One of the world’s richest petrostates, Kuwait is running out of cash

When Kuwait’s then-Finance Minister Anas Al-Saleh warned in 2016 that it was time to cut spending and prepare for life after oil, he was ridiculed by a population raised on a seemingly endless flow of petrodollars. Four years on, one of the world’s richest countries is struggling to make ends meet as a sharp decline in energy prices raises profound questions over how Gulf Arab states are run.

Al-Saleh’s long gone, shifting to other cabinet positions. A successor, Mariam Al-Aqeel, moved on in January, two weeks after suggesting restructure a public-sector wage bill that’s the single biggest drag on state finances. Her replacement, Barak Al-Sheetan, warned last month there wasn’t enough to cash to pay state salaries beyond October.

Slow to adjust big-spending habits as oil revenues fall, the Gulf states are hurtling toward a moment of economic reckoning, prompting renewed debate over the future of nations that for decades bought popular loyalty with state largesse.

“We’re going to wake up one day and realize we went through all our savings, not because we didn’t check our bank statement but because we looked at it and said, it’s probably a bank glitch, and then bought the latest Rolex,” said Fawaz Al-Sirri, who heads Bensirri political and financial communications firm.

The OPEC club of oil-exporters has revived crude from its historic drop this year, but $40 is still too low. The coronavirus pandemic and shift toward renewable energy threaten to keep prices depressed.

Saudi Arabia is curbing benefits and imposing taxes. Bahrain and Oman, where reserves are less plentiful, are borrowing and seeking support from wealthier neighbors. The UAE diversified with the rise of Dubai as a logistics and finance hub.

In Kuwait, however, a standoff between the elected parliament and a government whose prime minister is appointed by the emir has led to policy gridlock. Lawmakers have thwarted plans to reallocate state handouts and blocked proposals to issue debt.

Instead, the government has almost exhausted its liquid assets, leaving it unable to cover a budget deficit expected to reach the equivalent of almost $46 billion this year.

It’s been a gradual decline for Kuwait, which in the 1970s was among the most dynamic Gulf states, with its outspoken parliament, entrepreneurial heritage and educated people.

Then the 1982 crash of an informal stock market shook Kuwait’s and coincided with instability from the near decade-long Iran-Iraq war. embarked on a spending spree to rebuild after Saddam Hussein’s assault led to the 1991 Gulf War. It took years for oil to flow freely again.

still relies on hydrocarbons for 90% of its income. The state employs 80% of working Kuwaitis, who out-earn private-sector counterparts. Benefits for housing, fuel and food can total $2,000 a month for an average family. Salaries and subsidies soak up three-quarters of spending by the state, which is heading for its seventh consecutive deficit since the 2014 oil slump.

Savings for Life

But Kuwait has money, plenty of it, stashed away in an unbreakable fund — the world’s fourth-largest at an estimated $550 billion. Touching the Future Generations Fund, designed to ensure prosperity after oil runs out, is a controversial proposition.

Some Kuwaitis say the time has arrived. Opponents warn that without diversifying the and creating jobs, the savings would run out in 15-20 years.

“It’s not a solvency problem, although it’s considered a cash drought,” said Jassim Al-Saadoun, head of Kuwait-based Al-Shall Economic Consultants.

Rich for Infinity

The wealth fund has already come to the rescue, purchasing over $7 billion of assets from the Treasury in recent weeks. Parliament approved plans to halt, in years of deficit, an annual transfer of 10% of oil revenues to the fund, freeing up another $12 billion, but not enough to cover the budget shortfall.

To do that, the government has to borrow. But after a debut Eurobond issuance in 2017, Kuwait’s public-debt law lapsed. Al-Sheetan’s warnings about wages came as he tried, unsuccessfully, to convince lawmakers to support plans to borrow up to $65 billion.

His request coincided with a series of corruption scandals, some involving senior members of the ruling family, and lawmakers demanded the government end graft before accumulating debt.

Al-Sheetan is the fourth finance minister in as many years. Kuwait’s had 16 governments and seven elections since 2006.

The deadlock has undermined investor confidence. In March, S&P Global Ratings put Kuwait’s sovereign rating on negative watch. Moody’s Investors Service followed. The IMF said that month Kuwait’s “window of opportunity to tackle its challenges from the position of strength is narrowing.”

“The belief system in Kuwait is that we’re rich for infinity,” said Al-Sirri. “No one has the political capital to tell the Kuwaiti people that the party will be over soon if we don’t support change.”

