SEOUL – Hyundai Motor Co plans to add electric vehicles (EV) in its Montgomery assembly line in the United States, marking the South Korean automaker’s first EV production in the country, Hyundai Motor Manufacturing Alabama said on Tuesday.

Hyundai said it plans to invest $300 million to build the Electrified Genesis GV 70 and hybrid version of the Santa Fe at its U.S. manufacturing center.

(Reporting by Heekyong Yang; Editing by David Goodman)

(This story corrects APRIL 5 story to replace final chart, after data provider Nansen found error in their data)

By Elizabeth Howcroft

(Reuters) – The NFT bubble isn’t popping, but it may have sprung a leak.

A year on from when a single non-fungible token sold for $69.3 million in crypto at Christie’s auction house, with the buyer paying to be recorded on blockchain as the owner of a digital file that anyone can see online for free, this weird and wild market is showing some signs of slowing down.

Sales on OpenSea, the largest NFT marketplace, had reached nearly $5 billion in January, a giant leap from the $8 million a year before, but declined to around $2.5 billion last month.

Around 635,000 people bought an NFT last month, for $427 on average, according to market tracker CryptoSlam, down from about 948,000 for $659 in January.

Companies nonethless continue to pile into the fashionable “metaverse”, where digital assets like virtual land and clothing for avatars can be bought for cryptocurrency as NFTs. JPMorgan and HSBC are among businesses that have opened virtual venues in NFT-based worlds this year, while YouTube and Instagram also have NFT plans.

“Obviously the enthusiasm and interest that we had at some periods last year is not here anymore,” said Pablo Rodriguez-Fraile, a Miami-based digital art collector. “I think we achieved something that wasn’t sustainable.”

He added that sales had picked up again in recent weeks, though.

Graphic: NFT sales on OpenSea- https://fingfx.thomsonreuters.com/gfx/mkt/zjvqkdodgvx/Past%20the%20peak.png

Modesta Masoit, director of finance and analytics at NFT research firm DappRadar, said the market was not in overall decline but rather consolidating after its meteoric growth, adding that investor caution following Russia’s invasion of Ukraine in late February may have depressed sales.

“Everybody was expecting that there was going to be a consolidation period,” she added. “It’s not going away, it’s just consolidating.”

Overall NFT sales have totalled about $11.8 billion so far in 2022, according to DappRadar, excluding $19.3 billion worth of sales from a platform suspected to be dominated by irregular trades, where a small number of accounts trade items back and forth for inflated prices.

Graphic: Daily NFT volumes- https://fingfx.thomsonreuters.com/gfx/mkt/xmvjoqeqwpr/Daily%20volumes%20drop.png

BULL TO BEAR TO APE

NFTs can be exotic and dangerous beasts.

Prices can drop dramatically after an initial surge, in a highly volatile market where the value of an asset depends on its social status.

Nima Sagharchi, head of digital assets at auction house Bonhams, said that in contrast to the traditional art world, the NFT market can see-saw between bull and bear cycles within as little as a week.

An NFT representing a piece of computer-generated abstract images from a collection called Art Blocks would sell for around $15,000 on average at a peak in September 2021, but fetched just under $4,200 last month, according to CryptoSlam.

Meanwhile, Bored Ape Yacht Club NFTs – a set of 10,000 variations on a cartoon primate – still sell for around $300,000 on average.

Graphic: Bored Ape prices- https://fingfx.thomsonreuters.com/gfx/mkt/myvmnqxqlpr/Six%20figure%20profile%20pictures.png

Buying a Bored Ape – as celebrities including Madonna and Paris Hilton have done – can be considered akin to joining a cross between a members’ club and an investment scheme. Buyers often advertise their membership by setting their NFT as their profile picture on social media.

A cryptocurrency called ApeCoin was launched last month, given initially to holders of Bored Ape NFTs as well as the project’s founders. Its market cap is already $3.4 billion, according to Coinbase data.

Raoul Pal, a former Goldman Sachs executive, wrote in a blog post that expectations for this token encouraged him to spend around $400,000 worth of the cryptocurrency ether on a Bored Ape NFT.

