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Editorial

History of India’s Volatile Oil Prices and Taxes

Petrol and diesel prices have crossed Rs 100/litre across most cities in India. There are many reasons behind it like the petrol supply crunch and the OPEC+, UAE, and Saudi dispute. Another factor that has been eating into pockets of Indian citizens that goes unnoticed is how the government taxes oil. As an estimate, for every Rs 100 worth of petrol you buy, you are paying close to Rs 60 to central and state governments as tax. The figure keeps varying with time. Indians pay some of the highest taxes in the world on fuel. 

In this piece, we decode the history of petrol prices in India, how it stands in the world forum, and how the government acts on it.  

History Of Oil In India

India first struck oil in Assam in 1866. Oil production began in 1889 and the Assam Oil Company was set up in 1899 to oversee its production. As a British Colony, the oil discovered in India did not benefit our country directly, and the output was used to replenish British Troops in World War I and World War II. 

In 1928, the Asiatic Petroleum Company (a joint venture between Shell and Royal Dutch) allied with Burmah Oil Company. The joint venture was called Burmah-Shell Oil Storage and Distributing Company of India Limited. In 1976, Burmah Shell was taken over and nationalized by the Government Of India. It is now known as Bharat Petroleum Company Limited or BPCL.  

After 1947, India moved to a communist regime also known as License Raj. Just like any other country, India needed a big oil industry to be a superpower. Burmah Shell (now BPCL) and Oil India, two of the largest oil companies in the country, were still a joint venture with the British-owned Burmah Oil Company. In 1959, an act was passed which gave the state-owned Oil and Natural Gas Company (ONGC) the power to explore oil and develop resources in the field. The company struck gold when it took over Mumbai High, India’s first offshore oil field discovered in 1974. 

Post-1991, after the collapse of the USSR, the Indian economy was liberalized. This meant that oil became a rather freely traded commodity and could be impacted by global power and prices. Yet, the Government continued to regulate the prices of petrol and diesel till 2010.

Deregulation, Taxes, And More

Oil prices weren’t always so volatile. Till 2010, the Government would decide the baseline price of oil in India keeping room for oil marketing companies to earn profit. In 2010, then-PM Manmohan Singh decided to deregulate the price of petrol. In 2014, PM Narendra Modi decided to deregulate diesel. This meant that the fuel prices in India would change every 15 days in line with global crude oil prices. In 2017, the Government decided to change the fuel prices every day in line with global prices. 

In May 2020, the oil future prices became negative. Shouldn’t this have made oil prices in India a lot cheaper than they actually were? The central government took advantage of low oil prices and decided to hike excise duty on petrol and diesel. The Government saw the slump in oil prices as an advantage to add cash to the treasury. Essentially, petrol and diesel are cash cows for the government.

In India, petrol prices have consistently risen. Speaking with an estimate, petrol cost Rs 50/litre in 2010 in India and has now doubled up and crossed Rs 100/litre in 2020-21. On the other hand, fuel prices have been extremely volatile, sometimes high, sometimes low. There is no fixed trend in the recent decade 

So why have fuel prices in India consistently risen? Whenever oil prices decrease, the Government increases the excise duty. Conversely, whenever the oil prices increase, the Government decreases the excise duty, but only a little. The state governments tax petrol separately. Apart from global fuel prices, the answer to high fuel prices is bad taxation and policy regarding oil prices by the Government. 

So even if the prices go down, one continues to pay the same or even a higher price for petrol. This makes us ask, are fuel prices really deregulated in that case? 

Where Are Oil Prices Headed?

Oil prices hit all-time highs after UAE and Saudi had a disagreement at an OPEC+ meeting regarding production quotas. You can check out the article over here. To know how the Organization of the Petroleum Exporting Countries (OPEC) influences fuel prices, click here.

Coming back, the disagreement between UAE and Saudi led to inflated oil prices globally. The two came to an agreement and settled their vows. Oil prices started declining globally after that, but not in India. Minister of State for Finance Pankaj Chaudhary has said that the government is not deciding to cut down the excise duty anytime soon. The revenue generated by taxing petrol and diesel will help the Government conduct vaccination drives and run welfare programs. Long and short of it, one can’t expect a cut in excise duty anytime soon, one could have to watch global oil prices fall in order to see a change in Indian fuel prices. 

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Editorial

Explained: OPEC+ Crisis, UAE-Saudi Clash Over Oil

While India’s petrol and diesel prices have crossed Rs 100/liter in most states, the top oil-producing nations are in the middle of a price war. The war is between OPEC+, UAE, and Saudi Arabia. In case you do not know what OPEC is we highly recommend you go through this piece on marketfeed on What is OPEC and How Does it Control Global Crude Prices?

Nevertheless, let me give you a brief about OPEC. OPEC stands for Organization of the Petroleum Exporting Countries. Established in the 1960s consisting of 13 of the world’s major oil-exporting nations. The purpose of the organization was to control the global supply of oil and its prices, thereby giving a fair price discovery to all member and non-member nations. 

OPEC+ or OPEC Plus was a cartel formed in 2016 by 10 other oil-producing nations excluded from OPEC, these were Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan, and Sudan. OPEC and OPEC Plus were later amalgamated and now work together making OPEC Plus a 23 member organization. 

The organization conducts meetings twice a year to establish specific quotas or targets for each member based on current supply and demand, as well as expectations of future supply and demand. The basic norm is that all member nations have to follow these quotas. Since most of OPEC Plus’ oil production comes from state-run oil companies, it is easy for officials to control output/supply.

