2024-01-08 13:49

CAIRO, Jan 8 (Reuters) - Egypt's inflation rate probably fell for a third straight month in December on lower food prices, but may see an uptick in coming months after recent government price rises and a possible currency devaluation, a Reuters poll showed on Monday. Annual urban consumer inflation is seen edging down to 33.4% in December from 34.6% in November, according to the median forecast of 14 analysts polled. Inflation has eased from a historic high of 38.0% in September, but inflation risks are growing again. "The various price hikes announced last week are likely to drive inflation higher in the January inflation print released in early February," said Carla Slim of Standard Chartered. The government last week raised the price of Cairo metro tickets by up to 20%, internet services by as much as 33% and electricity prices by around 15%. "Another devaluation of the pound seems on the horizon and the recently announced price hikes to numerous services will further add to price pressures," Capital Economics wrote in a note. Many analysts believe Egypt is preparing to devalue its currency sharply in coming weeks as part of a renewed deal with the International Monetary Fund. The currency has been fixed at 30.85 to the dollar since March but trades on the black market at around 52 to the dollar. Inflation may be rekindled even without a formal devaluation due in part to a weakening currency and rapid monetary expansion, Goldman Sachs said in a note. "The risk remains that pass-through from the continuously weakening parallel FX rate could rekindle domestic inflationary pressures in the coming months," Goldman Sachs wrote. A median of six of the analysts surveyed expected core inflation, which excludes fuel and some volatile food items, to slow to 34.05% in December, from 35.9% in November. The state statistics agency CAPMAS and the central bank are scheduled to release December inflation data on Wednesday. https://www.reuters.com/world/africa/egypt-inflation-expected-slow-december-2024-01-08/

2024-01-08 12:10

LONDON, Jan 8 (Reuters) - The pound softened slightly on Monday but remained close to its strongest in three weeks against the euro, a level touched the week before on expectations the European Central Bank will cut rates before the Bank of England. Those expectations, which depend on the British economy holding up better than the euro zone's, will be tested this week by remarks on Wednesday by Bank of England governor Andrew Bailey before Parliament and monthly GDP data due Friday. The pound dipped 0.18% against the dollar to $1.2696, slightly nearer the top than the bottom of its recent range. The euro was at 86.15 pence, up 0.17% on the day and just above from the 85.995 pence hit Friday, the pound's strongest since mid December. "As you see economies in the euro zone move to something synonymous with an economic hard landing, you're seeing the opposite in the UK where the data is painting a more optimistic picture, and we think that's got room to run," said Simon Harvey, head of FX analysis at Monex Europe. An economic hard landing refers to a more severe recession than a soft landing. "That growth outperformance and the idea that the Bank of England will keep higher rates relatively longer than other central banks, in the short term is very positive for sterling." Data last week showed net borrowing by British consumers was the highest in nearly seven years in November - when retail sales leapt - and lenders approved the most mortgages since June. The final S&P Global/CIPS UK Services Purchasing Managers' Index also was revised higher last week to show the sector grew more strongly in December than had been thought. Current market pricing shows reflects a 75% chance of a 25 basis point BoE rate cut in May, and they are fully pricing one such cut by June. In contrast markets have fully priced a 25 bp ECB rate cut by April. https://www.reuters.com/markets/currencies/sterling-rolls-off-three-week-top-euro-2024-01-08/

