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London's West End turns dead end as shoppers leave Oxford Street

Retail|: London:  Kate Moss brought London's Oxford Street to a standstill in 2007 when the supermodel posed at Topshop's flagship store to launch her clothing collection. Hundreds of shoppers lined Europe's busiest retail street, trying to get their hands on the Moss range in the 90,000 square-foot (8,300 square meters) emporium, a retail sensation buzzing with a mix of clothing, food stalls and live DJ tunes. Now the music has stopped and Oxford Street is once again at a standstill. Topshop closed its doors in January, possibly for good, relegated to an online-only presence under a new owner. A short stroll down the street, Debenhams, a department store with more than 200 years of history, is also shuttered, as are dozens of other shops. In total, at least a fifth of the stores on Oxford Street are now shut and will not reopen after the Covid lockdown ends, according to the New West End Company, a lobby group for the district. As UK Chancellor Rishi Sunak prepares to unveil a budget next week that retailers hope will bring more aid for a sector on its knees, Oxford Street's reputation as Europe's premier shopping destination faces its biggest threat in decades. A flood of store closures and deterioration in the quality of the buildings and public space along the near two-kilometer (1.2 miles) thoroughfare is being aggravated by lockdown restrictions that are decimating foot traffic and driving more shoppers online. "I am really worried about the West End, there is nobody there, no shops are open and there is no reason to go," said Brian Duffy, the chief executive officer of Watches of Switzerland Group Plc, which sells fine watches and jewelery in shops on Oxford Street and the nearby Bond and Regent streets. Steep hill In a bid to stop the rot, the local authority for the U.K. capital's West End unveiled plans to "reinvent" the nation's main street, including a proposal to erect a climbable hill overlooking the Marble Arch landmark. The council is injecting 150 million pounds ($208 million) to kickstart the makeover, which includes a plan for more pedestrian space, pop-up parks and a wider range of businesses to reduce the reliance on retail. Melvyn Caplan, deputy leader of the Westminster council, is optimistic the proposals will help unwind some of the issues that plagued Oxford Street long before the pandemic. The street has been taken over by a mishmash of faceless retail brands and downmarket tourist traps; noisy traffic, few public spaces to relax and a lack of entertainment activities further diminished its appeal. "Oxford Street used to be at the heart of London's culture but it has disappeared a bit behind all the retail," Caplan said. The demise of London's top shopping destination is emblematic of major cities struggling to reinvent their main retail spheres. In Berlin, the Kurfuerstendamm long suffered a hemorrhaging of shoppers who favored smaller boutiques in the fashionable eastern part of the city or gravitated online. Only recently has the street made a comeback with a blend of restaurants, high-end boutiques and bread-and-and butter fashion retailers. In Paris, the Champs Elysee avenue is trying to revert years of decline with a $305 million plan that pares back the space allotted to cars, increases the area's tree cover and seeks to encourage more small-scale shops along the avenue's flanks. "The Parisians have certainly got their act together," said Jace Tyrell, chief executive officer of New West End Company. "We don't want to lose out to our great rival." Crown estate The council doesn't even need to look as far as Paris to learn how a concerted effort can reimagine a fading street. At the turn of the millennium, the Crown Estate, the property company that generates income for Queen Elizabeth II, began a regeneration of nearby Regent Street and the Piccadilly Circus area after it became an uninspiring sea of travel agents and tourist shops flogging Union-Jack memorabilia. Today, the street houses flagship stores of global brands including Apple Inc. and Burberry Group Plc. Since the pandemic began, the Crown Estate has also widened sidewalks and introduced new greenery and seating areas. The revamp was made easier by the consolidated ownership of properties on Regent Street, said James Cooksey, director of central London development at the Crown Estate. It's a bonus that Oxford Street doesn't have, given properties there are in the hands of multiple landlords, complicating a concerted regeneration effort. Still, with the council pouring resources into the revival, more landlords pulling together and the general public rearing to go shopping again after months of being stuck at home, Oxford Street, too, has a chance to turn itself around, Cooksey said. Westminster's revival plans may get an additional boost from short-term measures in next week's budget, such as an extension of furlough, an employment-support program, and relief from a U.K. property tax that's a heavy burden for many retailers. Such a move would be particularly welcomed by retailers after the Treasury abolished tax-free shopping for overseas visitors, which dealt a crushing blow to West End retail. Overseas shoppers A third of sales on Oxford Street in 2019 came from Chinese shoppers, data from tax-refund company Global Blue shows. French President Emmanuel Macron has already sought to lure more shoppers to Paris by slashing the value of goods on which VAT sales tax can be reclaimed, to 150 euros ($183) from 175 euroes. For Oxford Street to make a comeback, authorities will need to become more flexible and open up to a new breed of occupiers. Until recently, Westminster Council showed little inclination to adapt, prompting Tesla Inc. to close its outlet on the street three years ago after Westminster refused an application to make changes to the building. In future, the make-up of the street might include technology giants such as Netflix Inc., Google or Snapchat wanting to open "experiential" stores to showcase their brands, said Sam Foyle, co-head of prime global retail team at property consultancy Savills. Samsung Electronics Co. already has a store on Oxford Street and Apple's store on Regent Street is one of the company's busiest in the world. "Oxford Street looks poor now but there is a lot going on behind the scenes," said Foyle.

