AliExpress Russia eyes $10 billion turnover by 2022-2023, up an estimated 66% By Reuters



© Reuters. The logo of AliExpress is seen at Alibaba Expansion office at the Alibaba company’s headquarters in Hangzhou

By Nadezhda Tsydenova

MOSCOW (Reuters) – AliExpress Russia, an e-commerce venture between Chinese online shopping giant Alibaba (NYSE:) and Russian partners, said it was aiming for annual turnover of $10 billion by 2022-2023, up from what analysts estimate is about $6 billion now.

Chief Executive Dmitry Sergeev, who did not give details on current turnover, told Reuters the company could consider an initial public offering (IPO) in three to four years, although he called the existing shareholding structure “optimal”.

“We are completely localising business and are building a separate company here,” Sergeev said in an interview, adding that this meant improving the Russian language search function and expanding the network of local sellers.

He said AliExpress Russia wanted to increase the share of Russian sellers on the platform to 50% by 2022-2023, adding that purchases from China now dominated business. He also said the firm aimed for 50 million customers a year.

The venture between Alibaba, the Russian Direct Investment Fund, mobile operator Megafon and internet firm Mail.Ru is one of several players expanding in Russia’s 2 trillion rouble ($28 billion) e-commerce market.

Experts from Moscow’s Higher School of Economics estimated the volume of goods shipped to Russians from abroad was worth $6.5 billion in 2019. A Russian Postal Service official said more than 90% of foreign shipments arrived from China, much of it driven by online orders via AliExpress Russia.

Sergeev said AliExpress Russia would invest in logistics in its effort to cut delivery times from China to 10 days from as long as 20 days now, saying this could be achieved with local Russian partners.

“I believe the value of owning the entire logistics infrastructure is overestimated,” he said, adding that there were a range of possible partners.

He did not rule out mergers and acquisitions, saying smaller players were likely to lose out as the marketed consolidated.

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Sunak Faces a Tax Reckoning After $38 Billion Summer Splurge By Bloomberg



© Reuters. Sunak Faces a Tax Reckoning After $38 Billion Summer Splurge

(Bloomberg) — Chancellor of the Exchequer Rishi Sunak faces the prospect of having to raise taxes to repair the public finances after his 30 billion-pound ($38 billion) stimulus package left the U.K. on course to borrow more this year than any time since World War II.

The extra spending will increase the cost of the government’s response to the crisis to almost 190 billion pounds, putting the budget deficit on course to hit 350 billion pounds in the current fiscal year, according to the Resolution Foundation think tank. That would be equivalent to about 17% of GDP.

For now, the pressure on the chancellor is political, rather than market driven. He needs to avoid a second wave of the virus and a wave of mass unemployment. With U.K. 10-year gilt yields close to zero, and hovering around record lows, he can afford to borrow, and postpone the question of how to pay for his largess during the crisis.

“The time to pay for this will come — but not this year and not next,” said Paul Johnson, director of the Institute for Fiscal Studies. “Our capacity to do so will depend above all on how the economy recovers. A reckoning, in the form of higher taxes, will come eventually.”

That would be a problem for Sunak, given his party’s election promise not to raise income tax, national insurance or the U.K.’s sales tax. Any increases could also see some of the stardust fall from the chancellor, whose spending announcements during the crisis have boosted his popularity and left some considering him as a future prime minister.

“These interventions will cost an extraordinary amount of money,” Sunak told the BBC on Thursday. “We can’t sustainably live like this, and over the medium term we can and will return our public finances to a sustainable position.”

So far, Sunak has been helped by the Bank of England’s vast program of government bond purchases, which have kept borrowing costs near the lowest on record. The central banks has supported demand and left billions of pounds of bonds funded at the BOE’s 0.1% interest rate, rather than market rates, bringing down the cost of debt servicing even further.

Yields on gilts barely budged after Sunak’s announcement on Wednesday, and are currently at about 0.18%.

But the scale of the budget deficit risks testing the equanimity of investors, with debt issuance in the first five months of the fiscal year already dwarfing the full-year record reached during the height of the financial crisis.

“We are borrowing at record-low rates that enable us to carry a higher degree of debt,” Sunak told the BBC. “But it would be important that we remain alert to changes in those interest rates.”

