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WEDNESDAY, FEBRUARY 5, 2020

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JOHN DELANEY

‘Don’t cry over spilt milk’: Exit of Julius Baer By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamas must “not cry over spilt milk” due to Julius Baer’s imminent exit, a former attorney general warned yesterday, and should instead focus on remaining “relevant” as a financial centre. John Delaney, principal of the Delaney Partners law firm, told Tribune Business the jurisdiction needed to make itself “the most desirable place from which to conduct financial services” after Julius Baer announced the closure of its Bahamian business with the loss of 30 jobs. While the Swiss-headquartered institution’s decision to depart was “not welcome”, Mr Delaney said it was presently unclear whether there was a wider message or “implications” for The Bahamas as an international financial centre (IFC) in its decision. Rather than dwell on the past, he called on The Bahamas to instead look to the future and ensure its financial services legislative and regulatory framework were aligned with international best practices and standards. Mr Delaney added that besides continuing to develop its product menu, The Bahamas also needed to embrace Fintech (financial technology), digital assets and blockchain technology to attract “the most modern type of financial services”. Warning that the jurisdiction had to prioritise remaining “relevant” in a rapidly-evolving global financial services industry, he added that it needed to keep attracting high net worth individuals and companies to domicile in The Bahamas in compliance with recently-passed economic substance legislation and also ensure the judicial system provides swift commercial dispute resolution. “Rather than cry over spilt milk and what has been lost, we need to be focused on remaining relevant going forward,” Mr Delaney told Tribune Business. “What are we doing to ensure we remain a desirable place from which to do financial services? “We know there are things we should be looking at, and trying to look at, to ensure we be the most desirable place for financial services. We need to focus on doing those things. We’re constantly looking at legislative reform and it needs to happen. “We have looked, and still continue to look at, things that make it convenient for high net worth individuals and companies to redomicile in The Bahamas consistent with economic presence. We need to look at the resolution of commercial disputes so that can happen efficiently and in good time. All these things are ingredients that are fairly well-known. They are things we need to continue to focus on and address.” Julius Baer said the decision to close its Nassau “booking centre” was part of a strategy designed to slash its global cost base

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‘All property owners must insure by law’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

AHAMAS First’s chief executive yesterday said laws making it mandatory for all business and residential property owners to have full catastrophic insurance cover “must be on the table for discussion”. Patrick Ward told Tribune Business he would personally seek to ensure it was on the industry’s agenda after the International Monetary Fund (IMF) called for The Bahamas to develop “new approaches” to increasing insurance penetration and prevent the “dire straits” suffered by any homeowners post-Hurricane Dorian. The fund, in a statement on its team’s visit to The Bahamas last week, said yesterday: “The financial sector appears to have weathered the hurricane well, with limited exposures to uninsured assets. Adequate reinsurance of domestic insurance companies abroad cushioned the impact of the hurricane on the domestic insurance sector.

the insurance sector once finalised.” He provided no details. However, Mr Ward yesterday argued that The Bahamas needed to explore making it a legal requirement for all property owners - business or residential - to have full catastrophe coverage in much the same way that the Road Traffic Act stipulates that all motorists have adequate insurance for their vehicles. Emphasising that he was voicing a personal view yet to be discussed with the wider Bahamian insurance industry, the Bahamas First chief said Dorian had exposed that just 40-50 percent of properties in the two devastated islands had proper insurance. This, he added, meant that Bahamian taxpayers were being burdened with greater recovery costs especially related to private home and business repairs - than they would otherwise have been had the owners

THE Bahamas will not be taking up the International Monetary Fund’s (IMF) offer of up to $200m in concessionary funding for Hurricane Dorian recovery, the deputy prime minister confirmed last night. K Peter Turnquest told Tribune Business via a messaged reply to its questions that the fund’s proposal was “not part of the financing mix” the Minnis administration is using to cover its net $508m fiscal deficit blow-out and essential reconstruction costs. “Yes, the IMF has offered unconditional rapid financing at concessional rates,” he said. “This financing offer is not part of the financing mix currently contemplated.” Marlon Johnson, the Ministry of Finance’s acting financial secretary, similarly affirmed: “We don’t intend

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• Concessionary funding ‘not part of financing mix’ • Fund: Speedy permits, labour key to recovery pace • Calls for structural reforms to be ‘accelerated’

K PETER TURNQUEST that as part of our financing mix. We have sufficient interest from our partners who do financing, so that is not required for this particular operation.” He explained that the $200m facility offered was part of the typical financing instruments that the IMF makes available to countries that have suffered natural

disasters, as The Bahamas did with Dorian, to assist their reconstruction efforts and economic recovery. Explaining that it was different from the assistance provided to states undergoing structural reforms, or encountering balance of payments difficulties, Mr Johnson added: “They do have these facilities available for countries going through what we did with Dorian in terms of providing short-term financing. Both men spoke after the IMF, in a statement on its week-long visit to The Bahamas that ended on January 31, dangled the carrot of up to $200m in financial assistance from its so-called Rapid Financing Instrument. “The IMF stands ready

to support The Bahamas, including through its emergency financing facilities,” its Bahamas team leader, Fabian Bornhorst, said. “Through the IMF’s Rapid Financing Instrument up to US$ 200m could be available to The Bahamas at low cost and without policy conditionality.” While that has been politely rejected, Mr Turnquest told Tribune Business that the government and IMF were “completely aligned” in other areas including the latter’s call for a “timely return” to fiscal consolidation efforts once post-Dorian reconstruction was behind it. The IMF’s statement, indicating that its visit was

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Economy fears: Bahamas ranked world’s sixth most expensive state By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamas’ ranking as the world’s sixth most expensive nation to live in highlights “a fundamental challenge related to the country’s economic viability”, it was argued last night. Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, said the findings by CEOWORLD magazine exposed the “tremendous” burden imposed on lower income Bahamians by the ever-increasing cost of living and growing “wealth disparity” between rich and poor. He told Tribune Business that many households and small businesses were “struggling to manage” in this

• Survey exposes ‘tremendous challenge’ • Many ‘struggling to manage’ living costs • Warning that house buyer pool ‘shrinking’

MATT AUBRY environment, and having to be “super stringent with their money” to make ends meet, thereby acting as a further drag on economic growth.