The Clash

When the pandemic started, oil consumption went down, demand decreased and therefore oil prices fell. In fact, in the US, WTI oil futures prices went negative to -$37.63 a barrel. To protect these oil prices from falling further OPEC nations decided to cut production since it would reduce supply and prices would eventually rise. The OPEC countries formed a pact to cut oil production till April 2022. The plan worked well so far till the global crude oil price surpassed normalcy. In India, many states have reported petrol prices crossing Rs 100 a litre. The OPEC nations have now decided to meet and mitigate the issue of soaring oil prices. The natural thing to do would be to increase oil production. On 5th July, the member countries met at a video conference, but the meeting was called off after a spat between UAE and Saudi Arabia. 

Problem #1: UAE wants to produce more oil, Saudi disagrees

OPEC Plus allots a baseline quota to each nation. A country needs to keep up with its baseline quota of producing oil. Neither too much, nor too little. UAE has been allotted a baseline of 32 lakh barrels per day. UAE Energy Minister Suhail Al-Mazrouei said that the level is “totally unfair and unsustainable.” The UAE thinks it can produce more than the current baseline, it says that it can produce 38 lakh barrels per day. Obviously, more barrels produced would mean more money coming into the country. 

Energy Minister Al-Mazrouei believes that the country has ‘sacrificed’ a lot in terms of production capacity as compared to other members. Saudi Arabia on the other hand believes that THEY sacrificed more production capacity as compared to other countries. Astonishingly, Saudi is the LARGEST producer of oil amongst the OPEC Plus countries and in the world. 

Problem #2: Saudi says extend agreement date, UAE refutes

OPEC had signed an agreement for cutting oil production that was valid for two years ending April 2022. Saudi Arabia wants the agreement for oil cuts to be ‘extended’ by 6 months till the end of 2022.

Naturally, UAE would not be happy with the extension as they would lose an opportunity to earn some extra income given that they are focussing on increasing oil production.

The 18th OPEC Plus meeting was called off. This is not the first time that there has been a clash amongst OPEC nations. Last year, Saudi and Russia had a disagreement on cutting oil production where Russia refused to cut oil production, unlike other OPEC nations. There have been multiple instances where different countries conflicted on production and price. In most conflicts, Saudi has a role and seems to be the big brother of OPEC member nations.

Saudi and UAE are amidst a political cold war. Saudi had imposed trade restrictions on UAE. Any company operating in Saudi would be forced to set up their regional office in Saudi or face business restrictions. This would mean that companies operating in both countries would have to choose between the two. Saudi Arabia imposed travel restrictions to and from UAE the very next day the OPEC Plus dissension took place. 

How Does This Conflict Impact India?

India’s ex-Petroleum Minister Dharmendra Pradhan had locked horns in the international forum with Saudi Arabia. Pradhan had pressed OPEC to cut down on production curbs in other countries. He had stated the importance of the right petroleum prices for all-around economic development. 

India had filled its ‘strategic oil reserves’ when prices were rock bottom last year. These reserves would then be used to cushion oil prices whenever they soared. Saudi had also nudged India to use these reserves instead of pressing for reducing production curbs. So can India actually use these reserves to control oil prices? The answer is NO. These reserves are way too small to have an impact on oil price control. India is planning to double its strategic reserves in the near future. It is planning to privatize the whole initiative incentivizing private companies that set up strategic oil reserves 

India faces way too many problems right now. Uncertain monsoons, rising inflation, possible US interest rate cuts, and high petrol prices. If petroleum prices are not curbed, India can expect some really high inflation rates. Goods would become expensive and transportation costs would increase. The only option available then would be for the government to cut down on high taxes that it charges on petrol. It would be in the best interest of India for UAE and Saudi Arabia to settle their vows and come to an agreement.

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Saudi – Qatar Normalize Relations – Top 10 Global News

1. Stocks Fluctuate Amid Key Georgia Senate Runoffs

Stocks wavered amid key elections in Georgia that will decide which party controls the U.S. Senate for the next two years, setting the scope of President-elect Joe Biden’s agenda. The S&P 500 swung between gains and losses after posting its worst start to a year since 2016. There’s a perception among several traders that if Democrats prevail in Tuesday’s runoff, Congress will deliver a more generous stimulus package, potentially leading to upward pressure on inflation and interest rates as well as higher taxes to pay for fiscal aid.
The S&P 500 was little changed as of early morning New York time.

The Stoxx Europe 600 Index decreased 0.5%.

The MSCI Asia Pacific Index climbed 0.6%.

2. Saudi, Qatar Borders Reopen Before Gulf Summit

Qatar’s ruler landed in Saudi Arabia on Tuesday to a warm embrace from host Crown Prince Mohammed bin Salman, hours after their nations re-established travel ties and eased a regional dispute. Qatari Emir Sheikh Tamim bin Hamad Al Thani is attending the Gulf Cooperation Council summit for the first time since a 2017 row that cut trade, travel and diplomatic ties with Saudi Arabia, the United Arab Emirates, Bahrain and Egypt. Saudi Arabia reopened its air, land and sea borders with Qatar on Monday, a leap toward easing the crisis that had complicated U.S. efforts to isolate Iran amid heightened tensions.

