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Israel's tech sector awaits UAE investment bonanza

Markets|Technology|: Dubai: UAE investors could lead the next wave of funding opportunities into Israeli tech companies, which recorded another bumper year in drawing global interest. These tech firms didn’t seem to feel any impact from COVID-19 disruptions, tapping $10.2 billion via 607 deals through 2020. That’s a 31 per cent increase in the volume of capital and a 20 per cent gain in number of deals compared with 2019. This is according to IVC-Meitar Israeli Tech Review 2020, which sees “many maturing Israeli tech companies turning to capital markets this year” and “creating opportunities for UAE investors”. Venture capital backed deals increased in 2020 - both in monetary volume and number of deals - to $8.95 billion compared to $6.52 billion (320 deals) in 2019. Investments in early rounds (seed and A rounds), however, declined in the first two quarters of 2020 due to uncertainties surrounding COVID-19. But Q3- and Q4/2020 saw an increase in VC fund capital flows. Total investments in "growth" companies were $8.54 billion, while early-stage companies raised $1.63 billion. There were 19 IPOs by Israeli tech companies in local and foreign capital markets in 2020, with a total offering of $1.6 billion. In rude health A record 128 publicly-traded Israeli tech companies raised $6.96 billion compared to $1.95 billion by 68 companies in 2019. According to Shira Azran, Partner at Meitar Law Offices, “Specifically, financing among growth companies showed a significant increase, as did the total number of rounds. This demonstrates the maturity and development of the Israeli high-tech industry, manifested, among other things, in the increased number of companies that have crossed the billion-dollar valuation.” “Faced with the industry’s financial challenges, the next year (2021) is expected to see Israeli institutional investors increasing their involvement in the field, and helping local companies reach new heights. Shira Azran, Partner at Meitar Law Offices Special purpose Last year saw a significant increase in financing by Israeli tech companies on the capital market as well as significant growth in SPAC (special purpose acquisition companies) deals. "We see this trend continuing in 2021, and many large companies that have matured in recent years will examine the option of public capital markets for continued growth and development,” said Azran. “We believe it will lead to an increase in M&As in these companies, where traded shares will be used as currency."

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London stock market facing blockbuster IPO year

Markets|: London: London will enjoy a very strong year for stock market flotations, analysts say, arguing that both Brexit and coronavirus offer firms a unique opportunity to expand. Various big-name businesses that have seen booming online demand from home-bound customers during Covid-19 lockdowns have revealed eye-catching plans for initial public offerings (IPOs) in recent weeks. Clarity over Britain's final departure from the European Union on January 1 acted as a catalyst for many companies to raise funds, according to specialists, while the rollout of Covid-19 vaccines also soothed investor concerns over the deadly pandemic. So far this year, the celebrated shoemaker Dr Martens, app-driven meals delivery service Deliveroo and online greetings card seller Moonpig have all outlined plans. Confidence on the rise "Looking to the year ahead, we can expect 2021 to be a very strong year for the UK IPO market," said Scott McCubbin at London-based financial services giant EY. "An uptick in IPO activity may well intensify the competition for investment, placing greater emphasis on preparing early for IPO and raising profile with investors. "Confidence continues to build with the Brexit deal now giving clarity around the future relationship with Europe and the rollout of Covid-19 vaccinations." Added to the mix, online money transfer specialist TransferWise has reportedly appointed banks to coordinate a planned float. British media report that others could include insurer Canopius, EDF-owned electric vehicle charging business Pod Point, and online fashion retailer Very. The IPO market has also attracted interest in recent years due to the easier availability of financing, alongside ultra-low interest rates. Ideal for IPOs "Over the past few years we have also seen a strengthening in the financing available for UK and European companies in the early stages of their growth," said Marcus Stuttard, head of UK primary markets at the London Stock Exchange. "This means that there are now an increasing number of dynamic businesses at the stage and size of development that are ideal for an IPO. "These factors coming together have contributed to the strong IPO pipeline we are seeing at the start of 2021," he told AFP. At the same time, investors have lots of cash, owing to low borrowing costs and several billion pounds worth of central bank stimulus funds. London thus hopes to steal a march on rival IPO destinations such as Frankfurt, Hong Kong and New York. Britain ranked only behind China and the United States in terms of the total amount of cash raised on the stock market last year, according to a recent EY study. The British capital represented more than 40 percent of the total IPO amounts raised in Europe. Brexit boost Brexit could deliver a further boost because the government wants to relax certain stock exchange regulations as it seeks to attract more big-name businesses to list. The Brexit trade deal, which took effect on January 1, did not encompass the finance sector - but Britain and the EU aim to seal a memorandum of understanding about financial services by March. The City of London Corporation revealed Friday in a study that the British capital still trails the United States and Hong Kong in attracting foreign company listings. London now wants to compete more effectively against European rivals and EU officials are concerned it could dump highly-prized standards. Catherine McGuiness, policy chair at the City of London Corporation, said: "The competitive strengths of London and the UK should mean that we are well placed to seize opportunities as we start a new trading chapter outside the European Union."