The ORG executive spoke out after the magazine’s survey ranked The Bahamas behind just Switzerland, the world leader, and Norway, Iceland, Japan and Denmark, making it the world’s sixth most expensive country to live in and the highest-cost destination in the Western Hemisphere. The survey, which uses New York as the baseline benchmark to compare all countries to, based its assessment on five metrics including the cost of living; rent; groceries; eating out; and purchasing power.

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

To assess these metrics, the magazine looked at consumer prices indexes and cost of living studies from 132 nations, as well as publicly-available data that measured every-day costs such as accommodation; clothing; taxi fares; utility; internet; the price of groceries; transport; and eating out. The Bahamas scored a combined 82.51 points in its “cost of living” rankings, rating especially highly on restaurant costs at 83.66 - a result that may have been

“done the responsible thing” and properly insured. Suggesting that a repeat of this situation would be unsustainable for an already cash-strapped government, Mr Ward said the level of non-insurance and under-insurance uncovered post-Dorian would likely have been even higher but for the presence of Abaco’s large second homeowner community. Noting that these investors were more inclined to insure, he added that legally mandating - and enforcing - the requirement for all property owners to purchase insurance could help reduce premium rates as more properties would “participate in the risk pool”. “That’s one of the ideas that has to be on the table for discussion,” Mr Ward told Tribune Business of such a proposal. “I’m not being dogmatic in saying it

Bahamas rejects IMF’s $200m Dorian offering By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

Loan arrears fall $125m in 2019 to decade-low TOTAL loan arrears fell by $123.5m or 15 percent during 2019 to hit their lowest level for a decade at year-end, a Central Bank of The Bahamas presentation has revealed. The monetary policy regulator, unveiling the status of credit quality within the Bahamian commercial banking system, said the ratio of arrears - loans that are 30 days or more past due - had declined by 2.2 percentage points during 2019 notwithstanding Hurricane Dorian’s impact. And non-performing loans, which are 90 days or more past due, represented just over half the decline with a $63m or 12.2 percentage point decrease over the 12-month period. The ratio of non-performing loans to total outstanding credit also dropped by 1.1 percentage point to hit eight percent at 2019 year-end. “During 2019, total private sector arrears contracted by $123.5m (15.3 percent),” the Central Bank said. “The ratio of arrears to total private sector loans fell by 2.2 percentage points to 12.1 percent in response to enhanced debt collection efforts and the improvement in the economy. “Short-term arrears fell by $60.5m (20.7 percent) resulting in a 1.1 percentage point decline in the arrears rate to 4.1 percent. Non-performing loans fell by $63m (12.2 percent), and the non-performing loan rate by 1.1 percentage points to 8 percent.” All three loan categories saw a double-digit decline in bad loans. Mortgage arrears fell by 15.3 percent year-over-year, while those for consumer and commercial loans were down by 13.5 percent and 20.3 percent, respectively. John Rolle, the Central Bank’s governor, this week indicated it had revised projections that the Bahamian commercial banking industry’s non-performing loan ratio will rise by several percentage points to hit the ten to 12 percent range in Dorian’s aftermath. He said the sector’s low exposure to the two Dorian hit islands, which collectively account for around 10 percent of its outstanding loan portfolio, meant the Central Bank no long saw “as major a push back as we anticipated initially” in terms of an increase in bad credit. Mr Rolle added that the Central Bank had also seen “millions of dollars paid down on loan balances in those islands” as a result of hurricane insurance settlements, and the reduction in outstanding debt by “sizeable chunks” could ensure the loan arrears ratios keep going downwards. Elsewhere, the Central Bank reported that excess liquidity in the commercial banking system expanded by $433.4m during 2019 to hit $2bn by year-end, reversing the previous year’s $209.3m decline. Excess reserves in the system jumped by a similar $434.9m to reach $1.1bn, again reversing the prior year’s $186.2m contraction. “At end-December 2019, bank liquidity increased, as the growth in deposits outpaced the rise in domestic credit. Inflows were provided from tourism and re-insurance proceeds,” the Central Bank said.

• Bahamas First chief to put idea on agenda • Says ‘must be on the table for discussion’ • IMF urges ‘new approach’; many in ‘dire straits’ “However, insurance penetration, in particular in the residential segment, remains low, leaving many homeowners in dire straits. New approaches to extend insurance coverage as part of a broader disaster risk management strategy would increase resilience.” K Peter Turnquest, deputy prime minister, last night told Tribune Business via messaged replies that the Ministry of Finance has “some initiatives” for increasing catastrophic coverage among Bahamian homeowners and businesses that it will soon discuss with the insurance industry. “The government recognises the national exposure to climate risk posed by significant exposed and under-insured private sector risk,” Mr Turnquest said. “The Ministry of Finance is investigating options to incentivise more insurance uptake in the private sector, and has some initiatives that it will discuss with

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THE TRIBUNE

BPL admits ‘slippage’ on Ragged Island solar plan

SOLAR field on Ragged Island. BAHAMAS Power & Light (BPL) last night blamed Hurricane Dorian for the timeline “slippage” in getting power from Ragged Island’s nowcompleted solar field to the island’s grid. Whitney Heastie, its chief executive, said in a statement: “Even though the solar installation contractor is in a position to meet its targets, BPL’s resource commitments in Abaco have meant that we were unable to hit our January 2020 target. The solar field in Ragged Island is largely complete, save for final wiring, grounding and protection works,

as well as finalising inverter installation.” Salt Energy LLC was awarded the engineering, procurement and construction contract to build a solar photovoltaic (PV) plant with fixed-tilt, ground mounted panels, an energy storage and power management system (PMS) capable of managing all sources of energy. Freeport-based Waugh Construction is the subcontractor on the project. The installation of a solar and battery storage renewable energy solution is taking place in stages, with the first phase involving completion

of the solar field. Mr Heastie explained that, for the next phase, BPL is required to build overhead line interconnections from the solar field to the plant. This is expected to take one week once the work starts. Following that, the battery storage facility will be constructed at the plant, and then a further week will be necessary for works once the battery storage solution is complete. He added that BPL has identified the materials needed to complete its works, and is already staging provisioning of those materials.

