US Business

Shareholders of troubled German gas giant Uniper on Monday approved the company’s nationalisation after it was pushed to the brink of collapse following Russia’s invasion of Ukraine. 

After Moscow sent its forces into Ukraine in February, crucial Russian gas supplies to Germany were drastically slashed in suspected retaliation for Western sanctions. 

Starved of Russian deliveries, Uniper was left facing bankruptcy, prompting the German government to announce it would nationalise the firm over fears its failure could send shockwaves through Europe’s top economy.

Shareholders backed the deal “by a large majority” in a vote at an extraordinary general meeting, Uniper said in a statement. 

The vote was seen as a formality after the majority shareholder, Finnish state-owned energy company Fortum, agreed to the measures in September. 

The European Commission still needs to agree to the nationalisation under state aid laws. Uniper, Germany’s biggest gas importer, said this approval is expected “in the near future”.

Ahead of the vote, company CEO Klaus-Dieter Maubach said that “by stabilising the company, the federal government recognises the central role that Uniper plays for the security of supply in Germany and Europe”. 

Earlier Monday, the German government and Uniper concluded a framework agreement related to the rescue package. 

Berlin had initially agreed to an eight-billion-euro ($8.5 billion) cash injection for Uniper, but the debt-laden company said last month the government would need to spend an additional 25 billion euros.

Uniper has reported a 40-billion-euro net loss for the first nine months of the year, one of the biggest losses in German corporate history.

The government will finance the rescue out of a 200-billion-euro fund designed to cushion the impact of the energy crisis on households and businesses.

With Russian supplies slashed, Uniper has been forced to pay high prices on the open market. 

And while costs have come down since the summer, they remain elevated. 

“We are still in a situation where we have to buy gas on the (spot) markets, where the prices have reached a level that is — in general — higher than the purchase price of our customers,” Holger Kreetz, Uniper’s chief operating officer for asset management, told AFP.

“We are still in a tight situation,” he said, adding this would remain the case until existing long-term contracts expire.

Uniper is seeking damages at an international tribunal from Gazprom over what it claims is the Russian energy giant’s failure to deliver contractually agreed gas supplies. 

Gazprom has said it does not recognise the legitimacy of the claims. 

European equities rose Monday in light pre-Christmas trade, rebounding gently from last week’s losses that followed bumper interest rate hikes, but Wall Street and Asian markets failed to get into the festive mood.

Equity markets often experience a so-called Santa rally, when prices rise during the low-level holiday trading.

“Everyone, it seems, is waiting to see if Santa is going to come around, which leaves the market stuck between feelings of hope and angst,” said market analyst Patrick O’Hare at Briefing.com.

“Accordingly, there isn’t much happening at the broad market level this morning,” he added.

The blue-chip Dow opened marginally lower, with the broader S&P 500 and tech-heavy Nasdaq Composite were flat.

Meanwhile in Europe, London rose 0.6 percent in afternoon trading, while Frankfurt and Paris both added 0.5 percent.

“Markets are grinding higher as some traders are optimistic about valuations which seem to them somewhat attractive,” AvaTrade analyst Naeem Aslam told AFP.

“We really don’t have much volume in markets as traders are away for holidays,” he added.

“Overall I think it’s going to be pretty subdued trading, given the lack of significant data to react to,” noted analyst Susannah Streeter at stockbroker Hargreaves Lansdown.

Asian indices, however, fell on lingering concern over a possible global recession caused by moves to fight inflation from top central banks.

Equities took a turn south last week after monetary policymakers around the world signalled that while price rises appeared to be stabilising, more work would be needed to get them under control.

All three main indexes on Wall Street ended sharply lower Friday after the Federal Reserve warned it would continue tightening monetary policy into 2023.

That was followed by similar warnings from the European Central Bank and Bank of England, while data suggested economies were feeling the pinch, dealing a blow to sentiment heading into the Christmas break.

“With no shortage of economic headwinds, investors struggle to find something cheerful about this holiday week after the two most dominant central banks cast a pall over the proceedings,” said SPI Asset Management’s Stephen Innes.