A sudden rise in interest rates isn’t the only risk he faces. This week, he also published a reminder of the threat the virus poses to his efforts to balance the books.

Buried in the Treasury document accompanying his statement was an announcement that he had allocated an additional 49 billion pounds to Britain’s public services since March, three times the latest estimate from the Office for Budget Responsibility.

Of that money, almost 32 billion pounds is going to health services, including 15 billion pounds for personal protective equipment and 10 billion pounds for the government’s track and trace program.

“No amount of fiscal support can mask the fact that the U.K. recovery hinges almost solely on avoiding a return to repeated, widespread lockdowns,” said James Smith, a developed markets economist at ING.

 





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Egypt’s foreign reserves recover slightly to $38.2 billion By Reuters



© Reuters.

CAIRO (Reuters) – Egypt’s net foreign reserves recovered some ground lost during the coronavirus outbreak, rising to $38.2 billion in June from $36 billion in May, the central bank said on Tuesday.

Foreign reserves have dropped since March from a high of more than $45 billion, as investors pulled cash from emerging markets and Egypt’s tourism industry, a key source of foreign revenue, came to a near standstill.

Remittances from Egyptians working abroad have also been threatened by the crisis.

To help Egypt cope, the International Monetary Fund approved $2.77 billion in emergency funding in May. Last month, Egypt secured a separate $5.2 billion standby agreement loan from the IMF.

The rise in foreign reserves registered in June could reflect the receipt of the first $2 billion tranche of the standby loan, said Allen Sandeep of Naeem Brokerage.

“We expect foreign reserves to be largely flat until the end of the year, as the interbank market is well funded to deal with the non-essential trade balances,” said Sandeep.

While the IMF emergency funding was designed to help Egypt close a gap in its balance of payments, the standby agreement is aimed at supporting macroeconomic stability and advancing structural reform.

 

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Indonesia unveils $40 billion bond scheme to fund recovery from pandemic By Reuters



© Reuters.

By Tabita Diela and Fransiska Nangoy

JAKARTA (Reuters) – Indonesia’s central bank has agreed to buy a total 574.59 trillion rupiah ($39.74 billion) of low-yielding government bonds this year to help fund the economic recovery programme, Finance Minister Sri Mulyani Indrawati said on Monday.

The bond-buying programme will help finance the 2020 fiscal deficit, which is forecast to reach 6.34% of GDP this year, more than triple an initial plan of 1.76%, as the government steps up spending to fight the virus outbreak while revenue drops.

Some 397.56 trillion rupiah of bonds will be used to finance public interest programmes and the cost will be fully borne by the central bank, Indrawati said. The rest will carry interest rates below the central bank’s 3-month reverse repurchase rate and will be used to support recovery schemes for some businesses, she said.

“This policy is aimed at invoking confidence in our economic recovery, healthcare response and to create more certainty,” Indrawati said.

The bond scheme will be a one-off policy and the debt tradeable, which will allow Bank Indonesia (BI) to utilise them for its monetary operation, she added.

BI Governor Perry Warjiyo told reporters the scheme will have a small impact on this year’s inflation, which hit a 20-year low in June due to weak demand, while BI will continue to assess the impact on future inflation and rupiah exchange rate.

Warjiyo added that the scheme will not have any implication to monetary policy.

“Our capital is strong and it will not affect how BI conducts our monetary policy according to the framework that we have established for years,” he said.

BI has intensified its “quantitative easing” operations in recent months to help cushion the economic slowdown. It has also cut its main policy rates three times this year to support GDP, on top of four cuts in 2019.

The benchmark 7-day reverse repurchase rate is now 4.25%, but Warjiyo at BI’s last policy review had flagged the potential for more cuts.=eci>

The government expects Indonesia’s GDP to be within a range of a 0.1% contraction to 1% expansion this year, compared with 5% growth in 2019, due to fallout from the pandemic.