3. Oil Rises Above $48 With OPEC+ Talks Set to Start Second Day

Oil gained ahead of a resumption of OPEC+ talks that were unexpectedly suspended due to a disagreement over whether to raise output in February. Futures in New York rose above $48 a barrel after dropping the most in two weeks on Monday. Discussions will restart on Tuesday after a majority of members, including Saudi Arabia, opposed Russia’s proposal for another supply hike. The talks are happening against a shaky short-term demand backdrop. England was ordered into a third lockdown until mid-February, Germany is set to extend its curbs and Japan is considering another state of emergency for the Tokyo area. Several Asian refiners won’t be getting into long-term supply contracts for fuel sales this year, a sign the region’s energy consumption recovery is far from certain.

4. China Stock Index Tops 2015’s Peak, Closes at 13-Year High

China’s stock benchmark has ended above its 2015 bubble high, marking a recovery from one of the country’s worst equity crashes. The CSI 300 Index rose 1.9% at the close on Tuesday, surpassing the peak from June 8, 2015. That is its highest since 2008. That advance helped push the value of China’s domestic equities to a record $11 trillion. China’s stock benchmark outpaced MSCI Inc.’s global benchmark by the most in six years in 2020, with savers funnelling cash into thousands of new stock funds after some popular wealth products suffered their first-ever losses. The bullishness was reinforced by a strong currency, as well as data showing China’s economy was rebounding faster than other major economies from the virus pandemic.

5. JPMorgan Says Bitcoin Could Surge to $146,000 in Long Term

Bitcoin has the potential to reach $146,000 in the long term as it competes with gold as an asset class, according to JPMorgan Chase & Co. Bitcoin’s market capitalization of around $575 billion would have to rise by 4.6 times — for a theoretical price of $146,000 — to match the total private sector investment in gold via exchange-traded funds or bars and coins. But that outlook depends on the volatility of Bitcoin converging with that of gold to encourage more institutional investment, a process that will take some time, they said.

6. NYSE Abruptly Reverses Plan to Delist Chinese Companies

The New York Stock Exchange has abruptly reversed plans to delist three major Chinese telecommunications companies after consulting regulators about an investment ban ordered by President Donald Trump. Coming days before the companies were to be delisted — and just over two weeks before Trump is to leave the White House — the U-turn avoids a step that threatened to heighten U.S.-China tensions further. The Big Board gave no reason for its decision in a statement released during Asian hours, saying only that it had consulted “relevant regulatory authorities” about Trump’s executive order, signed in November as part of his administration’s push to check China’s growing economic power.

7. Saudi, UAE Business Conditions Improve, but Employment Falls

Business activity in the Arab world’s two largest economies improved at the end of last year, with Saudi Arabia seeing its strongest expansion in 13 months. After 2020 setbacks caused by the spread of Covid-19 and lower crude prices, non-oil private sector economies in the United Arab Emirates and neighbouring Saudi Arabia still faced job losses as firms adjusted to the challenges of the global pandemic. Purchasing Managers’ Index surveys in December for the two Gulf nations rose above the threshold of 50 that separates growth from contraction. In Saudi Arabia, the gauge rose to the highest since November 2019, driven by an increase in output and new business.

8. Danes Get 20-Year 0% Mortgages

Denmark stands out in a global context as the country to have lived with negative central bank rates longer than any other. Back in 2012, policymakers drove their main rate below zero to defend the krone’s peg to the euro. Since then, Danish homeowners have enjoyed continuous slides in borrowing costs. The once unthinkable notion of borrowing for two decades without paying interest comes as central bankers across the globe shy away from rate hikes. No major western central bank is likely to raise rates this year. As rates have continued to sink, banks in Denmark — home to the world’s biggest mortgage-backed covered-bond market — to offer 20-year loans at 0%.

9. Airlines Start to Scrap U.K. Flights Following New Lockdown

Airlines kicked off 2021 by shrinking their already meagre U.K. schedules, prompted by a new coronavirus lockdown and the prospect of further restrictions on travel abroad. The fast-spreading virus strain that’s driven up U.K. case counts has also dashed airline-industry hopes of relief from 2020’s unrelenting downturn. Prime Minister Boris Johnson late Monday announced a new coronavirus lockdown that will keep most people at home until mid-February when vaccines being rolled out are able to stem the worst infection rates since the start of the outbreak.

10. Merkel Pushes for Strict Curbs With Vaccine Strategy Under Fire

Chancellor Angela Merkel is seeking tighter lockdown restrictions to contain the coronavirus as criticism over Germany’s vaccine rollout sparks feuding in her cabinet. The chancellery is proposing a limit on how far people can travel from their homes in areas with high infection rates. The plan has run into opposition from state leaders, who are joining a video conference with Merkel on Tuesday to decide the next steps in fighting the disease. The political tensions threaten to escalate amid a rising tide of criticism that the government bungled the rollout of a Covid-19 vaccine.

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OPEC+ Clinches Oil Deal with Compromises – Top 10 Global News

1. Futures Rise as Jobs Miss Boosts Stimulus Bets

American equity-index futures gained and Treasury yields rose after a report showing U.S. employment gains slowed in November bolstered expectations for more federal stimulus. S&P 500 futures gained along with those on the Nasdaq 100 and Dow Jones. The dollar headed for its biggest weekly decline in five days. U.S. Labor Department figures showed non-farm payrolls increased by a less-than-forecast 245,000 from the prior month, as the unemployment rate dipped 0.2% to 6.7%. Energy companies led the Stoxx Europe 600 index higher, with U.K. equities outperforming as negotiators edged closer to a Brexit trade agreement. The euro strengthened for the fourth day after data signalled the German economy’s resilience to the coronavirus pandemic.

