George Russell, Sarah Provan, Harry Dempsey, Adam Samson, Naomi Rovnick
India’s cash-strapped states are struggling to pay the salaries of public sector employees – including critical frontline healthcare workers – as the impact of the coronavirus pandemic wreaks havoc with the country’s public finances.
Prosperous states such as Maharashtra, Punjab and Karnataka are among those now struggling to pay their wage bills, including to healthcare workers and staff of educational institutions.
State governments have accused the central governments of failing to dispense funds promised to them when the country adopted a new value-added tax system – the so-called Goods and Services Tax – several years ago.
Tensions between states and Prime Minister Narendra Modi’s central government over the overdue funds are dominating a heated meeting of the country’s GST council on Thursday.
In the last financial year, New Delhi dispersed around $22bn in GST compensation payments to the states in bimonthly installments. But New Delhi has not made any compensation payments to the states in the current financial year, which began on April 1, though these payments are a legal obligation, which was written into the law when India moved to the GST system.
New Delhi says the unprecedented difficulties arising from the coronavirus could not have been foreseen, and that the states should raise funds from other sources, including borrowing from the markets.
The standoff over the unpaid dues comes as lockdowns and other restrictions deliver a severe blow to other sources of state revenues, including taxes on liquor and jet fuel.
Flutter Entertainment, the owner of PaddyPower Betfair and SkyBet, said that revenues jumped by more than a fifth during lockdown despite the widespread cancellation of sports fixtures.
The Dublin-based group said on Thursday that a move by customers to play online casino and poker games during lockdown had “more than offset” the lost revenue from the closure of its betting shops and the lack of sports fixtures.
The condensed run of football fixtures since the easing of coronavirus-related restrictions had boosted betting volumes, it added.
As a result it said that it expected adjusted earnings, excluding its US business, to be between £1.2bn and £1.3bn, about 10 per cent ahead of consensus forecasts.
Revenue in the six months to the end of June increased 22 per cent to £2.4bn on a like-for-like basis accounting for its acquisition of Stars Group in a £10bn deal that completed in May.
The planned initial public offering includes a proposed offer of new shares to raise £920m plus a sale of existing shares of an amount to be confirmed at a later date. It will be a free float of at least 20 per cent in a standard listing on London’s main stock exchange and will leave Matthew Moulding, its founder, chairman and chief executive, in control.
A market value of £4.5bn would make the IPO the biggest this year in London.
The coronavirus pandemic has meant more stay-at-home consumers have felt comfortable buying products online and has helped the Manchester-based group in its global expansion. The group had six-month sales of £675.6m and adjusted ebitda of £60.5m to June 30, its statement on Thursday revealed.
The Hut Group, whose brands include Espa skincare and Christophe Robin hair products, has expanded in the 16 years since it was founded to generate annual sales from £1m in 2004 to £1.14bn last year. Its adjusted earnings before interest, taxes, depreciation and amortisation were £111.3m.
Rolls-Royce will seek to raise at least £2bn by selling off assets including a division that makes parts for the Eurofighter Typhoon, after the coronavirus crisis dragged the UK’s premier engineer into heavy half-year losses.
The FTSE 100 group, whose shares are down two-thirds this year, has taken a big financial hit from the grounding of flights due to Covid-19, since it gets paid according to the hours flown by aircraft fitted with its engines.
Chief executive Warren East said the company was continuing to examine options for strengthening Rolls-Royce’s balance sheet on Thursday, as the extent of the damage was revealed.
The company sank into a £5.4bn pre-tax loss during the six months ended June 30, a figure that included impairment charges and write-offs, restructuring costs and a £2.6bn non-cash revaluation of currency hedging contracts.
Revenues dropped a quarter to £5.8bn and at an underlying level the operating loss was £1.7bn.
In an attempt to survive the collapse in global aircraft demand, the company is undertaking a deep restructuring that involves axing 9,000 jobs, almost one in every five of its total workforce.
The company burnt through £2.8bn of cash in the period ended June 30, as large engine flying hours were almost cut in half. Management expects a further outflow of £1bn in the second half of the year.
Hiring for permanent positions has only experienced a “moderate improvement”, the group said, at a time when concerns mount that a sluggish jobs market could hold back countries’ economic recovery from the virus. Hays suffered the steepest fall in fees for new hires in the UK market, where the economy has been stung particularly hard by Covid-19.
