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Israel ratifies free trade agreement with South Korea

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Israel is accelerating efforts to sign free trade agreements with East Asian economic powers and Israel’s vehicle market is likely to benefit from this over the coming months.

Sources close to the matter have informed “Globes” that the free trade agreement between Israel and South Korea, which was formally signed last year, has been formally ratified by Israel over the past few weeks – a major step which brings implementation of the free trade agreement closer. The agreement now needs to be formally ratified by the Korean parliament, which according to the Korean media, should happen in the coming few weeks with the full support of all parties across the political spectrum.

The Israel Foreign Trade Administration at the Ministry of Economy and Industry expects the 7% excise tax on all Korea cars imported into Israel to be canceled when the agreement comes into effect. But sources in Israel’s car industry are trying to temper expectations and insist that cancellation of the excise tax will only help moderate the sharp price rises being dictated by manufacturers due to increased production costs, and won’t be reflected in an actual fall in current prices.

At the same time, Israel is also expected to sign a free trade agreement with Vietnam later this year. Earlier this week an Israeli importer signed an agreement to import Vietnam’s Vinfast electric vehicles from the fourth quarter and the free trade agreement will also reduce the prices of these cars, which includes 7% excise tax. The Foreign Trade Administration said, “Talks to prepare a free trade agreement with Vietnam are in advanced stages. The sides hope to complete the negotiations during 2022. The Foreign Trade Administration stresses that the agreement will require ratification by both countries before coming into effect.”

The third free trade agreement being negotiated with an East Asia country is the biggest of all – China, which is also a major player in the car market. Last month Chinese TV station CGTN reported that Israel and China had agreed to speed up negotiations on the free trade agreement in a phone conversation between Israel’s Foreign Minister Yair Lapid and his Chinese counterpart Wang Yi.

Published by Globes, Israel business news – en.globes.co.il – on April 27, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.


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Price hikes help India Inc fight margin pressure; operating profit up 20%, net profit by 34%

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Despite the inflation in inputs, India Inc seems to have managed to protect its margins reasonably well by passing on the costs to consumers. Not all companies have been able to take price hikes to offset the entire increase in costs, but aggregate numbers for Q4FY22 show they have covered some ground.

For a universe of 927 companies (excluding banks and financials), operating profit margins contracted by only 50 basis points year-on-year to 16.37%, in the three months to March. Consequently, the operating profit went up by a good 20% y-o-y and the net profits by a handsome 34%.

Management commentary suggests companies plan to either raise prices further or offer smaller volumes for the same price to protect margins. By a rough reckoning, prices have been raised by 5-15% for consumer staples, 10-12% for durables, around 10% for automobiles, 5-15% for residential properties and around 5-8% at fast food eateries. By passing on the cost increases, companies have managed to grow their top lines despite, in many cases, selling smaller volumes. For the sample of 927 firms, net sales in Q4FY22 rose 24.2% y-o-y.

Hindustan Unilever, for instance, has upped prices by about 10%, enabling it to report a revenue growth of 11% y-o-y in Q4FY22 despite volumes staying flat. Despite a 9% y-o-y drop in volumes, Eicher Motors posted a revenue growth of 9% y-o-y, thanks to a 21% y-o-y increase in the average selling prices (ASPs). At Bajaj Auto, Ebitda margins were down 80 bps y-o-y despite price hikes. Tata Steel’s margins in Q4FY22 were softer but the management is hoping better realisations will offset the cost inflation in the current quarter.

Gross margins at Asian Paints came off by 450 bps y-o-y as the company was able to only partially offset the high raw material costs with price increases of 22% y-o-y. Again, the profit performance at JSW Energy was a modest one as the higher realisations of 4% y-o-y were inadequate to offset the higher cost of generation, which rose 23% y-o-y.

While profitability may have been under some pressure, the good news is that businesses that were hit by the pandemic are bouncing back with the economy opening up. AB Fashion and Retail, for instance, reported better-than expected Q4FY22 revenue growth of 25% y-o-y as the distributor channel recovered. Avenue Supermarts posted Q4FY22 revenue growth of 18% y-o-y, driven by a revival in same store sales growth and the contribution from 21 new stores added during the quarter. Sales of big-ticket items, however, were somewhat subdued. At Titan, for instance, jewellery sales were flat, impacted by the volatility in gold prices.

The strong show by commodity players and some turnaround performances do skew the numbers somewhat. The profit growth slows to 21.6% y-o-y from 34% if Reliance Industries, Tata Steel, Tata Motors and Adani Power are excluded; the four together account for 20.2% of the sample’s revenues. Tata Motors narrowed its losses to Rs 1,033 crore in Q4FY22 from Rs 7,605 crore in Q4FY21, while Tata Steel posted a strong 47% y-o-y growth in net profits. Adani Power posted a net profit of Rs 4,645.47 crore against Rs 13.13 crore reported a year ago.

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U.S. Stocks Poised to Open Higher on Monday

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U.S. Southern Baptists release scathing report on sexual abuse By Reuters

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© Reuters.

By Rich McKay

ATLANTA (Reuters) – For decades, complaints of sex abuse by pastors and staff in the largest U.S. Protestant denomination, the Southern Baptist Convention, were either ignored or covered up by top clergy, according to an internal report released on Sunday.

The nearly 300-page report details how complaints were kept as “closely guarded secrets” within the church to avoid liability, “to exclusion of all other considerations,” it said.

“In service to this goal, survivors and others who reported abuse were ignored, disbelieved,” the report said, with church leaders covering up accusations and allowing accused clergy members to remain pastors or in other positions of authority.

Lawsuits against the church were denigrated as “opportunistic” and not having merit, it added.

The year-long investigation was initiated by the Southern Baptist Convention in June 2021, when a stream of complaints were raised at its annual meeting. The complaints focused on sexual abuse by pastors and volunteers and the lack of response by the religious body’s executive committee.

A representative of the Southern Baptist Church Convention, which claims more than 13 million members in the United States and more than 40 million worldwide, was not immediately available for comment.

The scandal echoes the one faced by the Roman Catholic Church, which has been rocked by allegations of sexual abuse, when the Boston Globe newspaper revealed in 2002 that church hierarchy covered up sexual misconduct by its clergy for decades.

The U.S. Catholic Church has paid out an estimated $3.2 billion to settle clergy abuse cases, according to BishopAccountability.org, which tracks the issue.

In 2019, the Houston Chronicle and the San Antonio Express-News reported that more than 700 victims had been abused by pastors, leaders and volunteers in Southern Baptist congregations.

The Southern Baptist investigation was carried out by Guidepost Solutions LLC.

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