Bahamas promoted as ‘captivating’ jurisdiction

FROM left: Tamika Dean (ICB); Guilden Gilbert (CG Captive Managers); Jamell Bodie (ICB); and Indira Munroe (BFSB). THE Bahamas Financial Services Board (BFSB) was among the 2020 World Captive Forum’s sponsors as it sought to promote this nation as an external insurance domicile. The event, held at the JW Marriott Turnberry Miami Resort in Florida from January 27-29, was attended by the BFSB, private sector executives and members of the Insurance Commission of The Bahamas (ICB). The conference brought together more than 200 delegates, and featured leading

captive services providers. Those attending included executives involved in captive management, legal, accounting, actuarial, claims and asset management functions, as well as numerous regulators and representatives from major jurisdictions. Tanya McCartney, the BFSB’s chief executive and executive director, said: “The Bahamas is an ideal captive domicile including its geographic location, political and economic stability, and a

favourable tax neutral environment for business. “BFSB’s attendance at The World Captive Forum was aimed at showcasing the ‘captivating’ advantages of The Bahamas for external insurance”. The World Captive Forum addresses new and emerging risks facing global companies and organisations, demonstrating how captives can offer viable insurance coverage that may not be available in the traditional market.

Preparing for a Tru Bahamian Festival THE Ministry of Tourism and Aviation has teamed with the Bahamas Hotel and Tourism Association (BHTA) and vendors as they prepare for

the annual Tru Tru Bahamian Festival, which will take place on February 8-9 at John Watling’s Distillery on Buena Vista Estate. Joy Jibrilu, the Ministry

of Tourism’s director-general, is pictured third left, while BHTA president Carlton Russell, is fourth left. Photo: Kemuel Stubbs/ BIS

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Wednesday, February 5, 2020, PAGE 3

MINISTER HAILS ATLANTIS OWNER’S REINVEST PLAN By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net

A CABINET minister yesterday hailed planned reinvestment in Atlantis by its owner as “welcome news” after it abandoned efforts to sell the Paradise Island-based destination resort. Dionisio D’Aguilar, minister for tourism and aviation, said there was minimal to no involvement by the government in Brookfield Asset Management’s latest effort to exit its now-eight year ownership of arguably The Bahamas’ key destination resort. “Brookfield has always led the process on who they By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net A CABINET minister yesterday confirmed that Hutchison Ports Holdings had indicated it will “not rebuild” the parts of Grand Bahama International Airport that were devastated by Hurricane Dorian. Senator Kwasi Thompson, minister of state for Grand Bahama, said the government would also continue to put “some pressures” on the Grand Bahama Port Authority (GBPA), Freeport’s quasi-governmental authority and Hutchison’s 50/50 joint venture partner in the airport.

DIONISIO D’AGUILAR are entertaining to buy it, and there was very little involvement by the Government,” Mr D’Aguilar said. “According to the news reports in the paper... they now intend to reinvest in the property. That is welcome news.” Mr D’Aguilar was

responding after Atlantis/ Brookfield revealed exclusively to Tribune Business, in response to this newspaper’s inquiries, that the resort had been pulled off the market. “We have received a number of offers to purchase Atlantis, but have made a determination not to sell at this time,” a spokesperson said. “Instead, we have decided to make a significant investment in a renovation of Atlantis which will take place over the next three years, and will include room renovations, additional nightlife venues, new restaurants, and other expanded indoor and outdoor activities.” The statement confirmed

A BAHAMAS-based financial services provider yesterday said it plans to hire extra staff within the next few months as its restructuring nears an end. Marco Netzer, Private Investment Bank’s vice chairman, dismissed financial services industry talk that it was set to lay-off multiple workers and close its Nassau office. “No. There is no closing of the bank,” he told Tribune Business. “The bank has simplified some structures to concentrate on other banking activities and asset management. This was a long-term plan back in 2010 to restructure the bank. We are not making a lot of money, but

“The government of The Bahamas is going to continue to work with the Grand Bahama Port Authority (GBPA); we are partners,” Mr Thompson said. “There are some things that need to change, and there are some pressures that the government needs to continue to put on the GBPA.” Turning to the airport, he added: “The GBPA is half owner of the airport as well as Hutchison is also half owner of the airport. Since the storm, Hutchison has indicated that they will not rebuild the existing portions

SENATOR Kwasi Thompson, top right, and the Grand Bahama International Airport.

we are doing well. “We are coming to the end of our restructuring exercise, and we are looking to hire persons within the coming months to rebalance our asset management team and get back to our core business,” Mr Netzer added. “But, because of the planed simplification of the operational structure, and the refocus on the private banking and asset management activities, the bank had to terminate several employment agreements. On the other hand we are looking to reinforce our commercial front and will try to hire next some relationship managers.” Mr Netzer’s comments came one day after fellow institution, Julius Baer, announced it pans to close its Nassau booking centre

with the loss of 30 jobs. He added: “I follow the news in The Bahamas and I understand that rumours can start a panic, but there is simply no truth to Private Investment Bank closing down. We are not planning on laying off any staff members either.” IPG Securities Asset Management (Nassau), a fully-owned subsidiary of IPG Securities Asset Management (Geneva), bought a 85 percent majority ownership interest in Private Investment Bank in 2018 from Norinvest Holding’s fully-owned subsidiary, Banque Cramer & Cie SA. Carlos Molina is the chairman of Private Investment Bank and principal owner of IPG Securities Asset Management in Switzerland.

DISNEY TARGETS LIGHTHOUSE POINT WORK START FOR 2020 By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net DISNEY Cruise Line yesterday said it is hoping to begin construction work on its Lighthouse Point destination this year, and is targeting late 2022early 2023 for the project to become operational. Kim Prunty, vice-president of Disney Cruise Line, told Tribune Business: “We are hopeful construction could begin in 2020, and the experience could be operational by late 2022 or early 2023.” Disney’s own website for the south Eleuthera project concedes that construction will only begin after the Environmental Impact Assessment (EIA) and Environmental Management Plan (EMP) are approved by the government. Public consultation must also be completed, and all other necessary government permits and approvals granted. Ms Prunty added: “Disney, along with its own animal and conservation experts, assembled a team of highly-qualified and experienced scientists and other professionals who spent more than two years

sovereign wealth fund, had also fallen through. Brookfield and Atlantis made no mention of how much will be invested to upgrade and refresh the Atlantis product over the next three years. No explanation or reason was given for why all bids were rejected, and nor were the identities of those behind the offers revealed. Mr D’Aguilar added that the government’s lack of involvement meant he was unable to “opine on the twists and turns that would have taken place to reach what is apparently being stated in the paper” in terms of the sales process coming to an end without a buyer being found.

