Saturday, May 14, 2022

Embattled Orpea Gets $1.8 Billion Financing as Debt Looms

Albertina Torsoli
Fri, May 13, 2022



(Bloomberg) -- Orpea SA, the embattled retirement-home operator at the heart of a scandal in France, secured 1.73 billion euros ($1.8 billion) of financing from banks as the company faces increasing costs and debt maturities.

The company aims to sell 3 billion euros of assets by end of 2025 to reduce debt, Orpea said in a statement Friday. It won’t pay a dividend this year because of the expenses it faces to overhaul its operations in the wake of the scandal, in which it was accused of stinting on care for the elderly to boost profits. The stock slumped as much as 7.9%, only to reverse losses and gain as much as 4%.

The financing agreement, with banks including BNP Paribas SA, Credit Agricole SA and Societe Generale SA, includes a commitment to maintain at least 300 million euros of cash on hand. The syndicated facility is a response to “the current period of uncertainty,” access to financial markets that’s been closed off and a slowdown in the originally planned asset disposal program, it said. The average interest rate on the facility is higher than the company’s current cost of funding of 2.2%.

Orpea has “major financing challenges” due to investments amounting to about 900 million euros a year for the development of its real-estate portfolio in 2022 and 2023, the company said. It has 850 million euros of debt maturing in the second half of this year and 983 million euros in 2023. Orpea is setting up another “optional” syndicated facility for up to 1.5 billion euros, it said.

The company was thrust into the spotlight at end of January, when a book called “The Gravediggers” singled out its top managers for putting profits ahead of patient welfare, rationing items like food and adult diapers. Orpea shares have since lost about 60% of their value, and a string of government representatives -- including President Emmanuel Macron -- expressed shock and disgust over the revelations.

France to Bolster Nursing-Home Oversight After Orpea Scandal

A review into the allegations commissioned by Orpea pointed to chronic under-staffing and mishandling of public funds. France’s government in March filed a legal complaint, saying it wants Orpea to return millions of euros that it believes were misused.

Prosecutors last month expanded an investigation into the company following a referral by the government. The probe is looking into allegations of falsification of records and violation of labor rules through the abusive use of short-term contracts, according to prosecutors.

Orpea said Friday that net income slumped 59% last year to 65.2 million euros, with debt standing at 7.89 billion euros as of Dec. 31, up by 1.23 billion euros versus the previous year due to a “sustained” property development and acquisition strategy. Last year’s net income result includes 83 million euros of provisions for liabilities and charges linked to risks for the 2017-2021 period following investigations commissioned by the government, Orpea said.

“We remain pessimistic,” Yi Zhong, analyst at Alphavalue, wrote in a note to clients. “The ESG crisis weighed on Orpea’s FY21 results and its occupancy rate in France. The group has signed a sort of ‘emergency’ financing at nearly-doubled cost, showing a worrying liquidity outlook.” She sees the stock sinking another 39% over the next six months.

First-quarter sales climbed 9%, Orpea said. That’s in line with expectations, according to Jefferies International Ltd. analyst James Vane-Tempest. The company held a conference call with analysts at 2 p.m. Paris time to discuss the publication and denied access to reporters. Earnings calls typically are open to journalists. Orpea, which says it’s making efforts to bolster its transparency, declined to comment on the lack of media access.

The company expects operating profitability will be hurt this year by inflation, notably higher energy costs and salaries in certain countries. It’s also bracing for expenses related to the management of the scandal and its consequences.

The company plans a “major” overhaul, primarily in France, focused on the quality of care and well-being of residents, the strengthening of dialog with stakeholders, an improved human resources policy, stronger internal controls and promotion of its whistle-blowing policy for employees, it said.
DOJ warns AI hiring and productivity tools can violate anti-discrimination law

Jon Fingas
·Reporter
Fri, May 13, 2022,


Federal agencies are the latest to alert companies to potential bias in AI recruiting tools. As the AP notes, the Justice Department and Equal Employment Opportunity Commission (EEOC) have warned employers that AI hiring and productivity systems can violate the Americans with Disabilities Act. These technologies might discriminate against people with disabilities by unfairly ruling out job candidates, applying incorrect performance monitoring, asking for illegal sensitive info or limiting pay raises and promotions.

Accordingly, the government bodies have released documents (DOJ, EEOC) outlining the ADA's requirements and offering help to improve the fairness of workplace AI systems. Businesses should ensure their AI allows for reasonable accommodations.They should also consider how any of their automated tools might affect people with various disabilities.

