebbed in a saturated smartphone environment.

Profits for Apple's third fiscal quarter were $19.9 billion, up 2.3 per cent from the year-ago period. Revenues again declined, this time by 1.4 per cent to $81.8 billion, the third straight quarter with a year-over-year decline.

Bright spots for the tech giant included an "all-time high" in services revenue, comprised of the App store, Apple pay and Apple TV and other subscription services.

AI for all? 

Amazon reported a quarterly profit that trounced market expectations, driven by strong sales helped by its annual prime discount event.

The e-commerce giant said it made a profit of $6.7 billion in the recently ended quarter, eclipsing earnings forecasts.

"It was another strong quarter of progress for Amazon," the company's chief executive Andy Jassy said in an earnings release.

The e-commerce colossus boasted of having its "biggest Prime Day event ever" in July, with subscribers to the Amazon service worldwide ordering more than 375 million items.

Order delivery speeds in the US were the fastest ever, with Amazon continuing to work on optimising efficiency and lowering costs at fulfillment centres, according to the company.

Jassy in March laid out a plan to cut 9,000 more jobs from the online retail giant's workforce, following the 18,000 that were axed in January.

Jassy told his workers at the time that the extra layoffs were necessary as the company seeks a way to downsize after years of sustained hiring by the Seattle-based company.

"The upturn in Amazon's commerce business is an encouraging sign for the back half of the year," said Insider Intelligence principal analyst Andrew Lipsman.

Revenue taken in by the Amazon Web Services (AWS) cloud computing unit increased to $22 billion in a year-over-year comparison, but costs climbed as well, resulting in a lower operating income than in the same period in 2022.

"Our AWS growth stabilised as customers started shifting from cost optimisation to new workload deployment," Jassy said.

"AWS has continued to add to its meaningful leadership position in the cloud with a slew of generative AI releases."

AWS remains a concern, however, and pressure is on to show growth as the broader economy recovers and companies invest in cloud-based computing power, according to analyst Lipsman.

Amazon is seeing more businesses focus on shifting systems to the cloud, where they can save money and tap into AI capabilities, Jassy said on the earnings call.

AWS is investing heavily in being a place where AI models are trained and put to work for businesses, according to Jassy.

"What we're doing is democratising access to generative AI; lowering the cost of training and running models," Jassy said.

"We think AWS is poised to be the longterm partner of choice in general AI."

Amazon shares were up more than eight per cent to $140.25 in after market trades.

RIYADH — Saudi Arabia announced Thursday it is extending a voluntary oil production cut of one million barrels per day for another month, keeping up its campaign to prop up prices. 

"Saudi Arabia will extend the voluntary cut of one million barrels per day... for another month to include the month of September," the energy ministry said in a statement.

The cut, which first took effect for July, could be further prolonged or even deepened, the energy ministry added.

The move leaves daily production by the world's biggest crude exporter at approximately nine million bpd. 

The "voluntary cut comes to reinforce the precautionary efforts made by OPEC Plus countries with the aim of supporting the stability and balance of oil markets", the energy ministry said.

Announcing the cut following a June meeting of the 23-nation OPEC+ alliance, which also includes Russia, Saudi Energy Minister Prince Abdulaziz Bin Salman noted that it was potentially "extendable". 

It followed a decision in April by several OPEC+ members to slash production voluntarily by more than one million bpd — a surprise move that briefly buttressed prices but failed to bring about lasting recovery. 

Oil producers are grappling with falling prices and high market volatility, reflecting continued fallout from the Russian invasion of Ukraine and China's faltering economic recovery. 

Saudi Arabia is counting on high oil prices to fund an ambitious reform agenda that could shift its economy away from fossil fuels. 

'Extended period' 

Analysts say the kingdom needs oil to be priced at around $80 per barrel to balance its budget. 

There are signs recent supply cuts are starting to have the desired effect, with oil prices "strengthening", the Riyadh-based firm Jadwa Investment said in a report published on Tuesday. 

"Brent was trading at around $85 [per barrel] in late July, up by some $10 [per barrel] from the beginning of the month," Jadwa said. 

"Sour crudes, which dominate Saudi Arabia's output, are especially in vogue. Meanwhile, there are hopes that US demand will be stronger than expected, with many anticipating a 'soft landing' for the US economy rather than a recession." 

Yet, Jamie Ingram, senior editor at the Middle East Economic Survey (MEES), told AFP that Riyadh "will want to see an extended period of higher prices before bringing volumes back on to the market". 

He added: "Concerns over the Chinese economy are also hanging over oil markets." 

Oil giant Saudi Aramco, the jewel of the kingdom's economy, said it recorded profits totalling $161.1 billion last year, allowing Riyadh to notch up its first annual budget surplus in nearly a decade. 

But with the spiking oil prices that resulted from Russia's invasion of Ukraine last year now a thing of the past, Saudi oil activities contracted 4.2 per cent year-on-year in the second quarter, according to preliminary data published on Monday by the kingdom's General Authority for Statistics. 

Non-oil activities grew by 5.5 per cent during the same period, resulting in overall GDP growth of 1.1 per cent, the authority said.

TOKYO — Tokyo stocks tumbled more than 2 per cent on Wednesday in their biggest single-day drop this year, mirroring selling across Asian markets after Fitch cut the United States' AAA credit rating.

The benchmark Nikkei 225 index dropped 2.30 per cent, or 768.89 points, to 32,707.69, while the broader Topix index ended down 1.52 per cent, or 35.60 points, at 2,301.76.

