Aurelia Butler

Investment banks, brokers, and corporate organisation charts usually classify Morocco as part of the Middle East and north Africa, or MENA — reflecting the country’s strong cultural, linguistic and historical links with the Middle East. But Saïd Ibrahimi, chief executive of Casablanca Finance City, launched in 2010 to help promote Morocco as a “gateway” to investment in Africa, insists that thinking is wrong. “We are more African than we are Middle Eastern,” he states unequivocally, rejecting the entire notion of sub-Saharan Africa as anachronistic. “Africa must trust Africa,” he says, quoting a 2014 speech in Abidjan in which Morocco’s King Mohammed VI made a commitment to strengthen ties with the continent. Investment has risen substantially since that speech, which was followed, in 2017, by Morocco’s accession to the African Union following a 33-year absence from Africa’s main diplomatic bloc after a dispute over Western Sahara.Morocco’s foreign direct investment into Africa has risen from some $100mn in 2014 to more than $800mn in 2021, by which time 43 per cent of its total FDI went to the continent, according to the finance ministry. That makes Morocco the second-largest African investor in the continent after South Africa, and the largest in west Africa, much of which is French-speaking. Moroccan business interests across the continent are extensive.Attijariwafa Bank, Banque Centrale Populaire and Bank of Africa, all headquartered in Casablanca, control more than a fifth of banking assets in west Africa. OCP Group, the state-owned phosphate and fertiliser manufacturer, operates in 16 African countries outside Morocco. Maroc Telecom has operations in Benin, Burkina Faso, Ivory Coast, Gabon, Mali, Mauritania, Niger, Chad, Togo and the Central African Republic.“Moroccan companies are already investing a lot in Africa,” says Ouns Lemseffer, partner and co-head of francophone Africa for Clifford Chance, an international law firm, adding that she expects the trend to continue. Trade has been far more patchy, however. Europe still accounts for about two-thirds of Moroccan exports, a dominant position that has been bolstered by fast-rising car exports. Moroccan exports to sub-Saharan Africa have grown steadily, but unspectacularly: they still accounted for only 6 per cent of the total in 2021, according to the World Bank. Well connected: a Maroc Telecom billboard in Casablanca More

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TOKYO (Reuters) – The yen got some much needed relief as the dollar and U.S. Treasury yields both steadied slightly lower on Thursday after mixed U.S. economic data overnight had markets lowering the odds of the Federal Reserve’s raising interest rates again this year.The dollar index, which tracks the greenback against six peers, held near overnight levels at 106.78.The greenback gave up some of its recent gains after U.S. private payrolls increased far less than expected in September, according to the ADP National Employment Report on Wednesday, although that most likely exaggerates the pace of slowdown in the labour market.Longer dated U.S. Treasury yields eased from 16-year highs after the data and remained off recent highs in the Asian morning.Meanwhile, the Institute for Supply Management’s (ISM) non-manufacturing purchasing managers’ index (PMI) came in 0.9 points lower at 53.6 but remained above the 50 mark, which divides monthly expansion from contraction.”Although the U.S. economy still appears resilient and arguably too strong, the ISM Services PMI at least provides one data point to suggest that economic activity isn’t taking off again,” said Kyle Rodda, markets analyst at Capital.com, in a note.The yen, which tends to be sensitive to U.S. yields, last traded around 148.85 yen, down almost 0.2% from late U.S. levels and off Tuesday’s low of 150.165.Questions about possible intervention by Japanese authorities sparked after the yen strengthened 2% following the 150-line breach, but the Bank of Japan’s money market data showed on Wednesday Japan most likely did not intervene in the currency market the previous day.Elsewhere, the euro stood mostly flat at $1.0512, keeping above this week’s fresh low of $1.0448.In a Reuters poll, the median view among 20 analysts on how low the euro will go this month was $1.04, with only one respondent saying the currency would touch parity. No forecaster had a parity call anywhere in their point predictions.Sterling traded at $1.2139, off of Wednesday’s fresh low of $1.20385 per dollar. More

