Algeria’s banks on stock exchange
WITH major central bank policy on hold for now, politics will take centre stage in the coming week as the US presidential election enters a new phase with the first televised debate.
Although Fed chief Janet Yellen said on Wednesday the Federal Reserve took decisions independently of politics, policymakers nevertheless found fit to wait until after the November election to get serious about raising rates again.
“The European Central Bank (ECB), the Fed and even the Bank of England have held their meetings, and the markets can finally focus on something other than monetary policy,” Société Générale analysts wrote in a note.
“We believe that among the things to look out for will be the first US presidential election debate, which… is likely to set the tone for the two subsequent debates,” they added.
While a tense debate is likely today, given Republican candidate Donald Trump’s penchant for eyebrow-raising statements, the stakes will be high with a Super Bowl-sized viewership of around 100 million Americans expected.
Referendum
As if European politicians did not have enough on their plates grappling with Britain’s exit from the EU, Italy will start the countdown towards a highstakes referendum on constitutional reform.
The Italian cabinet is to decide in a meeting today on the date for the referendum on whether to accept the reform already passed by parliament.
With polls suggesting the vote – expected in November or December – could be close, and Prime Minister Matteo Renzi having staked his job on the vote, the prospect of a political crisis in Italy could discomfit European leaders.
While central banks have had little success creating inflation in recent years, Opec may have more luck.
With members plus Russia due to hold an informal meeting in Algiers on Wednesday, the organisation may be its closest in years towards agreeing on cuts in production quotas, with Saudi Arabia actively seeking a deal.
Riyadh has offered to cut oil production if rival Iran caps its own output this year, four sources familiar with the discussions said.
While politics will be centre stage, central bankers will not be far away, with a handful of Fed policy makers due to make public appearances that may offer insight into how divided they are about raising rates.
Stimulus
Investors will meanwhile be looking for signs that ECB policymakers are moving towards boosting monetary stimulus at their December meeting when ECB president Mario Draghi speaks at the European Parliament today.
September inflation data due on Friday from the euro zone will give the ECB food for thought, with economists polled expecting on average an increase to 0.4 percent, which would be the highest rate since January.
“Euro zone inflation is expected to accelerate in September and the trend for the coming months will be upwards,” Unicredit economists wrote. – Reuters ALGERIA plans to allow its dominant state banks to list on the local stock exchange to help develop its financial markets and diversify sources of funding after the oil price slide, a senior financial official said.
The plan will open the door for foreign investors to acquire controlling stakes in banks, reversing a rule requiring Algerian firms to keep a majority shareholding in any partnership with foreigners, the official said.
Algeria’s six government-run banks account for most of the sector’s assets. French companies such as Société Générale and BNP Paribas have the strongest presence among foreign-owned banks already working in the country.
Reliant
Opec member Algeria’s economy has been largely based on a state-run and centralised system since its independence from France in 1962 and it remains reliant on an energy sector that still provides 60 percent of its budget.
But the oil price drop since 2014 has put Algeria under financial pressure, forcing the government to trim spending and search for alternative financing sources.
“The era of $100 a barrel is over. We have no choice but to change our policy,” the official said, while asking not to be named because they were not authorised to speak to the media.
With more than $130 billion in foreign exchange reserves and little foreign debt, Algeria is in better shape than other oil producers such as Venezuela.
However, it has been forced to push up taxes and increase subsidised petrol and diesel prices, scaling back a vast welfare system that has in the past helped ease social tensions. – Reuters