"Tidbits From TNT" Tuesday AM 2-22-22

Feb 22

TNT:

Tishwash: Iraq gets rid of freezing its financial assets and takes a step towards exiting from Chapter VII

Economic expert Ahmed Saddam confirmed today, Monday, that Iraq has got rid of the problem of freezing its financial assets after completing the payment of Kuwaiti compensation.

Saddam told "Earth News" that "Iraq will exit from Chapter VII after it has fulfilled all its international obligations, the latest of which is the payment of Kuwait's compensation amounting to 52.4 billion dollars."

He added, "This means that the Iraqi government has got rid of the problem of freezing its financial assets. In addition, completing the payment of compensation to Kuwait and removing Iraq from Chapter VII will give the impression that Iraq is now outside the framework of dangerous countries," noting that "this is a positive impact on Iraq's international reputation." And it has a positive impact on its economic reality.” link

TishwashSpecialists: The decision harmed a large segment of citizens, but it boosted revenues

The economic controversy over the calls to return the exchange rate of the dinar against the dollar, which was demanded by the leader of the Sadrist movement, Muqtada al-Sadr, as a result of the apparent rise in all goods and services in the local market, especially foodstuffs and health, resulting from the increase in import costs covered by the dollar.

This exacerbated the inflation and poverty, and led to the erosion of a large percentage of the purchasing value of the salaries of employees and workers in the private sector.

Despite the significant negatives left by the decision voted on by the House of Representatives in the previous session, economists see some “positives” in other angles of the move, which “created a wide debate in political and economic circles,” stressing that the devaluation of the dinar led to confronting the financial crisis that It resulted from the collapse of oil prices during the Corona pandemic and the restrictions imposed by that pandemic on all countries of the year, indicating that the matter also achieved financial liquidity that led to securing the salaries of employees.

Parliamentary position

Immediately from Mr. Al-Sadr’s calls, the House of Representatives hosted the Governor of the Central Bank, while the Minister of Finance “refused” to accept the invitation that was sent to him by the legislative authority, to discuss ways to reduce the value of the dollar against the dinar. ,

Governor of Al-Zamili, chaired an expanded meeting attended by a number of heads of political blocs and representatives, and witnessed hosting the Governor of the Central Bank, Mustafa Ghaleb Mikheib, while Finance Minister Ali Abdul Amir Allawi refrained from attending, to discuss the issue of currency smuggling and the dollar exchange rate, and some banks controlled the currency auction and the most effective situation Solutions to mitigate their impact on citizens.

While Al-Zamili called on the Public Prosecution to take the necessary legal measures to prevent the travel of Finance Minister Ali Abdel Amir Allawi, he confirmed that this week will witness an emergency parliamentary session to question the minister.

Alternative proposal

In order not to create an economic “confusion” that might be caused by decreasing the exchange rate of the dollar, the economic expert, Nabil Jabbar Al-Ali, suggested that the reduction be gradual, at a rate of 1% or 2% per month, through a clear and announced exchange policy for all, in other words 1000-2500 dinars per 100 Dollars depreciate per month by setting the price in the coin auction regulations.

Al-Ali believes that “a return to the previous exchange rate may not be reasonable so quickly, due to the recent monetary policy of the Central Bank, which strengthened and raised the cash in circulation by a large percentage, and the price of 1300 dinars per dollar may be reasonable.”

The economic expert called for the necessity of "sending messages of reassurance to traders, importers and savers by clearly clarifying the foreign exchange policy for a period of one year or more."

And the Governor of the Central Bank, Mustafa Ghaleb, pledged during the parliamentary hosting, to hold banks that do not comply with regulations and manipulate exchange rates to account. big mistake

The economic expert, Raed Al-Hashemi, did not depart much from the previous opinion, when he described the move to change the exchange rate as a “big mistake” that directly harmed citizens, especially those with limited income.

Al-Hashemi said: “I think that returning the dollar exchange rate is never that easy. Reality to support basic services and reduce pressure on the citizen, such as subsidizing the ration card items and reducing electricity, water and internet wages and mobile recharge cards, and this is better for the market in general and for the citizen secondly.

Exchange rate stability

In turn, the researcher in economic affairs, Issam Salem, confirmed that “the uproar that is being raised about the exchange rate has no real justification, as the consequences on which it was built are great and cannot be addressed now or in the foreseeable future, and that this confusion directly affects trading in the local market.”