The US sell-off fed through to Asia, where Tokyo shed more than one percent, while Hong Kong, Shanghai, Taipei, Manila, Bangkok, Jakarta and Wellington were in negative territory, but Singapore and Mumbai edged up.

Adding to the downbeat mood was a spike in Covid-19 cases in China following the country’s reopening after almost three years of strict containment measures.

While the move is expected to boost the world’s number two economy, there is a worry that businesses and China’s health system will be hit in the near term.

Still, Beijing flagged a number of measures aimed at kickstarting growth next year, including support for the beleaguered property sector.

An expected pick-up in Chinese demand helped propel oil prices higher.

– Key figures around 1430 GMT –

London – FTSE 100: UP 0.6 percent at 7,374.60 points

Frankfurt – DAX: UP 0.5 percent at 13,960.89

Paris – CAC 40: UP 0.5 percent at 6,482.31

EURO STOXX 50: UP 0.4 percent at 3,819.75

New York – Dow: DOWN less than 0.1 percent at 32,894.27

Tokyo – Nikkei 225: DOWN 1.1 percent at 27,237.64 (close)

Hong Kong – Hang Seng Index: DOWN 0.5 percent at 19,352.81 (close)

Shanghai – Composite: DOWN 1.9 percent at 3,107.11 (close)

Euro/dollar: UP at $1.0610 from $1.0586 on Friday

Pound/dollar: UP at $1.2187 from $1.2148

Euro/pound: DOWN at 87.09 pence from 87.14 pence

Dollar/yen: DOWN at 136.59 yen from 136.60 yen

West Texas Intermediate: UP 1.9 percent at $75.72 per barrel

Brent North Sea crude: UP 1.7 percent at $80.35 per barrel

burs/cw

Since buying Twitter, Elon Musk has made radical changes that have sparked fears for the future of the platform, from firing half the staff to restoring ex-president Donald Trump’s account and temporarily suspending those of several journalists.

After Twitter users voted on Monday to oust Musk, AFP looks back at a rollercoaster two months at the Silicon Valley giant.

– Enter Elon –

Musk, the world’s second-richest richest man and CEO of Tesla and SpaceX, buys Twitter in late October for $44 billion after months of on-off negotiations.

“Let the good times roll,” he tweets after the deal is sealed on October 28. He becomes the sole director of the company after dissolving its corporate board.

– ‘Content moderation council’ –

In one of his first moves, the self-declared free speech absolutist announces he will form a “content moderation council”, in a nod to concerns that Twitter could become a free-for-all platform for disinformation and hate speech.

– Monthly charge –

On November 1, Musk announces the site will charge $8 per month to verify the accounts of celebrities and companies — a service that used to be free. But the November 6 launch of the Twitter Blue subscription plan goes awry. Musk is forced to suspend the move after an embarrassing rash of fake accounts alarm advertisers.

– Brands step back –

Top global companies, including General Mills and Volkswagen, suspend their advertising on Twitter on November 3 as they monitor the new direction the company will take.

– Massive layoffs –

On November 4, half of Twitter’s 7,500-strong staff are made redundant, sending shockwaves through Silicon Valley.

Musk tweets that “unfortunately there is no choice when the company is losing over $4M/day”.

– Regulator’s ‘concern’-

The chaos draws a rare warning on November 10 from the Federal Trade Commission (FTC), the US authority that oversees consumer safety.

“We are tracking recent developments at Twitter with deep concern,” says an FTC spokesperson.

– Ultimatum to staff –

Musk delivers an ultimatum to Twitter staff on November 16, asking them to choose between being “extremely hardcore” and working long hours, or losing their jobs. He gives them a day to decide.

Large numbers of staff quit.

– Trump reinstated –

Musk reinstates the account of banned former president Donald Trump after conducting a poll of users, a narrow majority of whom support the move. 

A few days later he announces an “amnesty” for all banned Twitter accounts.

– Covid controversy  –

In late November, Twitter says it is no longer enforcing a policy of combatting Covid-19 disinformation. Musk had fiercely opposed Covid restrictions.

