AFP

Times have been so good for luxury watchmakers that they are running behind demand, forcing some to delay the release of new collections and others to invest more in production capacity.

After the pandemic severely hit the global economy in 2020, the sector enjoyed a spectacular recovery last year and started 2022 with a bang, though Russia’s war in Ukraine created new uncertainties.

Watches were the best performing business for French luxury group Hermes, with sales soaring by 73 percent last year.

“We had an extraordinary year in the watches business,” Hermes vice president Guillaume de Seynes told AFP at Watches and Wonders in Geneva this week, one of the industry’s biggest annual showcases.

“We can feel a very strong dynamic for watchmaking everywhere in the world,” he said, adding that there was hot demand for a men’s watch model last year.

“We could have even sold more if we had been able to make more,” de Seynes said, noting that watchmakers face a “demand phenomenon that exceeds production capacity.”

His priority for 2022 is to invest in production. 

– Solid year –

The Oris brand also had “a very strong year”, said its chief executive, Rolf Studer.

Oris watches range between 1,800 and 7,200 Swiss francs ($1,928 and $7,710 or 1,767 euros and 7,064 euros).

The company had to delay the launch of a new collection in the higher price range because it did not produce enough watch movements — their internal mechanisms — in its workshops.

The watch was supposed to come out last summer but it is only launching now.

“We planned too conservatively,” Studer said.

“So we decided to keep the movements for the watches that were already out instead of launching new models and not be able to supply existing models already on the market,” he added.

Swiss watch exports rebounded last year, rising by 31.2 percent after a 21.8-percent contraction in 2020, when countries closed borders and went into strict Covid lockdowns.

Exports have not only exceeded pre-pandemic levels, they beat their 2014 record, too.

They went up by almost 16 percent in the first two months of this year, according to industry data, though the recovery has been seen only in watches worth more than 3,000 Swiss francs.

– Wait list –

The sector is now bracing for the fallout from the war in Ukraine and sanctions on Russia, which has a sizeable rich client base.

But the industry can rely on long wait lists for higher-end timepieces.

“Since we didn’t have enough watches for other markets, we will sell those that won’t be delivered to Russia elsewhere,” Edouard Meylan, CEO of H. Moser & Cie., told AFP.

All of his 2022 production is already pre-sold to retailers and partly pre-paid by final customers.

H. Moser only makes 2,000 watches per year at an average price of 45,000 Swiss francs. The watchmaker is even rejecting orders for timepieces that require a more than two-year wait.

“There’s uncertainty that can be created in other markets, particularly financial markets,” Meylan said.

“But we would have to have a big crash for an independent brand like ours to be affected,” he added.

Global equities sank Wednesday on bets the Federal Reserve will act more aggressively to bring inflation under control, while oil prices rebounded.

Asian and European bourses retreated after heavy falls on Wall Street Tuesday.

The euro hit a one-month dollar low before minutes from the Fed’s latest policy meeting due Wednesday.

London stocks slid also as UK businesses and individuals saw a major tax hike kick in, worsening Britain’s cost-of-living crisis as domestic energy bills rocket.

Minutes from the Fed’s March meeting will be pored over for insights into the thinking of US central bankers, in light of the Ukraine war and recent data suggesting the world’s top economy remains resilient.

– ‘Significant headwinds’ –

“Investor confidence might have improved from the low point in early March when the Ukraine war was unfolding,” said AJ Bell investment director Russ Mould. 

“However, there remain significant headwinds for equities and the latest trouble spot is what the Federal Reserve might do to curb inflation.”

Investors are fretting also over how quickly officials will withdraw their vast pandemic-era financial support.

After last month’s 0.25-percentage-point hike in US interest rates, the focus is now on its plans for May’s meeting, with expectations growing that the Fed will announce a 0.50-point lift followed by several more before the end of the year.

Fed governor Lael Brainard, who is considered a dove, on Tuesday spooked traders by saying bringing US inflation down from 40-year highs was of “paramount importance” and that the bank was “prepared to take stronger action” if warranted.

Brainard also said bank policymakers were ready to start reducing its vast bond holdings, which have helped keep borrowing costs down.

“Brainard’s hawkish comments rocked the markets,” said Swissquote analyst Ipek Ozkardeskaya.

“In this tense environment, investors will be closely watching the Fed minutes today. There would be no surprise if the Fed hinted a 50-basis-point hike (for) the next meeting,” she noted.