There's no guarantee companies will follow the advice. However, it comes amid mounting pressure on companies to temper their uses of AI for recruiting and worker tracking. California recently enacted a productivity quota law banning algorithms that violate health, labor and safety regulations, or lead to firings of people who can't meet dangerous quotas. New York City, meanwhile, now requires that AI hiring systems pass yearly audits looking for discrimination. Companies that don't heed the new warnings could face serious legal repercussions at multiple levels.
Harvard Paid Endowment Chief Narvekar $6.24 Million in 2020

Janet Lorin
Fri, May 13, 2022


(Bloomberg) -- N.P. “Narv” Narvekar, the head of Harvard University’s endowment, was paid $6.24 million in 2020, little-changed from the year before.

Narvekar received about $1 million in base salary, according to the school’s federal tax filing. He had about another $5.2 million in deferred compensation, Harvard said.

Since taking over in December 2016, Narvekar has revamped the endowment -- which at $53 billion is the largest in US higher education -- by unloading underperforming assets. He also changed the investment team’s compensation, tying it to long-term returns and overall portfolio returns.

The endowment’s performance has recently lagged behind peers. The fund gained 34% in the year through June 2021, a period when many colleges benefited from the surge in stocks. That ranked it seventh out of eight Ivy League schools. Harvard’s 10-year return of 9.2% is the lowest among the group.

Narvekar’s 2020 pay differs from what’s in Harvard’s tax filing because some of his payments are deferred and will appear in future years, according to the school.

In 2019, Narvekar, chief executive officer of Harvard Management Co., the entity that runs the endowment, had total compensation was $6.25 million.

The importance of college endowments has been underscored as the pandemic led to a financial crisis in US higher education. Universities lost revenue as they were forced to close and refund room and board fees. At the same time, schools incurred additional costs for Covid-19 testing and other social-distancing measures.
Bill Gates Sells $940 Million of CN Rail Stock, Trimming Stake to 9%

Scott Carpenter
Fri, May 13, 2022


(Bloomberg) -- Bill Gates sold about $940 million of Canadian National Railway Co. shares, trimming one of the largest holdings of the investment firm that controls his $117 billion personal fortune.

Cascade Investment unloaded roughly 12% of its shares in the Montreal-based company from April 27 to May 12, leaving it with a stake of about 9% or $6.8 billion, according to a Securities and Exchange Commission filing.

Cascade has been reducing its ownership of the Canadian railway since at least May 2021, when it still owned roughly 13% of the company. One of Cascade’s investment managers, Justin Howell, has served on Canadian National’s board since last year.

Canadian National shares have slid 7.3% this year after rising steadily from pandemic-era lows in March 2020.

Kirkland, Washington-based Cascade also owns a $14.1 billion stake in Republic Services Inc., a waste-management company, as well as $9.7 billion of Deere & Co. stock. Cascade’s largest holding is thought to be $26.9 billion worth of shares in Microsoft Corp., the software company Gates founded. Gates stopped reporting his Microsoft shares in 2020 after stepping down from its board.


Gates, 66, the world’s fourth-richest person according to the Bloomberg Billionaires Index, recently got into a spat with Elon Musk after he accused Gates of damaging his environmental credibility by shorting Tesla Inc. In an interview with the BBC this month, Gates appeared to acknowledge that he had indeed shorted shares of the electric-vehicle maker, saying that he was merely diversifying his investments.

Gates’s former wife, Melinda French Gates, 57, received stock of companies including Canadian National, Deere and AutoNation Inc. from Cascade after the couple announced a divorce last year. She’s since sold a large portion of the railway holding, including $467 million of shares in December.

The Bill & Melinda Gates Foundation Trust also sold $180 million worth of Canadian National shares since late April, reducing its stake to less than 2%, according to the filing.
Wolves, witches and rapping Ukrainians compete for Eurovision title




Alexandria SAGE
Fri, May 13, 2022


Will it be Norway's banana-eating wolves, France's coven of witches or Britain's space man?

Or maybe a Greek with a death wish, a slinky Lithuanian chanteuse with a jet-black bowl cut or a Serbian germaphobe?

The line-up for Saturday's grand finale of the Eurovision Song Contest is typically outlandish, but with the roars of war on the continent's eastern front, a hiphop lullaby from Ukraine is the song to beat.