Responding to increased industrial tensions between the hotel union and Atlantis over the resort’s plans to switch from a weekly to bi-weekly staff payroll, the minister added: “That is an internal issue with the employees and the hotel, and I would rather not opine on that. Let that take its course and we will see where that ends up.” Harrison Williams, the Bahamas Hotel, Catering and Allied Workers Union’s first vice-president, told Tribune Business yesterday that a “fight” may result over Atlantis management’s decision. However, he said no industrial action is planned at this time as negotiations continue.

Minister: Hutchison ‘will not rebuild’ GB airport

Bank: ‘No truth’ to lay-off, closure talk By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net

information reaching Tribune Business from multiple sources that the Atlantis sales process, initiated last year, had come to an end with no preferred bidder or buyer selected, and no suitors left in negotiations with Brookfield Asset Management. The sales process, which had been run on the $330bn Toronto-headquartered asset manager’s behalf by Citibank, was disclosed last July in a report by Bloomberg. That move came after this newspaper revealed in February 2019 that a potential deal with a New York-based real estate investor, Ashkenazy Acquisition Corporation, which was backed by Qatar’s

developing a comprehensive Environmental Impact Assessment (EIA). “Disney submitted the EIA in late December, and has been advised that the BEST (Bahamas Environment, Science and Technology) Commission will post the document on their website after their feedback is incorporated and government reviews are complete. “Additional public consultation will occur as part of the site plan approval process. The EIA is based on extensive field work, robust data collection and analysis, direct engagement with those who have studied the site and the species observed there, and an exhaustive review of available literature. Rochelle Newbold, the BEST Commission’s director, said yesterday of the EIA: “They (Disney) submitted it in December and it is presently under review. We will finish it when we get through the document; there is no way to give any specific timing on it. “After it’s done it will be posted in the public domain for the public to see what the government is considering relative to the project.”

there of the airport. “They have opened the temporary location, which was the former FBO. So we now do have international flights, we have domestic flights that are going to Freeport. We are pleased with that. “However, the airport requires a long-term development plan, and the government has entered into talks with Hutchison and the GBPA with respect of transfer of ownership. So those talks are ongoing, but the airport does require a long term development plan.”

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THE TRIBUNE

Bahamas gains ‘massive visibility’ from mall show

BAHAMAS branded advertising on display throughout Sawgrass Mills. THE Bahamas has gained “massive visibility and exposure” through being promoted to thousands of shoppers at one of South Florida’s largest malls. This nation has “dominated” the Sawgrass Mills

complex since January 16, and shoppers have one final weekend to experience the showcase which ends on February 9. Large Bahamas banners are hung throughout the mall, including one covering

a wide-open area where three of Sawgrass Mills’ avenues meet. Bahamas tourism representatives and their partners are also staffing a booth in the mall between 12 noon and 6pm each Thursday through Sunday to provide

BTO senior marketing rep, Adrian Kemp, at Bahamas Booth in Sawgrass Mills Mall. information updates and promotional items. Betty Bethel-Moss, director of sales for the Bahamas Tourist Office (BTO) in Florida, said the mall promotion provides a “one-of-a-kind opportunity for the islands

Economy fears: Bahamas ranked world’s sixth most expensive state FROM PAGE ONE aided by the inclusion of the automatic 15 percent gratuity. It also achieved a 62.65 score in the groceries cost index. While rent costs in The Bahamas received a relatively low score of 36.36, this jumped to 60.43 when added to the magazine’s cost of living index. And it scored just 54.18 for “local purchasing power, the third lowest mark among the 20 most expensive countries. This indicates that many Bahamians are struggling to keep up with rising living costs. The survey’s findings will come as little surprise to many observers given that The Bahamas has long been known as, and perceived as, an expensive destination due in large part to its import dependency and regressive taxation system that focuses primarily on taxing the cost of living through VAT and import tariffs/excise Tax. Mr Aubry, recalling a previous survey that described The Bahamas as 40 percent more expensive than the average US city, said of the latest findings: “I think that’s a fundamental challenge related to the economic

SIR FRANKLYN WILSON viability of The Bahamas. “The cost of living is tremendously challenging in an environment where we see a growing expanse between those that have and those that do not in terms of wealth disparity. It particularly

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affects those on the bottom scale of that. What we’ve seen is the every day Bahamian struggling to manage in this condition, and that’s challenging from a growth perspective. “The type of financial behaviours required from every-day citizens and small businesses are that they have to be super-stringent in how they manage their money.” Mr Aubry said high living costs frequently meant small businesses required extra capital to purchase essential goods and services, forcing them to take on and maintain higher levels of risk than they would otherwise. He added that the current system typically provides “more opportunity” to those with existing wealth than those without it, with a more

productive workforce also being key to reducing living costs. Sir Franklyn Wilson, the Arawak Homes and Sunshine Holdings chairman, told Tribune Business that the survey’s findings highlighted the competitiveness issues high cost bases cause for destinations such as The Bahamas. Yet while this meant the country was “non-competitive on price” with Caribbean rivals, he added that it had helped focus The Bahamas on the high-end clients that form its core tourism and financial services business. “The implications are obviously not helpful,” Sir Franklyn said of the survey findings, “to the extent that we have got to be competitive in a global marketplace. The fact of the matter is there are a lot of people in the world who cannot afford to be going to a place that’s ranked the sixth most expensive in the world.” He added, though, that there were “two sides to the story” as The Bahamas’ high living costs had positioned it at the ultra-luxury segment of the resort market with products such as Atlantis, Baha Mar, Albany and Baker’s Bay. “It’s not just about moaning, groaning and critiquing it,” Sir Franklyn said. Still, he acknowledged that the survey findings pointed to the growing gap between rich and poor in The Bahamas. “I can tell you from being in the housing business that the percentage of the population that can afford to buy a house is shrinking,” Sir Franklyn told Tribune Business. “There may be a number of reasons for that, but there are some real issues. That’s the way it is.”

of The Bahamas to be showcased at a venue that attracts such a large number of shoppers daily, translating into massive visibility and exposure for our islands”. Partners working alongside the local BTO team

include Bahamasair, Bahamas Paradise Cruise Line, the Grand Lucayan Resort, Balearia Caribbean Express ferry, Dolphin Encounters, Grand Bahama Island Promotion Board, Jet Blue and Sandals resorts.