“Social tokens are the BIG thing,” he wrote.

Graphic: NFT indexes – https://fingfx.thomsonreuters.com/gfx/mkt/gkplgqaoevb/NFT%20indexes.png

(Reporting by Elizabeth Howcroft in London; Editing by Pravin Char)

By Brenna Hughes Neghaiwi and Oliver Hirt

ZURICH -Former Raiffeisen Switzerland Chief Executive Pierin Vincenz was jailed for nearly four years on Wednesday at the end of a fraud trial which exposed his huge strip club bills and misuse of company expenses.

After one of Switzerland’s highest-profile corporate crime trials in decades, Zurich’s district court convicted Vincenz, a former Swiss ‘banker of the year’ who was charged with making millions through illicit deals while he was CEO of the bank.

Vincenz, who was acquitted on several counts, was fined 840,000 Swiss francs ($900,600) and ordered to pay nearly 1.6 million francs in damages to compensate firms in which he was involved, as the court also found the 65-year-old guilty of using business expenses for private purposes.

His lawyer told Reuters that Vincenz, who denies any wrongdoing, would appeal the verdict after he was sentenced to 3-3/4 years in prison.

Vincenz had told the court that a near 200,000 Swiss franc expenses bill for strip club visits was largely business-related, while a 700 franc dinner with a woman he met on dating app Tinder was justified because he was considering her for a real estate job.

But Judge Sebastian Aeppli told the court that the expense claims went too far and were not in his employer’s interests.

“(His) understanding, whereby practically all expenditures of a business person fall under disposable company expenses so long as any remote connection to the business activity exists, clearly went too far,” Aeppli said.

“The relationship maintenance he carried out in cabarets, strip clubs and contact bars was no longer in the primary interest of Raiffeisen,” the judge said, adding prudent handling of Raiffeisen’s money would have meant limiting tabs to 1,000 Swiss francs or less per occasion.

The trial, which was moved from a courthouse to Zurich’s Volkshaus theatre due to the intense public interest, centred around conflicts of interest on deals between a number of firms in which Vincenz and another defendant were involved.

All seven defendants in the trial, which began in January, had denied the allegations against them.

Vincenz was ordered to pay Raiffeisen more than 260,000 Swiss francs over expenses he charged to the bank, while he was ordered to pay a further 1.3 million francs to compensate damages incurred by another firm over a corporate transaction.

Prosecutors had sought nearly 70 million Swiss francs in total in assets from the defendants, as well as pursuing financial penalties and prison sentences ranging from two to six years for all but one of them.

Prosecutor Marc Jean-Richard-dit-Bressel told reporters that his office would await the written verdict as well as other parties’ next moves before deciding on any possible appeal, but noted the court had largely supported the prosecutors’ charges.

($1 = 0.9327 Swiss francs)

(Reporting by Brenna Hughes Neghaiwi and Oliver Hirt; Editing by Michael Shields and Alexander Smith)

By Natalie Grover and Yadarisa Shabong

(Reuters) – Britain’s GlaxoSmithKline sought to bolster its cancer business on Wednesday by agreeing a $1.9 billion deal to buy U.S. drug developer Sierra Oncology, the latest move to fend off pressure from activist shareholder Elliott.

GSK has been facing mounting calls to shore up its drug pipeline since Elliott built up a significant stake in the company last year.

The company is also pressing ahead with plans to spin off its large consumer healthcare business, which includes brands such as Sensodyne toothpaste and Advil painkillers, in July.

Shareholders in Sierra, a cancer drug developer, will receive $55 per share of common stock in cash, which is a 39% premium to the company’s closing price on Tuesday.

GSK’s shares were up 0.9% at 1043 GMT, while Sierra’s shares jumped 37% in U.S. premarket trading.

The deal’s price tag doesn’t look unreasonable given it is roughly three times consensus peak sales expectations of $630 million for Sierra’s lead experimental drug, momelotinib, J.P.Morgan analysts wrote in a note.

Momelotinib, which Sierra acquired from Gilead Sciences in 2018, is designed to treat anaemic patients with a type of bone marrow cancer called myelofibrosis. It is expected to be submitted for U.S. marketing approval this quarter.

