Some of the world’s largest money managers soured on emerging markets as compounding trade threats deepened the worst monthly rout for developing currencies since the U.S. election.
Goldman Sachs Group Inc. said it’s reducing an overweight position in developing-nation currencies, preferring a more “defensive” stance as China and Europe warned the escalating trade war could trigger a global recession. Citigroup Inc. cautioned that investment flows into emerging-market assets will subside, while Morgan Stanley lowered its recommendation toward the asset class, citing the risk of a stronger U.S. dollar and ballooning trade threats.
Investors are increasingly paying heed as the U.S. digs in. After a flurry of tit-for-tat tariffs, Washington is mulling a new front by potentially ratcheting up scrutiny of Chinese investments, according to people familiar with the plans. Outflows from U.S.-listed exchange-traded funds that invest across developing nations, as well as those targeting specific countries, hit $3.38 billion last week, the most in more than a year.
The implications are familiar.
“A significant slowdown in trade would materially deteriorate the global growth outlook with repercussions for risky assets,” Elia Lattuga, a cross-asset strategist at UniCredit Bank, said in a note dated June 22. Emerging markets would be “especially exposed,” he said.
While there’s no clear resolution to the fiery trade rhetoric, some money managers are taking a more optimistic medium-term outlook. UBS Global Wealth Management, which reduced its weighting on emerging-market equities to neutral, said trade risks should wane in coming months and help support a double-digit rally in the asset class.
There’s limited downside risk to “already very cheap” developing-nation currencies as any nasty surprises from Donald Trump would only prompt a “temporary and very bitter-sweet sugar high for the greenback,” according to Ashmore Group Plc. Getting Defensive
Most major developing-nation currencies weakened against the dollar on Tuesday, with MSCI Inc.’s gauge trading down for a second day. Stocks fell 0.4 percent after a 1.6 percent tumble the day before.
The Trump administration’s threat last week to impose levies on another $200 billion of Chinese goods has increased the risk of a trade war and led to a “risk-off” environment in emerging markets, according to Goldman.
“While we have been inclined to discount previous trade rhetoric, we are now taking a more defensive view,” the firm, which oversees more than $1 trillion of assets, said in its fixed-income weekly report on June 22.
Similarly, Credit Agricole is keeping risk-aversion strategies in place, according to analysts led by Valentin Marinov. Emerging-market central banks would eat through their reserves defending their currencies in a trade war, selling Treasuries and contributing to the U.S. yield advantage, they said. ‘Appetite for Destruction’
Monetary policy would be complicated as a flight to safety weakened emerging currencies, pushing up inflation in an environment where growth is “dented by decreased trade volumes,” Isaah Mhlanga, an economist at Rand Merchant Bank, said in an emailed note. That would drive regulators to lift rates to slow price growth, further cutting into economic expansion, he said.
In a report titled “Appetite for Destruction” Commerzbank AG analysts led by Ulrich Leuchtmann warned that it’s tricky to predict where the spat will lead.
“After all, who can estimate the impact of a process that has been unprecedented in trade policy since the middle of the last century?” — Bloomberg
THE Davao City government has warned the public against the membership recruitment activities of groups Mindanao Grassroots People’s Coalition, Caesar City Corporation, Mindanao Bunkers Monetary Council, Mindanao Indigenous Sovereign People for CCC, Mindanao Golden Mind Filipino, Mindanao Filipino Religious Sectors, and the Mindanao Filipino Youth Leaders for CCC. The Davao City Anti-Scam Unit has already conducted a preliminary background check on these groups and “uncovered a possible pyramiding scam,” the local government said. The matter has been endorsed to the National Bureau of Investigation for appropriate and urgent action, it added.
By Arra B. Francia, Reporter
LOCAL SHARES staged a last-minute rebound on Tuesday, jumping back to the 7,000 level as investors looked for bargains.
The 30-member Philippine Stock Exchange index (PSEi) snapped a nine-day losing streak Tuesday, June 26, firming up 0.29% or 20.33 points to 7,007.21.
In contrast, the broader all-shares index dipped 0.04% or 2.10 points to 4,309.31.
“Philippine investors turned into bargain hunters… The market seems more likely to see more pressure as more exchange on US-China Trade Tension feedback and more western corporates commented to be impacted with trade tariffs globally,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile message.