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Average time spent on Instagram doubled with Government of India banning Chinese Apps: Kantar

The bulk of this additional engagement is being driven by smaller town consumers

Soon after the Government of India announced the banning of 59 Chinese apps in the country including top social media platforms such as TikTok, WeChat and Helo, the average time per day on Instagram more than doubled (2.3X), while Facebook too saw a significant 35% jump in time-spent on the platform, a study conducted by data, insights and consulting company Kantar revealed. The company’s Web Audience Measurement (WAM) panel, released insights on the impact of the ban on consumers’ digital behaviour. The ban came into effect on June 29, 2020.

According to the report, the bulk of this additional engagement is being driven by smaller town consumers. Meanwhile, among the youth audience aged below 24 years, the average time per day on Instagram grew by 35%. Sharechat, the country’s own video sharing platform which focuses content around regional languages too witnessed a 2.5X increase in time spent primarily being driven by the younger faction of internet audience. Although consumers lost access to some of their favourite short-form video sharing apps, the bulk of consumers switched over to alternate platforms in an almost seamless manner, Akhil Almeida, vice president (Insights), Kantar, said. “We saw that overall time-spent online was not as strongly impacted as one might have expected, given the size and scale of the affected platforms,” he added further.

Interestingly, the report also noted that there was no significant impact on engagement as the average time-spent dropped only marginally (-6%), indicating that consumers were switching over to rival platforms much faster than anticipated. Infact, platforms such as YouTube saw a further 25% increase in time spent. The report also observed that other players such as OTT also enjoyed their fair share of rise in engagement levels. Video OTT player Hotstar, for instance, saw their daily time spent grow by over 25%. Time spent in the video OTT space grew by 40% overall once the ban was imposed.

Read Also: Broadcasters led OTT platforms bet big on original content

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Online Learning Got You Down? At Least You Can Bet On It By

© Reuters.

By Christiana Sciaudone — Got kids in quarantine? With school openings uncertain for the fall and the threat of a fresh round of stay-at-home orders in big U.S. cities, investors may be looking for a new way to get in on the burgeoning field of online learning.

To do so in one fell swoop, look no further than the first education-focused thematic exchange-traded fund, EDUT, which debuted on July 14. As far as can tell, it’s the only pure education play on the market today. Part of the reason for that, according to the fund’s creator, is that schooling has largely been in the hands of the government, so there have been fewer opportunities for investors looking for stocks of publicly traded education companies.

“Education is more publicly funded, but we do think that dynamic is changing very quickly as people are looking to plug the gap, not just in the U.S., but around the world,” said Jay Jacobs, head of research at Global X.

Education is comparable to healthcare, but in the latter, about 50% of expenditures come from the private sector, versus about 25% for the former, Jacobs said. Among the fund’s top holdings are China’s TAL Education Group (NYSE:), Zoom Video Communications Inc (NASDAQ:), Pearson PLC ADR (NYSE:) and Bright Horizons (NYSE:). 

“The allocation is really what’s available on the market,” Jacobs said in a phone interview last week. Companies are likely to evolve to do “full lifecycle learning,” addressing educational needs from nursery through professional development. 

EDUT, a passive ETF, wasn’t created as a Covid-19 play, but it could end up being a good bet with the prevalence of distance learning and school systems in the U.S. showing a reluctance to open. 

“Covid is an accelerant to the theme,” Jacobs said, noting that such thematic ETFs that aim to profit off the pandemic are all the rage right now. 

EDUT’s holdings include categories of educational content, publishing, digital learning platforms, early childhood education, secondary/higher education and enterprise video and chat communications. Jacobs said the ETF took about six months to research and put together.

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A Look At CenturyLink’s(NYSE:CTL) Total Shareholder Returns

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For many, the main point of investing is to generate higher returns than the overall market. But in any portfolio, there will be mixed results between individual stocks. At this point some shareholders may be questioning their investment in CenturyLink, Inc. (NYSE:CTL), since the last five years saw the share price fall 65%. There was little comfort for shareholders in the last week as the price declined a further 1.1%.

View our latest analysis for CenturyLink

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).

CenturyLink became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics may better explain the share price move.

The most recent dividend was actually lower than it was in the past, so that may have sent the share price lower.

The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).


We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling CenturyLink stock, you should check out this free report showing analyst profit forecasts.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of CenturyLink, it has a TSR of -44% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

While the broader market gained around 11% in the last year, CenturyLink shareholders lost 6.2% (even including dividends) . However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, longer term shareholders are suffering worse, given the loss of 7.6% doled out over the last five years. We’d need to see some sustained improvements in the key metrics before we could muster much enthusiasm. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example – CenturyLink has 3 warning signs (and 2 which don’t sit too well with us) we think you should know about.

CenturyLink is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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How companies can celebrate intersectional diversity in a remote work world

This year’s Pride Month has been a study in contrasts. The power of our community was never more evident than when health and safety kept us physically apart. We saw genuine milestones of progress and tragic reminders of how much further we have to go. And all June long, across the U.S., we’ve seen firsthand that the ideal of equal dignity for all people is both powerful and elusive. 