Results from a late-stage trial in January showed the drug was successful in reducing disease symptoms and cut patients’ dependence on blood transfusions.

“We see the key risk around the acquisition as being commercial execution on the launch, given the number of competitors targeting the myelofibrosis space, and momelotinib’s mixed historical data, prior to the recent positive …. study results,” the analysts added.

The acquisition is expected to close in the third quarter and will complement Blenrep, GSK’s treatment for another form of blood cancer called multiple myeloma.

There’s about a 70% overlap in customer base between momelotinib, Blenrep and other haematology products, said Luke Miels, chief commercial officer at GSK.

GSK, whose oncology business last year accounted for about 2.8% of total pharmaceutical sales, recently suffered trial setbacks on two cancer compounds that were once touted as potential blockbusters.

Patent exclusivity on its HIV drug dolutegravir is also due to expire at the end of 2027, worth about 3 billion pounds ($3.9 billion) in annual sales.

Miels signalled GSK continues to have an appetite for deals like Sierra. “They could be anywhere ranging from cancer, anti-infectives, vaccines, renal, autoimmune,” he said.

($1 = 0.7692 pounds)

(Reporting by Yadarisa Shabong in Bengaluru and Natalie Grover in London; Editing by Josephine Mason and Mark Potter)

By Silke Koltrowitz

ZURICH -Swiss chocolate maker Barry Callebaut will keep operating in Russia to help customers and employees there, even though images from the war in Ukraine create “enormous pressure,” it said on Wednesday.

Shares in the Zurich based-group fell more than 5% as some analysts worried about its – albeit small – exposure to the turbulent Russian market, as well as flattish first-half earnings per tonne of chocolate sold.

The company reported higher first-half profits and sales volumes overall, helped by a recovery in the global chocolate market. But Moscow’s invasion of Ukraine has forced all consumer goods companies with a presence in Russia to rethink strategies.

While customer Nestle has stopped selling most foods, including KitKat chocolate bars, in Russia, Barry Callebaut’s three Russian factories and 500 staff are still working.

“We are under enormous pressure just watching the images we get from the war and we cannot not look into the boardroom of other companies,” Chief Executive Peter Boone told reporters.

He said the question of whether to stay in Russia was raised “internally and externally” and even by his children, but it was important to protect the jobs of staff in Russia.

“It feels right because we are in contact with our 500 colleagues in Russia, they clearly have not asked for this decision by the Russian government. For us, it feels like the right thing to do to stay close for our employees and our customers,” he said, adding the company’s chocolate and cocoa went into all kinds of products including drinks and breakfast cereals.

He said the business in Russia – the fourth-largest chocolate confectionery market, according to Euromonitor – represented less than 5% of group volumes and the company was taking a 5 million Swiss franc ($5.4 million) impairment to reflect the increased risk of customer default there. It has also stopped new capital investment in the country.

Shares in the group were down 5.7% at 1123 GMT, underperforming the European food sector index.

“The exposure to Russia with close to 5% of the group’s volume as well as the flattish EBIT per tonne despite strong volume growth could partly explain the share price drop,” Vontobel analyst Jean-Philippe Bertschy said in an emailed comment.

Boone said it was difficult to get raw materials to Russia, but still possible as food is not covered by Western sanctions.

The company confirmed its goals for 5-7% sales volume growth and earnings before interest and tax above volume growth for the three years to August 2023.

Strong chocolate sales and a recovery in its gourmet business with restaurants helped sales volumes rise 8.7% in the six months to the end of February. Net profit climbed 3.1%.

($1 = 0.9333 Swiss francs)

(Reporting by Silke KoltrowitzEditing by Paul Carrel and Mark Potter)

By James Davey

LONDON -Tesco, Britain’s biggest retailer, warned of a drop in profits this financial year as surging inflation piles pressure on the supermarket group and its customers alike.

Shares in the company, which has a more-than 27% share of Britain’s grocery market, were down 5% at 0931 GMT, the biggest decline of a blue-chip stock in Europe.

