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U.S. sanctions ‘mostly symbolic’ and won’t trouble Russia



This combination of pictures created on March 17, 2021 shows US President Joe Biden(L) during remarks on the implementation of the American Rescue Plan in the State Dining room of the White House in Washington, DC on March 15, 2021, and Russian President Vladimir Putin as he and his Turkish counterpart hold a joint press statement following their talks at the Kremlin in Moscow on March 5, 2020.

Eric Baradat | AFP | Getty Images

New U.S. sanctions on Russia are “mostly symbolic” and will have minimal impact on markets and the macroeconomic outlook, economists have suggested.

President Biden’s administration on Thursday announced a raft of new sanctions against Moscow over 2020 election interference, a huge cyberattack on U.S. government and corporate networks, illegal annexation and occupation of Ukraine’s Crimea, and human rights abuses.

Sanctions targeted 16 entities and 16 individuals accused of attempting to influence the 2020 U.S. presidential election, along with five individuals and three entities linked to the Crimea annexation, and expelled 10 Russian diplomats from the U.S.

Washington also imposed sanctions on newly-issued Russian sovereign debt, which caused a slight sell-off in the Russian ruble and sovereign bonds on Thursday.

The move prevents U.S. financial institutions from participating in the primary market for ruble and non-ruble denominated debt after June 14.

‘Symbolic exercise’

However, economists do not foresee any tangible fallout from the sanctions in their current form.

“The latest round of U.S. sanctions was a mostly symbolic exercise,” Agathe Demarais, global forecasting director at The Economist Intelligence Unit, told CNBC on Friday.

“Sanctions on Russian individuals and companies are irrelevant, as these people and firms have no ties to the US and probably no intention to ever use the U.S. dollar or to have bank accounts in the U.S.”

Demarais added that the sanctions on sovereign debt are less stringent than the initial market reaction would suggest, since they only target the primary debt market and can therefore “easily be circumvented via the secondary market.”

The primary market in this instance refers to Russian debt securities created and offered to the public for the first time, while the secondary market is where those securities are traded among investors.

“This policy choice means that the U.S. administration was careful to avoid hurting U.S. investors, who hold billions in Russian sovereign debt,” Demarais said.

Notably, U.S. officials accompanied the sanctions with a series of statements voicing desire to improve bilateral relations with Moscow. The sanctions effectively draw a line under a period of investors waiting and guessing as to their timing and extent.


Vladimir Tikhomirov, chief economist at Moscow-based BCS Global Markets, told CNBC on Friday that some investors were relieved by the removal of uncertainty and fairly modest sanctions, which reduced the overall level of Russia-related investment risks.

Tikhomirov said the sovereign debt ban was the most significant of the new measures, but its impact was still limited.

“However, given the current state of Russia’s budget (in 1Q21 the budget was in surplus), low level of sovereign debt, conservative fiscal policy and high volume of accumulated reserves the ban on new debt purchases is unlikely to have significant implications for the state of Russia’s finances or for the economy at large,” he said.

Liam Peach, emerging markets economist at Capital Economics, agreed that the fallout will be limited unless the sanctions are extended to all sovereign debt, or Russia launches aggressive retaliation.

Capital Economics estimates that the Russian government will issue 2.5 trillion rubles of bonds in 2021, equivalent to 2.7% of its GDP, to finance its deficit and roll over maturing debt. However, Peach anticipates that almost all debt will be issued in rubles and bought by Russian banks, limiting the impact of sanctions on new issuances.

While past sanctions have tended to result in a prolonged premium on Russia’s dollar bonds and currency, the macro impact has been fairly limited, Peach highlighted in a research note Thursday.

“This provides an anchor, but of course the impact will depend on what scale non-residents sell their holdings of outstanding debt,” he said.

“Russian retaliation could consist of counter-sanctions or increased tensions with Ukraine but the key point is that the trend towards increased isolation will only grow further,” Peach noted.

Is retaliation coming?

Tikhomirov said Russian investors do not expect retaliation by way of economic or financial measures, and therefore remain relatively sanguine about the implications on markets and the economy.

“That said, the prime risk in this area is mainly political: as Russia is likely to retaliate by political moves these potentially could result in a further escalation in Russia-West relations, which, in turn, could trigger counteraction from the U.S. and its allies,” he said.

“Such a scenario cannot but concern many investors, although hopes remain that Moscow will take the U.S. offer and will also make moves aimed at improving relations with the U.S. and the West in general.”

Economists broadly expect the Central Bank of Russia to hike interest rates next week. Peach projected that should the ruble come under significant pressure and the CBR develops worries about the inflation outlook, more aggressive monetary tightening can be expected. Capital Economics now expects a 50 basis point hike to 5%.

Meanwhile Tikhomirov anticipates a 25 basis point hike to 4.75% and a possible additional 25-50bp hike later in the year, as policymakers track an acceleration in inflationary pressures rather than reacting to sanctions.