Profit before tax slipped 63 per cent compared with a year earlier to £86.3m with the recruiter cutting about 1,000 jobs or 9 per cent of its workforce last month.
The 11 per cent fall in fees for the group was as deep as the drop during the financial crisis but it took place over just six weeks, with fees falling 34 per cent in the fourth quarter, whereas the drop in revenues lasted for eight months during the previous crisis.
“The pandemic severely impacted all our markets globally,” said Alistair Cox, chief executive of Hays. "Although many uncertainties remain, group fees have been stable since May and we see modest signs of improvement in [permanent hires].”
Hays did not propose a final dividend for the financial year but it said that it hoped to return to paying dividends when appropriate.
The Indian government’s plans to conduct competitive entrance exams for admission to prestigious engineering colleges and medical schools in the midst of the coronavirus pandemic has unleashed fierce controversy, with students and opposition parties demanding the exams be postponed.
The tests, normally conducted in April but subsequently pushed back to July, are now due to be conducted in September, though India’s coronavirus pandemic shows no signs of abating, with nearly 76,000 new cases detected on Wednesday.
More than 858,000 students have signed up to take the JEE – the exam for entry into the Indian Institutes of Technology – while nearly 1.6m have signed up for the medical school entry tests, the NEET.
Officials say the repeated postponement has put intense pressure on students, who have been forced to prepare for an exam that is repeatedly receding into the future.
The controversy, which has deeply divided students and parents between those frightened of the virus and those eager for the exams to proceed, has attracted the attention of Swedish climate change activist Greta Thunberg, who tweeted in support of the demand that the test be postponed.
Authorities say failure to conduct the exam will result in a lost year of intake, which would have lasting consequences.
India is already grappling with a severe shortage of doctors owing to intense restrictions on medical schools. But opposition-ruled states have demanded the exams be postponed further, lest students risk their health.
The furore highlights the severe social cost of India’s failure to contain the spread of the virus, which has forced schools and educational institutions to remain closed since March.
The Bank of Korea sharply downgraded its economic projection for this year, forecasting a 1.3 per cent contraction for Asia’s fourth-largest economy, as health authorities grapple to contain the country’s worst coronavirus outbreak in six months.
But the BoK left its benchmark interest rate unchanged at a record low of 0.5 per cent, concerned about a red-hot property market, after cutting interest rates by 75 basis points so far this year to cushion the economic blow from the pandemic.
The central bank in May forecast the South Korean economy to shrink 0.2 per cent, expecting the virus to be brought under control in the second half. However, South Korea is grappling with a fresh outbreak nationwide just as many other countries are experiencing a second wave of infections.
The country’s daily new infections have risen to triple digits in recent weeks after right-wing church members infected with coronavirus attended a massive anti-government protest. On Thursday, the country reported 441 new cases, including 315 in the greater Seoul area, bringing the total to 18,706.
The continued spread of the virus bodes ill for recovery of the export-dependent economy, which suffered its worst recession in more than two decades in the second quarter. South Korea’s exports declined 7 per cent in July from a year earlier, falling at the slowest rate in four months.
Meanwhile, the country’s domestic consumption recovery, driven by government subsidies and stimulus packages, may get derailed as the government is considering strengthening social-distancing measures, economists said.
The lowered economic forecasts came amid growing calls for a fourth supplementary budget on top of the Won277tn ($233.8bn) stimulus packages announced this year.
“A second wave of infections has bolstered the case for further stimulus to support the economy,” Alex Holmes, economist at Capital Economics, said in a research note on Thursday, forecasting a 2.0 per cent contraction for the South Korean economy.
The scramble to slash costs in response to Covid-19 has piqued concern that diversity and inclusion could slip down, or even off, companies’ agendas.
At the same time, some leaders are looking to tap the positive value of inclusivity, especially as the pandemic heralds a more fragmented workplace in which more staff work from home.
The crisis has exposed how some companies view D&I as nice to have rather than a core value, said Pragya Agarwal, a diversity consultant and author of Sway: Unravelling Unconscious Bias. "The pandemic has ... showcased that we need D&I more than ever."