Bahamas rejects IMF’s $200m Dorian offering FROM PAGE ONE not surprisingly consumed by Dorian-related fall-out, added that the speedy processing of construction permits and sufficient labour supply will be key to the pace of reconstruction in Abaco and Grand Bahama. While restoring “financial buffers” and ensuring The Bahamas becomes more resilient to natural disasters were identified as key medium-term objectives, the Fund also urged the government to “accelerate” structural reforms to enable the economy to achieve its growth potential. This is effectively “code” for realising the government’s long-stated objective of improving the “ease of doing business” by removing regulatory bottlenecks, while also enhancing energy supply reliability and lowering costs. “We are confident that the people of The Bahamas will rebuild a stronger and more resilient economy,” Mr Bornhorst said: “Hurricane Dorian devastated parts of Abaco and Grand Bahama, resulting in a sharp fall in tourists visiting these areas. “Nevertheless, a gradual recovery is already underway, and tourism to other islands of the archipelago is holding up. The still-favourable economic outlook for tourism source countries will support the process. A mild economic contraction is projected in 2020, [and] growth is expected to pick up once the infrastructure and tourism capacity is rebuilt. “The pace of recovery will depend on the implementation of the reconstruction plan. Critical elements include the rebuilding of infrastructure, the expeditious processing of construction permits, the availability of labour, and the availability of private and public financing.”

Mr Bornhorst and the IMF backed the government’s decision to “activate the escape clause” in the Fiscal Responsibility legislation post-Dorian to “allow a temporary deviation” from the consolidation targets so that reconstruction can take place. “Public debt is projected to be higher in the medium term, underscoring the need for a timely return to the fiscal targets, and for accelerating the implementation of structural reforms to realise the economy’s growth potential,” he added. “The financial resilience to natural disasters built in the recent past - a contingent credit line, sovereign insurance against natural disasters, and a natural disaster relief fund - has proven to be an important buffer. “Together with substantial private insurance payouts, these flows underpin the robust increase of foreign exchange reserves ahead of an import-heavy reconstruction process. Gradually restoring the financial buffers and rebuilding the infrastructure in a more resilient way will be key to mitigate the impact of future disasters.” Turning to the launch of the Bahamian digital dollar, Mr Bornhorst added: “The Central Bank of The Bahamas launched the Sand Dollar in Exuma to modernise the payment system and increase its resilience to natural disasters. “The design of this Central Bank Digital Currency will allow for offline transactions, interoperability with the existing payment system and can boost financial inclusion by easing access to digital payments. The pilot project will allow the Central Bank to refine the design to further mitigate financial stability, financial integrity and cybersecurity risks.”

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Wednesday, February 5, 2020, PAGE 5

‘All property owners must insure by law’ FROM PAGE ONE has to be, but it definitely has to be one of the ideas on the table for discussion. I don’t know if it will be an industry initiative, but to the extent I can influence the position I would like to see that on the table for discussion. “We have a precedent for it in place. Everyone driving a motor vehicle has to have insurance by law. There’s an acceptance that it’s in the public’s interest as well as the individual driver’s to have insurance in place as it protects the driver of the vehicle as well as innocent third parties. And if everybody has to buy it, it results in a lower cost per person. “If you have more people buying insurance, it reduces the cost for every taxpayer and results in lower premiums as you have more persons participating in the pool.” Mr Ward said other countries had also made it a legal mandate for property owners to have insurance coverage against natural disasters, pointing to the case of Chile in dealing with earthquakes. Suggesting that The Bahamas now faced similar risks from ever-stronger and more frequent hurricanes, he added that Chile’s move had spread insurance costs over a wider population base while reducing the disaster recovery burden on government. The Bahamas currently has no all-encompassing legal requirement that

property owners must have catastrophe coverage. Banks and other lenders, though, require such insurance to be in place for commercial and residential properties on which mortgages are secured, and will pay the premium themselves if the borrower fails to do so, adding it to the latter’s repayment costs with interest. However, John Rolle, the Central Bank’s governor, affirmed earlier this week that just ten percent of the commercial banking industry’s loan exposure is to Grand Bahama and Abaco. This meant that, in most cases, there was no lender pressure to properly insure. While some may see Mr Ward’s call as self-serving in terms of selling more insurance policies, there is little doubt that Dorian’s $3.4bn worth of losses and economic damages is a game changer for how The Bahamas and its resident population tackles risk and climate change resiliency. “There’s no question that this is a conversation that needs to take place,” the Bahamas First chief told Tribune Business. “It is to take away the cost of recovery from the public sector into the private sector, and to put in plans where people are able to buy insurance. “I think the estimate is that probably between 40-50 percent of properties, anywhere from four to five out of ten, commercial and residential, were uninsured or underinsured to some extent. It is a bit skewed to

the higher end because of the significant number of Abaco second homeowners that tend to buy insurance. If you took that segment out of it, the penetration rate would be even lower. “That’s the issue we need to address,” Mr Ward added. “In some cases the problem is affordability, and in some cases persons have chosen not to insure and then rely on the government for assistance. They’re passing the cost on to other taxpayers as opposed to doing the responsible thing and buying insurance when there’s a need for it.” While reform ideas are still being “thrown around” informally, he predicted that discussions will intensify in a month’s time as the insurance industry gets its final Dorian claims out the way and the government makes further progress on recovery and restoration efforts. Tom Duff, Insurance Company of The Bahamas (ICB) general manager, told Tribune Business that the low penetration rates exposed by Dorian were on “the consciousness of the industry” but developing a solution would not be easy. Revealing that the topic had recently been discussed at a meeting between the insurance industry and Inter-American Development Bank (IDB), Mr Duff said: “I don’t think there’s anything specific but it’s something the Bahamas Insurance Association (BIA) has on its list. “We’d all like to see greater penetration, but