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Is it safe to travel this summer or fall? Here’s what experts say



For some homebound travelers yearning for a vacation, the question isn’t whether to book a vacation this year, but when. 

Enthusiasm for travel is at its highest point in a year, with 87% of American travelers expected to take a trip this summer, according to a survey conducted last week by travel market research company Destination Analysts.

But is the summer the best time to travel this year, or is it prudent to wait? Medical professionals present several scenarios of how the rest of 2021 may play out.   

1. A summer of low infection rates

Dr. Sharon Nachman, chief of the Division of Pediatric Infectious Diseases at Stony Brook Children’s Hospital, said she expects this summer to have lower infection rates than the winter.

“When I add in the idea that kids 12 and older will also have access to vaccines this summer, the risk to families will continue to drop, allowing for more activities and with lower risk … to all,” she said.

Dr. Anne Rimoin, a professor of epidemiology at the UCLA Fielding School of Public Health, said she thinks there is “a real chance at a summer with much lower rates of disease, however, it means we all have to pull together and do our part” by getting vaccinated, wearing masks, social distancing and practicing hand hygiene.

Vaccinations are important for safe summer travel, said UCLA Fielding School of Public Health’s Dr. Anne Rimoin, though she noted they are “no guarantee” against infection.

Tetra Images/TGI | Tetra images | Getty Images

As to whether traveling is safe this summer, she said it depends on two factors: vaccinations and variants.

“It all depends upon how many vaccines we get in arms,” Rimoin said. “The variants are more contagious, so … those that are not vaccinated are more easily infected.”

2. A good summer and a ‘mild fall’

Former Food and Drug Administration Commissioner Scott Gottlieb told CNBC’s “Squawk Box” in April that he expects infection rates to be “really low” in the United States this summer, which will likely result in “a relatively mild fall.”

After that, things may change, he said.

We’re going to have to do things differently as we get into the winter.

Scott Gottlieb

Former FDA commissioner

“I think we should be thinking about the late winter,” he said. “I think the overall death and disease from Covid, hopefully, will be diminished, but there’s a chance that it’s going to start to spread again.”

Gottlieb said Covid-19 will “transition this year … from more of a pandemic strain to a seasonal strain.” This, however, could change if variants that can “pierce” prior immunity or vaccines develop, though he noted that “right now we don’t see that on the horizon.”

“I don’t think we’re going to be having holiday parties in the back room of a crowded restaurant on December 20th,” he said. “I think that we’re going to have to do things differently as we get into the winter.”

“But I think that’s going to be a fact of life going forward for a number of years anyway,” said Gottlieb.  

3. Flare-ups and outbreaks

Dr. Charles Bailey, medical director for infection prevention at Providence St. Joseph Hospital and Providence Mission Hospital, does not view this summer as a safe period for travel before infections return in the fall because he expects outbreaks to continue throughout the year.

He said he anticipates the majority of the United States will continue on a path to normalcy, while areas experience “episodic disease flare-ups — local and regional ‘hotspots’ — of Covid activity through the remainder of 2021 and into early 2022.”  

Mark Cameron, epidemiologist and associate professor at Case Western Reserve University’s School of Medicine, also doesn’t see the summer as a “window of opportunity for perfectly safe travel per se” because of concerns about last summer’s surges and the possibility of variant-fueled outbreaks.

He compared the current state of the pandemic towatching the tick and the tock of an irregular clock pendulum.” 

“The pandemic could end with the virus circulating unpredictably, with new variants causing outbreaks or epidemics on a semi-regular basis, especially where vaccine availability is low or vaccine hesitancy is high, much like the flu does now,” said Cameron.

“The moment we’re in — with vaccination rates, variant spread and Covid-19 fatigue competing with each other — is critically important in putting a lid on this virus and its growing penchant for evading our eradication efforts,” he said.

4. The chance of another summer surge

William Haseltine, former professor at Harvard Medical School and author of “Variants! The Shape-Shifting Challenge of COVID-19,” said there is a risk of another summer surge, and traveling during the summer will only exacerbate the problem.  

“The more people choose to travel as an escape from the very real pandemic stress and fatigue, the more we risk another surge of cases this summer,” he said.

Covid-19 is expected to eventually become a seasonal illness, yet it is unknown when this will occur.

Marko Klaric / EyeEm | EyeEm | Getty Images

Read more on summer travel in the age of Covid

Dr. Supriya Narasimhan, chief of infectious diseases at Santa Clara Valley Medical Center, agreed that another summer surge is possible, even in places where vaccines are being aggressively rolled out.

She agreed that Covid is “less seasonal than flu” and said the factors which will affect whether another surge occurs are public compliance with masking, vaccine uptake and variants.

It is a game of cat-and-mouse with the virus mutating and the only way to stop it is to stop transmission,” she said. “We may yet hit a vaccine ‘wall’ in that people just don’t want to take it even if available.”

“In my opinion, we need more data to make travel decisions,” she said.