Equality has to be demanded, fought for, and won. As LGBTQIA+ organizations have written in an open letter, “Today, we join together again to say #BlackLivesMatter and commit ourselves to the action those words require.”

Pride commemorates the June 1969 Stonewall rebellion in New York City, a series of angry demonstrations against police brutality and harassment which lit the spark that became the modern-day gay rights movement. Over time, it has become part celebration and part protest—appropriate for a movement originally focused on sexual freedom and identity, but which has become an assertion of human rights and equal dignity for all.

For businesses that value diversity, honoring Pride in 2020 has required flexibility to adapt to a remote work world. More importantly, it has also demanded an intentionally intersectional approach, focused on centering the experience of LGBTQIA+ people of color and supporting all those coming together to press for solutions to racial inequity and systemic injustice.

This has required strategic commitment and compassionate leadership (no small thing amid a deep economic downturn). And in the process, it has helped some companies develop a template for celebrating intersectional diversity in a remote work world. Here are a few takeaways based on our experience at my company. 

Bring in outside experts on intersectionality

With schedules more flexible because no one can travel, companies have a unique opportunity to bring in more vital external perspectives. This proved especially important this June, as companies sought to broaden the voices they elevate, turning to experts on intersectionality to meet the demands of this moment.  

At our company, we welcomed Jonathan Capehart, Pulitzer Prize-winning Washington Post columnist, who shared his experience as a Black gay man and his view on the shifting political terrain; Geena Rocero, a widely celebrated trans advocate and model whose powerful TED Talk about coming out has been viewed millions of times; and GLG social impact fellow Amit Paley, CEO of The Trevor Project, whose organization works to prevent suicide and safeguard the mental health of LGBTQIA+ young people, and which has focused especially this month on supporting young people of color.

These three intersectional outside voices made inclusion and diversity come alive for our employees. In a remote work world, take advantage of the increased flexibility to bring in the most powerful voices you can find.

Turn the floor over to your employees

As Pride Month began, our LGBTQIA+ employee resource group—many of whom, in their words, weren’t feeling very celebratory at all—decided to collectively issue a letter standing in solidarity with their Black colleagues and with all people of color fighting systemic violence and injustice. Leadership might pave the way, but when it comes to celebrating diverse groups, there are no more powerful voices than your own employees. Throughout the month, we turned the floor over to them. This included a series of op-eds on community issues on our intranet, and a wide range of virtual gatherings, coffee chats, and happy hours over Zoom.

Paradoxically, the context of remote work can give your LGBTQIA+ employees (and all employees from marginalized groups) greater visibility than they might have in a physical office. Zoom can level the playing field, in particular, for employees from smaller offices or from regions where LGBTQIA+ issues are less culturally acceptable. In these places, Zoom has allowed every participant to feel like they’re in the same “place,” with the same opportunities to make their voices heard.

Reaffirm your strategic commitment to diversity and inclusion for all

In a period when every company is facing the twin challenges of a pandemic and a deep recession, the time and resources it takes to celebrate intersectional diversity might not seem worth it. Don’t be tempted. Especially now, employees need to know you have their backs. The month of June has been an opportunity for companies to vocally affirm the right of Black and LGBTQIA+ employees—and employees from all underrepresented groups—to feel safe in who they are at your (and their) company.

These efforts must continue all year long, not only because they will help your employees be more engaged, fulfilled, and productive, but because they’re simply the right thing to do (now more than ever). During a period of extended physical separation and often painful uncertainty, celebrating intersectional diversity is an opportunity for companies to assert leadership in their communities and sustain connection among their stakeholders.

And that’s important for all of us. Marginalized and underrepresented groups have much to teach the world in 2020—about how to cope with isolation, foster community, and vigorously stand up for the dignity of all people in the face of common vulnerability. And each of them deserves support from the companies where they work.

Those of us, like myself, who lived through the AIDS pandemic know that while times of crisis bring great pain and difficulty, they also present opportunities to strengthen community and common understanding. Even—and perhaps especially—during a time of social distancing, this Pride Month has been an invaluable opportunity for individuals and businesses to come together in support of the rights of all employees to be their most authentic selves.

Richard Socarides is executive vice president and chief communications officer at GLG, a former White House special assistant, a writer for the New Yorker, and a longtime LGBTQ rights activist.

More opinion in Fortune:

19 Black economists to celebrate and know, this Juneteenth and beyond
Rep. Marcia Fudge: Black history is American history. Let’s start teaching it that way
We can’t breathe at work, either: John Henryism and the health impact of racism
A step toward justice: The pandemic is opening the theatre to BIPOC audiences
Why the future of financial markets is in the cloud

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