the mechanism of how to achieve that, and the products that would be needed, I can’t give you a hard and fast plan. It’s something there in the consciousness of the industry. “We obviously saw the low insurance penetration rate following Dorian, which is unsustainable, and would like to see higher penetration levels, but coming up with a product to give individuals a higher level of coverage needs greater discussion with the industry and the government, as they may have to be part of the discussion at this point. We’re in the infancy of the discussions

at this point.” Mr Duff added that Bahamian insurers were “looking at all the different options” for solving low insurance penetration rates, but said any new product or solution would need to be approved by the reinsurers that underwrite the majority of the collective multi-billion dollar risk in this nation. The ICB chief said Dorian had produced evidence of “substantial non-insurance and very significant underinsurance”, and added: “The adjusters’ reports coming in provided plenty of evidence of customers being under-insured. That’s something that happens

with every hurricane event, and is closely linked to the state of the economy.”

PAGE 6, Wednesday, February 5, 2020

THE TRIBUNE

Loan arrears US antitrust chief leaving Google ‘Don’t cry over spilt milk’: Exit of Julius Baer fall $125m probe because of lobbying FROM PAGE ONE by 200 million Swiss francs, and was a “purely commercial decision based on future growth potential” - indicating that it did not see its Bahamas unit generating the profitability it was looking for. However, Mr Delaney said change was taking place at many levels across the global financial services with the regulatory landscape just one element in this process. Pointing to the disruptive effects of new technology, he added that The Bahamas had little choice but to embrace digital assets such as crypto currencies and related processes such as blockchain. “We know that the whole space in international financial services is evolving on many levels,” he told Tribune Business. “It’s important that we make sure we are doing what is necessary so that the most modern type of financial services and mechanisms by which they are conducted can be done in this jurisdiction. “The Bahamas, as an IFC, has to be aligned with international financial systems for things to work. We need to have international access for there be a frictionless transfer of funds. Whatever lessons

may come from this [Julius Baer] in due course, we must make sure we are aligned with the international system in terms of standards.” Describing Julius Baer’s imminent exit as “regrettable”, Mr Delaney added: “A financial centre such as ours would not welcome the news that a player with the brand and status of Julius Baer is exiting. “I’m sure most in the financial services industry would wish that was not so, that they are staying here, and that there will be more arrivals. It bolsters our brand as an international financial centre to have players of that calibre here. “To see them go is not a good thing, but at the same time these things happen. Knowing that, and that the space is very dynamic at this time, from the perspective of the financial services industry and the future, the question is: What are we doing to position ourselves to remain relevant as an IFC?” Mr Delaney continued. “That, at this point, is the most relevant question. Some may go and some may come, but others coming depends on whether we remain convenient and relevant as a jurisdiction from which to conduct international financial services.”

in 2019 to decade-low

WASHINGTON Associated Press

FROM PAGE ONE

“Total private sector credit increased by $1.4m, tempering the prior year’s decline of $121.4m.” Loans to businesses drove this modest growth, expanding by $68.8m, while consumer credit and mortgages declined by $39.7m and $27.7m respectively. “The external reserves grew by $560m to $1.8bn at end-December 2019,” the Central Bank said. “Balances fell by $209.2m in 2018. Balances were equivalent to approximately 5.9 months of current year’s total merchandise imports versus four months of coverage in 2018. The international benchmark is three months. “The external reserves represented 95.3 percent of the Central Bank’s demand liabilities, compared to 88.8 percent at the end of 2018. The target range is 90 percent to 100 percent.”

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THE Justice Department official leading the investigation of big tech companies’ market dominance is stepping aside from the department’s Google probe because of his previous lobbying work for Google as a private attorney. Assistant Attorney General Makan Delrahim, the department’s antitrust chief, is recusing himself from the investigation into Google, a person familiar with the matter said yesterday. Word of Delrahim’s recusal came as other Justice Department officials met with state attorneys general to discuss their parallel investigations of Google and co-operation in enforcing antitrust laws in the tech industry. The person wasn’t authorised to discuss the investigation and spoke to The Associated Press on the condition of anonymity. Delrahim lobbied on Google’s behalf in 2007 when the Mountain View, California-based search giant faced antitrust scrutiny over its acquisition of DoubleClick, a competitor in digital advertising. The Justice Department’s ethics office apparently found no potential conflict of interest when Delrahim sought guidance as the investigation of Facebook, Google, Amazon and Apple began

NOTICE

NOTICE is hereby given that DERBY DOREUS of Fox Hill Road, Blueberry Hill, Nassau, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 5thday of February 2020 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

NOTICE is hereby given that DJENIFLORE ERMILUS of Kemp Road Nassau, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 5thday of February 2020 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

MARKET REPORT www.bisxbahamas.com

(242) 323-2330

TUESDAY, 4 FEBRUARY 2020

ALL SHARE INDEX: CLOSE: 2,209.77 | CHG: -8.10 | %CHG: -0.37 | YTD: -21.83 | YTD%: -0.98 52WK LOW 3.35 20.91 5.50 5.38 1.60 0.67 2.00 9.50 5.60 3.95 6.35 2.53 1.76 8.00 6.30 12.38 6.80 3.01 13.50

SECURITY AML Foods Limited APD Limited Bahamas Property Fund Bahamas Waste Bank of Bahamas Benchmark Cable Bahamas CIBC FirstCaribbean Bank Colina Holdings Commonwealth Bank Commonwealth Brewery Consolidated Water BDRs Doctor's Hospital Emera Incorporated Famguard Fidelity Bank Finco Focol J. S. Johnson

SYMBOL AML APD BPF BWL BOB BBL CAB CIB CHL CBL CBB CWCB DHS EMAB FAM FBB FIN FCL JSJ

1000.00 1000.00 1000.00 1000.00

Cable Bahamas Series 6 Cable Bahamas Series 8 Cable Bahamas Series 9 Cable Bahamas Series 10 Colina Holdings Class A Fidelity Bank Class A Focol Class B