Hours before the Tokyo market opened, Fitch downgraded the United States' top-notch credit rating by a step, citing a growing federal debt burden and an "erosion of governance" that has manifested in debt limit standoffs.

Overnight on Wall Street, the broad-based S&P 500 shed 0.3 per cent, and the tech-heavy Nasdaq fell 0.4 per cent, while the Dow gained 0.2 per cent.

"Fitch's downgrade and rise in yields of US bonds led to selling in US high tech shares. That, in turn, weighed on the Tokyo market," Toyo Securities senior strategist Ryuta Otsuka told AFP.

"In addition to falls in US high-tech shares, rise in yields of long-term bonds in the domestic market is also accelerating stocks selling," Daiwa Securities said in a commentary. 

Japan's 10-year bond yield hit a nine-year high of 0.625 per cent on Wednesday, Jiji Press reported, reflecting the Bank of Japan's tweak last week to part of its policy tools to maintain ultra-loose monetary policy. 

The dollar fetched 142.89 yen in Asian trade, against 143.34 yen in New York late Tuesday.

Among individual equities, Uniqlo operator and market heavyweight Fast Retailing dropped 3.90 per cent to 34,530 yen, SoftBank Group lost 3.68 per cent to 6,983 yen and chip-testing equipment maker Advantest sank 4.48 per cent to 19,400 yen.

Toyota climbed 2.33 per cent to 2,502.5 yen after having gained 2.49 per cent in the previous session following its announcement of better-than-expected financial results. 

BAGHDAD — Iraq's prime minister said on Tuesday Baghdad is in contact with the United States on settling outstanding debts of $10 billion the country owes Iran for gas imports.

Iranian gas is crucial for Iraq's electricity generation, but US sanctions on Iranian oil and gas impose restrictions on how Baghdad can pay for its imports.

Iraq cannot directly hand over cash to Iran, but payments must be held in a bank account and be used by Tehran to fund imports of food and medicines.

On July 11, Prime Minister Mohammed Shia Al Sudani announced that Iraq would start paying for Iranian gas with oil, as a way of circumventing the complicated mechanism.

"Work is continuing with the American side concerning unpaid bills, which have fallen to 9.2 billion" euros ($10 billion), Sudani told reporters at a press conference on Tuesday, recalling that Baghdad in the last few months paid Iran around $1.9 billion it owed.

He said a delegation from Iraq's central bank and the Trade Bank of Iraq (TBI) went to Oman on Tuesday "to agree on a formula for transferring these funds to the Sultanate of Oman, in agreement with the US Treasury".

On July 24, United States State Department Spokesman Matthew Miller said some funds could be transferred via Oman, which has often acted as an intermediary between the West and Iran.

"We thought it was important to get this money out of Iraq, because it is a source of leverage that Iran uses against its neighbour," Miller told reporters.

Ravaged by decades of conflict and international sanctions, oil-rich Iraq relies on Iranian gas imports for a third of its energy needs. It is also beset by rampant corruption, and suffers from dilapidated infrastructure.

Miller told the July 24 briefing that Oman would still be subject to "the same restrictions as when the money was held in accounts in Iraq, meaning that the money can only be used for non-sanctionable activities such as humanitarian assistance".

All the transactions also will need to be approved by the US Treasury Department in advance, he added.

TOKYO — Toyota reported on Tuesday a quarterly net profit of $9.1 billion as global production rebounded after major supply disruptions a year ago, but warned of "severe" competition in China.

The Japanese giant, the world's biggest automaker by sales, said net profit in the three months to June surged 78 per cent year-on-year to 1.31 trillion yen ($9.1 billion).

Sales in the firm's first fiscal quarter were 10.55 trillion yen, up 24.2 per cent from a year ago.

Toyota, including its high-end Lexus brand, sold 2.538 million vehicles worldwide, up 8.4 per cent from a year ago.

The figures beat market expectations, sending the company's stocks up almost three per cent after the announcement.

Major automakers are enjoying a robust surge of global demand after the COVID-19 pandemic slowed manufacturing activities. 

Severe shortages of semiconductors had also limited production capacity for a host of products ranging from cars to smartphones.

Toyota said that chip supplies were improving and that it had raised product prices and worked with suppliers to bring production activities back to normal.

Toyota has said its global production in the first six months of the year reached a record 5.6 million units, while sales reached 5.4 million, reinforcing its position as the world's biggest carmaker. 

However, the company is still experiencing delays for deliveries of new vehicles to customers, it added.

Toyota maintained its annual targets, including net profit of 2.58 trillion yen and sales of 38 trillion yen.

"The sales volume increased in all regions due to productivity improvement efforts promoted with suppliers, in addition to an improvement in the supply and demand situation for semiconductors, which continued for a while," the company said in a statement.

The yen's slide and foreign exchange fluctuations added 115 billion yen to Toyota's operating profit.

A better mix of models, improving sales and price revisions in overseas markets also boosted its earnings, Toyota said.

However, soaring materials prices impacted the company to the tune of 230 billion yen. 

But Toyota said it believed "market conditions, such as those for precious metals, have stabilized compared to last year".

While Toyota registered rising earnings in major markets, it suffered falling profits in China, mainly due to forex fluctuations and increased marketing costs to compete with rivals.

"Although the competitive environment is becoming increasingly severe due to the rise of local brands, Toyota and Lexus vehicle sales are steadily increasing," the company said.