That dragged down other grocery stocks, including Sainsbury’s, Marks & Spencer and Ocado, as well as retailers such as JD Sports.

Tesco reported retail adjusted operating profit of 2.65 billion pounds ($3.45 billion) for the year to Feb. 28, up 36% and in line with guidance. It sees profit of between 2.4 billion pounds and 2.6 billion pounds for 2022-23.

“Given the significant uncertainties in the external environment, we believe it is appropriate to provide profit guidance in the form of a wider than usual range,” Tesco said.

Britain’s inflation rate hit a 30-year high of 7% in March, even before April’s sharp increase in utility bills. Surging prices are causing the biggest squeeze on household incomes since at least the 1950s.

Tesco said three factors would influence its performance – the return to more normal customer behaviour after the COVID-19 pandemic, its ability to offset higher costs with savings elsewhere in the business, and the investment required to keep prices competitive.

“Inflation is very real for everyone. It’s household expenses going up and finances stretched. It has been many years since we last saw living costs rise at the rate they are today,” CEO Ken Murphy told reporters.

COST OF LIVING CRISIS

A cost of living crisis and supply chain disruptions due to Russia’s invasion of Ukraine are weighing on Britain’s grocers.

Last week, No. 4 supermarket group Morrisons warned its annual profit could be hit by the conflict and rising inflation. No. 7 player, the Co-operative Group, pointed to “stark” economic headwinds.

The war in Ukraine has hurt supplies of sunflower oil, and has driven-up animal feed and wheat prices, which has had a knock-on effect on meat, dairy and bakery.

Soaring energy prices, as well as increased labour costs, have added to the cost of doing business.

Murphy said Tesco was “laser focused” on keeping the cost of the weekly shop in check and noted cheaper, own-brand products would play an important role. He said Tesco was in “great shape” to deal with the crisis.

Market data suggests shoppers have started to shift their buying habits to save money, opting for more own-label foods.

Tesco’s group sales rose 3.0% to 54.8 billion pounds in 2021-22, while UK like-for-like sales rose 0.4% as it gained market share. Industry data has shown Tesco consistently outperform its three biggest rivals – Sainsbury’s, Asda and Morrisons.

Analysts say Tesco is benefiting from its strategy of matching prices at discounter Aldi on 650 key lines, the popularity of its ‘Clubcard Prices’ loyalty scheme and the unrivalled scale of its store network and online operation.

Tesco raised its full-year dividend 19.1% to 10.9 pence a share and committed to return a further 750 million pounds to shareholders by April 2023 through a share buyback programme.

“Tesco has proven its ability to adeptly navigate tricky periods and few would bet against it doing so again,” said Zoe Gillespie, investment manager at Brewin Dolphin.

($1 = 0.7681 pounds)

(Reporting by James Davey Editing by Kate Holton and Mark Potter)

By Tassilo Hummel and Giulio Piovaccari

PARIS -Fiat parent Stellantis will sell its stake in an auto financing joint venture to its Chinese partner Dongfeng and set up its own financial services unit in China, the latest step to overhaul its business in the world’s top car market.

The move comes after the world’s fourth-largest carmaker expanded its credit business in the United States and launched a major reorganisation in Europe, as CEO Carlos Tavares aims to boost profitability and simplify the company’s structure.

Stellantis, formed at the start of 2021 through the merger of France’s PSA with Fiat Chrysler (FCA), has struggled to sell cars in China and has been looking to reshuffle its strategy in the country where it has joint ventures with Dongfeng and GAC.

“As we continue our push to drive profitable growth in China, we need to also reset our financial services offering in the country,” said Tavares in a statement.

Under the deal, one of Stellantis’ financing units and car maker DPCA – co-owned by Stellantis and Dongfeng – have entered into an equity transfer agreement with Dongfeng aimed at transferring the whole of their joint auto financing assets to the Chinese company.

In return, Stellantis said it would create a new structure called Auto Finance Co (AFC).

JOINT VENTURES

Stellantis through its China-based joint ventures represents just 0.5% of the Chinese auto market. DPCA, the joint venture with Dongfeng, sold 100,567 vehicles in 2021, more than doubling annual sales. Its joint venture with GAC sold 20,123 units last year, a 50% decline.