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Islamic financing growth to outpace conventional lending in GCC, core Islamic markets in 2021

Banking|: Dubai: Despite difficult operating conditions in most countries amid pandemic-driven economic downturns, demand for Islamic financing assets (lending) across the core Islamic markets will grow in 2021, according to rating Moody’s. The rating agency said while the Islamic financing remained resilient in 2020 and it expects growth to continue into 2021. In the GCC mergers between Islamic and conventional banks, where surviving entities are Islamic banks, will drive further one-off increases in assets, as they did in 2019 and 2020. Demand driven growth Growth in Islamic financing assets remained steady in 2020, despite a marked slowdown in economic activity across core Islamic banking markets (which include the GCC, Malaysia, Indonesia and Turkey), and continued to outpace conventional asset growth. As a result, the market share of Islamic financing assets in core Islamic markets increased to 32.8 per cent of total financial assets (including conventional bank loans) in September 2020, from 31.4 per cent in December 2019 and 30.4 per cent in Islamic finance penetration in the GCC accelerated in the past decade to reach 45.7 per cent in September 2020 from 32 per cent in 2009. Saudi Arabia was the main contributor to this growth, although similar trends prevailed in the other GCC countries as well. Similarly, the industry has flourished over the years in Malaysia, making its Islamic finance industry the second largest globally. “Overall, the core Islamic finance markets benefited from increased demand from consumers, which powered strong financing growth of around 8.1 per cent in compound annual terms in the last three years, compared with a 6.2 per cent increase in conventional bank financing,” said Ashraf Madani, VP-Senior Analyst at Moody’s. Islamic financing Image Credit: Moody's M &A a major catalyst In addition to customer demand, Moody’s said, proactive government legislation and mergers and acquisitions (M&A) have driven growth in Islamic banking assets. In the GCC, there has been a flurry of acquisitions and consolidations in the past few years and the trend accelerated in 2020 amid lower oil prices and deteriorating economic conditions. In several cases, Islamic banks are acquiring conventional banks and emerging as the surviving entity, substantially adding to their asset bases. All M&A transactions in the GCC in 2020 involved at least one Shariah-compliant bank. In Saudi Arabia, the merger between National Commercial Bank and Samba announced inOctober 2020 will reinforce National Commercial Bank's position as the largest bank in the country with an estimated market share of 31 per cent of assets and 30 per cent of deposits (as of Q2 2020). It will also create the world's largest Shariah-compliant bank along with AlRajhi and Kuwait Finance House. In Qatar, the announced merger between Al Khalij Commercial Bank PQSC and Masraf Al Rayan QPSC (A1 stable, baa2) will make the resulting entity the fourth largest Islamic finance institution in the region. In Kuwait, the merger between Kuwait Finance House and Bahrain-based Ahli United Bank, once completed, is likely to create the world's second largest Islamic bank. Other mergers in 2020 include: the acquisition of Noor Bank by Dubai Islamic Bank in January 2020 with $75 billion in combined assets, the stake increase of Bahrain's National Bank of Bahrain in Bahrain Islamic Bank in January 2020 with $11.7 billion in combined assets, and an $8.2 billion merger between Oman Arab Bank and Alizz Islamic Bank finalised in July 2020. UAE among largest markets Saudi Arabia, Malaysia and the UAE remain the largest markets for Islamic finance globally. Overall, Saudi Arabia remains the largest market for Islamic finance globally, with financing assets rising to $361 billion as of September 2020 from $323 billion in December 2019. Despite the pandemic-induced economic recession and drop in oil prices, Islamic financing continues to expand in Saudi Arabia, propelled by growing demand from corporate and retail clients for Shariah-compliant products and a supportive regulatory environment with coordination between the Ministry of Finance, Saudi Arabia Monetary Authority (SAMA) and the Capital Market Authority. “We expect Islamic assets in Saudi Arabia to account for 80 per cent of systemwide loans (including both conventional and Islamic financing assets) over the next 12-18 months, from 78 per cent in 2019,” said Madani. Key growth markets of future In Turkey and Indonesia, the penetration of Islamic banking remains relatively low at 5 per cent to 10 per cent. To promote Islamic banking, the authorities in both countries have significantly increased their involvement over the past few years and adopted comprehensive policies to develop the sector. Despite the continent's large Muslim population, Islamic banking assets only represent a small portion of Africa's total banking assets. Moody’s expects Islamic banking to expand significantly in the next five to ten years given the vast financial need of the continent, underpinned by strong demographic and economic growth in Muslim-majority countries, a low starting base and growing government interest in the sector.

