Iraq Emerges as Iran’s Top Export Destination

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Iraq has emerged as Iran’s top export destination in the current Iranian year, an official announced.

The director of the export bureau of Iran’s Customs Office, Ali Akbar Shadmani, said the value of the country’s exports since the beginning of the current Iranian year (March 21, 2018) has surpassed $30 billion, with Iraq being the top export destination.

He said the value of exports has risen by 12.5 percent compared to the corresponding period last year.

Iraq has imported 21 percent of the Iranian commodities this year in terms of value, worth $6.607 billion, he noted.

The main goods exported to Iraq include natural gas, steel bars, oils and bitumen, home appliances, and agricultural products, the official added.

President of Iraq Barham Salih visited Tehran on Saturday with a ranking delegation for a series of political and economic talks.

After high-profile talks between the Iranian and Iraqi delegations, Iranian President Hassan Rouhani said the two neighbors can increase their annual trade from the current $12 billion to $20 billion.

Rouhani also noted that the two sides discussed ways for cooperation in the energy, power and oil industry, including the extraction of petroleum, and a plan to connect the two countries’ railroad networks.


How small businesses can guard against cyber threats

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The more interconnected the world becomes, the greater the risk posed by weaknesses in devices or networks.

According to Simon Bryden, consulting system engineer of cyber security firm Fortinet, it’s not just preventing breaches that’s important for businesses – it’s knowing what to do once there is a breach, which most businesses overlook.

Bryden spoke to Fin24 about the importance of adequate cyber security at the company’s international media conference held last week in Sophia Antipolis, France.

Fin24: Do consumers and small businesses understand the extent of security threats? How can they be made more aware?

Simon Bryden: For the most part, our customers understand risk. Most know there are risks and that they need to invest in security.

There is a big drive towards security management, especially in enterprises. These enterprises need a security partner who understands risk, and can best advise them and provide them with the level of protection they need. It is more tricky if enterprises do it themselves.

For example, enterprises need to quantify the risks and understand how to allocate their budgets to address them. This is where a security management partner can help.

Are there some basic pitfalls that small businesses often overlook when it comes to security?

There are some pitfalls. For example, they rely on boundary protection – where they protect everything from the outside.

But apart from these barriers, they need to ensure that if a cyber attacker gains access to the network, it’s not an “open bar” for attackers to cause more damage. They need more barriers within their networks.

Put in place solutions – assume that you will be breached, and when you do get breached, you need to make sure that you are made aware of it as soon as possible to take further action.

What’s the best starting point for a small business with limited resources to protect themselves?

Small businesses without the necessary in-house skills need to find a managing security partner – that’s the most efficient way of getting protection.

Secondly, they should make sure their staff are trained. This may even be more cost-effective than getting a managing security partner.

What’s the best way to approach innovation, while maintaining security measures?

When we use artificial intelligence to improve products, there’s a risk that attackers can use innovation to get a foothold in networks.

It’s a double-edged sword – we can’t stop attacks from happening, but we can be proactive and predict potential vulnerabilities. That way we can help consumers better understand the need to have protection.

What’s the most important thing organisations should focus on when to comes to managing cyber threats?

Train staff to make sure they are aware of potential security threats.

And work with partners to figure out the best solutions for the risks to the organisation. It’s important to understand the risks to the organisation, and understand the best security approach to manage these risks – especially for small and medium sized businesses without inhouse skills.

They can’t turn away from the problem. They need to face it and find partners to help out, and put the best solution in place.


Asian dealers trade carefully before Trump-Xi, oil extends gains

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Hong Kong – Asian markets were mixed on Friday with dealers moving cautiously at the end of a broadly upbeat week with focus turning to the much-anticipated meeting between Donald Trump and Xi Jinping.

Energy firms were among the best performers after a rally in oil prices, while high-yielding and emerging market currencies continued Thursday’s advances against the dollar as the Federal Reserve shows signs it will slow down its pace of interest rate hikes.

While the outcome of Saturday’s crunch talks between Trump and Xi hangs in the balance, there are hopes the heads of the world’s top two economies can find a way to ease their trade row that has seen them exchange deep import tariffs.