Foreign investors were net buyers for the first time in 27 days, recording a small net inflow of P57.67 million, compared to the previous session’s net sales amounting to P401.53 million.
“The index ended with a hammer candlestick pattern, which typically indicates that a bullish reversal may be afoot. On a similarly positive note, foreign investors were net buyers today, although the amount was rather modest at P58 million,” Papa Securities Corp. analyst Arbee B. Lu said in an e-mail.
Despite the uptick, analysts noted that the PSEi may not be seeing a trend reversal just yet.
“If we are indeed in for a bounce, expect it to be short-lived as the PSEi has yet to reach its support at 6,600,” Ms. Lu said.
Wall Street indices suffered huge drops overnight, after one of United States President Donald J. Trump’s top advisers said the market was “overreacting,” noting that investment restrictions against China and other countries will not be immediate.
Analysts have also expressed fears on the slowing down of the global economic growth due to the trade spat with China.
The Dow Jones Industrial Average dumped 1.33% or 328.09 points to 24,252.80. The S&P 500 index shed 1.37% or 37.81 points to 2,717.07, while the Nasdaq Composite index gave up 2.09% or 160.81 points to 7,532.01.
Meanwhile, Asian markets ended mixed, with Chinese indices leading the losses due to prevailing fears on the trade war.
Back home, sectoral indices were split between gainers and losers. The mining and oil counter led decliners with a loss of 1.95% or 190.83 points to 9,556.57. Financials dropped 1.06% or 18.89 points to 1,750.67, while services gave up 0.41% or 5.65 points to 1,371.63.
Meanwhile, holding firms gained 0.75% or 51.37 points to 6,873.07, followed by property which picked up 0.50% or 17.01 points to 3,406.75. Industrials climbed 0.34% or 35.35 points to 10,352.28.
Some 707.56 million issues switched hands, resulting in a value turnover of P5.92 billion, down from Monday’s P6.12 billion.
Decliners outpaced advancers, 127 to 78, while 41 issues were unchanged.
THE PESO slipped further against the dollar on Tuesday amid continued geopolitical concerns abroad.
The peso ended at P53.47 versus the greenback on Tuesday, weaker by three centavos from its P53.44-per-dollar finish the previous day.
The local unit opened the session slightly stronger at P53.43 against the greenback. It declined to as low as P53.50, while its intraday high stood at P53.35 versus the dollar.
Dollars traded rose to $748.82 million from the $449.2 million that switched hands on Monday.
In an interview, a trader said the peso depreciated as corporate demand for the US currency pushed peso lower.
“The peso depreciation was due to corporate flows,” the trader said over the phone on Tuesday.
“This is quite regular. Usually at the end of the month, you see oil firms buying dollars to repatriate their income.”
Meanwhile, Rizal Commercial Banking Corp. Economics and Industry Research Division Head Michael L. Ricafort said the peso closed lower on higher global oil prices.
“Dollar-peso closed at P53.47…on higher global oil price recently on some market expectations that actual OPEC (Organization of the Petroleum Exporting Countries) oil production hike may be below the agreed 1 million barrels per day,” he said in a text message.
“The peso again weakened Wednesday, June 27, as increasing uncertainties of a possible trade war continue to rattle the markets,” another trader said on Tuesday.
According to RCBC’s Mr. Ricafort, China and the European Union warned that the persistent trade tensions could result in a global recession.
“[The uncertainties] prompted investors to seek for safe-haven currencies,” the second trader added.
Despite the depreciation of the local currency which may seem negative, First Metro Investment Corp. (FMIC) said its short- and medium-term impact is “net positive.”
“Peso depreciation also has positive effects for the country. The most obvious effect of this would be to discourage imports and produce more exports,” FMIC and the University of Asia & the Pacific (UA&P) said in a statement.
The production of more exports will boost employment generation and reduce the trade deficits over the medium term.
FMIC and UA&P added the weakness of the peso will boost the income of overseas Filipino workers (OFW).
“There are about 10 million OFWs, and with an average family size of 4.6, the peso slide benefits some 46 million Filipinos,” First Metro and UA&P added. “Add to that the number of families dependent on exports… we can easily conclude that a vast majority of Filipino families benefit from the higher peso-dollar exchange rate.”