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Reserve Bank of India expected to rein-in rising rupee

Banking|: Mumbai: The Reserve Bank of India (RBI) is expected to rein in any sharp appreciation in rupee due to hefty foreign institutional investment (FII) inflows during the upcoming week. Experts contend that effects of large FII inflows will be neutralised by the RBI as it aims to keep the country's exports competitiveness. "Rendezvous with 73 is becoming interesting, with RBI defending it and showing resolve that chunky capital flows should not lead to a strong rupee and hurt India's trade deficit," said Sajal Gupta, Head, Forex and Rates, Edelweiss Securities. "The RBI has made it clear that sovereign interest is paramount even at risk of being on the watch list for regular interventions. Equity markets look shaky now after a historical upmove and trade deficit rising strongly suggests that rupee strength might not come easy going forward." The RBI is known to enter the markets via intermediaries to either sell or buy US dollars to keep the rupee in a stable orbit. Recently, the RBI was called out by the US Treasury Department to curtail its market activities. "Rupee has appreciated back to 73 levels. In September month, when rupee came near these levels, RBI bought dollars aggressively and did not allow it to strengthen further," said Devarsh Vakil- Deputy Head of Retail Research at HDFC Securities. "We believe the RBI will step in now and protect the rupee's competitiveness this time also. We expect rupee to reverse its recent appreciating trend in next few weeks. 72.9 is a strong support for the coming week." According to Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services: "Next week is the US Fed policy, so the ultra-loose monetary policy along with the verbal intervention will have a negative reaction on the dollar. However, RBI is keeping the spot near 73 zones, so if that breaks we can expect the spot falling to 72.75, while 73.50 will continue to be the resistance." Besides, pre-Budget correction and high valuations in the equity market are expected to curb FIIs' inflows to an extent, this, in turn will keep rupee in check. Lately, FIIs inflows have powered a rally in equities and gave an appreciation push to the rupee. However, the average inflow has fallen below the average of over Rs 2,500 crore per day which was witnessed during last month.

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Abu Dhabi’s EWEC and Tadweer invites tender for waste-to-energy power plant

Business|: Abu Dhabi: The Emirates Water and Electricity Company (EWEC) and Abu Dhabi Waste Management Center (Tadweer), announced the commencement of a competitive tender process for the development of a greenfield Waste-to-Energy (WtE) Independent Power Project (IPP). For the first stage of the tender process, EWEC and Tadweer invite developers to submit an Expression of Interest (EOI) to EWEC by the deadline of 11 February 2021. The proposed WtE plant will be developed through Abu Dhabi’s successful IPP model, with long-term project agreements encompassing both power purchase and waste supply with EWEC and Tadweer. “Our collaboration with Tadweer to develop this plant is a crucial next step in the aim of significantly reducing waste to landfill, stimulating the economy, and decreasing CO2 emissions. We are looking for the best partners to develop the project and support this ambitious and significant strategy,” said Othman Al Ali, Chief Executive Officer of EWEC. The WtE plant, to be located near the existing Al Dhafra landfill in Abu Dhabi, will have an expected processing capacity between 600,000 and 900,000 tonnes of waste per year, and will generate enough electricity to power up to 22,500 UAE households, making it one of the largest WtE facilities in the region. In addition, the WtE plant is expected to reduce CO2 emissions by up to 1.5 million tonnes per year (equivalent to the removal of more than 300,000 cars from the road). “This facility will set the benchmark for WtE energy projects in the region, not only in terms of scale but also in terms of efficiency and environmental benefits, and ensure that we meet UAE Vision 2021 to divert 75 percent of Municipal Solid Waste away from landfills,” said Dr. Salem Al Kaabi, Director General of Tadweer The project will involve the financing, construction, operation and maintenance of the WtE plant that will use advanced moving grate technology to convert municipal solid waste into electricity via a high-efficiency steam turbine generator set. The successful developer will own up to 40 per cent of the entity while the remaining equity will be primarily held indirectly by the Abu Dhabi Government. The deadline to submit EOIs is 12 pm Gulf Standard Time (GST) on 11 February 2021.