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GCC’s retail banking revenue growth projected to slowdown

Banking|: Dubai: Revenue growth from retail banking across GCC is expected to slowdown in the next few years according to Boston Consulting Group (BCG). A recent BCG study showed the projected revenue outlook of retail banks in key economies in the GCC, which includes the UAE, Saudi Arabia, and Kuwait in three retail banking revenue growth scenarios. In all three projected scenarios of 2019 – 2024, revenue growth is subdued when compared to the strong growth recorded in 2014 – 2019, a 5.5 per cent compound annual growth Rate (CAGR). The pandemic has taken a toll on the retail banking sector, and we believe that a slow-recovery scenario is most likely to occur for GCC retail banks. Godfrey Sullivan, Managing Director and Partner, BCG In a quick-rebound scenario, the retail banking revenues in the region is estimated to grow from $26.4 billion in 2019 to $28.6 billion in 2024, at a CAGR of +1.6 per cent. In a slow-recovery scenario revenue is expected to shrink by a CAGR of -0.1 per cent to $26.3 billion and in a deeper-impact scenario, BCG estimates banks’ retail revenue pool to shrink by a CAGR of -2.1 per cent. “The pandemic has taken a toll on the retail banking sector, and we believe that a slow-recovery scenario is most likely to occur for GCC retail banks,” said Godfrey Sullivan, Managing Director and Partner, BCG. “In this scenario, the revenue pool of regional retail banks will approximately reach the 2019 level only by 2024, essentially a flat market.” Slowing consumer loans and deposits Findings from the BCG study indicate that the most affected retail banking products in regional banks because of the pandemic are consumer loans and deposit revenues. While loans (mortgages and consumer loans) and deposits accounted for 80 percent of retail banking revenues in 2019, recent events highlight that payment, mortgage, and investment products are now likely to be the main sources driving retail banking revenue growth. The acceleration of digital payments and e-commerce adoption in the GCC will be a factor to contribute and benefit the revenue growth. “In a low revenue growth market, bank growth comes from taking the market share, and they compete by providing more appealing and relevant offerings, which is better for the end-users,” said Sullivan. “With shifting consumer preferences and increasing population growth, a lot more focus on better implementation of data and analytics in the organization and cross-selling their full breadth of products to their existing customer base is key to remain competitive.” In the current market conditions, retail banks face tremendous challenges to improve customer experiences, grow revenue, build sustainable capabilities, reduce costs, and enhance the quality of their controls. They must start to reimagine their strategies and consider the following: Focus on costs The successful retail bank of the future cannot operate with the cost structure of the present and remain competitive. BCG’s analysis shows that the operating costs of the best banks are already about 40 per cent lower than those of the typical bank, and they have roughly 50 per cent fewer employees. These banks make larger and more sales, and they do so with branches that are less transaction-focused. Top banks globally open 69 per cent more accounts per branch full-time equivalent and conduct 80 per cent fewer branch transactions per customer, compared with the typical bank. Banks that are not planning now for a major step-change in their cost structure will find themselves at an unsustainable competitive disadvantage. Way forward is digital Retail banks can achieve their goals by focusing on their key value streams—a series of value-adding activities that they can undertake to produce a result that customers want—and by redesigning and digitizing them from front to back. The study notes that successfully implementing an integrated approach requires bold business goals, reimagined end-to-end customer journeys, simplified and automated processes, improved risk controls, transformed technology, and integrated teams. By digitizing their main value streams, banks will fundamentally change the way all functions operate, including distribution, relationship management, risk and compliance, and IT. “The retail bank of the future requires organizational change and building digital capabilities, which takes time. With low-interest rates likely to continue, fee income becomes key, including enhancing wealth management offerings as banks look to advise their clients on better ways of growing and protecting their wealth. In addition, addressing key priorities, such as digitizing all major value streams will help regional banks manage the added pressure from the global pandemic and start to build the bank of the future,” said Sullivan.