Ahead of the leaders’ arrival in Buenos Aires late on Thursday for the G20 meeting, there have been conflicting messages coming out of Washington about the chances of a breakthrough, with most observers saying they do not expect any major announcements.

“I wouldn’t be surprised at the end of this weekend if the US and China didn’t announce a concord that basically set down a path to help resolve the trade frictions,” Scott Minerd, chief investment officer at Guggenheim Partners, told Bloomberg TV.

“I don’t think that out of the meeting there’s going to come much substance, but there will be a sort of set of principles that will be established to start the process of bringing an end to the trade war.”

OPEC meeting up next

On Asian equity markets Hong Kong added 0.6 percent, while Shanghai gained 0.1%, with dealers there poring over data showing Chinese manufacturing stalled in November as the effects of Trump’s multi-billion-dollar tariffs begin to bite.

Singapore gained 0.3%, while Wellington and Taipei each rose 0.4%.

However, Tokyo reversed early gains to end the morning marginally lower, Sydney shed 1.3% and Seoul was off 0.4%.

Past the G20 meeting, traders are looking to the following weekend’s gathering of OPEC and non-OPEC oil producers, where Saudi Arabia and others are expected to cut output in a bid to support prices.

Crude edged up on Friday, a day after enjoying a much-needed rally on a report that Russia will join in the reduction, providing a boost to regional energy firms.

“If a meaningful deal is reached between OPEC and Russia to tackle glut problems, we can probably expect a meaningful rebound in energy prices,” said Margaret Yan Yang, market analyst with CMC Markets Singapore.

However, others pointed out that no one knows how much and for how long the output cuts will be, while at the same time the US continues to ramp up production.

Stephen Innes, head of Asia-Pacific trade at OANDA, added: “With traders already anticipating a one million barrels per day cut, which is arguably priced in, it will probably take a much deeper cut to jolt the market into a short covering rally.

“Otherwise, the market falls prey to the prevailing bearish sentiment that will continue to drive prices lower on the premise the reduction might not be sufficient enough to draw down surplus supplies.


Stocks Decline Before G-20; Treasuries Edge Higher

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US equity futures dropped with European stocks as investors count down to a meeting between the American and Chinese presidents that could decide the course of the trade war. Benchmark Treasury yields fell and the dollar gained.

Carmakers and banks led a retreat in the Stoxx Europe 600 Index, while futures for all three major US indexes slid amid lingering doubts over the prospects for a thaw in relations between Presidents Donald Trump and Xi Jinping. Shares gained in Tokyo, slipped in Seoul and fell in Sydney, with Shanghai and Hong Kong stocks rising even after data showed that China’s economy remains in a weak patch. WTI crude dropped below $51 a barrel, on track for the biggest monthly slump in a decade. The euro weakened after data showed inflation in the common-currency region easing.

Trump, who is meeting Xi over dinner on Saturday, said on Thursday he’s very close to “doing something” with China as officials work on the contours of a deal that may delay ramping up tariffs on the Asian country in January. Any sign of a trade truce could take the edge off a rampant greenback and boost risk assets including emerging-market currencies and stocks. Goldman Sachs, however, said an escalation of tensions is the most likely outcome.

“I wouldn’t be surprised at the end of this weekend if the US and China didn’t announce a concord that basically sat down a path to help resolve the trade frictions,” Scott Minerd, chief investment officer at Guggenheim Partners, told Bloomberg TV in Tokyo. “I don’t think that out of the meeting there’s going to come much substance, but there will be a sort of set of principles that will be established to start the process of bringing an end to the trade war.” His firm manages about $265bn.

The best-case scenario: what the Trump-Xi dinner could yield

The first official gauge of China’s economy in November showed manufacturing activity continued to worsen, indicating the authorities will need to keep using stimulus measures as economic growth slows. On Thursday in the US, minutes from the Federal Reserve’s last policy meeting showed the central bank preparing for a more flexible path in 2019.

Elsewhere, Korea’s won held on to this week’s losses as Friday’s interest rate increase did little to assuage concern surrounding the economy. The pound remained under pressure, drifting downward as UK Prime Minister Theresa May continued efforts to win backers for her Brexit deal. Emerging-market equities and currencies dipped.