Riding a wave of public support following Russia's invasion, Kalush Orchestra's tribute to the motherland is the bookmakers' favourite to triumph at the world's biggest live music event, watched by tens of millions of people.

Kitschy and quirky, Eurovision embraces the eccentric and the contest's 66th edition held in Italy's northwestern city of Turin is no exception, with its national competitors exemplifying the contest's central charm -- anything goes.

That's good news for Norway, whose Subwoolfer performs "Give that Wolf a Banana" dressed in cartoonish yellow wolf masks with long white fangs and France's Alvan & Ahez, whose "Fulenn" sung in Breton celebrates nocturnal dancing with the devil.

And not to be outdone is Serbia's Konstrakta, who scrubs her hands onstage while reflecting on Meghan Markle's well-hydrated hair in a subtle critique of national healthcare in "In Corpore Sano".

- Back at the front -

The joy of Eurovision is in the camp and the clowning, although the nearly three-month war in Ukraine hangs heavily over festivities.

The European Broadcasting Union, which organises the event, banned Russia on February 25, the day after Moscow invaded its neighbour.

Ukraine's Kalush Orchestra is heavily tipped for victory amid an outpouring of empathy in Europe for the country's plight -- as well as genuine appreciation for their unique song, "Stefania".

Written before the war, the song mixes traditional Ukrainian folk music with an invigorating hiphop beat and nostalgic lyrics recalling the motherland.

The band has pulled off a crowd-pleasing cultural mashup with the sound of obscure flute-like folk instruments and the sight of embroidered ethnic dress onstage added to breakdancing and rapping.

Representing Ukraine at Eurovision while loved ones suffer back home has been tough, frontman Oleh Psiuk told AFP.

"We have one band member who joined the territorial defence of Kyiv on the third day of the war," and who remains at the front, Psiuk said.

"We are very worried about him, and we hope to see him safe once we are back."

- Stratospheric singing -

Other more sober offerings include Greece's "Die Together" by Amanda Georgiadi Tenfjord and "Brividi" (Shivers), a duet from Italy's Mahmood and Blanco.

Italy hopes the gay-themed love song will bring it a second consecutive Eurovision win after last year's "Zitti e Buoni" (Shut up and Behave) from high-octane glam rockers Maneskin, who will perform at Saturday's finale.

After a quarter century of being shut out from the top spot, Britain hopes it has found a winner in "Space Man", whose stratospherically high notes belted by the affable, long-haired Sam Ryder has made it a serious contender.

On the fashion front, Lithuania's Monika Liu has generated as much social media buzz for her bowl cut hairdo as her sensual and elegant "Sentimentai".

Meanwhile, Sheldon Riley of Australia -- one of Eurovision's few non-European entries -- has sung his personal self-affirmation ballad "Not the Same" through a sparkling face veil laden with crystals.

And since no Eurovision is complete without a smattering of gyrating and undulating bodies onstage, Spain's Chanel comes to the rescue with "SloMo" and its memorable "booty hypnotic" refrain.

Votes for Eurovision's winner are cast by music industry professionals and the public from each country, with votes for one's home nation not allowed.

ams/ar/raz

Eurovision Song Contest 2022 - Grand Final - Full Show - Live Stream - Turin


 

Eurovision final: With Russia excluded, Ukraine wins the political contest

Sabrina HAESSLER 

Italy will host the final of the 66th Eurovision Song Contest on Saturday evening with one country notably absent: Russia was excluded from the competition in February following its invasion of Ukraine. Despite the competition organisers' insistence that the contest is a non-political event, the conflict in Europe looks set to dominate the public vote. 
© Marco Bertorello, AFP

Bets are already being placed on the results of the 2022 Eurovision Song Contest final, happening on May 14 in Turin, Italy. Sweden and last year's winners Italy are among the bookmaker’s favourites, with both countries entering soaring love ballads that typically go down well in the competition. Another favourite to win is Ukraine, represented by a less traditional front-runner: folk-rap group Kalush Orchestra.

Ukraine’s status among the favourites is undeniably linked to the war being waged in its territory by Russia. Since Russian troops entered Ukraine on February 24, Russia has faced international sanctions and been banned from competing in sports competitions around the world. The day after the invasion, The European Broadcasting Union (EBU), which owns the right to Eurovision, announced that Russia would be banned from the 2022 contest.

“In light of the unprecedented crisis in Ukraine, the inclusion of a Russian entry in this year’s Contest would bring the competition into disrepute,” the EBU said in a statement.