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The Australian state of Victoria has recorded 113 new coronavirus cases and 23 deaths, as neighbouring New South Wales saw an unexpected jump in cases.
NSW recorded nine new Covid-19 cases, with a cluster linked to a gymnasium in Sydney.
Jeremy McNulty, NSW director of health protection, said three of the new cases had attended the City Tattersalls Club gym in central Sydney, bringing the total in the cluster to eight.
Health officials have also sounded alarms over two more Sydney gyms and three restaurants in the state capital.
India detected an all-time high of nearly 76,000 new coronavirus cases on Wednesday — and recorded more than 1,000 new coronavirus deaths — as the pathogen continues to spread uncontrolled through the South Asian nation of 1.4bn people.
The latest fatalities push India’s overall toll from the pandemic above the grim milestone of more than 60,000 deaths, the fourth highest death toll in the world.
India has detected more than 3.3m cases of coronavirus since the pandemic began. Health officials say the pathogen is now spreading out from big cities – where the pandemic began – into the rural heartland.
India is now detecting more new cases every day than any country in the world, including the US and Brazil, which have been the hardest hit by the virus.
Despite the rapid rise in cases, Prime Minister Narendra Modi’s government claims that India is waging an effective battle against the pathogen, citing a lower case fatality rate than that of more developed countries.
However, experts counter that the lower toll also reflects India’s younger population.
The rampant spread of the virus across the country has cast a long shadow over India’s economy and social life, with the nation’s schools and educational institutions closed since March and unlikely to open for months.
Property investors may think they have enough to worry about right now, with the coronavirus pandemic driving some commercial tenants to suspend rent payments while others consider whether they will need big office or retail space at all in future.
But the bleak outlook has a green-tinged silver lining. The market upheaval is creating opportunities to invest in environmentally sustainable buildings that will not only potentially make investors feel good but also deliver good financial returns.
A recent report from property agent Savills cited the positive or neutral correlations that academics have found between sustainable investing and returns, and concluded “this is happening in real estate, too . . . it shows through in values”.
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Profits at Chinese industrial firms grew at the quickest rate in more than two years last month in a further sign of economic recovery across the country.
Year-on-year profits rose by 19.6 per cent in July to Rmb589bn ($85.6bn), official data showed on Thursday, well above the rate in June and the fastest pace of growth since June 2018.
For the year to date, industrial profits in China are down 8.1 per cent but have risen for three consecutive months, with new coronavirus infections remaining low and economic activity having rebounded.
Across 41 major industrial sectors, 32 achieved profit growth in July, the National Bureau of Statistics said, compared with 23 in June. It pointed also to a sharp jump in the profits of the high-tech manufacturing sector, which added 36.5 per cent in July.
The Chinese state has supported the country's economic rebound, with local government borrowing for infrastructure projects boosting steel output. At the same time, retail spending has remained weak, with consumers still cautious over employment and economic activity in the future.
Malaysia's government hopes to complete guidelines for proposed travel corridors with Japan and Singapore by next week, as new cases in the south-east Asian country slowed, state-funded media reported on Wednesday.
Nancy Shukri, the tourism, arts and culture minister, told the official Bernama news agency that the guidelines would have to be reviewed by the country's National Security Council.
“[The ministry] has been tasked by the government to put forward our proposals," Ms Shukri said. "We have been talking to Japan [and] Singapore ... this is going to be a continuous initiative."
In the meantime, she added, the government would push domestic tourism ahead of international travel.
Malaysia recorded six more cases on Wednesday, the health ministry announced. The country of 31.5m people has declared 9,291 cases since the pandemic began, with six official deaths.
Ahead of Scotland’s 2014 independence referendum, the Scottish National party sought to reassure voters worried about going it alone by citing a resurgent economy, a relatively modest budget deficit and the prospect of untrammelled free trade with both the remaining UK and the EU.
Things are different now. Brexit means that an independent Scotland in the EU — the SNP government’s goal — would face a hard economic border with England, its most important market.
Data released on Wednesday showed Scotland’s notional fiscal deficit climbing to a hefty £15bn in the year to April, even before the worst of the coronavirus crisis is felt.
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Asia-Pacific shares struggled for momentum even as US stocks continued to reach new highs.