Futures on the S&P 500 Index increased 0.3% early morning New York time, the highest ever.

The Stoxx Europe 600 Index climbed 0.3%, the highest in a week.

The MSCI All-Country World Index rose 0.2%, the highest on record.

2. OPEC+ Finds Its Way to an Exhausting Compromise on Oil Cuts

After five days of difficult talks that exposed new rifts between core members, OPEC+ agreed to gently ease output cuts next year. The deal appeared to satisfy the oil market and most of the cartel’s members, but strained the group’s unity and set up testing times ahead. After a split emerged between Saudi Arabia and the United Arab Emirates, the cartel couldn’t agree on what had been widely expected before this week: a full three-month delay to the scheduled January output increase. Instead, ministers resolved to add 500,000 barrels a day of production to the market next month, then hold monthly meetings to decide on subsequent moves. The maximum change in any month will be 500,000 barrels a day in either direction.

3. U.S. Hiring Rebound Markedly Slows Amid Virus Surge

The U.S. labour-market rebound markedly slowed in November, indicating the surge in Covid-19 cases is hitting workers and curbing the broader economic recovery. Nonfarm payrolls increased by 245,000 from the prior month, as the unemployment rate dipped 0.2 percentage point to 6.7%, according to a Labor Department report Friday. The labour-force participation rate and employment-population ratio both declined, in negative signs for the economy. The data raise the chances that President-elect Joe Biden will inherit an even weaker labour market next year, with the recovery at risk of stalling during the wait for widespread vaccine distribution. With millions still enduring long-term joblessness, the report may also help push Congress to pass new fiscal aid and could make Federal Reserve officials more inclined to provide new stimulus when they meet Dec. 15-16.

4. Ant, Grab Win Singapore Digital Bank Licenses Along With Sea

Ant Group and a venture led by Grab Holdings won licenses to run digital banks in Singapore, paving the way for the technology giants to expand their financial services in the Southeast Asian hub. Sea Ltd. is also among the four winners announced Friday by the Monetary Authority of Singapore after almost a year of deliberation. A consortium involving China’s Greenland Financial Holdings Group is the other successful candidate. Singapore joins the U.K. and Hong Kong in opening up its banking system to purely digital entrants, as it seeks to inject innovation and competition into a market dominated by traditional lenders. The permits are coveted given the city’s status as a rapidly growing wealth management centre and a gateway to Southeast Asia, where the digital lending market is expected to quadruple in five years.

5. India’s Gold Imports Slump as Festival Fails to Light Up Demand

Gold imports by India tumbled last month as the festival of lights failed to revive demand in the world’s second-biggest consumer. Overseas purchases fell 41% in November from a year earlier to 33.1 tons. Still, imports showed an improvement from the 29 tons in October. Jewellers in India may be staring at one of their worst years for sales in 2020 as the coronavirus pandemic, high prices and a weak economy slam the ability of buyers to purchase gold. Demand during Diwali, the biggest occasion for the country’s more than 90 crore Hindus to purchase jewellery, was only about 70% of last year’s levels. India’s imports in the January to November period are down 63% from a year earlier to 220.2 tons.

6. Glaxo-Backed Vaccine Shows Strong Immune Response in Early Trial

A Covid-19 vaccine project supported by GlaxoSmithKline is headed for advanced trials after showing a strong immune response in early studies. Sichuan Clover Biopharmaceuticals Inc. of China said its shot induced neutralizing antibodies and proved to be safe in a study of 150 adults and elderly volunteers. The vaccine uses adjuvants — agents that boost a vaccine’s response — from both Glaxo and Dynavax Technologies Corp. Advanced-stage trials using Glaxo’s adjuvant are planned to begin this month, while studies using the Dynavax system will start in the first half of 2021, according to a statement Friday. The Clover vaccine showed long-term stability at refrigerator temperature. That would allow it to be used widely, including in developing nations.

7. U.K. Grants Five Passports a Minute to Hongkongers as China Tightens Grip

The U.K. is granting the most special travel documents to Hong Kong residents since the 1997 handover, bolstering predictions of a mass exodus as China tightens its grip over the former British colony. Some 216,398 Hong Kong residents received British National (Overseas) passports during the first 10 months of the year, higher than any annual figure stretching back to 1997. In October alone, the office issued 59,798 Hongkongers with BNOs, or 52% higher than in the same period last year, and the highest monthly figure since the Passport Office began readily compiling them in 2015. That translates to more than five every minute, based on an average eight-hour working day.

8. Europe Vaccination Plans; U.S. Sees Record Cases: Virus Update

European nations are rushing to draw up large-scale coronavirus vaccination programs, with the U.K. hoping to inoculate millions of Britons before the year is out. Sweden expects to get enough doses in the first quarter to immunize a fifth of the population and Norway sees its program starting in early 2021. Spain is aiming at vaccinating up to 20 million people by June. The U.S. posted another day of record Covid-19 infections and deaths, as overburdened hospitals around the nation brace for a surge in cases after Thanksgiving. In Asia, Japan’s Osaka prefecture raised its virus alert to the highest level following a rise in serious cases. South Korea’s number of newly confirmed cases climbed to the highest since early March.