Songs are frequently rejected from the Eurovision Song Contest for being too political, but it is rare to see a country disqualified for its political stance. The last time this happened was almost 30 years ago, in 1993. Following sanctions from the United Nations, Yugoslavia, led by Slobodan Milosevic, was banned from Eurovision at the height of the Yugoslav wars.

‘The one and only thing to do’

The decision to ban Russia this year was not controversial among fans. “Most fans thought that it was the one and only thing to do,” Simon Bennett, President of OGAE International, a Eurovision fan group with national committees in 43 countries, said. ”No one was happy about [the ban] at all, but most people thought it wouldn’t be appropriate for Russia to compete.”

The EBU also reached a consensus on Russia quickly, said Eurovision historian, Dean Vuletic. “Pressure came from within the EBU, especially from the Nordic countries, who threatened to not participate if Russia was allowed to stay,” he explained. “And it was more important for the Eurovision to have Sweden than Russia.”

Sweden is one of the Eurovision’s most prolific winners, having won the competition six times, most famously in 1974 with ABBA’s 'Waterloo'.

The exclusion of Russia this year is the cumulation of years of tensions with Ukraine that have played out on the Eurovision stage. In 2014, Russia was not officially excluded from the event following its annexation of Crimea, but was obstructed by Ukraine in years to come.

The next time Ukraine competed in the contest after the annexation was in 2016, when it was represented by Jamala, a singer of Crimean Tatar origin. Her song '1944', which memorialised the historical deportation of her people from the Crimea, went on to win the competition.

As winners, Ukraine hosted the competition the following year and tensions with Russia increased. Ukrainian organisers refused to let Russia’s entry, disabled singer Yulia Samoilova, into the country on the basis that she had performed in Crimea since the annexation and had therefore breached Ukrainian law. Russia refused to send another performer or to participate remotely, meaning a de facto exclusion from the final.

Tensions between the two countries were visible in previous Eurovision contests too. “It started much earlier, with the Orange Revolution,” said Vuletic. In 2004-5 a presidential election which was widely believed to be rigged in favour of pro-Russian candidate Viktor Yanukovych sparked protests in Ukraine. “One of the spokespeople [for the revolution] was the singer Ruslana,” said Vuletic. That same year, Ruslana won the 2004 Eurovision final with her song 'Wild Dances'.

By the time the contest was held in Ukraine the following year, Ukraine had a pro-European president, Viktor Yushchenko, who attended the event to award the winner and extol European values. Ruslana went on to become an MP and was heavily involved in Ukraine’s 2014 Maidan Revolution, protesting a government decision not to sign a political association and free trade agreement with the European Union.

‘The definition of soft power’

Despite the EBU’s best efforts, it seems countries are willing to use the Eurovision Song Contest for political purposes. “The motives are similar in sport and Eurovision,” Lukas Aubin, a specialist in Russia and geopolitics in sport, explained. “These events are a way for countries to highlight their national identity, construct a narrative and improve their image. It’s the definition of soft power.”

Ukraine is not the only country to do this. “Russia has been instrumentalising the Eurovision Song Contest for a long time, investing lots of money in participating, producing very lavish entries, with expensive stage effects,” said Vuletic. In 2009 Russia spent more than any previous host country when it hosted the Eurovision final in Moscow. Since then, only Azerbaijan has spent more.

In 2022, Russian authorities have taken a more critical stance on the Eurovision and its LBGT values in particular, indicating a change in attitude. “The contest is very popular in Russia and in former Soviet countries,” said Aubin. “But the authorities in Russia are opportunistic and want to participate in the Eurovision to show their best side. Then as soon as they are criticised or excluded, they play the victim and criticise the contest.”

When Ukraine won the content with Jamala in 2016, “it was seen as an insult in Moscow”, Aubin said. This year, exclusion from the contest fits neatly into a Russian narrative that the West is hostile to Russia. Ultimately, “the Eurovision is seen as a weapon of Western soft power”, Aubin said. As such, Russia’s relationship with the West defines its attitude towards the Eurovision.

‘In favour of Ukraine’

Meanwhile Ukraine continues to use the contest to construct its own image on the international stage. It’s entry this year is a mix of rap and traditional Ukrainian music entitled 'Stefania'. “The song was created before the war, but in the context, it has taken on a patriotic turn,” said Vuletic.