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Why economic optimism is unsettling stock markets?

Markets|: New York: Yes, it's possible to have too much of a good thing, and that's exactly why stock markets around the world are getting so unsettled. Optimism for an economic revival is surging following a year of coronavirus-induced misery. But expectations for stronger growth _ plus the higher inflation that could accompany it _ are pushing interest rates higher, which is forcing investors to re-examine how they value stocks, bonds and every other investment. When it tries to figure out the value for anything from Apple's stock to a junk bond, the financial world starts by comparing it against a U.S. Treasury bond, which is what the government uses to borrow money. For years, yields have been ultralow for Treasurys, meaning investors earned very little in interest for owning them. That in turn helped make stocks and other investments more attractive, driving up their prices. But when Treasury yields rise, so does the downward pressure on prices for other investments. All eyes have been on the yield of the 10-year Treasury note, which climbed above 1.50% this week after starting the year around 0.90%. Here's a look at why that move shook up the financial world, including the worst week for the Nasdaq composite since October: Why are treasury yields rising? Part of it is rising expectations for inflation, perhaps the worst enemy of a bond investor. Inflation means future payments from bonds won't buy as many bananas, minutes' worth of college tuition or whatever else is rising in price. So bond prices tend to fall when inflation expectations are rising, which in turn pushes up their yields. Treasury yields also often track with expectations for the economy's strength, which are on the rise. When the economy is healthy, investors feel less need to own Treasurys, considered to be the safest possible investment. Why do falling bond prices mean rising yields? Say I bought a bond for $100 that pays 1 per cent in interest, but I'm worried about rising inflation and don't want to be stuck with it. I sell it to you for $90. You're getting more than a 1 per cent return on your investment, because the regular payouts coming from the bond will still be the same amount as when I owned it. Why are inflation and growth expectations rising? Coronavirus vaccines will hopefully get economies humming this year, as people feel comfortable returning to shops, businesses reopen and workers get jobs again. The International Monetary Fund expects the global economy to grow 5.5 per cent this year following last year's 3.5 per cent plunge. A stronger economy often coincides with higher inflation, though it's been generally trending downward for decades. Congress is also close to pumping another $1.9 trillion into the U.S. economy, which could further boost growth and inflation. Why do interest rates affect stock prices?  When trying to figure out what a stock's price should be, investors often look at two things: how much cash the company will generate and how much to pay for each $1 of that cash. When interest rates are low and bonds are paying little, investors are willing to pay more for that second part. Consider a stock like Apple or another Big Tech company, which will likely keep generating large amounts of cash many years into the future. It's more worthwhile to wait a long time for that if a 10-year Treasury is paying less in the meantime. Are the rates headed north?  The recent rise in yields is forcing investors to pare back how much they're willing to spend on each $1 of future company earnings. Stocks with the highest prices relative to earnings are getting hit hard, as are stocks that have been bid up for their expected profits far in the future. Big Tech stocks are in both those camps. Dividend-paying stocks also get hurt because investors looking for income can now turn instead to bonds, which are safer investments. The ultimate worry is that inflation will take off at some point, sending rates much higher. Aren't inrterest rates still really low?  