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India's stock markets' volatility set to flare up as budget nears

Markets|: New Delhi: Volatility in Indias key stock markets are set to flare up as investors bet big on Union Budget 2021-22 to deliver policy reforms, sops and tax breaks. In general, investors expect higher government Capex along with other fiscal expansion measures to drive growth and neutralise the impact of the Covid-19 pandemic. Besides, a string of macro-economic data, derivatives expiry and global cues such as US Fed policy will add to this volatility. The Budget session of the Parliament would commence on January 29 with the presentation of Economic Survey. "In India, trading would be volatile next week due to the F&O expiry ahead of the Union Budget on February 1. The coming week and the week after carry a lot of triggers that could move the markets either way," said Deepak Jasani, Head of Retail Research at HDFC Securities. Global cues On the global front, the US Fed will wrap up its two-day meet on January 27 before announcing its interest rate decision. "The US Fed monetary policy is due next week, which would be the first post the inauguration of new US President Joe Biden and thus would hold lot more significance," said Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services. The US Fed is expected to retain its ultra-loose interest rates policy. This can potentially drive in more FII funds into the emerging markets such as India. Earnings Apart from global cues, the week ahead will be heavily influenced by the corporate earnings for the third quarter of FY21. Companies like L&T, Hindustan Unilever, India Cement, Marico, IndiGo, Axis Bank and Maruti Suzuki are expected to announce their quarterly results in the coming week. "The ongoing earning season, which kicked off on a strong note last, week would further add to the volatility. Overall, the long term trend of the market is positive, and thus we would advise investors to keep accumulating quality stocks on any dips. However, traders are advised to be cautious and book profit intermittently," Khemka said. According to Ajit Mishra, VP - Research, Religare Broking: "The coming week is a holiday-shortened one and we expect volatility to remain high due to the scheduled derivatives expiry. Markets will first react to the Reliance numbers in early trade on Monday. After two weeks of indecisive movement, we may see further slide ahead and a decisive break of 14,200-level in Nifty would derail the recent momentum."

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Sunak's tax choices to fix UK debt range from wealth to fuel