In the song, the lyrics are addressed to a mother. The group sings, “I will always find my path towards home, even if all the roads are destroyed.” It is difficult to avoid pairing the words with the images of destruction that have come from Ukraine in recent months.

At the same time, Ukrainian authorities have emphasised that the members of the group have been given special authorisation to travel to Italy for the contest, while other Ukrainian men in their age group have been banned from leaving the country, in case they are needed for the war effort.

For many, it will be impossible to separate Ukraine’s Eurovision performance from the context of the war.

“The public televote will probably be overwhelmingly in favour of Ukraine to show support,” said Bennett. Public voting will open after the acts have performed in Saturday’s final, but half of all points are given by a professional jury, which are harder to predict. Especially as the Ukrainian entry is not a typical Eurovision crowd pleaser. “If it was a normal year, we wouldn’t be talking about Ukraine winning,” Bennett said.

Win or not, the group is expected to perform well when their moment comes at the final in Turin. The event is typically watched by more than 200 million people in over 30 countries each year. As such, “Ukraine doesn’t have to win the Eurovision Song Contest to win over Russia here,” said Vuletic. “It won the day Russia was banned.”

This article was translated from the original in French.
‘I will not wear the burqa’: Some Afghan women defy Taliban edict

The Taliban earlier this month issued a decree urging women to stay home and ordering those who have to go out to cover their faces with a burqa. But a few brave Afghan women have vowed to defy the restrictive edict.
© FRANCE 24 screengrab

A day after the Taliban issued a decree on May 7 ordering women to fully cover their faces in public – ideally with the burqa – a group of women took to the streets of Kabul to protest the edict.

One of the women at the protest, who declined to be identified for security reasons, said the Taliban did not let them continue the demonstration.

"They insult us. We can't even reply because they have guns and their fingers are always on the trigger. They don't care that we are women, they don't value women. I am not just defending my own rights, but the rights of all women in Afghanistan," she said.

The decree from Taliban leader Hibatullah Akhundzada also said that if women had no important work outside then it was "better they stay at home", and outlined punishments for their male guardians if they did not comply with the new dress code.


Video: Afghan women protest decree to cover faces (AFP)


It was a major blow for women’s rights in Afghanistan, following two decades of relative freedom while US-led troops were stationed in the country.

"When you wear this, you can't even breathe. Even if they threaten to hang me, I will not wear the burqa," said another woman.

The decree was issued by the ministry for the promotion of virtue and suppression of vice, a department opened after the August 2021 Taliban takeover of Afghanistan following a chaotic US military exit. On the exterior walls of the ministry, a banner urges Afghan women to wear the proper Islamic veil.

"The proper Islamic dress covers from head to toe, including the face. This order does not come from the Islamic Emirate, but from Allah and the Koran. The implementation of the decree started the day we announced it. For now, we are explaining things and acting gently towards our sisters," said Mohammad Akif Muhajir, a ministry spokesman.

In some parts of Kabul, there are still women who do not cover their faces in public. But since the decree was issued, their numbers are decreasing.

Palestinian wounded in April clashes with Israel police dies

AFP , Saturday 14 May 2022

A Palestinian man died on Saturday of wounds suffered last month during clashes with Israeli police at Jerusalem's flashpoint Al-Aqsa mosque compound, an Israeli hospital said.

Israeli occupation forces
File Photo: Israeli occupation forces carry a Palestinian protester during clashes at the Al Aqsa Mosque compound in Jerusalem s Old City, on April 22, 2022. AP

 

Walid al-Sharif, 23, was taken to Hadassah Ein Kerem hospital with a "head injury" on April 22 and he was "pronounced dead this morning", the hospital said in a statement.

His family confirmed his death in an audio message shared with journalists.

Al-Aqsa mosque compound in Israeli-annexed east Jerusalem is Islam's third-holiest site which is also the holiest site for Jews, who call it the Temple Mount.

Palestinians have been angered by an uptick in Jewish visits to the compound, whereby longstanding convention that Jews may go but are not allowed to pray.

Palestinian news agency Wafa, quoting a family member, said Sharif had been shot in the head with "a rubber-coated metal bullet fired by Israeli occupation forces".

A spokesman for Hadassah hospital told AFP there had been no signs that Sharif had been hit by gunfire.

Israeli occupation police said his injury was caused when he fell and hit his head while throwing stones at security forces.

Clashes between Israeli occupation police and Palestinians at Al-Aqsa in April left nearly 300 people wounded, most of them Palestinians, and killed one Palestinian.

