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MONDAY, FEBRUARY 2, 2015
BUSINESS
Global deflation is
the main concern
By Hayder Tawfik
O
ver the past few months falling inflation or in some
places an outright deflation has again reared its
head as a problem in the developed economies.
Deflation has gathered momentum in Europe more than
anywhere else in the world. Now it is official that the eurozone registered a -0.6 percent inflation for the month of
January or an outright deflation. The statistic office
blamed the negative inflation on the sharp fall in oil price.
Indeed it is a fact but how and when this can be reversed,
is something they are all worried about it. In most countries, headline Consumer Price Index has been falling significantly since the end of 2011. The emerging economies
are more vulnerable to falling inflation than the developed
economies. These economies need positive rate of inflation to encourage investments and economic growth.
The sharp decline in headline inflation has been
accompanied by a similar decline in core inflation rates,
which are also hovering at worryingly low levels in most
countries. The vast majority of developed countries are
currently reporting a headline inflation rate of below 1
percent per cent, with the trend in virtually all of them
headed downwards. Few countries all in Europe are experiencing outright deflation. Germany, Spain, Greece,
Denmark and Switzerland are all in deflation. It is hard to
remember a period, other than in the months immediately
following the financial crash in 2008, when core and headline inflation has been so low in so many different
economies. Also it did happen in the late 1990’s and early
2000 when collapsing oil prices drove inflation rates temporarily as low as present levels.
Why suddenly inflation rate has started falling significantly?
Falling energy prices have as usual been a factor. Not
only do they have a major direct effect on headline inflation, they also affect the core rate, as the lower costs of
energy inputs feed through the non- energy sectors of the
economy. Apart from falling energy prices there are other
factors are clearly at work. More widely, labor market
recessions have resulted in very low rates of increase in
wages in almost all economies, with no sign of any reversal
yet apart from the US and the UK. But even in those two
countries unemployment has been falling but this has not
put any pressure on wages. The stubbornness of inflation
over the past few years has suddenly collapsed. We can say
that the sharp fall in oil price was the trigger but not the
full reason.
I believe that deflation did not take place much earlier
because of the tendency for wages settlement that got
stuck at positive levels rather than going negative and the
unrealistic inflation target of 2 percent set by major central
banks. Their targets were relied on a massive and rapid
expansion in the monetary base and reducing interest
rates to below zero. Historically speaking this might have
caused inflation to rise but the fall in oil price has ruined
the plan. Nevertheless, outright deflation has been experienced in several economies since 2011, including Japan,
Switzerland, Spain, Portugal, Cyprus, Ireland and Greece. It
would therefore been unwise to rule out such a development in other economies.
The Fed has succeeded at least for the time being in
stopping an outright deflation in the US. The late action by
the European Central bank to stimulate the euro-zone
economies by massive measures of Quantitative Easing
might have come too late to prevent deflation taking hold
in Europe overall rather than just the euro-zone. But the
risk of deflation taking hold seems much lower in the US
than in the euro area, and that is certainly reflected in the
Federal Reserve’s thinking at present. Not only is the US
economy forecast to grow above its trend rate in the coming years, but also inflation expectations seem to be fairly
well anchored at around 2 per cent.
On the opposite side of the Federal Reserve the
European Central Bank, however, has much bigger and serious problems than anything faced by the Federal Reserve.
The economies of the euro-zone are very weak and the
hope of economic recovery is very remote. The biggest
problem facing the euro-zone economies is the highly
indebtedness of some of its countries. Inflation is nose-diving further into negative territory, taking effective real interest rates to levels that are clearly undesired by the European
Central Bank. Furthermore, inflation projections for 2015
and 2016 are being revised downwards, so that the central
bank is no longer expected to hit its objective of inflation
“below but close to 2 per cent” at the end of the forecast
horizon. I am not sure if their forecasts can be achieved. If
this is going to be the case then the euro-zone economies
could become trapped in an environment of zero or negative inflation and therefore, bigger struggle when comes to
servicing those rising real debts. —Dimah Capital
VIVA announces net profits
of KD 40.3 million in 2014
Revenue of KD 239 million reflecting revenue growth of 31%
KUWAIT: VIVA, Kuwait’s fastestgrowing telecom operator, yesterday announced operational
profits of KD 45.1million at the
end of the 2014, and net profits
of KD 40.3 million, a 66 percent
increase compared to 2013.