9. BlackRock, Storebrand Pressure Indian Bank Over Coal Mining Loan

Shareholders of India’s largest bank are raising concerns about a proposed loan to Adani Enterprises Ltd. to help fund the opening of the controversial Carmichael coal mine in northern Australia. Officials from New York-based BlackRock Inc. and Norway’s Storebrand ASA have contacted the State Bank of India, which is majority-owned by the Indian government, about the loan. The loan’s value is expected to be as much as 5000 cr rupees ($678 million). The Carmichael mine has been the focus of environmental protestors since it was proposed in 2010, with demonstrations most recently at a Nov. 27 cricket match in Sydney between Australia and India. Adani changed its trading name in Australia to Bravus Mining and Resources last month, possibly to help dampen controversy about the mine, which is located in Galilee Basin in the northeastern Queensland province. The project has become a target of anger from climate-change activists in the country, which saw record temperatures and widespread wildfires this year.

10. Angry India Farmers Are ‘Ready to Die’ in Showdown With Modi

As India’s virus numbers swell and the economy stumbles, Prime Minister Narendra Modi has another crisis to deal with: Tens of thousands of angry farmers vowing to camp outside the capital for months. The farmers — mostly from Punjab, often called India’s bread-basket — want him to repeal three laws passed in September that allow them to sell crops directly to private firms instead of licensed middlemen at state-controlled markets. While Modi has said the laws will help them earn more cash, farmers fear those companies won’t give them minimum prices set by the government.

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U.K. approves Pfizer Vaccine – Top 10 Global News

1. U.S. Futures Dip; Pound Slides on Brexit Angst

Futures on U.S. equity indexes slipped a day after closing at record highs and European shares edged lower as investors struggled to find fresh catalysts to add more risk. Pro-cyclical sectors including auto and travel shares dragged the Stoxx Europe 600 Index modestly lower. Britain’s pound slumped after the European Union’s chief Brexit negotiator Michel Barnier reportedly told envoys the outcome of any deal is still too close to call. Salesforce.com fell more than 4% in pre-market trading after agreeing to buy software maker Slack. for $27.7 billion. Pfizer climbed after its Covid-19 shot was cleared for deployment in the U.K. as soon as next week.

Futures on the S&P 500 Index decreased 0.2% as of early morning New York time.

Nasdaq 100 Index futures declined 0.2%.

The Stoxx Europe 600 Index fell 0.2%.

The MSCI Asia Pacific Index increased 0.2%.

2. The U.K. Approves Pfizer’s Vaccine, Roll-out Next Week

Now that Britain has become the first western country to approve a Covid-19 shot, the spotlight shifts to the high-stakes rollout. Vaccinating the country’s roughly 6.7 crore people won’t happen overnight. The U.K. has ordered enough doses of the two-shot Pfizer-BioNTech vaccine to immunize 2 crore people. The government plans to prioritize as it begins to deploy the vaccine, starting with residents and staff in care homes, then moving to people over 80 years old and health-care workers. Britain will immunize people throughout the wider population next, based on age and risk. The shot is expected to be available from next week.

3. Barnier Voices Caution as Brexit Negotiators Race to a Deal

British and European Union officials are racing to strike a post-Brexit trade deal before the start of next week, with EU chief negotiator Michel Barnier telling envoys the outcome is still too close to call. While intensive, round-the-clock talks in London are making progress, genuine disagreement remains on the two biggest obstacles, meaning it’s impossible to predict an outcome with any certainty. A third issue — how the deal would be enforced — can only be overcome at the end. However, two officials said the general mood on both sides is one of optimism. 

4. OPEC+ Works Silently to Repair Crack at Oil Coalition’s Core

After failed talks exposed a dangerous fissure at the alliance’s core, OPEC and its partners are quietly working to repair the damage. Key players in the 23-nation alliance are making diplomatic efforts to resolve a dispute — centred around Saudi Arabia and the United Arab Emirates — over how much crude to pump in the new year. On Monday, differences between the Saudis and the UAE prevented the cartel from reaching a clear agreement on whether to delay a planned production increase. Traditionally stalwart allies, a fissure has emerged between the two Persian Gulf exporters as Abu Dhabi pursues a more independent oil policy.

5. Global Bank Job Cuts Reach Five-Year High

Banks around the world have announced the most job cuts in five years as the pandemic adds further pressure to business models upended by the digital revolution. ABN Amro Bank and Banco de Sabadell disclosed plans to eliminate as many 4,600 positions between them this week, taking the total to 85,540 globally, according to data compiled by Bloomberg. That’s the most since 2015, when deep overhauls of several major lenders called for a combined 91,448 positions to be axed. These moves are a reminder that Europe is at the epicenter of the industry’s job cuts, with its lenders facing record-low and even negative interest rates.

6. Grab, Gojek Close In on Terms for Merger

Grab and Gojek have made substantial progress in working out a deal to combine their businesses in what would be the biggest internet merger in Southeast Asia. The region’s two most valuable startups have narrowed their differences of opinion, though some parts of the agreement still need to be negotiated. The final details are being worked out among the most senior leaders of each company with the participation of SoftBank Group’s Masayoshi Son, a major Grab investor.