– Kanye suspended –

Musk revises his promises of unfettered free speech after rapper Kanye West tweets a picture that appears to show a swastika interlaced with a Star of David. His account is suspended for “incitement to violence”.

– Twitter Blue take two –

In mid-December Musk relaunches Twitter Blue. This time, Twitter conducts a review of the account before giving it the coveted blue check mark.

– Journalists suspended, then reinstated –

On December 15, Twitter suspends the accounts of more than a half-dozen journalists, including reporters from CNN, The New York Times, and The Washington Post.

Musk accuses them of endangering his family through their reporting on Twitter’s shutdown of an account that tracked flights of his private jet. 

The EU threatens to sanction the company.

On December 17 some of the accounts are reactivated.  

– Vote to oust Musk –

On December 19, Twitter users vote by 57.5 percent to oust Musk as CEO in a poll he organized and promised to honour.

Musk has not yet responded.

German business confidence improved for a third straight month in December, a key survey showed Monday, the latest sign a downturn in Europe’s top economy may be milder than feared.

The Ifo institute’s monthly confidence barometer, based on a survey of about 9,000 companies, reached 88.6 points, up from a reading of 86.4 points in November. 

Earlier in the year, the gauge declined for months after Russia’s invasion of Ukraine, and subsequent reduction in gas exports, sent inflation soaring and triggered warnings of recession for next year.

But a massive government fund to cap prices and efforts to diversify the country’s energy supplies have eased the immediate sense of crisis. 

“Sentiment in the German economy has brightened considerably,” Ifo president Clemens Fuest said.

“German business is entering the holiday season with a sense of hope.”

ING bank economist Carsten Brzeski said the reading shows that “hope has returned”.

“Hope that the economy might even avoid a winter recession or at least hope that it will only be a mild one.”

But he cautioned “the downsides still outweigh the upsides”, noting that gas reserves were dropping fast due to cold weather, as well as warning signs there could be a weakening of global trade. 

After months flashing red, leading indicators have started giving more optimistic readings in recent weeks. 

Last week, Ifo said the looming recession will be milder than expected, with economic output shrinking 0.1 percent in 2023, revising its previous prediction of a 0.3 percent contraction.

And another influential institute, IfW Kiel, even predicted that the economy would dodge recession due to the government relief measures. 

In its autumn forecast, the German government said the economy would contract 0.4 percent next year.

US online giant Meta appears to have “breached EU antitrust rules” in the online classified section of its Facebook social network, the European Commission said Monday in a preliminary finding.

“The Commission takes issue with Meta tying its online classified ads service, Facebook Marketplace, to its personal social network, Facebook,” it said in a statement.

“The Commission is also concerned that Meta is imposing unfair trading conditions on Facebook Marketplace’s competitors for its own benefit.”

The commission, the regulator for the 27-nation European Union, has had several run-ins with Meta and other Big Tech companies over their practices.

Its policy arsenal has been beefed up this year with two new pieces of EU legislation, the Digital Services Act and the Digital Markets Act, that carry massive financial penalties in the event of infringement. 

Those acts will come fully into force through 2023 and 2024.

Monday’s announcement was about “suspected violations” of EU antitrust rules and gives Meta a chance to respond to the commission’s formal Statement of Objections.

Those concerns focus on the way Meta gives Facebook users automatic access to Facebook Marketplace “whether they want it or not”.

That link may unfairly disadvantage Facebook Marketplace competitors, the commission said.

The concerns also home in on unfair trading practices on competing online classified ads services which advertise on Facebook or Instagram, both of which are part of Meta.

The commission said it was worried that the user terms on those platforms could allow Meta to use ads-related data from competitors to boost Facebook Marketplace.

If the EU’s concerns stand, and enough evidence of infringement is produced, Meta could face a fine of up to 10 percent of its total global annual turnover.

Meta’s worldwide revenue for the 12 months ending September 30 was $118 billion.

The commission could also prohibit the infringing behaviour.