The proposed transaction should be completed during the second half of 2022, pending regulatory approval, the car maker added.

In its business plan to 2030 outlined last month, Stellantis said it would adopt an “asset-light” model there – keeping only one fully-owned plant and opening up other manufacturing capacity to third parties to lower fixed costs.

It is aiming for Chinese revenue to reach 20 billion euros ($22 billion) by 2030. Revenue for “China, India and Asia Pacific” totalled 3.9 billion euros last year.

In November, Stellantis bought First Investors Financial Services Group for around $285 million as it seeks to build a full-service captive finance arm in the United States, where owning 100% of such structures is a common feature.

The business offers U.S. customers, dealers and partners financing options, including retail loans, leases and floorplan financing.

It took a different approach in Europe. Late last year, the company agreed to set up financing and leasing joint ventures with BNP Paribas, Credit Agricole and Santander.

The aim was to cut the number of entities it inherited from PSA and FCA.

($1 = 0.9232 euros)

(Reporting by Tassilo Hummel and Giulio Piovaccari; Additional reporting Zoey Zhang; Editing by Josephine Mason and David Holmes)

BEIJING -China’s imports unexpectedly fell in March as COVID-19 curbs across large parts of the country hampered freight arrivals and weakened domestic demand, while export growth slowed, prompting analysts to expect a worsening in trade in the second quarter.

The softer trade figures are likely to reinforce expectations of more policy support from the government, with an adviser on Wednesday calling for cuts in banks’ reserve requirements and interest rates to boost a flagging economy.

Inbound shipments fell 0.1% in March from a year earlier, marking the first decline since August 2020, customs data showed on Wednesday. That compared with a 15.5% gain in the first two months of the year and an 8% increase forecast by analysts in a Reuters poll.

The decline was broad-based. China’s imports of crude oil tumbled 14% in March and gas import volumes were the lowest since October 2020. Purchases of copper fell 8.8%, as COVID outbreaks hurt manufacturing and industrial demand for some raw materials remained soft.

Exports – a major driver of the economy – rose 14.7% in March, beating analyst expectations for a 13% rise, although slowing from a 16.3% gain in January-February.

“Due to the severe disruptions in factory operations, road transport and port congestion as a result of the worst COVID-19 wave and the most severe lockdowns since spring 2020, we expect export growth in dollar terms to slump to 0.0% year-on-year in April, while import growth is likely to drop further to minus 3.0%,” Nomura said in a note.

Many analysts expect trade conditions to worsen in April, on slower customs clearance and as the impact from a lockdown in Shanghai is felt.

China’s efforts to curb its largest COVID-19 outbreaks in two years have restricted activity in several cities including Shanghai and forced companies from Apple supplier Foxconn to automakers Toyota and Volkswagen to suspend some operations.

That likely reduced demand for imported raw materials for Chinese factories, according to Zheng Houcheng, director of the Yingda Securities Research Institute.

“The pressure on the global economy is likely to drive down commodity prices over the medium-term, which would hit China’s exports, in both volume and value, in the second half,” said Zheng.

China’s strong trade performance seen over the past two years is set to slow this year as other countries emerge from COVID lockdowns and higher energy prices and global logistics disruptions caused by Russia’s war in Ukraine squeeze exporters.

Factory activity in March fell as the declines in export orders accelerated, recent manufacturing surveys showed, with firms reporting clients cancelled or suspended orders due to the uncertainty over the Ukraine war.

Qi Yong, general manager at a consumer electronics distributor Shenzhen Muchen Technology Co, told Reuters that orders from European clients fell 20% in March from a year ago, although outbound shipments for North America remained brisk.

Qi said this was due to “the war-induced weak purchasing power and risks of economic slowdowns in European economies”, adding that “exporters with exposure to the bloc may continue to feel the pinch”.

China posted a trade surplus of $47.38 billion in March, more than double the forecast $22.4 billion, thanks to the unexpected decline in imports. It reported a $115.95 billion surplus in January-February.