2024-01-08 11:42

DUBAI, Jan 4 (Reuters) - Scores of Saudi Arabian companies said their earnings could be dampened this year as production costs will increase after state energy group Saudi Aramco (2222.SE) told them it would sharply raise feedstock and fuel prices. Companies including Nama Chemicals (2210.SE) and Saudi Ceramic (2040.SE) said in regulatory filings that they were notified by the energy giant on Wednesday that as of Jan. 1 retail diesel price for 2024 would rise by 53% to 1.15 riyals ($0.3067) per litre, its third increase since 2016. While it remains low compared U.S. prices of $3.979 a gallon, or $1.051 a litre, as reported by the American Automobile Association, the hike still marks a substantial cost increase. Qassim Cement (3040.SE), Saudi Aramco Base Oil Co. (2223.SE) and Rabigh Refining and Petrochemical (2380.SE) were also among companies that warned of the impact of the price increases in regulatory filings late on Wednesday and Thursday. Natural gas and other fuel prices will also rise but the companies did specify how much. The companies said they could start feeling the impact in the first quarter and were looking for ways to improve efficiencies to offset the rising costs. Saudi Aramco did not immediately respond to a request for comment when contacted by Reuters on Thursday. Saudi Arabia's Tadawul stock index fell 1.6% in early trading on Thursday, weighed down by petrochemical and cement stocks. The price rises are part of domestic fuel price reforms initiated by Saudi Arabia's government. The reforms began in 2016 in response to lower oil prices at the time, boosting gasoline, diesel and electricity prices the following year, as the kingdom sought to gradually eliminate energy subsidies. "While the market is taking the news negatively, investors were aware of a potential increase given how low prices were," said Yousef Husseini, director at EFG Hermes' equity research division. "I think most investors as well as producers viewed it as inevitable but there was no clarity at how large the increases could be nor the timing," Husseini said. Middle East Company for Manufacturing and Producing Paper on Thursday (1202.SE) said it expected its total annual sales costs to rise by about 3% due to the fuel price hike. Saudi Industrial Investment Group also spoke of higher production costs for its subsidiaries, but did not specify the impact. Rising costs associated with the development of the kingdom's Jafurah gas field, may have led Aramco to take the decision to hike prices now, said Husseini, who covers Aramco and Saudi Arabia's petrochemical sector. Jafurah is the kingdom's biggest unconventional non-oil associated gas field, which in 2020 was estimated to require investments of $110 billion. It is potentially the biggest shale gas development outside of the United States. "It is a massive field that will likely have higher production costs than the associated fields, so makes sense to push through an increase with the start-up of operations from this field,' Husseini added. ($1 = 3.7500 riyals) https://www.reuters.com/markets/commodities/saudi-arabian-companies-warn-aramco-fuel-price-hike-may-curb-earnings-2024-01-04/

2024-01-08 11:39

Jan 8 (Reuters) - A raft of investment managers on Monday disclosed the fees they plan to charge for their proposed spot bitcoin exchange-traded funds (ETF), in another step toward approval this week by the U.S. securities regulator. BlackRock (BLK.N), VanEck, Ark Investments/21Shares and Bitwise, among others, said in filings with the Securities and Exchange Commission (SEC) that they expect to significantly undercut the average market rate for U.S. ETFs as the battle for market share heats up ahead of an SEC approval deadline on Wednesday. Bitwise came in the lowest at 0.24%, compared with the 0.54% average for U.S. ETF products, according to Morningstar, followed by VanEck at 0.25%. Ark and 21Shares lowered their planned fee to 0.25% from 0.80%, while BlackRock said it would charge 0.30%. Fees are typically among the final details nailed down before an ETF launch. Market participants anticipate the SEC will approve the spot bitcoin ETFs this week in a watershed for the industry, which has been trying for a decade to bring the product to market. "This is unprecedented," said Todd Rosenbluth, head of research at VettaFi, a data analytics firm. "Having a real race right out of the gate in that context is going to be ... dramatic and exciting." The SEC has previously rejected all spot bitcoin ETFs, citing investor protection concerns. Hopes it would finally approve the product surged last year after a federal appeals court ruled that the agency was wrong to reject Grayscale's application to convert its existing Bitcoin Trust (GBTC), which charges a 2% fee, into a spot bitcoin ETF. The company said on Monday it would charge 1.5% for the proposed ETF, by far the highest of the fees so far disclosed. Grayscale CEO Michael Sonnenshein said the company had been in frequent contact with the SEC in recent months about the product. "It's been very encouraging to work together to pave the way for these products to come to market," he told Reuters in an interview. The race to launch a spot bitcoin ETF has pitted crypto companies such as Grayscale Investments against traditional finance heavyweights including BlackRock and Fidelity. Bryan Armour, an ETF analyst at Morningstar, said fees are one of the most important differentiators for a buy and hold investor. "There's no reason to pay more for the same exposure," he said. For short-term speculators, though, liquidity will be more important than fees, said James Angel, associate professor of finance at Georgetown University's business school. It's unclear how much money spot bitcoin ETFs could reel in, with a wide range of estimates from market players, ranging from $3 billion on its first day to $55 billion over five years. In a note on Monday, Standard Chartered said it anticipated inflows of $50 billion to $100 billion in 2024 alone. Hopes the SEC will approve a bitcoin ETF has helped shore up confidence in the crypto industry, which was rattled by the FTX meltdown and other crypto collapses last year. A spot bitcoin ETF would give investors exposure to bitcoin without directly holding it, drawing potentially billions more dollars into the world's largest cryptocurrency. Bitcoin was last up 2.01% at $44,828. Some financial regulatory experts, including Washington advocacy group Better Markets, have said the crypto market is rampant with fraud and that approving the product would be a "historic mistake." In a social media post on Monday, SEC Chair Gary Gensler warned that crypto investments "can be exceptionally risky & are often volatile," and noted that a number of crypto platforms and crypto assets have become insolvent. https://www.reuters.com/technology/blackrock-sets-030-fee-proposed-spot-bitcoin-etf-2024-01-08/

