Issue link: https://maltatoday.uberflip.com/i/514194
maltatoday, WEDNESDAY, 20 MAY 2015 11 Business Today www.creditinfo.com.mt info@creditinfo.com.mt Tel: 2131 2344 Your Local Partner for Credit Risk Management Solutions Supporting you all the way Malta Chamber supports internationalisation efforts by PM-led delegation to Qatar The Malta Chamber of Com- merce, Enterprise and Industry participated in the Doha Forum 2015 between 11-13 May at the invitation of the Ministry of For- eign Affairs of the State of Qatar. The Chamber was represented by its vice-president and chairman of the Middle East Business Council, Tonio Casapinta. The visit served to revitalise and underscore the excellent relations between the Malta Chamber and the Qatari Chamber of Commerce and Industry, as well as a follow- up on a business mission in which the Malta Chamber had also participated last year. During this visit, the Malta Chamber was instrumental in coordinating a meeting between Prime Minister Joseph Muscat and his delegation with Sheikh Faisal Al Thani, chairman of the Qatari Businessmen Association. The Maltese delegation was told that following a delegation to Doha in 2014 lead by the Minister of Economy, Investments and Small Business, the Al Thani Investments Group was interested in areas such as education, the hospitality industry and training, aviation, as well as financial services and has already taken steps to invest in Malta. In this respect, a follow-up visit to Malta by officials of the group was planned for early June. Casapinta also had a meeting with Remy Rahwani, director general of the Qatari Chamber of Commerce and Industry, to discuss Malta's economic situation and main areas of interest for investment in Malta. They discussed possibilities of organising a Qatari business delegation to Malta in the near future. The Doha Forum offered an overview of issues regarding democracy, development and free trade in the Middle East, Arab countries and the world. The international meeting also discussed critical political, economic, social, financial, strategic and human matters of pressing concern for a region witnessing most substantial changes. Fitch confi rms BOV Credit rating, reviews support rating Credit rating agency confi rms Bank of Val- letta's long-term credit rating of BBB+ with a stable outlook, but downgrades bank's sup- port rating Fitch Ratings have confirmed Bank of Valletta's credit rating but downloaded the bank's support rating. The agency is currently reviewing the issue of sovereign support for banks globally and as part of this exercise, the agency has announced that BOV's support rating has been reviewed downwards from "2" to "5". The support rating evaluates the likelihood that a bank will receive extraordinary support in case of need. Such support typically comes from the national authorities of the country where the bank is domiciled. Fitch's action does not reflect any concern about the ability or willingness of governments to support financial institutions, but rather reflects the agency's opinion that recent regulatory initiatives have reduced the likelihood of sovereign support for commercial banks worldwide. Within the European Union (EU), the Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism (SRM) provide a framework for resolving banks that is likely to require senior creditors participating in losses, if necessary, instead of or ahead of a bank receiving sovereign support. This action does not in any way affect BOV's long-term credit rating of BBB+ with a stable outlook. BRRD and SRM form part of the EU project of the Banking Union, which will require banks to improve their loss-absorbing capability by increasing capital. In this context, BOV will continue to strengthen its capital buffers by embarking upon a programme of capital issuance in the medium term. YOUR FIRST CLICK OF THE DAY www.maltatoday.com.mt Market commentary: 'Carry currencies' and the Icahn's Apple dream On Monday, European markets man- aged to snap a positive closing at the end of the trading session after re- maining negative throughout most of the day, signalling that investors are still not putting any money back into European assets after the recent selloff. Eurozone government bonds are still struggling to recover the sizable losses taken throughout the past month with yields of German Bunds and peripheral bonds still at the highest levels since the beginning of the year. US stocks posted modest daily gains continuing to recover from the drop that followed the recent disappointing economic data releases, while, overnight, Asian markets recorded another positive session across the board, with the Shanghai Index gaining as much as 2.58%. Early yesterday morning the New Zealand Central Bank published the most recent country's inflation data that showed a surge in inflationary expectations. Governor Graeme Wheeler had previously hinted his willingness to discuss a potential cut to the country's reference rate, which as at today stands at 3.5%, if inflation had continued to be flat and started to weight on price- setting behaviours. In contrast, officials from the Reserve Bank of Australia (RBA) have indicated that the country's Central Bank will retain the option to cut its interest rate further should the Australian economy continue to slow down. The RBA already cut interest rates twice this year, first in January, and then two weeks ago, bringing the country's borrowing rate to 2%, the lowest level ever recorded. The New Zealand Dollar rallied overnight, jumping over 1% before settling around the 0.7410 level, while the Australian Dollar has been overall appreciating against the US Dollar for the past six weeks. Investors adopting the so called "Carry Trade Strategy" have traditionally bought Australian and New Zealand Dollars, along with emerging market currencies such as the Turkish Lira and the South African Rand, while borrowing money in a low interest and declining major currency such as the Euro or the US Dollar,. However, with the rally in the US currency over the first four months of the year, and the sudden and unexpected rebound of the euro over the last four weeks, traders have been caught somehow off guard, making this strategy one of the worst currency trades of the year. Across the Pacific, Apple Inc. returned in the spotlight after billionaire activist investor Carl Icahn raised the price target for the Cupertino-based tech giant to a stunning $240 per share. The latest valuation given to Apple by Icahn implies an 84.3% upside potential, assuming Monday's closing price, that, in Icahn view, would be fuelled by a 30% EPS growth in financial year 2017, large revenues generated by the company's TV platform, a likely profitable entrance into the car industry and the leverage of a winning combination of dividend growth and buyback programmes' expansions. Although the positive comments of the activist investor contributed to push Apple's shares up 1.10% during Monday's session, I believe that such optimistic valuations will prove quite unreachable in the short to medium term. While I still consider Apple to be one of the best run businesses in the world, and I still think the stock is an interesting long term investment both as a growth opportunity and as a dividend growth play, Icahn's assumptions appear to be aimed more at boosting the share price rather than at realistically underpinning the value of the Cupertino tech company. To confirm my vision, the Wall Street Journal has published an article claiming that Apple has already abandoned its previous intention to build a TV set, and it is instead working to create a set of online services aimed at competing against Netflix and Amazon's pay TV platforms. While the news is per se interesting, given the highly capital intensive nature of the business and the steepening competition in the sector, I doubt Apple will be able to quickly capitalize on such a product. This article was issued by Paolo Zonno, Trader/Analyst at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this publication. Prime Minister Joseph Muscat at his meeting with Sheikh Faisal Al Thani