Disclosure: Scott Gottlieb is a CNBC contributor and is a member of the boards of Pfizer, genetic testing start-up Tempus, health care tech company Aetion Inc. and biotech company Illumina. He also serves as co-chair of Norwegian Cruise Line Holdings’ and Royal Caribbean’s “Healthy Sail Panel.”

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Singapore Press Holdings to transfer media business into not-for-profit entity



Logo of Singapore Press Holdings (SPH).

Roslan Rahman | AFP | Getty Images

SINGAPORE — Singapore Press Holdings, a newspaper publisher and real estate company, said Thursday it will transfer its troubled media business into a not-for-profit entity.

The company’s media business — which includes English broadsheets The Straits Times and The Business Times, as well as Chinese newspaper Lianhe Zaobao — have struggled with falling advertising revenues in recent years.

The troubles at SPH caused its market capitalization to shrink, and the company’s shares on the Singapore Exchange were dropped from the benchmark Straits Times Index last year. The STI is made up of the 30 listed companies with the largest market capitalization.

Trading of SPH shares were halted on Thursday, pending the announcement. As of Wednesday’s close, the company’s shares have risen roughly 58% this year.

In a statement, SPH said all media-related assets will be transferred into a new wholly-owned subsidiary named SPH Media Holdings, with an initial funding that includes a cash injection of 80 million Singapore dollars ($59.81 million) and 30 million Singapore dollars worth of SPH shares.

The new subsidiary will eventually be transferred to a not-for-profit entity for “a nominal sum,” said the company.

SPH cited The Guardian in the U.K. and the Tampa Bay Times in the U.S. as examples of media businesses that employ the not-for-profit model.

In addition to media, SPH is also in the property business. It owns 66% of a real estate investment trust called SPH REIT, with properties in Singapore and Australia making up its portfolio.

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India’s worsening Covid crisis could spiral into a problem for the world



A woman wearing mask as a precaution against Covid-19 stands in a crowded area near India Gate, in New Delhi on March 19, 2021 as coronavirus cases continue to increase across India.

Money Sharma | AFP | Getty Images

India’s Covid-19 cases spiked in April to daily record highs, and experts warn the country’s worsening health crisis could scuttle efforts to end the global pandemic.

The South Asian country — home to around 1.4 billion people or 18% of the world’s population — accounted for 46% of new Covid cases globally, the World Health Organization said Wednesday. One in every four deaths in the past week came from India, the UN health agency said.

India has reported more than 300,000 new cases daily in the last two weeks, and overtook Brazil in April to become the second-worst infected country in the world. Cumulatively, coronavirus infections in India reached around 20.67 million with more than 226,000 deaths, according to health ministry data on Wednesday. Several studies of India’s data, however, found that cases were likely severely underreported.

There are already signs that India’s outbreak is spilling over to other countries. Its neighbors Nepal and Sri Lanka have also reported increases in infections, while other regional economies including Hong Kong and Singapore have seen imported Covid cases from India.

Here’s how India’s coronavirus crisis could spiral into a wider global problem.

Potential new Covid variants

WHO has classified the B.1.617 as a variant of interest, which suggests the mutated strain could be more contagious, more deadly, as well as more resistant to current vaccines and treatments. The organization said more studies are needed to understand the significance of the variant.

Global vaccine supply at risk

India is a major vaccine manufacturer, but the health crisis at home has led authorities to halt exports of Covid-19 vaccines as the country prioritizes its domestic needs.

The Serum Institute of India (SII) — the country’s main producer — has the rights to produce the Covid vaccine co-developed by AstraZeneca and the University of Oxford. Some of its production is slated for Covax, the global initiative to supply poor countries with Covid vaccines.   

Developing countries are lagging advanced nations in securing vaccine supplies in what the WHO has described as a “shocking imbalance” in distribution.

A delay in vaccine exports by India could therefore leave lower-income countries vulnerable to fresh outbreaks of the coronavirus.

Threat to global economy

India is the world’s sixth largest economy and a major contributor to global growth.

Some economists have downgraded their growth forecasts for India. But they remained optimistic about the economy’s outlook for the year given that restrictions to curb the virus spread have been more targeted compared to the strict nationwide lockdown last year.

The International Monetary Fund last month said it expects India’s economy to grow 12.5% in the fiscal year ending March 2022, after shrinking 8% in the prior fiscal year.

Still, the renewed outbreak in India has led several countries to tighten travel restrictions — and that’s bad news for airlines, airports as well as other businesses that depend on the travel industry, said Uma Kambhampati, an economics professor at the University of Reading in the U.K.

Meanwhile, the U.S. Chamber of Commerce has warned that the health crisis in India could drag down the U.S. economy, reported Reuters. That’s because many U.S. companies hire millions of Indian workers to run their back-office operations, according to the report.

“Given all these issues, and the humanitarian crisis unfolding, it has become imperative for the world to act quickly to help India – whether such help is requested or not,” Kambhampati said in a report published on The Conversation, a not-for-profit website that carries commentaries by academics and researchers.

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