Japan's Topix index slipped 0.3 per cent in early trading on Thursday while South Korea's Kospi edged 0.1 per cent lower. Futures for markets in Hong Kong and mainland China, which open later in the morning, were little changed.
Overnight on Wall Street, the S&P 500 jumped 1 per cent to hit another record peak as technology shares continued to fuel a rally in the US index. Futures for the American benchmark were down 0.1 per cent on Thursday morning.
Investors remain focused on the US Federal Reserve's Jackson Hole meeting, which begins on Thursday, where they will be looking for new clues on how global central banks may deploy monetary stimulus.
US-China relations are also on traders' radar after it was reported that Beijing had fired missiles into a disputed part of the South China Sea in a move that could inflame tensions.
Meanwhile, the dollar index edged 0.2 per cent lower. Crude oil prices were little changed while gold slipped 0.2 per cent to $1,949.26 per troy ounce.
A new payment for people on low incomes who are required to self-isolate and are unable to work from home in areas with high rates of coronavirus is to undergo trials in the north-west of England, the UK government has announced.
Health secretary Matt Hancock said those who test positive will be entitled to access £130 over their 10-day self-isolation period, while members of their household will be entitled to a payment of £182 when they self-isolate for 14 days.
Any non-household contacts reached via the government’s NHS test-and-trace programme will be entitled to up to £13 per day and up to £182, depending on the length of their isolation period.
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South Korea’s National Assembly will be temporarily closed from Thursday amid fears of possible coronavirus transmission among the country’s lawmakers.
The move, which came after a parliamentary reporter tested positive for Covid-19, marked the latest disruption as the country grapples with its worst coronavirus outbreak in six months.
The Korea Centers for Disease Control on Thursday reported 441 new coronavirus infections.
Officials have over the past 10 days taken a series of actions to reinstate social distancing, including ordering most students to return to remote learning, limiting the size of public gatherings and urging Seoul residents to refrain from travelling outside the city.
The restrictions, which come months after coronavirus transmission fell into single digits, also serve as a warning to other countries over complacency even when they have strong systems in place for testing and tracing.
and Jamie Smyth in Sydney
A team from the World Health Organization tasked with investigating the origins of coronavirus did not visit Wuhan, fuelling concern from western governments over Beijing’s commitment to identifying the source of the pandemic.
A recently concluded three-week trip by the two-person WHO team did not entail a visit to Wuhan, the central Chinese city where the first cases of novel coronavirus were detected in December 2019, the UN agency has confirmed.
WHO said the team was merely laying the groundwork in advance of a full international mission to investigate the virus but it was also vague on whether this larger task force would visit Wuhan.
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Previous research published in May raised the possibility that certain mouthwashes could be used to help reduce transmission of enveloped viruses, such as SARS-CoV2, which causes Covid-19, but that more research was needed.
“We are very keen to start this much needed clinical trial as our review of the literature indicated that we need to look deeper into the possible positive impact that mouthwashes may play on the transmission of Covid-19," said David Thomas, a dentistry professor at Cardiff University.
The university said it would partner with Venture Life Group, which makes the Dentyl brand of mouthwash for the UK market.
New York’s governor said the state will not follow national coronavirus testing guidelines, after the US Centers for Disease Control and Prevention changed them to recommend that people who have been in close contact with an infected person but do not exhibit symptoms should not get a test.
The CDC changes, which were announced earlier this week, came after repeated complaints by President Donald Trump that the high number of tests being carried out in the US was the reason there were so many confirmed cases.
Andrew Cuomo, New York’s governor, said on Wednesday that his state would not follow the guidelines, denouncing them as “political propaganda”.
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Hong Kong reported 24 new cases on Wednesday as the city prepared to ease some social-distancing regulations.
An 81-year-old man died in Tuen Mun Hospital, the 79th fatality in the semi-autonomous Chinese city of 7.5m people.
There were still 24 patients, mostly elderly, in a critical condition owing to Covid-19, the hospital authority said on Wednesday. Another 34 patients were listed as serious.
From Friday, Hong Kong will have more relaxed social-distancing measures.
Dine-in services will be extended to 9pm from 6pm, cinemas will reopen with up to 50 per cent capacity, beauty salons can restart operations if staff wear masks and face shields or goggles, and some non-contact sports can be played.