Italy’s new hard-right government has abandoned plans to allow merchants to refuse card payments under 60 euros ($64), following pressure from the European Union.

Economy Minister Giancarlo Giorgetti confirmed the U-turn as he set out amendments to the 2023 budget late on Sunday.

The European Commission last week approved the general direction of far-right Prime Minister Giorgia Meloni’s first budget, but warned moves to boost the use of cash risked efforts to fight tax evasion.

“We must find solutions that are compatible with the recommendations and reference standards, also at the European level,” Giorgetti told a parliamentary commission.

The government had proposed merchants be allowed to refuse card payments for transactions worth less than 60 euros without incurring penalties, alongside measures to raise the maximum for cash payments in shops from 2,000 to 5,000 euros, which also drew criticism from Brussels.

The plan to raise the ceiling on cash payments will go ahead.

The European Commission had previously recommended that Italy fight tax evasion by strengthening e-payments and limiting the thresholds for cash payments.

The application of sanctions on merchants who refused card payments was also one of the goals agreed under an EU post-pandemic recovery plan, from which Italy stands to receive almost 200 billion euros in grants and loans by 2026.

The Bank of Italy has also criticised cash payments as aiding tax evasion, which costs Italy about 100 billion euros per year.

Another measure criticised by Brussels, a tax amnesty on debts of up to 1,000 euros from the period 2000 to 2015, has been postponed for three months, under the latest budget draft.

Ghana suspended payments on part of its foreign debt on Monday as the country undertakes debt restructuring in line with a bailout deal with the International Monetary Fund (IMF).

The West African state is facing an economic crisis with inflation at more than 50 percent and its cedi currency down sharply, hit by the adverse effects of the global pandemic and Ukraine crisis. 

“That is why we are announcing today a suspension of all debt service payments under certain categories of our external debt, pending an orderly restructuring of the affected obligations,” the finance ministry said in a statement.

“This suspension will include the payments on: our Eurobonds; our commercial term loans; and on most of our bilateral debt,” it said.

The government however said the suspension would exclude payments of multilateral debt, new debt (whether multilateral or otherwise) contracted after December 19, 2022 or debts related to certain short-term trade facilities.

“We are also evaluating certain specific debts related to projects with the highest socio-economic impact for Ghana which may have to be excluded,” it said.

– Debt troubles –

Once seen as an investor favourite, Ghana struggled recently with its debt burden. The government spends more than half of its revenues on debt servicing. The fall in the cedi increased debt values by $6 billion just this year.

The government said the foreign debt payment suspension was an interim emergency measure pending future agreements with the country’s creditors.

It also promised to engage with all of its external creditors to make Ghana’s debt sustainable.

Ghanaian economist Daniel Anim Amarteye said the government move could erode investors’ confidence in the economy.

“It could affect our credibility in the eyes of the investor community globally and our ability to go to the market in the near future could be affected,” Amarteye told AFP. 

“This move will lead to a further downgrade by the international rating organisations.”

Three major international rating agencies have all downgraded Ghana’s debt, in a sign of investor worries over its potential for defaulting.

“The ministry is yet to engage creditors. Whether or not they will agree to the terms from the ministry of finance is another issue. We are moving on very difficult turf,” he added.

Last week, Ghana agreed on a $3 billion credit deal with the IMF to tackle its economic crisis.

Although the three-year loan has yet to be approved by the fund’s board, the programme aims to reduce inflation, strengthen the economy’s resilience to external shocks and improve market confidence in the country.

A top cocoa and gold producer, Ghana also has oil and gas reserves, but its debt has soared and like the rest of sub-Saharan Africa it has been hit hard by fallout from the Covid pandemic and the Ukraine war.

The economic woes have caused social tension in the West African nation of 30 million people. There have been street protests against rising costs of living and the opposition has called for the removal of the finance minister.

The crisis forced President Nana Akufo-Addo’s government to reverse its position earlier this year and seek IMF help as economists warned of a default on debt payments.

The government has already announced a domestic debt swap as part of the programme to ease a crunch in payments and was soon expected to release details about restructuring foreign debt.