2024-01-08 11:38

DUESSELDORF, Jan 8 (Reuters) - Thyssenkrupp's (TKAG.DE) CEO has told employees that it must redouble efforts to regain investor trust in order to protect jobs and investment as it moves ahead with a restructuring. Miguel Lopez made the comments in an internal message, highlighting the German conglomerate's difficulties in reviving its share price, which has lost around 5% since he took over as CEO in June and is down around 10% over the past two months. Thyssenkrupp last year successfully listed its hydrogen business Nucera (NCH2.DE), but delayed efforts to divest its steel and marine divisions have been weighing on its shares. "We need to get stock exchanges and financial markets more enthusiastic about us again. Only then can we invest more and keep jobs secure in the long term," Lopez said. Lopez said in the memo, which was seen by Reuters, that he would therefore meet investors in the U.S. this week, without giving further details. Thyssenkrupp's calendar lists the Commerzbank und ODDO BHF German Investment Seminar in New York for the week of Jan. 8. https://www.reuters.com/markets/commodities/thyssenkrupp-ceo-tells-staff-it-must-regain-investor-confidence-2024-01-08/

2024-01-08 11:34

AMSTERDAM, Jan 8 (Reuters) - The Dutch government said on Monday it would turn on the "pilot light" - meaning minimal production - at two stations in the Groningen gas field due to impending cold temperatures in the Netherlands. The government said in June it would end production at Groningen by last October after winding down output gradually over years following earthquakes it triggered. However, the government said in a letter to parliament it was exercising an option left open to resume minimal production - which it refers to as a "pilot light" - in the event of a deep cold snap. While the expected temperatures are not enough cold enough to trigger actual production, the move is a preparatory step needed to recommence production in case of an emergency. Temperatures are expected to fall to below -6.5 Celsius on Jan. 9, according to forecasts by the Royal Netherlands Meteorological Institute. On current forecasts the "pilot light" measure will not be escalated and will be reversed in about two weeks, the Economic Affairs Ministry said. Dutch gas storage, which is large relative to the country's size and include commercial facilities that can be drawn on by surrounding countries, are currently around 80% full. That is slightly less than the European average, but more than usual for this time of year. https://www.reuters.com/business/energy/dutch-government-turn-pilot-light-output-groningen-gas-field-2024-01-08/