Analysis|: London: The UK is still in the grip of the coronavirus crisis, but political speculation is already rife on how the country will manage the ballooning debt it has run up to fight the pandemic. With the nation still fresh from almost a decade of austerity, there's little appetite for spending cuts to shrink a deficit on course to reach 400 billion pounds ($547 billion) this year. That puts potential tax rises in focus as Chancellor of the Exchequer Rishi Sunak prepares to set out plans in his March 3 budget to start restoring the public finances. While most economists agree now isn't the moment for fiscal tightening, the UK media has been rife with speculation that the government will try to swell its tax take, which would usually total almost 800 billion pounds. That's been fueled by Sunak's insistence, repeated on Friday, that he will repair the nation's battered public finances over time. "Once our economy begins to recover, we should look to return the public finances to a more sustainable footing," he said, after data showing that borrowing has ballooned again. Here's a look at the tax levers Sunak can and can't pull, should he decide he needs to start taking action. Sacred cows A major problem for Sunak is that the Conservatives' 2019 manifesto ruled out increases in the U.K.'s three biggest taxes - income tax, National Insurance and Value Added Tax. Between them they raise over 500 billion pounds in a normal year. VAT takings in particular will have been shriveled by the crisis, and government measures to tackle it. While increasing any of those levies might generate considerable extra revenue, that could prove highly unpopular and even risk hurting consumption once the recovery gets under way. No Chancellor has boosted the basic income tax rate since Labour's Denis Healey in the 1970s. That's left the government searching for alternatives. A Treasury spokesman said the department doesn't comment on speculation about tax changes. Corporation tax The Times reported last week that Sunak may hike a levy on businesses first because he sees that as the fairest way to raise significant sums. Corporation tax currently generates around 60 billion pounds a year. The main rate has fallen from 28% in 2010 to 19% currently. While each percentage point increase would raise more than 3 billion pounds, any move would jar with the government's priority of making the U.K. an attractive place for business after Brexit. Property tax Another idea mooted by the Times was a property tax on homes. That would replace local authority levies that net almost 40 billion pounds, based on 1990s valuations, and stamp duty, which takes a cut on house purchases. Stamp duty netted the Treasury more than 12 billion pounds in the last fiscal year, but takings are probably vastly reduced by the government's decision to temporarily exempt the first 500,000 pounds of a transaction. Combining both taxes would prove unpopular in Tory heartlands, which tend to have higher house prices, and could mean fairly large increases for the southeast of England without raising much money, according to Torsten Bell, chief executive of the Resolution Foundation. Still, such a move may prove popular in northern areas crucial to the Conservative election victory in 2019. Fuel duty The Sun reported last week that a 5-pence ($0.07) increase in fuel duty is being considered - another move likely to dismay Tory backbenchers. The levy has been frozen at 57.95 pence for a decade. Capital gains The Treasury commissioned a review into Capital Gains Tax last year, which found that an increase could theoretically more than double the current take of about 10 billion pounds, even though such an outcome might be elusive in practice. Proposals included raising rates levied on sales of assets such as property and shares to align with income tax. Other suggestions included lowering the floor above which the tax becomes liable, targeting more stock-based rewards for employees and abolishing relief on share disposals in unlisted companies. Wealth tax A more innovative and potentially hugely controversial option that could seek to address growing U.K. inequality would be a wealth tax. Last year, the independent Wealth Tax Commission said the U.K. could raise more than 260 billion pounds with an annual charge of 1% lasting five years on individual assets above 500,000 pounds. About 8 million residents would be affected. Wait and see Sunak could also decide that it's too early to raise taxes, choosing to tolerate a higher debt load until the U.K.'s recovery is assured. That tactic was mooted last week by a Treasury minister who suggested hikes could be avoided should the economy stage a strong rebound. "It's not absolutely obvious therefore that there may be any future need for consolidation, depending on the view you take for taxes," Financial Secretary to the Treasury Jesse Norman told the House of Commons Treasury Committee. That approach, which removes the risk of premature tightening that could choke off growth, could be achievable after Bank of England bond purchases to stimulate the economy drove U.K. debt-servicing costs below pre-pandemic levels, despite the borrowing splurge.

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Biden’s executive actions for economic relief at a glance

Business|: Washington: President Joe Biden signed a pair of executive orders Friday aimed at offering a quick dose of relief to an economy still being hammered by the coronavirus. Both measures were largely stopgaps as Congress considers a $1.9 trillion stimulus plan from Biden. The orders aim to increase food aid, make it easier to claim government benefits, protect unemployed workers and point federal workers and contractors toward a $15 minimum wage. Nutrition and government aid This order aims to increase by 15 per cent the amount of money going to the families of children who are missing meals because of school closures from the pandemic. For children who can no longer eat in schools, they receive payments to cover food costs at home equal to $5.70 per child per school day. The order asks the Agriculture Department to consider issuing new guidance that would more accurately reflect the cost of the missing meals and make it easier to claim benefits. Similarly, the Agriculture Department is asked to consider new guidance that would make all the lowest-income households eligible for emergency benefits from the Supplemental Nutrition Assistance Program. The Agricultural Department is also asked to update its formula for how much money a person needs to maintain a healthy diet. Direct payments The order also requests that the Treasury Department establish tools to make it easier for people to claim direct payments from past COVID-19 aid packages that could also be applied to any future stimulus packages. The administration is creating a network of benefit delivery teams to ensure people can get their aid and any other support more quickly. The order also asks the Labor Department to clarify that workers can refuse jobs that could jeopardize their health during the pandemic and still maintain unemployment benefits. Federal workers This order includes an effort to promote a $15 minimum wage for federal workers and to preserve civil service protections against political interference. The order revokes a trio of executive orders signed by President Donald Trump that limited the bargaining rights of unionized government workers. Trump’s orders made the employee discipline process stricter, restricted union representatives’ access to office space and cut the time for collective bargaining. Biden’s order also eliminates ``Schedule F,’’ a Trump action that stripped some federal policymaking jobs of their civil service protections such that agency heads could fire and replace people in those positions. The order directs agencies to identify which federal workers earn less than $15 per hour and craft policies to promote that wage level as a baseline. Biden also started the work to issue an executive order that requires federal contractors to pay a $15 minimum wage and provides emergency paid leave to workers.