Coming Up

Trump and Chinese President Xi Jinping will meet at the G-20 summit of world leaders in Argentina that kicks off on Friday. Russia’s Vladimir Putin and Saudi Arabia’s Mohammed bin Salman are likely to discuss oil policy. Ford, Fiat Chrysler, other automakers report November US sales on Monday. New York Fed President John Williams speaks at an event on Friday. Fed Chairman Jerome Powell testifies on the economic outlook before Congress’s Joint Economic Committee next Wednesday.

These are the main moves in markets:

The Stoxx Europe 600 Index sank 0.5% as of 07:02 New York time. Futures on the S&P 500 Index dipped 0.5%, the first retreat in a week. The MSCI All-Country World Index declined 0.2%. The MSCI Emerging Market Index fell 0.3%.

The Bloomberg Dollar Spot Index advanced 0.2%, the largest gain in a week. The euro decreased 0.2% to $1.1368. The British pound dipped 0.3% to $1.2755. The Japanese yen declined less than 0.05% to 113.49/$.

The yield on 10-year Treasuries decreased two basis points to 3.01%, the lowest in more than 10 weeks. Germany’s 10-year yield fell one basis point to 0.31%. Britain’s 10-year yield fell two basis points to 1.344%, the lowest in more than three months. Japan’s 10-year yield jumped one basis point to 0.092%.

West Texas Intermediate crude decreased 1.8% to $50.53 a barrel. Gold declined 0.1% to $1 222.41 an ounce. Copper fell 0.4% to $2.78 a pound.


The biggest responsible investing myth debunked

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By Jon Duncan, Head of Responsible Investment, Old Mutual Investment Group

Contrary to popular belief, investors are not giving up upside performance when prioritising companies with a better environmental, social and governance (ESG) record.

Responsible Investing is rooted in an understanding that how we invest today determines the quality of our future. Simply put, if we continue to invest in unsustainable companies that erode public trust, pollute the environment and drive inequality, we should accept that this is the kind of future we will bestow on our children.

Responsible Investing continues to gain attention from the investment community because companies with better Environment, Social and Governance (ESG) practises can, and do, drive better investment performance. At its heart, this latter dimension is a focus on the understanding that sustainability is a macro thematic trend that is fundamentally reshaping the competitive landscape across all sectors. Research from Harvard Business School in 2014 evidences that companies with good sustainability practises, versus their industry peers with poor sustainability practises, produce both market and accounting based outperformance. The core myth associated with Responsible Investment is that companies that focus on ESG issues reduce returns on capital and long-run shareholder value. The reality as evidenced by both academic and industry research is to the contrary: companies committed to sound ESG practises show specific measurable attributes such as lower cost of capital, better resource efficiency, stronger innovation, lower staff turn, stronger social licence to operate and better access to markets. All attributes that can and do influence competitive advantage and longer-term performance.


Both the “ethical” and the “maximising risk-adjusted returns” dimensions of responsible investing have resonated with the retail investing community. In line with global trends, there is a growing number of local retail investors, as well as financial advisors, who are realising that the outperformance of companies with higher ESG scores speaks for itself.

There are three broad approaches in the listed equity environment for a domestic retail investor to consider:

1. Traditional equity products that incorporate ESG issues.

This means the fund manager makes a commitment to factor in and integrate ESG issues in their investment strategies. This includes taking their role as custodians of clients’ capital seriously by engaging with investee companies through a ‘Responsible Investment’ lens and ensuring their proxy voting aligns with the commitment to a sustainable approach to investment. The fund manager should also be able to indicate how they have considered and championed ESG issues in their investment process through transparent communication, i.e. reporting. This approach should be a minimum consideration for all investments and investors can apply this equally to local and international investment funds, assessed through fund fact sheets.

2. Thematic-styled equity products that build portfolios of companies that are part of the sustainable economy (i.e. low-carbon, resource efficient and socially inclusive).

Funds using this approach can be single-themed funds focused on renewable energy, sustainable mobility or water. They can also cover a broad range of themes across the ‘green economy’ with specific exclusions around key issues, for example coal or tobacco. This approach is currently difficult to apply in the local market as there are not many listed companies with revenue directly linked to core sustainability growth themes. It can however be successfully applied at an emerging or developed market level, and there are several investment firms that offer compelling products in this category. This is a viable option for investors who believe in the long-term growth theme of a sustainable economy.