Adel Al Roumi, Chairman of
the Board, said: “2014 was a major
milestone for the company after
it was successfully listed on the
Kuwait Stock Exchange, where
investors trust in the company
was reflected on the share price,
which resulted in a return higher
than 600 percent at the inception
of the company. Post listing, the
company continued to build itself
and with God’s grace, fulfilled its
promise to its stakeholders.”
“Our strong performance in
2014 reflects our consistent hard
work and dedication in an exceptionally competitive market.
During the year we delivered a
solid performance with revenues
of KD 239 million, which reflects
strong revenue growth of 31 percent, when compared to the year
before. This has resulted in a net
profit of KD 40.3 million, (earnings per share of 81 fils) in comparison to net profit of KD 24.2
million in 2013, earnings per
share. These results illustrate our
continued ascending direction,
which enables us to achieve positive shareholder equity at 421
percent.”
“These excellent results represent a great leap in the company’s development, and reflect the
Adel Al-Roumi
many other record breaking
achievements VIVA consistently
delivered over course of the year,”
concluded Al-Roumi.
Eng Salman Bin Abdul Aziz AlBadran, VIVA’s Chief Executive
Officer said: “VIVA was able to
gain 33 percent of the market
share as the second largest operator in Kuwait in 2014, with a customer base of 2.4 million, and
network coverage of more than
99 percent of Kuwait’s residential
areas and other geographically
equipped areas. As we continued
to invest in our infrastructure and
new technologies that differentiate our company from the competition, VIVA was able to achieve
growth in operating income
before interest, tax, depreciation
and amortization (EBITDA), by 72
percent in 2014.”
“In response to the increase in
our customer base, we also
expanded our commercial presence across Kuwait to 53 outlets
by the end of 2014, to be closer
to our customers and to meet the
growing demand for our products and services. Our success
and achievements were also recognized by our industry peers in
2014 as we won several awards
for excellence, including the ‘Best
4G Package’ award at the 2nd
Annual Teknotel Awards, the ‘Best
Mobile Operator’ Award from
Service Hero, the ‘Editor’s Choice
Award’ from Network World
Middle East, the ‘Best Speech
Analytics Implementation’ from
INSIGHTS - Middle East Call
Centre Awards 2014, and last but
not least, the ‘Best Middle Eastern
Operator’ at the 2014 Telecom
Review Summit Awards.”
“A consistently important
Eng Salman Bin
Abdul Aziz Al-Badran
aspect is investing in our human
capital, and our commitment to
the government’s Kuwaitization
program remains one of the main
pillars of our strategy. As a result
of this, 66 percent of our work-
KAMCO wins ‘Kuwait Asset
Manager of the Year’ Award
KUWAIT: KAMCO, a leading investment company with one of the largest
AUMs in the region, announced today
that it has won the prestigious Kuwait
Asset Manager of the Year Award from
MENA Fund Manager Magazine
(MENA FM), specialized in asset management in the MENA region.
KAMCO’s success was recognized
at the MENA FM award ceremony held
in Dubai, for its strong performance in
the asset management sector in addition to its large AUM in the region.
KAMCO’s
MENA
Asset
Management team, Talal Al-Nafisi,
Vice President and Ljubomir
Krispinovic, Assistant Vice President,
accepted the award on behalf of the
Company.
KAMCO CEO Faisal Sarkhou said,
“The growth of KAMCO’s AUM by 24%
played a big role in winning this
award reaching around $12.1 billion
as at the end of Q3 2014 $10 billion at
the end of Q3 2013. KAMCO managed
to remain unwavered during challenging times due to its strategic
approach and distinct investment performance levels.”
Salah Al-Wuhaib, KAMCO’s MENA
Asset Management’s Senior Vice
President also said, “ This award
reflects KAMCO’s robust position in
the local and regional asset management markets, and one which can be
attributed to the team’s efforts and
expertise. The award will serve as a
motivation to continue offering optimal services to our investors and
clients.”
Al-Wuhaib added, “Despite geopolitical circumstances and the drop in
force is now Kuwaiti, which is
comparatively high when compared to other major companies
in the private sector in Kuwait. In
addition to our commercial operations, we have a long-standing
commitment to supporting the
local community. We are consistently involved in the development of many areas in Kuwait’s
society, including social, health,
sports and education.”
Al-Badran concluded: “I would
like to express my appreciation to
the whole VIVA family, including
all our employees, our business
partners, customers and shareholders, to whom we owe our
success.”
Abdulaziz Abdullah Al-Qatie,
Chief Financial Officer said: “VIVA’s
performance has exceeded all
expectations in terms of attracting more customers and achieving revenues, which enhanced
the financial performance of the
company. This reflected positively
on the record-breaking growth of
VIVA’s revenues and profits. VIVA’s
net profits growth reached 521
percent in 2013 and 66 percent
during 2014.” He added: “We will
continue the hard work in order
to achieve further growth and
success next year.”