BENGALURU (Reuters) – Foreign exchange strategists are sticking with their forecasts for a weaker dollar despite having been wrong-footed for years in predicting a downturn in the greenback, the latest Reuters poll showed. The dollar hit an 11-month high this week and is up nearly 3.5% this year against a basket of currencies as expectations that U.S. interest rates will stay higher for longer take hold.Much of the greenback’s strength has been driven by Treasury yields, which have soared to 16-year highs, based on the resilience of the U.S. economy in the face of the Federal Reserve’s interest rate rises since March 2022.That outlook remains at odds with the consensus view in Reuters foreign exchange polls, including the latest Oct. 2-4 survey of 80 FX strategists, which showed forecasters still expect the dollar to weaken against most major currencies.Adam Cole, the chief currency strategist at RBC, says he is biased toward a stronger dollar but admits the prevailing foreign exchange view in markets remains a tough nut to crack.”If you look at consensus forecasts, the consensus has been dollar negative for five years now and it hasn’t worked,” Cole said. “I don’t think the timing is right for that call yet.”Net U.S. dollar positioning by traders was long for the second week in a row, according to the latest Commodity Futures Trading Commission data.Despite a base case that showed the dollar weakening over the 12-month polling horizon, analysts who answered additional questions in previous polls have repeatedly said their bias was for the greenback to strengthen in the near-term period.EURO’S UPSIDE LIMITEDThe dollar has dominated nearly all major currencies this year, demonstrating particular strength against the currencies of countries whose central banks didn’t hike rates or failed to keep up with the Fed’s monetary tightening.One notable outlier among major central banks is the Bank of Japan, which has made the yen one of the worst-performing major currencies this year, down over 13%. Trading below 150 per dollar on Tuesday, it was expected to recoup more than 10% in a year to trade at 135 per dollar.”If they (BOJ) keep on threatening and they don’t do it, finally, the market’s going to say you’re not going to intervene and dollar/yen moves higher, so it’s a bit of a poker game,” said Jane Foley, head of FX strategy at Rabobank.”The longer they can get away with verbal intervention the better. As far as they’re concerned they keep their powder dry.”Losses among most major emerging market currencies polled by Reuters ranged between around 2% to as much as 32%, and they were not expected to recoup those losses over the coming year.At roughly $1.05, the euro was faring better than the yen and emerging market currencies. But it is down 2% on the year, far behind where most expected it to be in a January poll, when the consensus view was for about a 4% rise against the dollar by the end of this year.While the euro was forecast to claw back all of those losses and gain around 6% in the next 12 months, the currency’s upside will be limited by a weak euro zone economy and expectations the European Central Bank is done hiking rates.Among 20 analysts who answered a separate question on how low the euro will go this month, the median view was $1.04, with only one respondent saying the currency would touch parity. But no forecaster had a parity call anywhere in their point predictions. “We talked about putting parity on the forecast table and in the end we didn’t, only because when you start putting parity on the forecast table, it just creates a little bit too much attention. So we went for $1.02,” Rabobank’s Foley said.”I think if the euro is down at $1.03, $1.04, quite obviously people will be talking about the risks of parity, it will become a lot closer and I will not rule it out for early next year.”(For other stories from the October Reuters foreign exchange poll:) More

WASHINGTON (Reuters) – The U.S. should demand that China support debt restructuring for struggling poor and middle-income countries as a condition of changes to the International Monetary Fund’s shareholding formula, a former senior U.S. Treasury development expert said on Wednesday.Nancy Lee, a former deputy assistant Treasury secretary who works at the Center for Global Development think tank, told reporters it was “reasonable” to insist that any country getting a bigger quota, or shareholding, in the IMF should also help countries return to sustainable debt.U.S. Treasury Secretary Janet Yellen has said China, the world’s largest sovereign creditor, has been a roadblock to debt relief. U.S. officials have said China is unwilling to accept losses on loans unless private-sector creditors and multilateral development banks do the same. IMF member countries will discuss the crisis lender’s shareholding structure at annual meetings in Morocco next week.Major emerging market countries including China, India and Brazil have long wanted more voting power in the institution, and this is their first chance for a bigger share since 2010.The U.S. is pushing instead for IMF member countries to agree to contribute more funds to boost lending firepower, but keeping the U.S.-dominated shareholding structure unchanged. “If a country wants a larger share in the governance of the IMF, it should also aim to advance what the IMF goals are, which is helping countries finance growth paths and in a way that’s sustainable,” Lee said. “If a country is … not participating in that agenda, it is kind of hard to make the case that they need a larger quota.”Lee said she agreed with the views expressed by the U.S. Treasury’s top international official, Jay Shambaugh, in a speech last month. A U.S. Treasury spokesperson did not immediately respond to a request for comment. Shambaugh said it was important that “all countries – especially those that would see an increase in share – are respecting the roles and norms of the IMF and working to strengthen the international monetary system.”Without naming China, he said this would include doing more on debt relief and providing more exchange rate transparency — longstanding Treasury criticisms of Beijing. More