It paralyzes the market movement and allows speculators and money holders to reap additional profits. Salem stressed the need for “the exchange rate policy to be fixed and not subject to change, while achieving some support for the ration card items, maintaining food security and supporting basics, such as electricity, water, services and roads, stabilizing internal security, encouraging local production in all its aspects, and finding real solutions to save currency.”

Difficulties at home through tourism and export. The financial advisor to the Prime Minister, Dr. Mazhar Muhammad Salih, had suggested a mechanism to address the side effects of changing the exchange rate.

Saleh told the Iraqi News Agency (INA), that "the time has come for fiscal policy to play its active and important role in addressing the side effects that resulted from the exchange rate change and its effects on income, especially the poor and low-income classes being negatively affected by price failures without compensation."

He added, "This aspect directly bears the importance of significantly reducing customs taxes on imported foodstuffs, pharmaceuticals and local production supplies, as well as restructuring government support for goods and services that directly affect the poor social classes." link

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Tishwaash: VN likely to be upgraded to an emerging market after KRX system installed

The stock trading board inside the Hồ Chí Minh Stock Exchange (HoSE).

Experts believe that once the KRX trading system begins official operations, many international organisations will re-evaluate the Vietnamese market to upgrade it to an emerging market.

Speaking at the Financial Street Talkshow last week, Dương Ngọc Tuấn, Deputy General Director of the Việt Nam Securities Depository (VSD), said that solutions for the new information technology system, T+0 day trading mechanism and other solutions to help upgrade the market will be implemented this year. In addition, new products, especially products for the domestic derivatives market, are allowed to develop.

Tuấn also revealed the plan to submit to the Government the market development strategy project for 2021-2030, which sets out roadmaps for development in all aspects, helping market activities become more active and sustainable.

The KRX trading system, provided by South Korea’s bourse operator, the Korea Exchange (KRX), can handle 3-5 million orders per day, aiming to tackle system overloads which had troubled investors last year. It is expected to be completed and run in the first half of 2022 after a pause last year due to the COVID-19 pandemic.

Lê Chí Phúc, General Director of SGI Investment Fund Management JSC (SGI Capital), said that it is necessary to introduce the new KRX trading system soon, so all participants in the market can proactively make their own plans in product development, as well as attracting new customers.

“When the KRX system is officially put into operation, many international organisations will re-evaluate the Vietnamese market to upgrade it to an emerging market,” Phúc said.

Similarly, in its base scenario, VNDirect Securities Corporation said that if Việt Nam completes the implementation of the new trading system in the first half of 2022, the country’s market could be included on the MSCI (Morgan Stanley Capital International)’s watch list for upgrading to an emerging market in its annual market assessment in May 2023. Việt Nam may then be notified of its upgrade to emerging market during the MSCI annual market review in May 2024.

Meanwhile, in the optimistic scenario, VNDirect said that the FTSE (Financial Times Stock Exchange) may announce the inclusion of the Vietnamese stock market in the secondary emerging market group during its annual market review in September 2022.

Although it has not been officially recognised as an emerging market, the domestic market has achieved many criteria such as liquidity surpassing that of many other emerging markets in 2021, ranking only second in ASEAN after Thailand. Many large funds in the world specialising in investing in emerging markets have also begun to show up in Việt Nam, the leader of SGI Capital added.

According to Phúc, if other solutions are followed such as continuing to maintain and further improve asset quality, the prestige of the Vietnamese market will increase.

On the other hand, up to now, the criteria for organisations to evaluate updating Việt Nam into the emerging market category have reduced a lot. The remaining issues are only technical and will be solved, Tuấn said.

On the foreign capital flows front, both Tuấn and Phúc agreed that the cash flow into the market recorded the strongest growth in more than two decades. Of which the majority was cash flow from domestic investors and lacked cash flow from foreign investors.

Although domestic investors in the past two years have played a leading role in the market, experts say that foreign capital flows cannot be ignored, because this is an essential factor for any stock market.

“Foreign capital inflows will bring great and potential financial resources,” Tuấn said.

“The participation of major international investors will play a significant role in leading the investment trend, bringing a lot of experience and international practices to make the market more active and healthy.

Meanwhile, Phúc said Việt Nam needs both domestic and foreign capital flows to develop the market, as well as develop businesses.

New technologies, the experience of foreign investors and international standards they bring into the market will help the country connect with the world in a more comprehensive way. link

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