Yes, even at 1.50 per cent, the 10-year Treasury yield is still below the 2.60% level it was at two years ago or the 5% level of two decades ago. ``The concern isn't that the 10-year is at 1.50 per cent,'' said Yung-Yu Ma, chief investment strategist at BMO Wealth Management. ``It's that it went from 1 per cent to 1.50 per cent in a handful of weeks, and what does that mean for the rest of 2021.'' Ma thinks it could keep rising above 2 per cent by the end of the year, but he doesn't see it going back to the old normal of 4 per cent or 5 per cent, which would force an even bigger reassessment for markets. Until that becomes more clear, though, he says he's looking for the stock market to stay volatile. Hasn't the Fed said it will keep rates low? Yes. The Federal Reserve has direct control over short-term interest rates, and Chair Jerome Powell told Congress this week it's in no hurry to raise them. It's also not planning to trim its $120 billion in monthly bond purchases used to put downward pressure on longer-term rates. Powell said the Fed won't raise its benchmark interest rate, now at its record low of zero to 0.25%, until inflation runs slightly above its 2% target level. Powell told Congress that while price increases might accelerate in coming months, those increases are expected to be temporary and not a sign of long-run inflation threats. Is Wall Street still optimistic?  Yes, and one reason is that many investors agree with Powell and expect inflation pressures to be only temporary. That should hopefully keep rates from spiking to dangerous levels. Also, after a dismal 2020 for most companies, investors are banking that corporate earnings will improve in the second half of this year as the coronavirus vaccination efforts broaden and the economy gradually begins approaching something close to normal. If earnings rise, stocks can stay stable or maybe even rise. Do some companies do well when rates are rising? Financial companies, particularly banks, have gained recently because rising rates can mean bigger profits made on a variety of consumer loans, including mortgages. And if rates are rising on inflation worries, energy companies could benefit if prices are also rising for oil and other commodities. Overall, though, rising interest rates are a drag on companies because they make borrowing more expensive. This is especially painful for companies like real estate investment trusts, or REITs, which require a lot of money, and often debt, to operate. People who rely heavily on credit may also cut back, which could have a ripple effect on all kinds of companies that rely on consumer spending.

GulfNews Business

DIFC Academy and EdAid partner to enable digital education

Banking|: Dubai: The DIFC Academy has partnered with EdAid, the London based FinTech platform dedicated to increasing access to higher education, to launch the Future Campus. The platform will offer online education opportunities to UAE nationals and residents from leading global academic institutions. The initiative supports the UAE Vision 2021 to build a competitive knowledge-based economy by developing local capabilities driven by sustained investment in education. It will become a catalyst for expanding and deepening Dubai and DIFC’s talent pool, whose acquired knowledge and skills will support the growth of more sustainable, inclusive societies and economies. Innovation hub The Future Campus will become the fourth initiative at the DIFC Academy, alongside three schools dedicated to Finance, Law and Management. The opening of the Future Campus coincides with the DIFC Academy’s transition into the new state-of-the-art DIFC Innovation Hub at Gate Avenue, the largest innovation ecosystem in the region, supporting early and growth stage start-ups, unicorns and big tech firms to accelerate success and shape the future of finance. “DIFC is committed to shaping the future of finance through collaboration, innovation, and technology. The Future Campus will become part of the DIFC Academy and will accelerate the country’s economic growth by developing much-needed local talent,” said Alya Al Zarouni, Executive Vice President of Operations and Head of DIFC Academy, DIFC Authority. The Future Campus will welcome up to 25,000 students a year, offering programmes that focus on acquiring the necessary skills and knowledge to develop a sustainable and innovative future for the global finance industry. Students will benefit from the Centre’s dynamic and vibrant ecosystem, including a supportive environment to apply to over 400 online degree programmes, practical skills-based training courses, and vocational boot camps and study with a community of peers. All eligible online education opportunities are powered by 2U, Inc., a global leader in education technology, and will include a number of programmes focused on AI, Blockchain Cybersecurity, Software Engineering, Data Analytics and FinTech. Career guidance DIFC Academy and EdAid will offer students career guidance, mentoring and networking opportunities, including internship and employment prospects with over 2,500 companies based within DIFC. “Providing affordable access to high-quality online education and driving life-changing outcomes are everything to us at EdAid. Students enrolled in selected online courses will have access to co-working, co-study space within the Future Campus along with access to the DIFC’s comprehensive and vibrant ecosystem,” said Tom Woolf, Founder & CEO of EdAid.