(Additional reporting Maikel Jefriando; Editing by Jacqueline Wong) OLUSECON Reuters US Online Report Economy 20200706T111345+0000

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Chile announces new $1.5 billion stimulus for middle class as pandemic rages By Reuters



© Reuters. FILE PHOTO: Outbreak of the coronavirus disease (COVID-19) in Santiago

SANTIAGO (Reuters) – Chilean President Sebastian Pinera announced on Sunday a new $1.5 billion package of measures to help keep the country´s ailing middle class afloat as the coronavirus pandemic continues to ravage the economy of the world´s top producer.

The measures include access to zero-interest loans, subsidized rent and the ability to defer mortgage loan payments for up to six months, Pinera said in a televised speech.

“The coronavirus pandemic…is hitting our middle class hard,” Pinera said, touting the fresh round of stimulus as a bailout at least 1 million families.

Pinera’s center-right administration has already announced two sprawling stimulus packages worth nearly 12% of gross domestic product, aimed primarily at protecting small business, the poor and the unemployed.

The coronavirus pandemic, which struck just as Chile was beginning to recover from months of unrest over inequality, has hammered the country’s economy. Chile’s middle class – long the envy of the region- has been especially hard hit.

Unemployment crested 11% between March and May and is expected to continue to rise as lockdown measures in the capital Santiago take their toll. The central bank has predicted GDP will plunge by as much as 7.5% in 2020, the worst in 35 years.

The new plan will help subsidize university payments for middle-class families and partially underwrite the home or apartment rental fees for those who pay less than 400,000 pesos, or $500 per month.

Chile has reported more than 295,000 cases of coronavirus, surpassing the tally in crisis-racked Italy, and 6,308 deaths from the disease.

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Saudi initiatives to support private sector exceed 51 billion riyals



© Reuters.

DUBAI (Reuters) – Saudi government initiatives to support the financing of the private sector to mitigate the impact of the coronavirus oubreak have exceeded 51 billion riyals ($13.60 billion), the central bank said on Sunday.

 

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U.S. stock funds shed $4.6 billion in week: Lipper By Reuters




By David Randall

(Reuters) – The final days of the best quarter for the benchmark S&P 500 since 1998 were not enough to keep investors from pulling $4.6 billion out of U.S.-based stock funds in the week that ended Wednesday, according to Lipper data released on Thursday.

The S&P 500 500 rebounded from its stark drop in the first quarter to rally nearly 20% between April and June. The pace of gains has slowed over the last two weeks, however, as states including Florida and Texas have posted a series of new record highs for coronavirus infections. The United States posted its largest one-day spike on record on Wednesday.

For the year to date, the S&P 500 is now down 2.9% after hitting record highs in late February.

Fears of a second wave of infections helped boost taxable bond funds, which attracted $5.6 billion last week. The category has now garnered 12 straight weeks of inflows, helping push the yields of U.S. Treasuries near historic lows.

U.S. money market funds, meanwhile, lost $28 billion in the week, the seventh straight weekly outflow.

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Brazil posts $7.5 billion trade surplus in June: Economy Ministry By Reuters



© Reuters. Cranes are seen in the distance during a workers’ strike at Latin America’s biggest container port in Santos

BRASILIA (Reuters) – Brazil posted a trade surplus of $7.5 billion in June, official data showed on Wednesday, more than the median consensus forecast in a Reuters poll of economists of a $6.95 billion surplus and up sharply from a $5.4 billion surplus a year ago.

Exports totaled $17.9 billion and imports were $10.4 billion, the Economy Ministry said, adding the accumulated January-June surplus of $23 billion was 10% smaller than the same period last year.

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Shell to Write Down Up to $22 Billion as Virus Hits Big Oil By Bloomberg



© Bloomberg. The Royal Dutch Shell logo is seen on a fuel pump at a gas station in Crestwood, Kentucky, U.S., on Monday, April 27, 2020. Royal Dutch Shell is scheduled to release earnings figures on April 30. Photographer: Stacie Scott/Bloomberg

(Bloomberg) — Royal Dutch Shell (LON:) Plc will write down between $15 billion and $22 billion in the second quarter, as the company gave investors a wider glimpse of just how severely the coronavirus crisis has hit Big Oil.

The pandemic left no part of the energy giant’s sprawling business unscathed. Oil production slowed, fuel sales fell and shipments of everything from liquefied to petrochemicals suffered.