7. SoftBank Is Winding Down Options Bets After Investor Fallout

SoftBank Group is quietly winding down its controversial derivatives strategy after a sustained backlash from investors. The Japanese conglomerate is letting its options expire, instead of maintaining its positions. About 90% of the contracts will close out by the end of December because they are short-term. SoftBank will hold on to its underlying portfolio of big tech stocks, which included Amazon and Facebook. SoftBank shareholders balked after SoftBank’s foray into derivatives trading was first disclosed in September, cutting the company’s market value by as much as $17 billion. Investors have questioned the rationale of a company known for its years-long bets on technology startups dabbling in public securities, especially derivatives. They have also criticized founder Masayoshi Son for taking a personal stake in the trading.

8. HSBC’s Loyal Hong Kong Investors Find Redemption in 51% Rally

Europe’s biggest lender is up 51% in Hong Kong since touching its 25-year low in September and is the best-performing stock on the Hang Seng Index this quarter. Just two months ago, investors were fretting over how mounting regulatory and economic pressures would squeeze the firm’s key businesses in Asia. But a lot has changed since then. British regulators have signalled they would consider softening their stance on a dividend ban imposed on banks in March at the height of the pandemic. Also, HSBC recorded better-than-expected third-quarter results on cost savings while investors have piled into financial stocks as part of a sector rotation.

9. After Aramco, Plenty More IPOs rain in Saudi Arabia

One year on from oil giant Saudi Aramco’s record-busting initial public offering in Riyadh, the exchange has continued to enjoy a steady stream of listings. Deals are already lining up for 2021. For years, the twists and turns leading up to Aramco’s listing dominated Saudi Arabia’s IPO market. The decision to float on Riyadh’s Tadawul exchange and to largely forgo international investors sparked concerns that the $29 billion deal would soak up all the available local liquidity for years. That fear has turned out to be unfounded. This year, four companies have gone public on the Saudi exchange, raising a combined $1.5 billion. That’s more than the $1.3 billion worth of IPOs in Germany, though far behind the Aramco year of 2019.

10. Australia’s economy bounced back in the third quarter

Australia’s economy rebounded sharply in the third quarter from a coronavirus-induced recession as consumer spending surged, though the country’s top central banker signalled monetary policy will stay supportive of growth for a while. The latest data show that the 2-trillion Australian dollar ($1.5 trillion) economy expanded at a faster-than-expected rate of 3.3% in the September quarter, following a 7% contraction in June, as the country largely brought COVID-19 under control. The rebound was led by household spending, which rose 7.9%, driven by aggressive fiscal and monetary stimulus programmes since March.

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London to lose Finance Capital Crown – Top 10 Global News

1. Stocks Slip After Record Rally; Oil Retreats

U.S. futures slipped and European stocks steadied on the last day of the month after a record-breaking rally in global equity markets. Oil extended a retreat on signs of discord among OPEC+ ministers. The rotation that sent stocks to all-time highs showed signs of a slight reversal, with technology companies holding firm, while small-caps, banks and energy producers were broadly lower. The MSCI Asia Pacific Index sank 1.6%, the biggest loss in a month. Investors have become cautious after big gains in the last few weeks that were driven by the vaccine news.

Futures on the S&P 500 Index declined 0.5% as of early morning London time.

The Stoxx Europe 600 Index was little changed.

The MSCI Asia Pacific Index declined 1.6%.

The MSCI Emerging Market Index fell 1.3%.

2. OPEC+ Heads Into Crucial Talks Still Split Over Output Plans

OPEC and its allies headed into a two-day meeting with ministers still split on plans to delay a production boost, after failing to reach consensus in talks on Sunday night. The 23-nation coalition led by Saudi Arabia and Russia is debating whether to maintain the output cuts at current levels, deferring the increase scheduled for January. Some members are concerned that global markets remain too fragile to absorb additional barrels, while others are keen to sell more crude.

3. London in Deep Trouble as Brexit Finance Deal Unlikely

The golden age of the City of London began with a big bang. It’s ending with a whimper. Fears that the finance powerhouse that emerged from Margaret Thatcher’s 1986 deregulation — known as the Big Bang – will gradually be dismantled have deepened with a recent flurry of announcements about some business heading to the European Union as Britain enters the last month of the Brexit transition period without a financial-services deal in sight. The latest shift comes Monday at 8 a.m. when London Stock Exchange’s stock trading platform Turquoise Europe goes live in Amsterdam. It joins other trading venues like Cboe Europe and Aquis Exchange setting up shop on the continent as part of their no-deal Brexit plans.

4. China Says Its Grain Imports Not to Blame for Global Price Surge

A Chinese government official rebuffed the idea that the nation’s massive corn and wheat imports are to blame for the jump in international prices, saying the coronavirus pandemic and uncertainty in global food trade drove “panic” in the industry. Grain prices have risen because of export restrictions by major suppliers and the stockpiling of food reserves by some countries. China’s grain imports only account for a 10th of global trade, with the majority being soybeans, and have a limited impact on international food prices. Crop prices have been on a rise as China’s buying gained pace in recent months amid tighter-than-expected world grain and oilseed supplies. The second-biggest economy surpassed for the first time ever an annual corn-import quota set by the World Trade Organization as purchases in October hit a record high.

5. Iran Pledges Payback at ‘Right’ Time Over Scientist Killing

President Hassan Rouhani said Iran will respond to the killing of its top nuclear scientist “when the time is right,” and accused Israel of an “act of terrorism” in a significant escalation of tensions in the Persian Gulf. Mohsen Fakhrizadeh, a senior nuclear scientist working for the Ministry of Defense, was assassinated Friday in a shootout and car bombing on the outskirts of Tehran. Promising “severe revenge,” officials also pointed the finger at the U.S., potentially complicating President-elect Joe Biden’s bid to revive the Iranian nuclear deal.