3. Index or active quant funds that systematically capitalise on ESG data asymmetry.

This approach relies on the growing body of company level ESG data that is available through a range of service providers, for example the MSCI. This ESG data is leveraged to create ESG indices (indices that give exposure to companies with a strong ESG stance) or used in innovative active quant investment strategies. There are already several ESG index products available both locally and globally that can offer retail investors market-like returns by holding a basket of companies that are measurably better when considered on an ESG basis. Coupled with low costs, these passive investment products can offer investors an attractive starting point.

For domestic equity investors that have an interest in Responsible Investing, two viable options exist – either select a traditional fund that has integrated ESG into its investment and ownership decisions or look into ESG-led index-tracking products.

Not covered in this article are approaches that involve negative screening based on ethical or faith based values. Such approaches can be employed, but may conflict with maximizing risk adjusted returns (which is of course a perfectly reasonable outcome if values alignment is the primary goal).


South Africans can’t keep bailing out a broken airline

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R21 bn: that’s how much South Africa’s beleaguered national carrier, South African Airways (SAA), says it needs to keep running.

SAA has reached this point in its financial crisis through persistent mismanagement and cronyism, with the SA government as main shareholder refusing to take tough decisions about the company. But such decisions can’t be delayed any longer.

In theory, it’s the South African government that supports SAA and bails it out in times of need. But in practice, it’s the country’s already struggling taxpayers who foot the bill. And they keep doing so, with no clear plan in sight to stem the airline’s financial haemorrhaging. The Free Market Foundation, an economic and policy think tank, estimates that SAA has already cost taxpayers close to R60 bn in the past 20 years.

President Cyril Ramaphosa says that closing SAA would destabilise other state-owned entities and the broader economy.

The country’s recently appointed finance minister Tito Mboweni disagrees. In his recent medium-term budget policy statement, Mboweni warned that failing state-owned entities are “no holy cows” and would be expected to pull their financial weight.

South Africa can’t afford any more delays. Strong players in the continent are eating into the airline’s already weakened base. These include Ethiopia and Kenya’s national carriers as well as minnows like Namibia’s airline.

In the meantime, South Africans taxpayers are caught between a rock and a hard place. The country can’t afford SAA anymore – and can’t afford to close it down. What is the next step, then?

The only option left for SAA

I believe there is only one option: an independent cost-benefit analysis into SAA’s continued existence and the possible implications of its sale or closure. This should be an independent process; both SAA and the South African government have vested interests in the outcome.

This would be a first, and its successful completion could set a benchmark for judging the continued financial viability of other problematic state-owned entities like Denel and the South African Broadcasting Corporation.

I have argued for some time that SAA is nothing more than a government vanity project and should be sold. In March 2016, when I first said this, it might have been feasible; then, the airline was still financially viable. That moment has passed as the government kept SAA as a vanity project.

This is urgent. SAA is not just asking for more money to keep itself airborne. Its chief executive, Vuyani Jarana, has told a parliamentary committee that the airline will not be profitable by 2020, as it initially announced. It now says it will be profitable by 2021.

One of the reasons it has fallen short is that SAA’s management got its oil price forecasts completely wrong. It planned for an average oil price of US$ 45 per barrel over. The actual average has turned out to be US$ 75 per barrel.

It does not take a lot of management competence to understand that a single oil price cannot be used in profitability forecasts for a company sensitive to oil price fluctuations, as is the case with an airline.

It has also emerged that senior managers at SAA are earning enormous monthly salaries (Jarana, for instance, earns R6.7 million a year). This fact, coupled with obviously chronic financial mismanagement – how else to explain that the airline spent its last government bailout of R5 billion in just one month? – is galling to taxpayers.

During its presentation to Parliament, SAA’s managers offered no alternative plans. It’s a government bailout – or bust. But this isn’t sustainable. An independent assessment is critical if SAA is to be saved from itself; and the country’s reeling taxpayers are to be saved from the airline’s excessive demands.