News
i n
b r i e f
Dollar stable against
dinar at 0.294
KUWAIT: The exchange rate of the US dollar against the
Kuwaiti Dinar was stable yesterday at KD 0.294, while
the Euro remained at KD 0.332 compared to Thursday’s
exchange rates, said the daily bulletin of the Central
Bank of Kuwait (CBK). The sterling pound exchange rate
went down to KD 0.444, while the Swiss franc dropped
to KD 0.320, and the Japanese Yen remained
unchanged at KD 0.002.
Jordan’s Arab Bank 2014
net profit up 15%
AMMAN: Jordan’s largest lender, Arab Bank Group, posted
a 15 percent rise in 2014 net profit to $577 million, saying
its diversified portfolio helped it offset the impact of foreign exchange falls. Chairman Sabih Al-Masri said deposits
rose to $35 billion, up by 2 percent from the end of 2013.
“Despite the challenging environment and devaluation of
several major currencies the bank managed to see growth
in loans and deposits,” said Masri. CEO Nemeh Sabbagh
said its diversified model helped the bank succeed in
expanding its operating income. Arab Bank, which has a
$45.6 billion balance sheet spread across 30 countries and
five continents, saw no increase in nonperforming loans
last year, something which had hurt its profitability in
recent years, Masri said.
oil prices, KAMCO continues to hold a
solid position within the asset management sector backed by a skilled
team. He also mentioned that the
position of strength prepares KAMCO
for achieving many more awards in
the future.
KAMCO successfully launched the
KAMCO Real Estate Yield Fund in
March 2014 which focuses on investing in unique low-risk real estate
assets that have attractive returns in
the GCC and MENA regions. KAMCO is
also in the process of promoting the
KAMCO MENA Plus Fixed Income
Fund which aims to offer investors
attractive levels of absolute income
with potential for capital gains over
the medium term, and achieve relatively high returns as compared to
returns of the bank short term interest
by primarily investing in a portfolio of
MENA Conventional bonds and
Islamic Sukuk.
DI approves 60% buy
of Al-Mal Capital
DUBAI: Dubai Investments said yesterday its board had
approved the acquisition of a majority stake in investment
firm Al-Mal Capital. DI will purchase 60 percent of the financial
firm that manages assets and offers investment banking services. Al Mal shut down its brokerage unit in the fallout of the
2008 financial crisis. In January, DI said it was close to two
acquisitions, worth a combined value of 400 million dirhams
($109 million). This included a financial and a real estate firm.
The board proposed a higher dividend for 2014 - 12 percent
cash and 6 percent bonus shares. This compares with a 7 percent cash dividend and 7 percent bonus shares in the year
earlier period.
EXCHANGE RATES
Al-Muzaini Exchange Co.
Japanese Yen
Indian Rupees
Pakistani Rupees
Srilankan Rupees
Nepali Rupees
Singapore Dollar
Hongkong Dollar
Bangladesh Taka
Philippine Peso
Thai Baht
Irani Riyal transfer
Irani Riyal cash
Saudi Riyal
Qatari Riyal
Omani Riyal
Bahraini Dinar
UAE Dirham
ASIAN COUNTRIES
2.519
4.788
2.928
2.218
3.012
219.930
38.159
3.795
6.713
9.068
61.555
121.740
GCC COUNTRIES
78.754
81.297
768.910
785.970
80.588
ARAB COUNTRIES
Egyptian Pound - Cash
39.349
Egyptian Pound - Transfer
39.041
Yemen Riyal/for 1000
1.381
Tunisian Dinar
153.580
Jordanian Dinar
417.270
Lebanese Lira/for 1000
1.985
Syrian Lira
2.109
Morocco Dirham
31.468