Despite the new orders, the city's Centre for Health Protection called on the public to "avoid going out, having social contact and dining out".
US stocks powered to another record high on Wednesday, helping global equities set a new peak for the first time since February.
The tech sector remained in the driving seat, up 2.8 per cent and helping its broader benchmark, the S&P 500, finish 1 per cent higher overall at a record level. The tech-heavy Nasdaq Composite jumped 1.7 per cent to a new peak.
Big tech stocks have underpinned new highs for Wall Street and also carry relatively large weightings in global benchmarks.
Those gains helped push global stocks to a new record, with the FTSE All World rising 0.9 per cent to surpass its previous peak in February, just before many countries instituted economic lockdowns to curb the spread of coronavirus.
Government bonds were slightly weaker, with the yield on the benchmark 10-year Treasury up 0.01 percentage points to 0.692 per cent as investors sold the notes.
George Russell in Hong Kong
The US Food and Drug Administration on Wednesday issued an emergency use authorisation for the first Covid-19 antigen test where results can be read directly from the testing card, a similar design to some pregnancy tests.
"This simple design is fast and efficient for healthcare providers and patients and does not need the use of an analyser," the agency said in a statement.
Jeff Shuren, director of the FDA’s Center for Devices and Radiological Health, described the test as an "important addition to available tests" as the results can be "read in minutes, right off the testing card".
According to the FDA, a healthcare provider would swab a patient’s nose and twirl that sample on a test card with a testing reagent added.
"After 15 minutes, the healthcare provider reads the results directly from the testing card. One line indicates a negative result; two lines indicate a positive result."
The developer, Abbott Diagnostics, said it plans to make up to 50m tests available monthly in the US from October.
Abbott said it would also offer a free mobile app that would allow people to display their results when entering facilities requiring proof of testing.
The US reported its biggest one-day increase in deaths in a week, as a number of sunbelt states experienced jumps in fatalities.
A further 1,249 people died, up from 1,147 on Tuesday and the largest one-day increase since last Wednesday's rise of 1,420.
That brought the seven-day average down to about 942 a day, having fallen below 1,000 earlier this week for the first time in nearly a month.
Texas (229), Florida (155) and California (150) made among the biggest contributions to Wednesday's tally and represented the largest jumps in fatalities those states had seen in several days.
Over the past 24 hours, 43,130 people tested positive for the disease, according to the Covid Tracking Project, up from 36,679 on Tuesday. This was the biggest increase in four days.
New Zealand continued to record single-digit daily new infections on Wednesday, as concern mounted over a series of church services held in Auckland earlier this month.
The five cases reported on Wednesday appear to be part of the same cluster that threw New Zealand's largest city back into lockdown and delayed a general election by a month.
"An additional case reported yesterday as a household contact is now under investigation," the health ministry said in a statement. "Genome sequencing is under way."
Auckland Regional Public Health Service said it had diagnosed five people associated with the Mt Roskill Evangelical Fellowship Church as having Covid-19.
The diagnosis in the inner southern Auckland suburb followed a wedding at the church on August 7, and three services held from August 8-11.
"We would ask that anyone who attended the events get tested as soon as possible," the ministry statement added.
California reported its largest daily increases in new infections and deaths in days on Wednesday.
A further 6,004 people tested positive for Covid-19 over the past 24 hours, state authorities revealed this afternoon, up from 4,480 on Tuesday. That sits higher than the average over the past week of 5,753 cases a day.
Fatalities in California rose by 150, up from 105 on Tuesday and versus the seven-day average of about 126.
Florida reported more than 3,000 new coronavirus cases for the first time in four days on Wednesday.
A further 3,220 people tested positive for Covid-19 over the past 24 hours, the state health department revealed, up from 2,673 on Tuesday.
Florida conducted nearly 65,300 tests over the past day, the most in four days and up from about 43,500 a day earlier. The increase in tests may have been a factor in bringing the positivity rate down to 5.75 per cent from 7.48 per cent on Tuesday.
Texas reported an above-average increase in new coronavirus cases and the highest daily jump in deaths in five days. A further 229 people died, the state health department said this afternoon, up from 181 on Tuesday.
It was the largest single-day increase since Friday.