All three main indices on Wall Street ended Tuesday in the red, with the Nasdaq off more than two percent owing to tech firms being more susceptible to higher rates.

– Oil rebounds –

Oil prices rebounded on Wednesday, after European Council chief Charles Michel told the European Parliament that it must impose oil and gas sanctions on Russia “sooner or later”.

Crude futures had slid the previous day on the European Union’s decision not to include Russian oil in a fresh round of sanctions.

Adding to downward pressure on crude is a strong dollar thanks to the prospect of a series of US interest rate hikes. 

Oil is priced in dollars, making it more expensive for clients using other currencies.

– Key figures around 1030 GMT –

London – FTSE 100: DOWN 0.5 percent at 7,577.10 points

Frankfurt – DAX: DOWN 1.3 percent at 14,230.52

Paris – CAC 40: DOWN 1.2 percent at 6,564.72

EURO STOXX 50: DOWN 1.5 percent at 3,858.21

Tokyo – Nikkei 225: DOWN 1.9 percent at 27,080.52 (close)

Hong Kong – Hang Seng Index: DOWN 1.3 percent at 22,219.85 (close)

Shanghai – Composite: FLAT at 3,283.43 (close)

New York – Dow: DOWN 0.8 percent at 34,641.18 (close)

Brent North Sea crude: UP 1.5 percent at $108.24 per barrel

West Texas Intermediate: UP 1.8 percent at $103.78 per barrel

Euro/dollar: DOWN at $1.0903 from $1.0905 late Tuesday

Pound/dollar: UP at $1.3080 from $1.3074

Euro/pound: DOWN at 83.37 pence from 83.41 pence

Dollar/yen: UP at 123.96 yen from 123.60 yen

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Equities sank Wednesday after Wall Street tumbled on bets the Federal Reserve will act more aggressively to bring inflation under control, while oil recovered some losses caused by the European Union’s decision not to ban Russian crude.

While the Ukraine war continues to cast a shadow across trading floors, Fed monetary policy is at the top of the agenda this week as investors fret over how quickly officials will withdraw their vast pandemic-era financial support.

After last month’s 0.25-percentage-point hike in interest rates, the focus is now on its plans for May’s meeting, with expectations growing that it will announce a 0.50-point lift followed by several more before the end of the year.

Fed governor Lael Brainard, who is considered a dove, on Tuesday spooked traders by saying bringing inflation down from 40-year highs was of “paramount importance” and that the bank was “prepared to take stronger action” if warranted.

Brainard, who is awaiting congressional confirmation for the position of Fed vice chair, also said bank policymakers were ready to start reducing its vast bond holdings, which have helped keep borrowing costs down.

“The market might have been looking for… Brainard to at least give more balanced remarks — instead, they were at the hawkish end of the spectrum from someone like Brainard,” said Stephen Innes of SPI Asset Management.

“She was not overly hawkish, but neither did she offer anything for the doves to cling to.”

Michael Hewson at CMC Markets added that Brainard’s comments, and those from Mary Daly of the San Francisco Fed, “put into sharp relief the concerns investors have, that in looking to rein back inflation, the Fed might overplay its hand and tighten too aggressively and tip the economy into recession”.

Minutes from the Fed’s March meeting will be released later in the day and will be pored over for insights into officials’ thinking, in light of the war and recent data suggesting the world’s top economy remains resilient for now.

All three main indexes on Wall Street ended in the red, with the Nasdaq off more than two percent owing to tech firms being more susceptible to higher rates.

And the selling seeped through to Asia.

Hong Kong and mainland Chinese investors returned from a break to data indicating a sharp drop in China’s services sector caused by the imposition of lockdowns around the country including Shanghai, its biggest city.

Hong Kong dropped more than one percent but Shanghai recovered from early selling to end marginally higher.

Tokyo, Sydney, Seoul, Singapore, Mumbai, Manila, Jakarta, Bangkok and Wellington also retreated.

London, Paris and Frankfurt opened lower.

“Liquidity remains poor, and no one seems willing to take the other side as air pockets are becoming easier to find these days,” Innes added.

The European Union’s decision not to include Russian oil in a fresh round of sanctions saw both main contracts drop Tuesday and extend losses in early Asian business.

The reliance of the bloc — and particularly Germany — on crude from Russia has kept it from following the United States and Britain in imposing an embargo, though it signalled it wants to hit the country’s coal and shipping.