(Reporting by Stella Qiu, Ellen Zhang and Ryan Woo; Editing by Sam Holmes)

By Ron Bousso and Chen Aizhu

LONDON/SINGAPORE – China’s top offshore oil and gas producer CNOOC Ltd. is preparing to exit its operations in Britain, Canada and the United States, because of concerns in Beijing the assets could become subject to Western sanctions, industry sources said.

Ties between China and the West have long been strained by trade and human rights issues and the tension has grown following Russia’s invasion of Ukraine, which China has refused to condemn.

The United States said last week China could face consequences if it helped Russia to evade Western sanctions that have included financial measures that restrict Russia’s access to foreign currency and make it complicated to process international payments.

CNOOC did not immediately comment.

Companies periodically carry out reviews of their portfolios, but the exit being prepared would take place less than a decade after state-owned CNOOC entered the three countries via a $15 billion acquisition of Canada’s Nexen, a deal that transformed the Chinese champion into a leading global producer.

The assets, which include stakes in major fields in the North Sea, the Gulf of Mexico and large Canadian oil sand projects, produce around 220,000 barrels of oil equivalent per day (boed), Reuters calculations found.

Last month, Reuters reported CNOOC had hired Bank of America to prepare for the sale of its North Sea assets, which include a stake in one of the basin’s largest fields.

CNOOC has launched a global portfolio review ahead of its planned public listing in the Shanghai stock exchange later this month that is aimed primarily at tapping alternative funding following the delisting of its U.S. shares last October, the sources said.

The delisting was part of a move by former U.S. President Donald Trump’s administration in 2020 that targeted several Chinese companies Washington said were owned or controlled by the Chinese military. China condemned the move.

CNOOC is also taking advantage of a rally in oil and gas prices, driven by Russia’s invasion of Ukraine on Feb. 24, and hopes to attract buyers as Western countries seek to develop domestic production to substitute Russian energy.

As it seeks to leave the West, CNOOC is looking to acquire new assets in Latin America and Africa, and also wants to prioritise the development of large, new prospects in Brazil, Guyana and Uganda, the sources said.

‘A PAIN’

CNOOC is seeking to sell “marginal and hard to manage” assets in Britain, Canada and the United States, a senior industry source told Reuters.

All the sources spoke on condition of anonymity because of the sensitivity of the issue.

The industry source said last month that CNOOC’s top management, including chairman Wang Dongjin, found managing the former Nexen assets was “uncomfortable” because of red tape and high operating costs compared with developing nations.

CNOOC has faced hurdles operating in the United States in particular, such as security clearances required by Washington for its Chinese executives to enter the country, the source added.  

“Assets like Gulf of Mexico deepwater are technologically challenging and CNOOC really needed to work with partners to learn, but company executives were not even allowed to visit the U.S. offices. It had been a pain all along these years and the Trump administration’s blacklisting of CNOOC made it worse,” said the source.

In its prospectus ahead of the initial public offering, CNOOC said it could face additional sanctions.

“We cannot predict if the company or its affiliates and partners will be affected by U.S. sanctions in future, if policies change,” CNOOC said.

In the United States, CNOOC owns assets in the onshore Eagle Ford and Rockies shale basins as well as stakes in two large offshore fields in the Gulf of Mexico, Appomattox and Stampede.

Its main Canadian assets oil sands projects are Long Lake and Hangingstone in Alberta Province.

(Reporting by Ron Bousso and Chen Aizhu; editing by Barbara Lewis)

BERLIN -Germany would face a sharp recession if gas supplies from Russia are suddenly cut off, the country’s leading economic institutes said on Wednesday, and the government said the war in Ukraine poses “substantial risks” for Europe’s largest economy.

A sudden stop in Russian energy supplies – an adverse scenario and not the institutes’ baseline expectation – would slow economic growth to 1.9% this year and result in a contraction of 2.2% in 2023, they said.

The chairmen of three German parliamentarian committees called on Tuesday for the European Union to impose an embargo on Russian oil as soon as possible. But a survey published on Wednesday showed most Germans baulk at that idea.