6. U.K. Mortgage Approvals Unexpectedly Jump to 13-Year High

U.K. mortgage approvals jumped to the highest since before the financial crisis in October as buyers rushed to take advantage of tax incentives. Lenders approved 97,532 loans in October, the most since 2007, the Bank of England said Monday. Net consumer credit fell by 590 million pounds (INR 5800 cr) as households paid down debt, mostly on credit cards. The housing market is defying a broader economic downturn because of pent-up demand from the Covid lockdowns and a temporary tax break on home purchases. The BOE expects the unemployment rate to climb higher than 7% next year from the current 4.8%. Economic output won’t recover to pre-pandemic levels until 2022, the central bank’s latest forecasts show.

7. ABN Amro to Cut About 2,800 Jobs as Investment Bank Shrinks

ABN Amro Bank plans to cut about 2,800 jobs over four years as the Dutch lender retreats from large parts of its investment bank and digitization allows it to operate with a smaller staff. The company plans to reduce costs by about $840 million (INR 6200 cr) by 2024. The workforce will shrink by about 15%, with most reductions to start in 2022, Chief Executive Officer Robert Swaak said in an investor update on Monday. In August, Swaak announced plans to cut a third of the lender’s business with corporate clients, dropping company finance outside of Europe and exiting trade and commodity financing altogether. 

8. Cyber Monday Projected to Hit Pandemic-Fueled $12.7 Billion in Sales

Online shoppers in the U.S. are expected to drop a record-busting $12.7 billion (INR 94,000 cr)  on Cyber Monday — the busiest e-commerce day of the year — presenting a valuable opportunity for retailers whose websites, customer service departments and delivery operations can withstand the period of crushing traffic. Amazon.com, Walmart, Target, Best Buy and others have been preparing for the 2020 holiday season for months. This week will be the ultimate test for their new investments in ramping up delivery capacity and adding features like parking lot pickup for digital orders. The Covid-19 surge kept crowd-averse shoppers away from physical malls on Black Friday, reinforcing predictions that online shopping will soar this year. Adobe Analytics predicts that Cyber Monday spending for 2020 will climb by 35% – more than double the growth rate in the years prior to the pandemic. That also means that any service interruptions on Cyber Monday — slow websites, payment processing problems, shopping carts that vanish before checkout – could be painful for companies.

9. China Oil Giant CNOOC Targeted by U.S. After Years of South China Sea Tension

China’s third-biggest oil company faces a U.S. blacklist, which could spur major outflows from its Hong Kong-listed unit, after years of involvement in offshore drilling in disputed South China Sea waters. China National Offshore Oil Corp., the nation’s main deepwater explorer, is among four companies to be added to a list of firms owned or controlled by the Chinese military. The move comes as the Trump administration plans several new hard-line moves against Beijing in the final weeks of its term. CNOOC hasn’t yet received any official notice or decision from any relevant U.S. government agency, the firm’s listed unit said in an exchange filing in Hong Kong.

10. China’s factories crank up output, but jobs, debt remain concerns

China’s factory activity expanded at the fastest pace in more than three years in November, while growth in the services sector also hit a multi-year high, as the country’s economic recovery from the coronavirus pandemic stepped up. Upbeat data released on Monday suggest the world’s second-largest economy is on track to become the first to completely shake off the drag from widespread industry shutdowns, with recent production data showing manufacturing now at pre-pandemic levels. But companies are still not expanding their payrolls, the figures show, and some analysts point to rising debt levels among state-owned firms as another possible headwind for the economy.

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U.S. Pitches China’s Belt & Road Alternative – Top 10 Global News

1. Record Equity Rally Eases while Treasuries Advance

The global stocks rally eased on Friday as investors assess valuations following a record rise in equities this month and the enduring pandemic in parts of Europe and the U.S. Oil retreated amid rising tensions among OPEC+ members. Futures on the S&P 500 edged higher amid lower-than-average market volumes with reduced trading hours for U.S. stocks and bonds. Treasuries advanced and the dollar headed for a second weekly decline.

S&P 500 futures climbed 0.3% by early morning New York time.

The Stoxx Europe 600 index was little changed.

The MSCI Asia Pacific Index rose 0.2%.

The MSCI Emerging Markets Index was little changed.

2. U.S., Taiwan to Push an Alternative to China’s Belt and Road

An informal U.S.-led alliance to provide an alternative to China’s Belt and Road Initiative will provide greater transparency to countries seeking funding to develop their infrastructure. Taiwan and the U.S. are moving ahead with a plan to finance infrastructure and energy projects in Asia and Latin America, using capital raised from the private sector to ensure greater transparency. The plan, initiated with the signing of an agreement between the U.S. and Taiwan in September, aims to raise funds through bonds aimed at Taiwanese banks, insurers and other private capital. It is an opportunity for both Washington and Taipei to counter China’s global infrastructure spree amid concerns about Beijing’s commitment to international projects and worsening finances among developing countries.