However, European Council chief Charles Michel told the European Parliament on Wednesday that it must impose oil and gas sanctions “sooner or later”.

Adding to downward pressure on crude is the stronger dollar, which jumped in reaction to Brainard’s comments. Oil is priced in dollars, making it more expensive for clients using other currencies.

A coordinated move by Washington, Brussels and the G7 could also ban “all” new investments in Russia on Wednesday, while the US Treasury said Washington has barred Moscow from making debt payments using funds held at American banks.

Meanwhile, the Asian Development Bank lowered its 2022 growth forecast for developing Asia owing to “increasing” price pressures caused by Russia’s invasion of Ukraine, offsetting the recovery from Covid-19.

“The Ukraine crisis is nowhere near to being resolved,” Amy Wu Silverman, at RBC Capital Markets LLC, told Bloomberg Television. “And then we’re heading into earnings season. Volatility levels are probably too low and will start to pick up.”

– Key figures around 0720 GMT –

Tokyo – Nikkei 225: DOWN 1.6 percent at 27,350.30 (close)

Hong Kong – Hang Seng Index: DOWN 1.3 percent at 22,219.85

Shanghai – Composite: FLAT at 3,283.43 (close)

London – FTSE 100: DOWN 0.2 percent at 7,599.04

Brent North Sea crude: UP 0.5 percent at $107.19 per barrel

West Texas Intermediate: UP 0.3 percent at $102.21 per barrel

Dollar/yen: UP at 123.93 yen from 123.60 yen late Tuesday

Euro/dollar: DOWN at $1.0892 from $1.0903

Pound/dollar: DOWN at $1.3067 from $1.3071

Euro/pound: DOWN at 83.35 pence from 83.38 pence

New York – Dow: DOWN 0.8 percent at 34,641.18 (close)

After years spent translating Hollywood films, Russian Mila Grekova was suddenly thrown out of work after Moscow’s military intervention in Ukraine.

Five Hollywood giants — Disney, Warner Bros, Universal, Sony Pictures and Paramount — have all stopped releasing new films there, leaving Russian cinemas bereft of the latest blockbusters.

But it has not made Grekova turn against President Vladimir Putin.

“It’s the West that I hate today and not Putin,” the 56-year-old said.

“Bollywood may replace Hollywood in Russia, but it’s too late for me to learn Hindi,” she said, referring to India’s refusal to condemn Moscow or join in with sanctions.

Russia’s film industry has been thrown into turmoil by the fighting in Ukraine just as it was beginning to recover from the pandemic.

And like in many sectors hit by sanctions, the film industry is turning away from the West, looking inward to its own movies or east to Asia.

Russians are avid cinema-goers with the highest number of admission in Europe, 145.7 million last year, according to the European Audiovisual Observatory. 

Many flock to see Hollywood films, which are often dubbed instead of being shown with subtitles. 

– Looking to Asia –

Before Hollywood’s withdrawal, Russian company Mosfilm-Master was dubbing around 10 foreign films a month, mostly from English.

“Now we have lost two thirds” of business, the company’s director Yevgeny Belin told AFP in its high-tech dubbing studio in Moscow.

“During the pandemic, we had films but no cinemas open. Today, we have our cinemas but no films,” he said.

Russia’s National Association of Cinema Owners said last month that cinemas risk losing up to 80 percent of their revenue.

Looking to adapt, Mosfilm-Master is on the hunt for translators from Korean and Mandarin, even though Belin said he “doubts that Asian films work for Russians” because of cultural differences. 

“Westerners are closer to us,” said the 70-year-old, who has spent three decades in dubbing. 

Olga Zinyakova, the president of Karo, one of Russia’s leading cinema chains, said she is confident the industry can rebuild.

“The situation is extremely difficult but not catastrophic,” the 37-year-old said.

“Since the arrival of Hollywood in post-Soviet Russia 30 years ago, we have gone through a lot of crises: political, economic and the pandemic,” she said, surrounded by empty seats in Moscow’s Oktyabr cinema, home to Europe’s largest screening room with 1,500 places.

– Russian identity –

Since the conflict began on February 24, the number of tickets sold in Karo’s 35 cinemas has fallen by 70 percent, Zinyakova said.

The Russian government has promised major financial support and tax breaks to film production and cinemas, as it looks to replace Hollywood films with more homegrown fare.