“If gas supplies were to be cut off, the German economy would undergo a sharp recession,” said Stefan Kooths, vice president and research director business cycles and growth at the Kiel Institute for the World Economy.

The cumulative loss of gross domestic product (GDP) in 2022 and 2023 in the event of a such supply freeze would likely be around 220 billion euros ($238 billion), or more than 6.5% of annual economic output, the five institutes said.

In its monthly report, Germany’s Economy Ministry said the war in Ukraine “poses substantial risks” for the economy, but it was hard to quantify effects: “They depend heavily on the duration and intensity of the war,” it said.

The economic institutes – the RWI in Essen, the DIW in Berlin, the Ifo in Munich, the IfW in Kiel and Halle’s IWH – confirmed revised forecasts reported by Reuters on Tuesday, cutting their baseline 2022 growth projection for the economy to 2.7% from 4.8% and forecasting 2023 growth of 3.1%.

The Economy Ministry said that in coming months the inflation rate driven by energy prices and the uncertainty caused by the Russian intervention in Ukraine are likely to weigh on private consumption.

Trade flows and supply chainss have been affected by the war, it said, adding: “Uncertainty about future economic developments remains correspondingly high.”

($1 = 0.9228 euros)

(Writing by Paul Carrel; Editing by Maria Sheahan and Kim Coghill)

By Lisa Barrington and Farah Master

DUBAI/HONG KONG – It’s been the subject of quiet speculation among diplomats and executives for years, but now global casino bosses are setting their sights on a once improbable prize: gambling in the United Arab Emirates

Ras Al Khaimah (RAK), one of the smaller and lesser-known of the seven emirates, said earlier this year that it planned to regulate gaming in some resorts. On the same day, Las Vegas casino giant Wynn Resorts said it would build a resort licensed for gaming, or gambling, on a man-made island.

The announcements could mark a watershed moment for the Gulf, a region that has traditionally imposed stricter Islamic rules than other parts of the Middle East, and one where gambling has long been off-limits.

Currently, those seeking a flutter head to the likes of Lebanon’s Casino du Liban or some upmarket Egyptian hotels.

Yet times may be changing.

Two sources familiar with the matter told Reuters that gambling in some form would be permitted in the UAE, but that it would be up to each emirate to decide whether and how to regulate it, similar to how Sharjah prohibits alcohol sales unlike other emirates. The sources said it would happen soon, without providing a specific timeframe.

Other global casino and hotel brands which have moved into the UAE could benefit should RAK pave the way for other emirates to follow – with many eyes on the bigger and glitzier jackpot of Dubai, a global tourist magnet, where gaming is currently banned.

Caesars Palace, which opened in Dubai in 2018 and is the only one of U.S. giant Caesars Entertainment’ resorts globally without a casino – told Reuters that it would examine any possibility of offering gambling in Dubai.

“That acceptance now that there is going to be the potential of gaming in the UAE, in whatever form it’s going to be, allows people like Caesar’s and MGM as well to look at that closely,” said Anthony Costa, regional president at Caesars Palace. “I think it’s wonderful.”

“Like anybody, if a license is able to be bid for, any global gaming company is going to want to be actively involved in the conversation,” he added.

About 10 km along Dubai’s coast from the Caesars resort, digging has begun on another artificial outcrop to support a luxury resort by Las Vegas gambling stalwart MGM Resorts International.

When asked whether it would consider introducing gaming at the resort, MGM said “gaming has not been part of the planning and there are no updates to our plans”.

A year ago Dubai, traditionally the most liberal emirate, denied rumours circulating on social media and among the business community that several hospitality venues had been granted gambling licences.

The UAE government media office, as well as the media offices of the emirates of Dubai, Abu Dhabi and Sharjah, did not respond to requests for comment on RAK’s plan to regulate gambling and whether they planned to make similar shifts.

EMIRATES VS SAUDI

The prospect of casinos plays out against the backdrop of intense competition in the Gulf, with business and tourism hub UAE vying with rapidly-opening Saudi Arabia to become the go-to destination in a region pivoting away from oil.

The UAE, where foreigners make up 90% of the population, has already moved in other areas to keep first mover advantage over Saudi Arabia, the largest and most conservative Gulf state.

