Inflation in Lebanon, which is facing its worst economic crisis since the end of its 1975-1990 civil war, continued to accelerate in August following a massive explosion at the Port of Beirut last month, according to official data.
Consumer prices increased to an annual 120 per cent in August after rising to 112.4 per cent in July, according to the latest figures from the Central Administration of Statistics. Food prices surged 367 per cent compared with 336 per cent in July, while clothing and footwear rose 413 per cent and furnishings and household equipment soared 664 per cent.
“The cumulative surge in inflation in the first eight months … is due in part to the inability of authorities to monitor and contain prices, as well as to the deterioration of the Lebanese pound’s exchange rate on the parallel market, which has encouraged opportunistic wholesalers and retailers to raise the prices of consumer goods disproportionately,” Byblos Bank said in a note on Tuesday.
Emirates NBD economist Ed Bell said the latest figures also reflect the effect of the August 4 Beirut port blast, which killed more than 190 people and wounded over 6,000. The explosion “will have exacerbated the inflationary effects of the currency collapse ongoing through the course of the year”, he said.
Separately, Lebanon’s gross public debt reached $94 billion as of the end of July, a 2.1 per cent increase from the end of 2019 and up 9 per cent from July of last year.
The central bank, Banque du Liban, holds about 42.5 per cent of the debt at the end of July, commercial banks account for 28.4 per cent, foreign financial institutions 8.1 per cent, foreign investors 18.8 per cent, while multilateral institutions and foreign governments hold 2.2 per cent.
The central bank’s foreign currency reserves are estimated to have declined by a monthly average of $1bn since the beginning of the year, Goldman Sachs said in a report last week.
"Lebanon’s FX reserves are falling faster than we had been expecting, despite a sharp narrowing of the current account deficit," the investment bank said.
The drawdown and dwindling of reserves because of the financing of trade, weaker remittance inflows and capital flight could lead to the lifting of the pound's peg to the US dollar, which has been in place since 1997. The currency has lost more than 80 per cent of its value on the black market since October.
The central bank’s reserves may be wiped out in the coming 12 months if they continue to decline at the same rate they have been over the past three months, Goldman Sachs said.
If the central bank's reserves are depleted, "the consequences for the Lebanese economy would be severe", the investment bank said.
The impact could result in the complete dismantling of what’s left of the pound's peg, a further depreciation of the currency, acceleration of inflation, an erosion of living standards, and greater scarcity of basic goods, it said.
Under such a scenario, risks to "social and political stability would rise further, a particularly worrying situation given the country’s deep sectarian divisions and history of internecine strife”.
The August 4 Beirut port explosion in Beirut may shrink the economy 24 per cent this year, according to the Institute of International Finance.
The government, which defaulted on Eurobonds worth $31bn in March, turned to the IMF for a $10bn bailout in May but talks stalled due to haggling among the country’s political class. Prime minister-designate Mustapha Adib has yet to form a new government.
In July, Moody's Investors Service downgraded Lebanon's issuer rating to C, its lowest grade and said there is a high probability of significant losses for private creditors. Lebanon's debt-to-GDP ratio is projected to increase to about 200 per cent this year, from about 155 per cent of GDP last year, according to the ratings agency.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
West Indies v India - Third ODI
India 251-4 (50 overs)
Dhoni (78*), Rahane (72), Jadhav (40)
Cummins (2-56), Bishoo (1-38)
West Indies 158 (38.1 overs)
Mohammed (40), Powell (30), Hope (24)
Ashwin (3-28), Yadav (3-41), Pandya (2-32)
India won by 93 runs
Company profile
Name: The Concept
Founders: Yadhushan Mahendran, Maria Sobh and Muhammad Rijal
Based: Abu Dhabi
Founded: 2017
Number of employees: 7
Sector: Aviation and space industry
Funding: $250,000
Future plans: Looking to raise $1 million investment to boost expansion and develop new products
SPECS
%3Cp%3E%3Cstrong%3EEngine%3A%3C%2Fstrong%3E%201.5-litre%204-cylinder%3Cbr%3E%3Cstrong%3EPower%3A%3C%2Fstrong%3E%20101hp%3Cbr%3E%3Cstrong%3ETorque%3A%3C%2Fstrong%3E%20135Nm%3Cbr%3E%3Cstrong%3ETransmission%3C%2Fstrong%3E%3A%20Six-speed%20auto%3Cbr%3E%3Cstrong%3EPrice%3A%3C%2Fstrong%3E%20From%20Dh79%2C900%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20Now%3C%2Fp%3E%0A
QUALIFYING RESULTS
1. Max Verstappen, Netherlands, Red Bull Racing Honda, 1 minute, 35.246 seconds.
2. Valtteri Bottas, Finland, Mercedes, 1:35.271.
3. Lewis Hamilton, Great Britain, Mercedes, 1:35.332.
4. Lando Norris, Great Britain, McLaren Renault, 1:35.497.
5. Alexander Albon, Thailand, Red Bull Racing Honda, 1:35.571.
6. Carlos Sainz Jr, Spain, McLaren Renault, 1:35.815.
7. Daniil Kvyat, Russia, Scuderia Toro Rosso Honda, 1:35.963.
8. Lance Stroll, Canada, Racing Point BWT Mercedes, 1:36.046.
9. Charles Leclerc, Monaco, Ferrari, 1:36.065.
10. Pierre Gasly, France, Scuderia Toro Rosso Honda, 1:36.242.
Eliminated after second session
11. Esteban Ocon, France, Renault, 1:36.359.
12. Daniel Ricciardo, Australia, Renault, 1:36.406.
13. Sebastian Vettel, Germany, Ferrari, 1:36.631.
14. Antonio Giovinazzi, Italy, Alfa Romeo Racing Ferrari, 1:38.248.
Eliminated after first session
15. Antonio Giovinazzi, Italy, Alfa Romeo Racing Ferrari, 1:37.075.
16. Kimi Raikkonen, Finland, Alfa Romeo Racing Ferrari, 1:37.555.
17. Kevin Magnussen, Denmark, Haas Ferrari, 1:37.863.
18. George Russell, Great Britain, Williams Mercedes, 1:38.045.
19. Pietro Fittipaldi, Brazil, Haas Ferrari, 1:38.173.
20. Nicholas Latifi, Canada, Williams Mercedes, 1:38.443.
The five stages of early child’s play
From Dubai-based clinical psychologist Daniella Salazar:
1. Solitary Play: This is where Infants and toddlers start to play on their own without seeming to notice the people around them. This is the beginning of play.
2. Onlooker play: This occurs where the toddler enjoys watching other people play. There doesn’t necessarily need to be any effort to begin play. They are learning how to imitate behaviours from others. This type of play may also appear in children who are more shy and introverted.
3. Parallel Play: This generally starts when children begin playing side-by-side without any interaction. Even though they aren’t physically interacting they are paying attention to each other. This is the beginning of the desire to be with other children.
4. Associative Play: At around age four or five, children become more interested in each other than in toys and begin to interact more. In this stage children start asking questions and talking about the different activities they are engaging in. They realise they have similar goals in play such as building a tower or playing with cars.
5. Social Play: In this stage children are starting to socialise more. They begin to share ideas and follow certain rules in a game. They slowly learn the definition of teamwork. They get to engage in basic social skills and interests begin to lead social interactions.
NEW%20UTILITY%20POLICY%3A%20WHAT%20DOES%20IT%20REGULATE%3F
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