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India steps out of recession - does this mean the worst is over?

Analysis|: Dubai: After two straight quarters of economic contraction, sentiments eased after India reported growth in the last quarter of 2020, but economists were eyeing how recovery will look like in 2021. India’s quarterly GDP increased 0.4 per cent, while estimating that real GDP in the financial year 2020-21 will decline 8 per cent, as compared to 4 per cent growth in the previous fiscal. “India’s GDP data confirm that the economy continued to perform well at the end of 2020 and the outlook for this year has improved too as fiscal policy has been loosened substantially,” noted Shilan Shah, senior India economist in Singapore, working at London-based research firm Capital Economics. Will GDP now rebound sooner? “Even so, we doubt that GDP will be back on the pre-virus trend any time soon,” Shah added. “As such, monetary policy will remain loose for a long time to come.” Indian GDP data released on Friday, as expected, indicated only a small contraction in annual growth in the last quarter of 2020, and high-frequency indicators have been pointing to a relatively strong start to 2021. India’s central bank has sought to also retain its current inflation target of 4 per cent, saying it is appropriate for the next five years, while seeking to build confidence in the broader economy that is still prone to both supply shocks and sudden demand shrinkage. Heated debate over inflation target “The debate over the RBI’s 4 per cent headline inflation target – which runs until next month and is currently being reviewed – had heated up this week,” wrote Shah. “Some prominent government officials have suggested that the central bank should switch to target core inflation, while a paper authored by RBI officials released today makes the case for maintaining the existing target,” Shah further added. “We agree with the findings of the RBI paper, largely because of the significant role that food prices play in affecting inflation expectations in India.” Activity returning to pre-virus levels The coronavirus pandemic has stifled economic growth and led to job losses in the several sectors and subsequent demand destruction in the bottom of the pyramid section of the economy, but analysts have been expecting the economy to grow somewhat faster than estimated over the medium term. “Indeed, our in-house mobility tracker suggests that activity has returned to pre-pandemic levels,” evaluated Darren Aw, Asia economist at Capital Economics. “The outlook has improved too as fiscal policy has been loosened significantly. That all being said, there are still reasons for caution.” Although the economy is forecast to shrink in the fiscal year to March 2021, for the first time in more than four decades, the pandemic’s lasting impact on the Indian economy has turned out to be far lower than earlier expected. New COVID-19 cases remain low “While new COVID-19 cases remain low, the recent flare up in Maharashtra highlights the risk of targeted lockdowns, at least in the near term,” Aw added. “Meanwhile, the ailing banking sector looks set to take a further hit this year as more loans turn sour, which we think will prevent the economy from returning to its pre-virus trend any time soon.” Read more Indian economy: Will RBI keep rates steady in the years to come? How long will COVID-19 scar the Indian economy? Planning India's return as world's fastest growing economy India's economy shows signs of recovery as virus cases decline Banking sector concerns remains at the fore even as the economy stages a recovery. India’s $1.86 trillion financial system entered the pandemic already weakened by about $140 billion of bad loans at its banks. Aw further wrote in a recent note that according to RBI Governor Shaktikanta Das, this is an important barometer in determining the health of the economy. “As such, we think markets are too hasty in pricing in rate hikes within the next 12-18 months and think rates will remain on hold for the foreseeable future.”