The Emirates switched to a Saturday-Sunday weekend this year to move closer to global markets, from the Friday-Saturday break common in many Muslim nations. In the past 18 months, the UAE has overhauled laws and regulations, including decriminalising alcohol consumption and pre-marital cohabitation.

The country has also found ways to offer some potentially lucrative games of chance.

In 2020 a national “Loto” was launched, for example. Players purchased a “collectable” picture of an iconic UAE scene, such as the Burj al Arab hotel, for 35 dirhams ($9.50) and were entered into a draw. Now players seeking to enter the draw purchase a bottle of water to be donated to charity to win a top prize of 10 million dirhams.

The game was deemed Sharia compliant by virtue of there being an “exchange of value” in the purchase of the collectable or bottle.

Horse racing fans at some UAE racecourses can also enter for free a ‘pick six’ competition across a number of races for the chance to win 40,000 dirhams.

Yet, while RAK’s intentions are clear, big question marks remain over how it or other emirates would actually license gaming, until a prohibition is removed from the federal penal code, which was overhauled as recently as January.

RAK stressed that its regulations, being developed by the recently created Department of Entertainment and Gaming Regulation, would push for responsible gaming.

“Gaming is a responsible form of entertainment and leisure tourism that takes into consideration community, cultural and social norms,” the Ras Al Khaimah Tourism Development Authority told Reuters.

It did not answer questions about how its plans would work alongside the federal prohibition.

Wynn told Reuters that the definition of gaming and types of games permitted would be determined by the regulator.

FOREIGNERS ONLY?

RAK’s gaming regulations are being shaped by those of Singapore and the United States, according to Wynn Resorts and Vitaly Umansky, a gambling industry analyst at the Sanford C Bernstein investment company in Hong Kong who is familiar with the Wynn project.

“Like Singapore, the country is looking to gaming to help drive tourism and has allowed gaming to occur in an integrated resort format for just such purpose,” Umansky said.

He added that gaming in RAK would likely be limited to foreigners.

The UAE also appears unlikely to develop resorts that rely primarily on gaming revenues, or foreground gaming, with slots and tables forming part of a wide entertainment offering.

“The regulatory environment would be the kind that hides the casino, kind of like Singapore but even more so. It won’t be like Vegas where the casino is out there,” Umansky said of Wynn’s proposals, which are currently in the design phase.

Caesar’s Costa said big resort brands did not necessarily need to operate their gaming side: “They are great hotels in themselves.”

(Reporting by Lisa Barrington and Farah Master; Additional reporting by Alexander Cornwell)

By Leika Kihara

TOKYO -Bank of Japan Governor Haruhiko Kuroda on Wednesday warned the recent rise in inflation driven by higher import costs could hurt the economy, stressing the central bank’s resolve to keep monetary policy ultra-loose.

Consumer inflation is likely to clearly accelerate as energy prices rise sharply and companies steadily pass on higher raw material costs to households, Kuroda said.

While the BOJ chief said the world’s third-largest economy was expected to recover as consumption shows signs of improvement, and robust overseas demand underpin exports, he also warned of risks.

“The outlook, however, remains highly uncertain due to the impact of the pandemic, as well as developments regarding Ukraine and the impact on commodity prices,” Kuroda said in a speech to an annual meeting of trust banks.

He stressed the need to maintain the BOJ’s massive stimulus to support an economy yet to recover to pre-pandemic levels.

“Recent rising inflation, driven by higher import costs, weighs on Japan’s economy by reducing households’ real income and corporate profits,” Kuroda said.

The spike in global commodity prices, fuelled by the war in Ukraine, and a weak yen have inflated the cost of imports for resource-poor Japan, threatening to derail a fragile economic recovery.

Finance Minister Shinichi Suzuki jawboned markets against pushing down the yen too much, saying earlier on Wednesday that rapid moves in the yen were “undesirable.”

The remark, however, failed to prevent the yen from sliding below 126 to the dollar on Wednesday, the first time it breached that level since May 2002.

(Reporting by Leika Kihara; Editing by Tom Hogue & Shri Navaratnam)