The consumer price index stood 3.7% higher in September from a year earlier, after recording a 3.4% rise in August. Economists in a Reuters survey had expected the figure to stay unchanged. It was the second consecutive month the annual rate quickened, from a 25-month low of 2.3% in July, and marked the fastest annual rise in five months. Finance Minister Choo Kyung-ho said after the data release that inflation would likely stabilise again from October with seasonal factors easing. On a monthly basis, the index rose 0.6%, according to Statistics Korea, compared with a 1.0% jump the previous month and a median 0.3% forecast. Broken down by sector, prices of petroleum products jumped 4.0% over the month, agricultural prices climbed 4.1%, while public utility prices added 5.3%. Core CPI, which excludes volatile food and energy prices, was 3.3% higher in September on an annual basis, the same as in August.The data comes two weeks before the Bank of Korea’s next policy decision. The central bank held interest rates steady for a fifth straight meeting at its last review in August, seeking to balance softer inflation and heightened risks to growth. More

Ng Kok Tiong has been working in the semiconductor industry for 34 years and in all that time, the Kuala Lumpur native says, he has never seen the kind of activity in Malaysia that he is seeing now.As evidence, Ng, a senior vice-president at top European chipmaker Infineon, pointed to a new phenomenon: daily traffic jams between Penang Island and Kulim, site of the country’s first high-tech industrial park.“Malaysia benefited quite a bit from this diversification of the supply chain,” said Ng, who is also chair of the Semiconductor Fabrication Association of Malaysia. “Traffic increased a lot because of so many factories coming. The government is now widening the road, and that will probably be complete by next year.”Next to his office in Kulim, cranes and trucks are busy building a $7bn facility that will eventually be Infineon’s — and the world’s — largest production site for silicon carbide chips, a type of semiconductor used in electric cars, wind turbines and other heavy applications, as well as consumer electronics.Malaysia has long been Infineon’s most important manufacturing hub in Asia, and the company now has more employees there than in its home base of Germany, according to Ng.The country became an early leader in Asian chipmaking by attracting many foreign chipmakers in the 1970s. It was even nicknamed “the Silicon Valley of the east,” but it lost ground to South Korea and Taiwan thanks to the rise of homegrown companies Samsung Electronics and Taiwan Semiconductor Manufacturing Company in the 1990s. Now Malaysia is hoping to make a comeback as the industry pushes to diversify production amid flaring US-China tensions.This article is from Nikkei Asia, a global publication with a uniquely Asian perspective on politics, the economy, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the biggest and fastest-growing listed companies from 11 economies outside Japan. Subscribe | Group subscriptionsUS-based Intel is also expanding in Malaysia, with plans to invest $7bn to turn the country into the company’s primary production base in Asia.At the industrial park of Bayan Lepas in the south-east of Penang Island, about a 40-minute drive from Kulim, Intel is building its biggest site for advanced 3D chip packaging, an area emerging as the next battleground in the attempt to make ever more powerful chips.“There is a saying that goes, ‘A rising tide lifts all boats’,” said AK Chong, Intel’s vice-president of manufacturing and supply chain. “When you have a new technology” introduced to a country, “you’re bringing in a lot of ecosystem suppliers. Like our advanced packaging — you need a new chemical solution and new equipment. So you expect a lot of these investments coming in. It’s like a chain effect.”Inflows of foreign direct investment into Malaysia have reached record levels over the past few years, thanks largely to global tech and chip companies. The country approved RM71.4bn ($15.25bn) in the first quarter of 2023, more than double the RM32.4bn recorded for the whole of 2019, before the coronavirus pandemic-driven chip crunch.Malaysia is already a major hub for the final steps of the chipmaking process. It controls 13 per cent of the global market for packaging, assembly and testing services and is the sixth-biggest semiconductor exporter, according to the government.On the other hand, the country relies heavily on foreign chip companies to sustain its industry. Intel, NXP, Infineon, Texas Instruments and Renesas have all had a presence in the country since the 1970s, while Malaysian chip packaging and testing service providers, such as Inari Amertron, Unisem and Carsem, play only a small part in the global market. The country has produced no major chip manufacturers or top developers.In 2020, chip suppliers in Malaysia suffered a months-long lockdown because of Covid-19 restrictions that created a bottleneck in the output of semiconductors. But now Malaysia hopes foreign companies will see its strengths, such as a relatively stable geopolitical outlook and little risk of natural disasters.Inflows of foreign direct investment into Malaysia have reached record levels over the past few years, thanks in large part to global tech and chip companies More