The violence, including in the occupied West Bank, followed a wave of attacks in Israel and raids by the Israeli occupation military.

Anti-Israeli attacks have killed at least 19 people since March 22, including an Arab-Israeli police officer and two Ukrainians.

A total of 32 Palestinians and three Israeli Arabs have died during the same period, according to an AFP tally, among them perpetrators of attacks and those killed by Israeli occupation forces in West Bank operations.

Executive pay: replacing greed with good

Greed is not good, say investors pushing back as company bosses pocket big cheques. On Friday Norway’s sovereign wealth fund’s boss Nicolai Tangen amplified the chorus of dissent with a rallying cry to shareholders to vote down excessive pay and rein in corporate greed.

The $1.2tn oil fund has already voted against pay packages at Apple, IBM and Intel. Apple investors did vote through Tim Cook’s $99mn compensation package; it was approved by almost two-thirds. But then Apple — until this week the world’s most valuable company — has rewarded those who hold its shares as well as those who run it. The same cannot be said for Intel’s Pat Gelsinger, who pocketed $178mn while its shares have flatlined for years.

Some will moan that Tangen, once a highly paid hedge fund manager, has gall complaining about pay. Yet his argument is not about altruism. Markets reward the deserving and reduce the spoils for lesser performers.

The growth of stakeholder capitalism complicates today’s calculations. Bosses presiding over languishing performance may well talk up other metrics. As valuations compress, shareholders should be wary of alternative proposals for benchmarking pay.

True, linking pay to shareholder returns does not always ensure executives are aligned with shareholders. But it remains the least bad. Rising stakeholder capitalism has spawned a growing trend to link remuneration to environmental, social and governance metrics. In the UK almost two-thirds of FTSE 100 companies had some kind of ESG link to pay at the end of last year, a PwC study found, up from less than half the year before. US statistics reflect a similar trend.

The logic is sound: climate change and societal issues require attention. The problem lies in accurately measuring performance. There are no uniform standards — let alone sufficient external scrutiny. Most ESG pay incentives at US companies are impossible to assess and outcomes are rarely even disclosed, a recent study from Harvard Law School concluded.

Greed under the guise of good might be the next big pay scandal in waiting.

The LME’s Operation Fightback

In some financial circles, the London Metal Exchange’s reputation is on a par with that of estate agents, car salesmen and journalists.

That’s down to a fateful day in March when the price of nickel doubled in a few days to $100,000 a tonne in an epic short squeeze on Chinese metals tycoon Xiang Guangda, before the LME halted trading.

But it wasn’t the market closure that infuriated a lot of people. Instead it was the cancellation of nearly $4bn worth of trades, when the exchange realised the price would put many of its members in severe financial difficulty. Some missed out on a once-in-a-lifetime trade.

Cue outrage.

Now the exchange is going back to those users it either saved or mightily annoyed with a clean-up plan that once again may please some users but likely annoy another set of members. Here is the full proposal.

Some background: Back in March, one of the reasons the LME didn’t react earlier to the nickel squeeze was that it didn’t know just how much business was being done over-the-counter via swaps (with the price on the LME being used as a reference price).

When the banks who were the counterparties to the swaps ‘fessed up, it emerged the LME saw just one-fifth of the market.

The LME’s chief executive Matthew Chamberlain was due to quit for a crypto start-up, but has now done a U-turn and stayed as CEO (probably wisely given the absolute carnage in crypto lately), and feels he has a mandate for change.

The LME’s first move will try to ram through a plan for more regular reporting of over-the-counter positions in all physically-delivered metals, like aluminium, cobalt, copper, lead and yes, nickel.

As part of a big revamp last year, the LME had tried to introduce daily reporting to reduce “the potential for market squeezes on LME and related OTC markets.” The market rejected the idea because it was all too complex and costly. Quite.

It appears the LME has absorbed some lessons, however. Last year it pushed for daily reporting but now will accept weekly updates. There would be no minimum position size threshold. The positions would be filed on a template provided by the LME, thus closing off one of the avenues the market has used to skirt a post-2008 push on transparency in fixed income markets.

Regulators didn’t standardise publication of information, so the data that is public is simultaneously within the letter of the law and useless.

The exchange is giving the market just two weeks to respond to its proposal, far shorter than usual.

