May 27 - Daily Brief of World Finance & GCC News
Macron Pledges Additional Stimulus to Help French Carmakers, Dimon Sees a Good Chance for a Rapid U.S. Economic Recovery, Why the PIF’s Latest Investments Support Saudi Arabia's Strategic Goals
World Finance News Brief
Macron Pledges Additional Stimulus to Help French Carmakers
The plan includes incentives for the purchase of electric cars, cash-for-clunkers to encourage consumers to trade in older, more polluting cars and subsidies for struggling car-parts makers. The total of roughly 8 billion euros ($9 billion) also includes state-backed loans such as 5 billion euros slated for Renault SA.
No other European country has such an ambitious support system for electric vehicles, exclusively funded by the state.”
The car industry employs 400,000 people in France.
French automotive industry is already being kept alive by the state, with some 250,000 employees being partly paid by an unemployment benefits scheme and through 300 million euros of state-backed loans, according to the president.
PSA and Renault have pledged to increase local production of electrified vehicles and components.
While Macron has seen his approval rating slide, his government is rated better prepared to handle the economic slump than the health crisis.
Dimon Sees a Good Chance for a Rapid U.S. Economic Recovery
Dimon sees “pretty good odds” of a fast economic rebound starting in the third quarter thanks to the U.S. government’s stimulus programs and the strength of the consumer going into the pandemic.
He pointed to data that show roughly 33% of those who asked for forbearance on home loans didn’t use it. He is concerned that a prolonged downturn is still possible.
Around 180,000 employees, or roughly 70% of the bank’s global staff, are working from home to help stem the spread of the deadly coronavirus.
Hong Kong Protests May Force Bankers Back to Working From Home
The Asian financial hub is bracing for what could be its biggest day of protests in months, with pro-democracy groups calling for a general strike against moves by China to increase control of the city.
GCC NEWS BRIEF
Businesses Thrilled to Resume Work in UAE
Citizens who were quarantined will have a lot of requirements and release of this pent up demand will give surge to retail sales. Even sectors like healthcare will see an increase in revenue as people requiring many elective procedures have been postponing these for three months. I see that there will be an overall spurt of all business activities in the near future"
Vigilance on compliance and safety precautions will be of prime importance as the businesses resume activities.
Farooq, CEO of Samana Group, said: "Restarting business activities in offices is a wise decision and much-appreciated by the business community to put the virus-stricken economy back on track. It will have a ripple effect on all stakeholders to start moving forward. But businesses need to be extra vigilant on compliance on safety precautions."
Why the PIF’s Latest Investments Support Saudi Arabia’s Strategic Goals
PIF investments make sense - While investing roughly $1.5 billion in BP, Shell and Total might at first glance go against that maxim, it still makes sense. It shows confidence in the oil and gas sector going forward. The three European oil majors also have very clear strategies focusing on the renewables’ sector and looking at how to survive in a world where oil becomes less important. This is compatible with the Kingdom’s Vision 2030 reform plan, which also wants to wean Saudi Arabia off its total dependence on oil.
PIF invested just over $2 billion in Carnival Cruises, Marriott International, Walt Disney, Live Nation Entertainment, Starbucks and Booking. com. These investments also have to be seen against the backdrop of Vision 2030 with its aim to develop tourism as a major contributor to the economy.
The $714 million stake in Boeing also makes sense. The Gulf Cooperation Council is located on a peninsula at the crossroads between East and West, where air travel will remain strategically important.
Investments in major US banks — Citi and Bank of America — are stalwarts of the US banking sector. Furthermore, as long as the Fed opposes negative interest rates, their business model is under far less pressure than that of their European and Japanese competitors.