For Wednesday, the first trader sees the peso moving between P53.40 and P53.60 versus the dollar, while RCBC’s Mr. Ricafort gave a P53.35-P53.50 forecast range. — Karl Angelo N. Vidal
The Philippines growth dialogues, a collaboration between McKinsey and BusinessWorld, is a video series presenting the ideas of influential leaders in the public, private, and social sectors about key opportunities to promote economic growth in the Philippines. This third installment focuses on the banking sector.
Despite the global financial crisis, the Philippine banking system has made impressive strides in recent years: loans have quadrupled and deposits nearly quadrupled since 2005, and the number of ATMs and bank branches rose by 14,000 and 4,000, respectively, during the past decade. Reforms of the banking system have strengthened balance sheets, governance, and risk management.
As the sector becomes more integrated globally, additional growth lies in store, but so do two challenges. The first is innovation. In ten years, two-thirds of the Filipino workforce won’t know what life was like before the Internet. Are banks ready to meet the needs of these women and men, who will command the largest share of the country’s purchasing power by the coming decade? The second challenge is inclusive growth. Only 32 percent of Filipinos have a bank account, and only 31 percent of the small and midsize businesses get financing from banks. Can the Philippines create incentives so that its financial institutions serve these segments and turn the gaps into growth opportunities? Kristine Romano is the managing partner in McKinsey’s Manila office. Nestor A. Espenilla Jr. is the governor of Bangko Sentral ng Pilipinas, the country’s central bank. Nestor Tan is president and CEO of BDO Unibank, the largest bank in the Philippines. The following transcript has been edited for clarity and concision.
INTRODUCTION
[Kristine Romano]
Digital is on everyone’s mind. Today, four in ten Filipinos in the workforce are digital natives. Technology is changing the way banks do business. Artificial intelligence, advanced analytics, blockchain, and the Internet of Things—all of these are blurring the traditional lines between financial services and other industries. Hundreds if not thousands of fintechs are trying to disrupt the banking sector. While all this is happening, Philippine banks still seem to be in a wait-and-see mode. How do we encourage our banks to adopt these new technologies and how can they use them to promote financial inclusion?
FINANCIAL INCLUSION
[Nestor A. Espenilla Jr.]
We see a very strong connection between innovation and financial inclusion. The reason is that financial exclusion has existed for some time, notwithstanding the fact that there is opportunity. Demand from small and midsize companies and from consumers is strong. We have a young population that’s upwardly mobile, looking for financial services to meet their needs. About 47 percent of the adult population has loans, but only 4.4 percent borrow from banks. A major reason is that these markets are hard to serve using the traditional, conventional bricks-and-mortar approach. The last couple of years have seen all kinds of products, but they essentially don’t connect to one another.
[Nestor Tan]
Let me give you a concrete example. If I want to do electronic payments, there has to be an originating account and a destination account. If one is absent, you cannot digitize. So we try our best to create digital products for customers, but we have been lagging behind in trying to convert recipients or merchants. In my view, financial inclusion will precede digitization, not the other way around.
FINTECH
[Nestor A. Espenilla Jr.]
Fintechs have come in to, basically, strengthen the backroom operations of banks. Many of our banks still lack scale, but scale is an issue that will be solved over time. That’s also where competition comes in and forces strategic decisions. Bigger scale creates more efficient services. We are seeing our domestic banks adopting new technology; gearing up for a more digital world; introducing more products, credit, savings, and investment products; and distributing insurance products through a bancassurance platform.
[Nestor Tan]
I do believe that our banks, as an industry, are still relatively subscale compared with the region. I don’t know if it still holds, but if you combine the top three banks here, it would only be ranked number six in the ASEAN or maybe number seven, so we’re relatively subscale. The question, then, for us is will we be able to achieve the right scale or penetration before the market opens up. If we can, maybe we can build our industry from the ground up. If we can’t, we will be vulnerable to regional competition.
We’re vulnerable in the consumer-lending side of the business, particularly to those that are financially included—salaries, employees, formal-sector businesses, large corporations. We’re also vulnerable in areas like asset management. We are vulnerable in payments. Competitors will get market share. We will still be there, but the margins will be affected. It’s a game of scale and cost efficiency. However, other sectors are still untapped. The challenge for local banks is how do you compensate for a loss of market share or margins in some products by building up other areas?