EUROPEAN & AMERICAN COUNTRIES
US Dollar Transfer
295.800
Euro
337.210
Sterling Pound
448.370
Canadian dollar
334.420
Turkish lira
120.970
Swiss Franc
325.050
Australian Dollar
232.790
US Dollar Buying
294.600
20 gram
10 gram
5 gram
GOLD
238.100
121.740
61.560
UAE Exchange Centre WLL
COUNTRY
Australian Dollar
Canadian Dollar
Swiss Franc
Euro
US Dollar
Sterling Pound
Japanese Yen
Bangladesh Taka
Indian Rupee
Sri Lankan Rupee
Nepali Rupee
Pakistani Rupee
UAE Dirhams
Bahraini Dinar
Egyptian Pound
Jordanian Dinar
Omani Riyal
Qatari Riyal
Saudi Riyal
SELL DRAFT
219.49
236.45
326.46
337.06
296.00
448.76
2.56
3.797
4.781
2.219
2.982
2.927
80.43
785.62
38.93
420.58
767.63
81.51
78.85
SELL CASH
216.49
237.45
324.46
338.06
299.00
451.76
2.58
4.067
5.081
2.654
3.517
2.790
80.90
787.69
39.53
426.23
774.93
82.06
79.25
Syrian Pound
Nepalese Rupees
Malaysian Ringgit
Chinese Yuan Renminbi
Thai Bhat
Turkish Lira
Bahrain Exchange Company
COUNTRY
Belgian Franc
British Pound
Czech Korune
Danish Krone
Euro
Norwegian Krone
Romanian Leu
Slovakia
Swedish Krona
Swiss Franc
Turkish Lira
Dollarco Exchange Co. Ltd
Rate for Transfer
US Dollar
Canadian Dollar
Sterling Pound
Euro
Swiss Frank
Bahrain Dinar
UAE Dirhams
Qatari Riyals
Saudi Riyals
Jordanian Dinar
Egyptian Pound
Sri Lankan Rupees
Indian Rupees
Pakistani Rupees
Bangladesh Taka
Philippines Pesso
Cyprus pound
Japanese Yen
Selling Rate
295.750
234.575
446.970
335.350
272.710
786.690
80.895
82.060
79.060
417.445
38.889
2.220
4.774
2.925
3.795
6.711
725.940
3.515
2.565
3.980
82.205
47.700
10.005
121.335
Australian Dollar
New Zealand Dollar
America
Canadian Dollar
US Dollars
US Dollars Mint
Bangladesh Taka
Chinese Yuan
Hong Kong Dollar
Indian Rupee
Indonesian Rupiah
Japanese Yen
Kenyan Shilling
Korean Won
Malaysian Ringgit
Nepalese Rupee
Pakistan Rupee
Philippine Peso
SELL CASH
Europe
0.007707
0.440486
0.004078
0.041049
0.329643
0.034240
0.084848
0.008700
0.031865
0.316867
0.121372
SELLDRAFT
0.008707
0.449486
0.016078
0.046049
0.337643
0.039440
0.084848
0.018700
0.036865
0.327067
0.128372
Australasia
0.221853
0.209571
0.233353
0.219071
0.228188
0.291700
0.292200
0.236688
0.296400
0.296400
Asia
0.003499
0.046174
0.036053
0.004466
0.000019
0.002436
0.003280
0.000260
0.078661
0.003024
0.002691
0.006565
0.004099
0.049674
0.038803
0.004867
0.000025
0.002616
0.003280
0.000275
0.084661
0.003194
0.002971
0.006845
Sierra Leone
Singapore Dollar
South African Rand
Sri Lankan Rupee
Taiwan
Thai Baht
0.000065
0.215787
0.019614
0.001880
0.009283
0.008719
0.000071
0.221787
0.028114
0.002460
0.009463
0.009269
Bahraini Dinar
Egyptian Pound
Iranian Riyal
Iraqi Dinar
Jordanian Dinar
Kuwaiti Dinar
Lebanese Pound
Moroccan Dirhams
Nigerian Naira
Omani Riyal
Qatar Riyal
Saudi Riyal
Syrian Pound
Tunisian Dinar
Turkish Lira
UAE Dirhams
Yemeni Riyal
Arab
0.778155
0.036603
0.000082
0.000196
0.413157
1.000000
0.000147
0.022718
0.001206
0.762292
0.080538
0.078243
0.001754
0.149705
0.121372
0.079554
0.001336
0.786155
0.039703
0.000083
0.000256
0.420657
1.000000
0.000247
0.046718
0.001841
0.767972
0.081751
0.078943
0.001974
0.157705
0.128372
0.080703
0.001416
Al Mulla Exchange
Currency
US Dollar
Euro
Pound Sterlng
Canadian Dollar
Indian Rupee
Egyptian Pound
Sri Lankan Rupee
Bangladesh Taka
Philippines Peso
Pakistan Rupee
Bahraini Dinar
UAE Dirham
Saudi Riyal
*Rates are subject to change
Transfer Rate (Per 1000)
294.250
348.000
448.650
247.700
4.738
41.135
2.222
3.770
6.590
2.928
783.450
80.150
78.600