The dire second quarter also threatened to have a lasting legacy, as reductions in long-term price forecasts will force writedowns on the value of assets all over the world, with its integrated gas business taking the biggest hit.

The drop in demand comes as little surprise. Oil majors’ earnings took a beating in the first quarter, and the companies warned that things would only get worse as the full impact of the pandemic started to be felt in March. Despite a recent rebound in consumption in some of the worst-hit countries, resurgent waves of the virus show the recovery remains fragile.

Oil-product sales volumes will be 3.5 million to 4.5 million barrels a day in the second quarter, down from 6.6 million a year earlier, driven by a “significant drop” in demand because of the pandemic, the oil major said Tuesday in a statement ahead of quarterly results on July 30.

Shell said it has revised its mid- and long-term pricing and refining margin outlook, and expects gearing — a measure of debt — to increase by as much as 3% due to the impairment charges.

Drastic Changes

The coronavirus has exposed the vulnerability of some of the world’s biggest oil and gas companies, but also given them the opportunity to make investors swallow some unpleasant remedies. Since the pandemic started, Shell and BP (NYSE:) Plc have made drastic changes to their businesses, from multibillion-dollar writedowns to big cuts to dividends and jobs.

They explained these moves as responses to the dual threats of the lockdown-induced oil slump and the growing pressure to cut carbon emissions. BP has said oil and gas prices will be lower than expected in the coming decades as the virus hurts long-term demand and accelerates the shift to cleaner energy.

Shell’s in-house trading unit, which can be a boon when other parts of the business are hurting, won’t provide respite this quarter. Trading and optimizations results “are expected to be below average,” the company said. That compares to 2019, when Shell – as with the many of the world’s largest energy traders – enjoyed one of its best years in gas trading.

The company indicated more pain to come from LNG sales, which have a price lag of 3 to 6 months compared with oil. The impact of crude prices on LNG margins became “more prominent” from June.

Longer term, Shell is optimistic about the LNG market, with Chief Executive Officer Ben van Beurden telling Bloomberg in an interview in May that he expects the market to recover to pre-virus levels.

In April, Van Beurden cut the company’s dividend for the first time since the Second World War. In May, the Anglo-Dutch major said it would be well-placed to boost shareholder payouts again once the oil market recovers.

(Updates with writedown in first paragraph)

©2020 Bloomberg L.P.

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France’s Macron pledges 15 billion euro green push after vote rout By Reuters


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© Reuters. French President Emmanuel Macron meets French citizens’ council over environment proposals in Paris

2/2

PARIS (Reuters) – French President Emmanuel Macron promised 15 billion euros of new funding on Monday to speed up the move to a greener economy, a day after the Greens trounced his party and took control of major cities in local elections.

Macron said he would move faster on environment-friendly policymaking and that he was ready to call a referendum on revising the constitution to include climate aims if parliament allowed it.

He was responding to propositions put forward by a Citizens’ Climate Council as the Greens’ sweeping wins in towns and cities put him under pressure to act on the environment.

“The challenge to our climate demands we do more,” Macron told members of the Climate Council in a meeting at the Elysee Palace.

He also backed a proposal for a moratorium on new commercial zones in city outskirts, and said he would consider bringing in a new law against “ecocide”.

The Climate Council defined ecocide as any action causing serious environmental damage and proposed the crime be punishable by jail and a fine of up to 10 million euros ($11.27 million).

However, Macron told the council he disagreed with its proposal for a 4% tax on dividends to help finance new greener policies, saying such a levy would discourage investments.

France’s Green party – officially known as Europe Ecology – The Greens (EELV) – stunned Macron and France in Sunday’s vote when it won control of large cities including Lyon, Bordeaux and Strasbourg, often in alliance with leftist allies.

It is a junior partner in the winning Socialist-led alliance in Paris and may still emerge victorious in Marseille.

Macron’s ruling party emerged from the vote without a single victory in a big city, an outcome that leaves the president without a local power-base as he eyes a re-election bid in 2022.

Macron set up the Citizens’ Climate Council in the wake of ‘yellow vest’ protests, which erupted over a hike in diesel taxes but morphed into a wider rebellion against the president and his pro-business reform agenda.

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