DIGITAL INFRASTRUCTURE
[Nestor A. Espenilla Jr.]
There are still also issues of infrastructure, the reliability of channels. We’re talking about digital technology. If we are hampered by unreliable services or speed, then that’s also an issue.
[Nestor Tan]
Are banks ready for digital? Probably not yet, but they’re getting there. We want to get our utilities in order. As I mentioned, in a lot of areas, the banking community has to work together. The country is in the process of creating an ID registry using biometrics as the base for identifying individuals. It’s just a registry, I think, but consider the potential. We will be avoiding the use of ATM cards, which is expensive. We will be minimizing fraud if we can use fingerprints or facial recognition to identify the account holder. We’re also trying to upgrade our utilities—the clearinghouse, the Bancnet ATM exchange, and the credit bureau—so we can be of better service to our members.
DIGITAL ECOSYSTEM
[Nestor A. Espenilla Jr.]
There’s homework to be done in terms of creating a digital financial ecosystem that can be trusted by people. Our approach is to work with the private sector, and today we have embarked on a project for the national retail-payment system. The big idea is that we want to create a digital platform that will allow an ecosystem of financial products to be efficiently distributed throughout the economy. What we hope to see is that any one of us, from a chosen account—a bank account or a wallet account—will be able to transact business with anyone. You can transfer a value person to person. You can transfer a value to government, paying taxes or fees. Or government can transfer value to you: benefits, subsidies, conditional cash transfers. Et cetera. So it’s an ecosystem. And digitization enables the design of credit products, savings products, investment products, and insurance products that are easier to distribute. You can also break this down into smaller amounts. The Philippine economy operates on the tingi system, so you’ll be able to save in little amounts. It is easier to do that electronically.
[Nestor Tan]
If you do something unique and try to keep it to yourself, the usual competitive behavior is that others will try to do something and outdo you on innovation. Then you will be competing on innovation, which is not our core competency. However, if a group of us decide that we will level the playing field, then we compete on what we know best, which is banking.
Europe’s stock markets attempted to recover Tuesday after slumping the previous day on global trade war concerns, dealers said.
In early afternoon deals, Frankfurt rose 0.3 percent and Paris gained 0.4 percent, while London won 0.5 percent by midday.
Markets had plummeted Monday, with European indices shedding about two percent, on reports that US President Donald Trump was planning new curbs on Chinese investment in America.
Trump has threatened to strike back against China’s retaliation to the US tariffs that are due to take effect July 6.
“We have seen some tentative buying across indices, an almost inevitable development after Monday’s drop, but the gains do little to dent the heavy losses suffered yesterday,” said IG analyst Chris Beauchamp on Tuesday. Trade war rhetoric
“The question … is whether we have further to go before equities find a bottom,” he added.
“With trade war rhetoric still in abundance, it might be too early to sound the all-clear.”
Asian stocks banked sharply lower on Tuesday following steep falls on Wall Street, amid fear that Washington was readying a new phase in its economic confrontation with China.
China was hardest hit, dropping close to two percent at the session low before paring losses later in the day.
Tokyo followed the same pattern, even ending up fractionally in the black on bargain-hunting late in the day.
Despite the slight bump back up, analysts warned that market sentiment remained fragile.
“The market is in a really bad state. It is in as dangerous a place as it was in 2015,” said Zhang Qi, an analyst with Haitong Securities in Shanghai, referring to the 2015 market swing that saw the Shanghai index plunging more than 40 percent within three months.
Beauchamp noted: “The talk of trade wars certainly raises the risk of a re-run of that volatility.”
This week, trade frictions topped market players’ concerns.
Washington has already announced it will impose investment restrictions on Chinese companies by June 30, with the Wall Street Journal reporting that any firm that is 25 percent Chinese-held would face curbs. ‘Diplomatic doublespeak’
The reports drove US stocks down two percent at the lowest point on Monday but they recovered some of their losses after senior White House economic adviser Peter Navarro sought to ease fears in a TV interview.
Treasury Secretary Steven Mnuchin also rebuffed the reports but the mixed messages left some traders bemused.
“Despite the rebound, there remains a considerable degree of scepticism,” said Stephen Innes, head of trading at OANDA, adding that investors were not sure whether the comments were “diplomatic doublespeak or a meaningful denial”.