“Russians will explore themselves more deeply,” said Zinyakova, pointing to the success of Russian films from the 1990s like the cult movie “Brat” (“Brother”) which is screening again in several Moscow cinemas.

Zinyakova is also preparing to include more Asian and Latin American films among upcoming releases. 

“And when Hollywood comes back, the Russian market and viewers will no longer be the same,” she said.

Pavel Doreuli, a 44-year-old sound designer who works on around 15 Russian films a year, said it was no surprise that Hollywood has pulled out of Russia. 

“World cinema has been hostage to big politics for years,” he said, saying major film festivals like Cannes and Berlin were no longer about art, but about promoting “certain values”.

Still, Doreuli said it would be a shame for Russia to be cut off from world cinema, pointing to the exclusion of official Russian delegations from this year’s Cannes film festival.

“If they are excluded from international festivals, Russians will give up on arthouse cinema that offers a different vision of the world, which is so precious today,” he said.

Equities sank Wednesday after Wall Street tumbled on bets the Federal Reserve will act more aggressively to bring inflation under control, while oil prices extended losses after the European Union refrained from imposing sanctions on Russian crude.

While the Ukraine war continues to cast a shadow across trading floors, Fed monetary policy is at the top of the agenda this week as investors fret over how quickly officials will withdraw their vast pandemic-era financial support.

After last month’s 0.25 percentage point hike in interest rates, the focus is now on its plans for May’s meeting, with expectations growing that it will announce a 0.50 point lift followed by several more before the end of the year.

Fed governor Lael Brainard, who is considered a dove, on Tuesday spooked traders by saying bringing inflation down from 40-year highs was of “paramount importance” and that the bank was “prepared to take stronger action” if warranted.

Brainard, who is awaiting congressional confirmation for the position of Fed vice chair, also said bank policymakers were ready to start reducing its vast bond holdings, which have helped keep borrowing costs down.

“The market might have been looking for… Brainard to at least give more balanced remarks — instead, they were at the hawkish end of the spectrum from someone like Brainard,” said Stephen Innes of SPI Asset Management.

“She was not overly hawkish, but neither did she offer anything for the doves to cling to.”

Minutes from the Fed’s March meeting will be released later in the day and will be pored over for insights into officials’ thinking in light of the war and recent data suggesting the world’s top economy remains resilient for now.

All three main indexes on Wall Street ended in the red, with the Nasdaq off more than two percent owing to tech firms being more susceptible to higher rates.

And the selling seeped through to Asia, where Hong Kong, Shanghai and Taipei dropped on their return from a break.

Tokyo, Sydney, Seoul, Singapore, Manila, Jakarta and Wellington also retreated.

“Liquidity remains poor, and no one seems willing to take the other side as air pockets are becoming easier to find these days,” Innes added.

The European Union’s decision not to include Russian oil in a fresh round of sanctions saw both main contracts drop Tuesday and extend losses in early Asian business.

The reliance of the bloc — and particularly Germany — on crude from Russia has kept it from following the United States and Britain in imposing an embargo, though it signalled it wants to hit the country’s coal and shipping.

Adding to downward pressure on crude is the stronger dollar, which jumped in reaction to Brainard’s comments. Oil is priced in dollars, making it more expensive for clients using other currencies.

A coordinated move by Washington, Brussels and the G7 could also ban “all” new investments in Russia on Wednesday, while the US Treasury said Washington has barred Moscow from making debt payments using funds held at American banks.

Meanwhile, the Asian Development Bank lowered its 2022 growth forecast for developing Asia owing to “increasing” price pressures caused by Russia’s invasion of Ukraine, offsetting the recovery from Covid-19.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 1.9 percent at 27,262.05 (break)

Hong Kong – Hang Seng Index: DOWN 1.8 percent at 22,106.00

Shanghai – Composite: DOWN 0.7 percent at 3,261.22

Brent North Sea crude: DOWN 0.2 percent at $106.44 per barrel

West Texas Intermediate: DOWN 0.3 percent at $101.68 per barrel

Dollar/yen: UP at 124.00 yen from 123.60 yen late Tuesday

Euro/dollar: DOWN at $1.0895 from $1.0903

Pound/dollar: DOWN at $1.3069 from $1.3071

Euro/pound: DOWN at 83.35 pence from 83.38 pence

New York – Dow: DOWN 0.8 percent at 34,641.18 (close)

London – FTSE 100: UP 0.7 percent at 7,613.72 (close)