Kuwait fears fallout from Iran reactor

Kuwait has expressed concern over an Iranian nuclear reactor on the opposite shore of the Gulf, saying it fears the fallout from possible leaks, the official news agency reported. "Kuwait's concern is based on fears of any leaks due to natural causes that may have future consequences," the foreign ministry undersecretary Khaled al-Jarallah was cited as saying by the KUNA news agency. Kuwait is the nearest country to the Russian-built nuclear plant in the Iranian city of Bushehr, which lies just at the other end of the narrow Gulf.

A number of Kuwaiti MPs called on the government to take precautionary measures against any incident from the Iranian plant. Iran loaded the Bushehr facility with nuclear fuel on Saturday and the United States said there was no "proliferation risk" from the civilian plant because of Russian involvement. Kuwaiti media have reported that a senior Iranian official is due to arrive in Kuwait within days, possibly to discuss the nuclear plant issue.

During a short visit late on Monday, Qatar's prime minister Sheikh Hamad bin Jassem Al Thani conveyed the outcome of his meeting with the Iranian president Mahmoud Ahmadinejad. Sheikh Hamad said in statements cited by KUNA that the Bushehr powerplant was an Iranian affair. "If the plant is peaceful and for power use according to our information, then this is a legitimate right for Iran under international law and we do not want to change this framework at the present time," he was reported as saying.

* AFP

Four reasons global stock markets are falling right now

There are many factors worrying investors right now and triggering a rush out of stock markets. Here are four of the biggest:

1. Rising US interest rates

The US Federal Reserve has increased interest rates three times this year in a bid to prevent its buoyant economy from overheating. They now stand at between 2 and 2.25 per cent and markets are pencilling in three more rises next year.

Kim Catechis, manager of the Legg Mason Martin Currie Global Emerging Markets Fund, says US inflation is rising and the Fed will continue to raise rates in 2019. “With inflationary pressures growing, an increasing number of corporates are guiding profitability expectations downwards for 2018 and 2019, citing the negative impact of rising costs.”

At the same time as rates are rising, central bankers in the US and Europe have been ending quantitative easing, bringing the era of cheap money to an end.

2. Stronger dollar

High US rates have driven up the value of the dollar and bond yields, and this is putting pressure on emerging market countries that took advantage of low interest rates to run up trillions in dollar-denominated debt. They have also suffered capital outflows as international investors have switched to the US, driving markets lower. Omar Negyal, portfolio manager of the JP Morgan Global Emerging Markets Income Trust, says this looks like a buying opportunity. “Despite short-term volatility we remain positive about long-term prospects and profitability for emerging markets.”

3. Global trade war

Ritu Vohora, investment director at fund manager M&G, says markets fear that US President Donald Trump’s spat with China will escalate into a full-blown global trade war, with both sides suffering. “The US economy is robust enough to absorb higher input costs now, but this may not be the case as tariffs escalate. However, with a host of factors hitting investor sentiment, this is becoming a stock picker’s market.”

4. Eurozone uncertainty

Europe faces two challenges right now in the shape of Brexit and the new populist government in eurozone member Italy.

Chris Beauchamp, chief market analyst at IG, which has offices in Dubai, says the stand-off between between Rome and Brussels threatens to become much more serious. "As with Brexit, neither side appears willing to step back from the edge, threatening more trouble down the line.”

The European economy may also be slowing, Mr Beauchamp warns. “A four-year low in eurozone manufacturing confidence highlights the fact that producers see a bumpy road ahead, with US-EU trade talks remaining a major question-mark for exporters.”