3. OPEC+ Calls Last-Minute Talks Ahead of Decision on Oil Cuts

Saudi Arabia and Russia summoned the OPEC+ alliance for last-minute talks on Saturday, just before it’s due to decide whether to delay January’s output increase. A clear majority of OPEC+ watchers expect the group to maintain their supply curbs at current levels for a few months longer due to lingering uncertainty about the strength of demand. However, the decision is by no means certain amid public complaints from Iraq and Nigeria, and private discord with the United Arab Emirates. The 23-nation network known as OPEC+ made vast production cuts during the depths of the pandemic to offset a historic collapse in fuel demand. The alliance had planned to ease some of the curbs at the start of 2021 in anticipation of a global economic recovery

4. India Enters Recession as Virus Pummels No. 3 Asian Economy

India entered an unprecedented recession with the economy contracting in the three months through September due to the lingering effects of lockdowns to contain the Covid-19 outbreak. Gross domestic product declined 7.5% last quarter from a year ago, a marked improvement from a record 24% contraction the previous quarter. Prime Minister Narendra Modi imposed one of the world’s strictest lockdowns in March, sapping demand for non-essential goods and services. Despite the measures to stem the pandemic, the country is now home to the second-highest Covid-19 infections after the U.S. at 93 lakh cases. The second straight quarterly decline in GDP pushes Asia’s third-largest economy into its first technical recession. Financial and real estate services — among the biggest components of India’s dominant services sector — shrank 8.1% last quarter from a year ago, while trade, hotels, transport and communication declined 15.6%. Manufacturing gained 0.6%, electricity and gas expanded 4.4% and agriculture grew by 3.4%.

5. Bitcoin Edges Lower to Extend Biggest Slump Since Pandemic Hit

Bitcoin and many of its major peers edged lower on Friday in the wake of some of the biggest declines since the onset of the pandemic, a sell-off that has stirred fresh doubt about this year’s craze for cryptocurrencies. The most-traded digital coin slipped as much as 2.6% before paring the decline.  The sell-off was kicked off by worries over the prospect of tighter crypto rules in the U.S. and profit-taking after a big rally. Even with the slump, Bitcoin has more than doubled this year — an advance that has split opinion. Crypto believers tout a broadening investor base and the search for a hedge against dollar weakness as reasons for a durable boom. Critics point to a history of big swings, including a spectacular boom and bust three years ago.

6. Pfizer Vaccine Goes to Malaysia: Covid-19 Updates

Malaysia agreed to use Pfizer’s Covid-19 vaccine for 20% of its population, while Russia hopes to start supplying its shots next month to Hungary. Ireland, the first western European country to reimpose a lockdown, will order an easing of coronavirus curbs on Friday. Germany’s patients in intensive care rose to record levels. AstraZeneca’s vaccine looks like it’s headed for an additional global trial as the drugmaker tries to clear up uncertainty around favourable results in its current study. Tokyo posted a record 570 cases just one day before a request for bars and restaurants to close early takes effect. New York’s new infections reached a seven-month high, while hospitalizations rose to their highest level since June.

7. Qatar Inks Deal for Minority Stake in Turkish Stock Exchange

Qatar announced a series of high-profile investments in Turkey, its biggest ally in a years-long rift with Gulf heavyweights Saudi Arabia and the United Arab Emirates, including the purchase of a stake in the country’s main bourse. Doha-based sovereign wealth fund Qatar Investment Authority signed a memorandum of understanding with its Turkish counterpart known as TWF to purchase a 10% stake in Borsa Istanbul AS. The agreement for a minority stake in the company that runs the main Turkish stock exchange, for an undisclosed amount, was unveiled at a ceremony at the presidential palace in Turkey’s capital Ankara. Qatar also signed another preliminary deal to invest in a multibillion-dollar port project in Istanbul and finalized an earlier agreement to buy a stake in Istinye Park, one of Istanbul’s largest shopping malls that’s popular among tourists from the Middle East.

8. Brexit Britain’s Food Supply Is Imperiled by Christmas and Covid

A scarcity of warehouse space because of Christmas demand and the pandemic is putting the U.K. at risk of shortages of some food products as it prepares to leave the European Union’s single market. With five weeks to go before the end of the Brexit transition period, large manufacturers and industry groups are warning that the capacity of the food supply chain is at its peak and can’t withstand any further shocks. There have been numerous warnings about potential Brexit disruption from companies and even U.K. ministers, such as lines of trucks on the highway regardless of whether there’s a trade deal or not. The trouble is that the latest contingency planning couldn’t come at a worse time as Christmas goods take up storage space.

9. Euro-Area Economic Confidence Slumps Amid New Virus Restrictions

Economic confidence in the euro area fell sharply in November, the first deterioration in seven months after governments imposed new restrictions to halt the spread of the coronavirus. A European Commission sentiment index dropped to 87.6 from 91.1 the previous month, with retailers, services providers and consumers particularly pessimistic. An indicator for employment expectations declined for a second month. Many governments took new steps to curb economic activity in November, threatening to pitch the currency bloc back into a slump in the final quarter. Germany extended its partial lockdown until at least Dec. 20, while France is planning to keep restaurants closed until a month after that.

10. China Targets Australian Wine, Says Ties Have Taken ‘Nosedive’

China is set to impose anti-dumping duties of more than 100% on Australian wine from this weekend, adding to a series of sweeping trade reprisals this year and further escalating tensions with Canberra. The anti-dumping deposits will take effect Nov. 28 and range from 107.1% to 212.1%, the Chinese Ministry of Commerce said. Australia responded by warning Beijing that its actions could create a perception among businesses and countries around the world that trade with China is risky.