Over the past 24 hours, 5,045 people in Texas tested positive for Covid-19, down from 6,091 on Tuesday. New cases today and yesterday sat higher than the seven-day average for the first time since August 19.
EU trade commissioner Phil Hogan has resigned from his post following a furore over apparent violations of Covid-19 guidelines in his native Ireland.
Mr Hogan occupies one of Brussels’s most powerful positions at a key moment for trade talks with both the US and China.
He tendered his resignation on Wednesday night to European Commission president Ursula von der Leyen, who said she respected Mr Hogan's decision, calling him a “valuable member" of the commission.
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New York's commuter transit network said on Wednesday it needs $12bn in urgent federal funding to "weather the most severe financial crisis in its history" as it signalled severe cuts to its services.
The Metropolitan Transportation Authority, which provides public transport in 12 counties in New York – including the city – and two more in neighbouring Connecticut, launched a new digital ad campaign highlighting its budget shortfall.
“The MTA simply cannot wait any longer for relief from Washington,” said Patrick Foye, the MTA's chairman and chief executive.
“If the Senate fails to step up and deliver $12bn, it would be a devastating blow to mass transit as we know it," he added. "We need action now, and the more we can amplify this message, the better.”
The MTA outlined a series of potentially devastating service cuts, fare increases and plans to lay off employees and slash capital expenditure. Since the pandemic began, the MTA has seen greater declines in passenger numbers than in the aftermath of the Great Depression in the 1930s.
Senior members of Boris Johnson’s government have expressed their concern at the recent string of policy U-turns, questioning the UK prime minister’s approach, the make-up of the cabinet and the civil service’s ability to handle the pandemic.
The government has changed course 12 times in major policy areas since coronavirus hit in March. The latest reversal came when education secretary Gavin Williamson announced that face masks would be mandatory in communal parts of English schools in areas under stricter lockdown.
A dozen senior Tories have privately told the Financial Times about their growing disquiet, with one cabinet minister expressing unhappiness with both the substance and form of the latest announcement on face coverings.
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Italy on Wednesday reported its biggest one-day increase in coronavirus cases in more than three months as Europe contends with a sharp uptick in infections. The country reported 1,367 new cases up from 878 the previous day, taking the total caseload to 262,540. The country's death toll has climbed to 35,458. Italy is one of several countries in Europe with a rise in infections as holidaymakers return home.
Coronavirus will sap more than £20bn from Britain's travel industry while the UK quarantine policy leaves London at risk of surrendering its position as a global hub for tourism and business, an industry group has warned. Spending by international travellers is expected to plummet 78 per cent, or £22bn, this year, the World Travel & Tourism Council said.
Inflation surged in Lebanon during July, with its consumer price index rocketing 112 per cent compared with 2019. The cost of consumer goods is being driven up by the devaluation of the Lebanese pound, whose two-decade peg to the dollar at L£1,500 has effectively been broken. Black market rates are currently hovering at L£7,000-7,500.
Dick’s Sporting Goods registered its highest-ever quarterly sales and earnings, as consumers showed growing interest in fitness and socially distant outdoor activities. The Pittsburgh-based retailer said net sales jumped 20.1 per cent year-on-year to $2.71bn for the three months to August 1. Consolidated same-store sales advanced 20.7 per cent.
London Gatwick is to cut up to a quarter of its workforce as part of a major restructuring following a collapse in passenger numbers at the UK's second-busiest airport. Gatwick is entering into consultations with about 600 staff, and said it was in talks with the government over sector-specific support to help the aviation industry through the crisis.
Salesforce shares were poised to extend their gains a day after the cloud-based software group surpassed $5bn in quarterly sales and raised its forecast for next year. Shares in the San Francisco-based company rose 13 per cent in pre-market trading on Wednesday. They have risen more than 10 per cent this month, and 33 per cent for the year.
Russian gold miner Polymetal doubled its dividend after metal prices rallied in the first half of the year. Polymetal said it would pay a first-half dividend of 40 cents a share. The group has benefited from a 27 per cent rise in gold prices this year and lower costs due to a fall in the Russian rouble and Kazakh tenge. Gold hit a record $2,072 an ounce on August 6.
Compiled by George Russell in Hong Kong