The LME’s urgent need to ensure that it has a clear understanding of activity that could impact on the orderly functioning of the LME’s metals markets, during the current period of global uncertainty and supply chain pressures. Further, in the interests of ensuring a level playing field between respondents to the consultation, the LME shall not consider responses submitted after the deadline.

It seems that Clifford Asness, one of the most vocal, colourful and amusing critics of the LME after his firm AQR lost out on a large windfall, isn’t convinced.

But even this change will need approval from its members and users. So far there’s been little detail from the banks as to how Guangda built up such a big position, nor why they did not close him out earlier when margin calls were surely due.

Reform of the OTC commodities market may be a hard challenge but the LME isn’t letting a good crisis go to waste.


India Bans Wheat Exports in Growing Wave of Food Protectionism


 


Pratik Parija
Sat, May 14, 2022

(Bloomberg) -- India prohibited wheat exports that the world was counting on to alleviate supply constraints sparked by the war in Ukraine, saying that the food security of the nation is under threat.

Exports will still be allowed to countries that require wheat for food security needs and based on the requests of their governments, India’s Directorate General of Foreign Trade said in a notification dated May 13. All other new shipments will be banned with immediate effect.

Food Secretary Sudhanshu Pandey said at a media briefing on Saturday that higher local wheat prices prompted the ban, and that costs are likely to fall after the move. The policy will allow some supplies to be diverted to the needy and vulnerable people across the world, Commerce Secretary B.V.R. Subrahmanyam said at the same event.

The decision to halt wheat exports highlights India’s concerns about high inflation, adding to a spate of food protectionism since the war started. Governments around the world are seeking to ensure local food supplies with agriculture prices surging. Indonesia has halted palm oil exports, while Serbia and Kazakhstan imposed quotas on grain shipments.

Curbing exports would be a hit to India’s ambition to cash in on the global wheat rally after the war upended trade flows out of the Black Sea breadbasket region. Importing nations have looked to India for supplies, with top buyer Egypt recently approving the South Asian nation as an origin for wheat imports.

German Agriculture Minister Cem Oezdemir said he and his Group of Seven counterparts had discussed “with concern” on Saturday both Indonesia’s decision to limit exports of palm oil and India’s move to halt wheat exports.

“If we all started imposing these export limits, or even closed down markets, that just makes the crisis worse,” Oezdemir said at a news conference in Stuttgart. “It also hurts India itself and the farmers there because of course it means a roller-coaster ride for prices.”

“We now have an environment with another supplier removed from contention in global trade flows,” said Andrew Whitelaw, a grains analyst at Melbourne-based Thomas Elder Markets, adding that he’s been skeptical about the high volumes expected from India.

“The world is starting to get very short of wheat,” Whitelaw said. At present, the US winter wheat is in poor condition, France’s supplies are drying out and Ukraine’s exports are stymied.

Bloomberg News reported earlier this month that a record-shattering heat wave has damaged wheat yields across the South Asian nation, prompting the government to consider export restrictions. The food ministry had said it didn’t see a need to control exports, even as the government cut estimates for India’s wheat production.

Shipments with irrevocable letters of credit that have already been issued will still be allowed, according to the latest notification. Traders have contracted to export 4.5 million tons so far in 2022-23, the food ministry said. After Egypt, Turkey has also given approval to import wheat from India, it said.

After the war hampered logistics in the Black Sea region, which accounts for about a quarter of all wheat trade, India has tried to fill the vacuum. The country targeted to export a record 10 million tons in 2022-23.

But its domestic challenges have come into sharper focus in recent weeks. Hundreds of acres of wheat crops were damaged during India’s hottest March on record, causing yields to potentially slump by as much as 50% in some pockets of the country, according to a Bloomberg survey.

That’s raised concerns for the domestic market, with millions depending on farming as their main livelihood and food source. The government said wheat purchases for its food aid program, the world’s largest, will be less than half of last year’s level. The ban on exports will likely hurt farmers and traders who have stockpiled the grain in anticipation of higher prices.

Controlling wheat exports by India -- given uncertainties related to the crop size, the grain procurement program, the war, high fertilizer costs and extreme weather in other growing nations -- is a logical move to ensure domestic availability and manage inflation, said Siraj Chaudhry, managing director and chief executive officer of National Commodities Management Services Ltd., a warehousing and trading company.

However, an approach with measures such as a minimum export price and quantitative restrictions would have been better as a sudden ban throws challenges to trade, affects Indian exporters’ reliability and hits the earning potential of farmers, Chaudhry said.