CAB6 CAB8 CAB9 CAB10 CHLA FBBA FCLB

PREFERENCE SHARES

1.00 10.00 1.00

CORPORATE DEBT - (percentage pricing) 52WK HI 100.00

52WK LOW 100.00

115.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

104.79 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

SECURITY Fidelity Bank Note 22 (Series B) +

SYMBOL FBB22

Bahamas Note 6.95 (2029) BGS: 2015-1-3Y BGS: 2014-12-5Y BGS: 2015-1-5Y BGS: 2014-12-7Y BGS: 2015-1-7Y BGS: 2014-12-30Y BGS: 2015-1-30Y BGS: 2015-6-3Y BGS: 2015-6-5Y BGS: 2015-6-7Y BGS: 2015-6-30Y BGS: 2015-10-3Y BGS: 2015-10-5Y BGS: 2015-10-7Y

BAH29 BG0203 BG0105 BG0205 BG0107 BG0207 BG0130 BG0230 BG0303 BG0305 BG0307 BG0330 BG0403 BG0405 BG0407

BAHAMAS GOVERNMENT STOCK - (percentage pricing)

LAST CLOSE 3.35 17.43 6.00 6.68 2.10 1.62 3.80 11.61 6.00 4.40 6.49 3.43 4.60 10.90 7.60 15.05 9.33 3.53 15.20

CLOSE 3.35 17.43 6.00 6.68 2.10 1.62 3.80 11.61 6.00 4.34 6.49 3.39 4.60 10.77 7.60 15.05 9.33 3.53 15.20

CHANGE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.06 0.00 -0.04 0.00 -0.13 0.00 0.00 0.00 0.00 0.00

1000.00 1000.00 1000.00 1000.00 1.00 10.00 1.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00

CLOSE 100.00

CHANGE 0.00

107.31 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

LAST SALE 100.00 107.31 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

VOLUME

23,600

VOLUME

EPS$ 0.239 0.932 1.760 0.369 0.070 0.000 -0.438 0.722 0.449 0.184 0.140 0.102 0.467 0.646 0.728 0.816 0.939 0.203 0.631

DIV$ 0.170 1.260 0.000 0.260 0.000 0.020 0.000 0.720 0.220 0.120 0.000 0.434 0.060 0.328 0.240 0.540 0.200 0.120 0.610

P/E 14.0 18.7 N/M 18.1 N/M N/M -8.7 16.1 13.4 23.6 46.4 33.2 9.9 16.7 10.4 18.4 9.9 17.4 24.1

0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.0 0.0 0.0 0.0 0.0 0.0 0.0

YIELD 5.07% 7.23% 0.00% 3.89% 0.00% 1.23% 0.00% 6.20% 3.67% 2.76% 0.00% 12.80% 1.30% 3.05% 3.16% 3.59% 2.14% 3.40% 4.01% 0.00% 0.00% 0.00% 0.00% 6.25% 7.00% 6.50%

INTEREST Prime + 1.75%

MATURITY 19-Oct-2022

6.95% 4.00% 4.25% 4.25% 4.50% 4.50% 6.25% 6.25% 4.00% 4.25% 4.50% 6.25% 3.50% 3.88% 4.25%

20-Nov-2029 30-Jul-2018 16-Dec-2019 30-Jul-2020 15-Dec-2021 30-Jul-2022 15-Dec-2044 30-Jul-2045 26-Jun-2018 26-Jun-2020 26-Jun-2022 26-Jun-2045 15-Oct-2018 15-Oct-2020 15-Oct-2022

YTD% 12 MTH% 3.73% 3.73% 2.93% 2.93% 2.67% 2.71% 5.76% 5.76% 12.81% 12.81% 3.93% 3.93% 6.38% 6.38% 4.50% 4.50% 7.96% 7.96% 11.57% 11.57% 18.35% 18.35% 5.17% 5.17% 15.86% 15.86% 5.67% 5.67% 3.40% 3.40% N/A N/A 10.80% 2.60% 10.40% -4.00%

NAV Date 31-Dec-2019 31-Dec-2019 27-Dec-2019 31-Dec-2019 31-Dec-2019 31-Dec-2019 31-Dec-2019 31-Dec-2019 31-Dec-2019 31-Dec-2019 31-Dec-2019 31-Dec-2019 31-Dec-2019 31-Dec-2019 31-Dec-2019

MUTUAL FUNDS 52WK HI 2.29 4.37 2.09 195.13 166.73 1.66 1.85 1.76 1.20 8.34 10.26 6.94 12.01 12.35 10.74 10.00 8.98 11.79

52WK LOW 1.67 3.04 1.68 164.74 116.70 1.60 1.74 1.69 1.12 6.41 7.62 5.66 8.65 10.54 9.57 9.88 8.45 11.20

FUND CFAL Bond Fund CFAL Balanced Fund CFAL Money Market Fund CFAL Global Bond Fund CFAL Global Equity Fund Leno Preferred Income Fund Leno Growth Fund Leno Diversified Fund Leno Global USD Bond Fund Royal Fidelity Bahamas Opportunities Fund - Secured Balanced Fund Royal Fidelity Bahamas Opportunities Fund - Targeted Equity Fund Royal Fidelity Bahamas Opportunities Fund - Prime Income Fund Royal Fidelity Int'l Fund - Equities Sub Fund Royal Fidelity Int'l Fund - High Yield Fund Royal Fidelity Int'l Fund - Alternative Strategies Fund Colonial Bahamas Fund Class D Colonial Bahamas Fund Class E Colonial Bahamas Fund Class F

NAV 2.29 4.37 2.09 195.13 166.73 1.66 1.85 1.76 1.20 8.34 10.23 6.94 12.01 12.35 10.73 N/A 8.98 11.40

MARKET TERMS

BISX ALL SHARE INDEX - 19 Dec 02 = 1,000.00 52wk-Hi - Highest closing price in last 52 weeks 52wk-Low - Lowest closing price in last 52 weeks Previous Close - Previous day's weighted price for daily volume Today's Close - Current day's weighted price for daily volume Change - Change in closing price from day to day Daily Vol. - Number of total shares traded today DIV $ - Dividends per share paid in the last 12 months P/E - Closing price divided by the last 12 month earnings

YIELD - last 12 month dividends divided by closing price Bid $ - Buying price of Colina and Fidelity Ask $ - Selling price of Colina and fidelity Last Price - Last traded over-the-counter price Weekly Vol. - Trading volume of the prior week EPS $ - A company's reported earnings per share for the last 12 mths NAV - Net Asset Value N/M - Not Meaningful

TO TRADE CALL: CFAL 242-502-7010 | ROYALFIDELITY 242-356-7764 | COLONIAL 242-502-7525 | LENO 242-396-3225 | BENCHMARK 242-326-7333

in 2013 without taking action. Scrutiny of Big Tech has deepened and widened across the federal government, U.S. states and abroad. The FTC also is conducting a competition investigation of the four tech giants. In addition to their probe of Google, state attorneys general from both major political parties have opened an antitrust investigation of Facebook. The House Judiciary subcommittee on antitrust has been conducting a sweeping bipartisan investigation of the big tech companies and their impact on competition and consumers. Delrahim has suggested in speeches that he’s taking a broad view of how competition is harmed, when assessing whether big tech firms should be broken up. He also has made clear that he is aware that just two companies dominate digital advertising, though he hasn’t named the two, Google and Facebook. Justice Department and FTC officials haven’t publicly named the companies under investigation or indicated whether they plan to move against any particular company. The companies have said they’ll fully co-operate with the investigations. But in congressional testimony, their executives have pushed back against accusations that they operate as monopolies, laying out ways in which they say they compete fairly yet vigorously against rivals in the marketplace. Delrahim’s recusal was first reported by The New York Times.

NOTICE NOTICE is hereby given that LARKLAND CRAIG CAMPBELL of Emehs Street, Nassau, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 5th day of February 2020 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

NOTICE

(242) 323-2320

BISX LISTED & TRADED SECURITIES 52WK HI 4.45 22.65 7.00 6.70 2.60 2.00 5.47 12.00 6.17 4.50 10.99 3.24 5.06 10.57 7.90 16.99 9.40 3.80 15.20

last spring. But as the competition probe progressed, Delrahim “revisited” potential conflicts with the ethics staff, and he and the ethics office “have decided that he should now recuse himself from a matter within the tech review in an abundance of caution,” said a department statement, which did not mention Google. Associate Deputy Attorney General Ryan Shores will continue to oversee the tech review, the statement said. Shores, Deputy Attorney General Jeffrey Rosen and staff of the antitrust division met at Justice Department headquarters with state attorneys general “to continue strengthening their multilateral antitrust lawenforcement co-operation concerning technology markets,” the department said in a separate statement. “The Department of Justice looks forward to continued bipartisan co-operation with the states.” Attorneys general for 50 states and territories are participating in the Google investigation, taking a deep look into the company’s advertising business. They have asked Google for internal documents related to how it sells ads and tracks the behavior of people who use its search engine and other products. Google, owned by Alphabet Inc, was fined a record $2.72bn by European regulators in 2017 for abusing its dominance of the online search market. In the US, the Federal Trade Commission made an antitrust investigation of Google but closed it

30-Sep-2019 30-Sep-2019 30-Sep-2019

NOTICE is hereby given that JIAJIE LAN of #116 Cordeaux Ave, P.O.Box N-9221 Nassau, Bahamas, is applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/ naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 29th day of January 2020 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

NOTICE NOTICE is hereby given that JOSE LUCIANO ORTEGA DIAZ of Thompson Avenue, P.O.Box FH-14603 Nassau, Bahamas, is applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 29th day of January 2020 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

NOTICE

NOTICE is hereby given that ILIANA LOUISEIZE of Pinedale Road, Nassau, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 5th day of February, 2020 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

THE TRIBUNE

Wednesday, February 5, 2020, PAGE 7

PAGE 8, Wednesday, February 5, 2020

THE TRIBUNE

Tesla stock is soaring. Madness or visionary investing? DETROIT Associated Press

YOUR

CHOICE FOR THE FAMILY WWW.FACEBOOK.COM/JOYFM1019

EIGHT months after it seemed headed for the corporate junkyard, Tesla is now worth more than General Motors, Ford and Fiat Chrysler combined, even though the Big Three together sell more cars and trucks in two weeks than Tesla does in a whole year. In a reversal of fortune analysts find amazing if not nutty, the stock of the electric vehicle and solar panel maker has rocketed to nearly $900, up over 30% in just the past two days. It is now worth five times what it was in June, when there were whispers of bankruptcy surrounding the company founded by the erratic visionary Elon Musk, pictured. Among the world’s automakers, Tesla, with a market value yesterday just shy of $160bn, ranks behind only Toyota, at $232bn. Many investors see it as justified for a company that is leading the world in electric vehicle sales amid an expected global transition from the internal combustion engine to batteries. Others see the meteoric rise as just plain crazy for a company that’s never turned a full-year profit. “It doesn’t seem to be closely attached to reality,” said Gartner analyst Mike Ramsey. Tesla sold only 367,500 vehicles last year, compared with millions at GM, Ford or Fiat Chrysler. GM alone sold 7.7 million, 21 times more than Tesla. While the spectacular run-up in the stock has been attributed in part to rising profits and other encouraging signs from Tesla, it has been amplified, paradoxically, by the many investors who have been “shorting” the stock — that is, betting it would drop. As the stock goes up, these investors are losing money, so they try to

limit their losses by rushing in to buy, driving the price even higher. Just last spring, Tesla seemed to be in trouble. Its stock had fallen 40% largely on concerns that it was running out of buyers for its high-priced vehicles, which start at nearly $40,000 and can run well over $100,000. Big debt payments were looming, the company was burning cash and losses were growing. Its federal tax credit was being phased out by the end of the year, and competitors were about to launch their own electric vehicles. But sales emerged stronger than many expected, production problems were vanquished, and while Tesla lost $862m in 2019, it turned a profit during the last two quarters of the year, including $105m in quarterly earnings posted last week. Among the positive news coming from the automaker: Tesla said it expects to exceed production of 500,000 vehicles this year at its factories in Fremont, California, and Shanghai. It appears to have worked the kinks out of making the Model 3 small car, the company’s lowest-priced vehicle. And it announced it will start producing the Model Y, a small SUV with broad global appeal, sooner than expected. “For Tesla worldwide, this will probably be their most important car,” said Jessica Caldwell, executive director of insights at the Edmunds. com auto pricing site, which provides content for The Associated Press.