In a concrete consequence of the tit-for-tat trade blows, US motorbike maker Harley-Davidson said late Monday it planned to shift some manufacturing overseas to avoid retaliatory European tariffs imposed last week.
This sparked a furious response from Trump who said he was “surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag,” adding that he had “fought hard for them”. Key figures around 1100 GMT
London – FTSE 100: UP 0.5 percent at 7,545.58 points
Frankfurt – DAX 30: UP 0.1 percent at 12,284.99
Paris – CAC 40: UP 0.4 percent at 5,304.39
EURO STOXX 50: UP 0.4 percent at 3,381.42
Tokyo – Nikkei 225: UP 0.02 percent at 22,342.00 (close)
Hong Kong – Hang Seng: DOWN 0.28 percent at 28,881.40 (close)
Shanghai – Composite: DOWN 0.5 percent at 2,844.51 (close)
New York – Dow Jones: DOWN 1.3 percent at 24,252.80 (close)
Euro/dollar: DOWN at $1.1674 from $1.1704 at 2100 GMT
Pound/dollar: DOWN at $1.3263 from $1.3281
Dollar/yen: DOWN at 109.65 yen from 109.77 yen
Oil – Brent Crude: UP 35 cents at $75.08 per barrel
Oil – West Texas Intermediate: UP 16 cents at $68.24 — Roland Jackson, AFP
A bill enacting Britain’s decision to leave the European Union has become law after months of debate, the House of Commons speaker announced Tuesday, to cheers from eurosceptic lawmakers.
Speaker John Bercow said the EU (Withdrawal) Bill, which repeals the 1972 European Communities Act through which Britain became a member of the bloc, had received royal assent from Queen Elizabeth II.
The bill transfers decades of European law onto British statute books, and also enshrines Brexit day in British law as March 29, 2019 at 11pm (2300 GMT) — midnight Brussels time.
Prime Minister Theresa May said the approval was a “historic moment for our country, and a significant step towards delivering on the will of the British people”.
The bill has undergone more than 250 hours of acrimonious debate in the Houses of Parliament since it was introduced in July 2017.
Eurosceptics celebrated the passing of the bill through parliament last week as proof that, despite continuing uncertainty in the negotiations with Brussels, Brexit was happening.
“Lest anyone is in any doubt, the chances of Britain not leaving the EU are now zero,” International Trade Minister Liam Fox said.
Conservative MP Jacob Rees-Mogg, a staunch Brexit supporter, said: “The legal position is now so much stronger for a clean Brexit.
“Crucially this makes the prime minister’s negotiating hand much stronger.”
Another eurosceptic Conservative MP, Dominic Raab, said May would go to an EU summit later this week “with the wind in her sails”.
The government had a tough time getting the bill through parliament and was forced to concede some power to lawmakers over the final Brexit deal agreed with Brussels.
Further battles are expected in the House of Commons in the coming weeks, when MPs debate two bills on trade — with pro-Europeans seeking to force the government to keep close ties with the bloc.
May has yet to set out her plans for customs arrangements after Brexit, which have become a major stumbling block in talks with Brussels.
She will gather her top ministers after the EU summit, which starts on Thursday, to thrash out their differences with the aim of publishing a Brexit blueprint shortly after. — AFP
In the Corolla, Toyota Motor Corp. has the best-selling car of all time. The problem is the people who bought the model when it was introduced in 1966 are still the main customers.
The average Corolla sedan owner in Japan is more than 70 years old, according to Toyota, making it a priority for the company to attract a new generation of buyers. Toyota is betting it can do that through internet connectivity.
On Tuesday, Toyota began selling a fully redesigned Corolla Sport hatchback — along with a new Crown, the flagship sedan in Japan akin to the Avalon in the US — as its first generation of fully connected cars. Toyota’s Data Communication Module hardware will come standard, allowing owners to perform tasks such as closing their car windows from a mobile phone and asking a virtual assistant for directions using the company’s T-Connect service.
“At some point, Corolla became a car that attracted a much older customer,” Yoshiki Konishi, the model’s chief engineer, said at a briefing this month. “Keeping that clientele is also very important, but what is needed now is a rebranding.”
Toyota President Akio Toyoda is racing to turn the automaker his grandfather founded eight decades ago into a mobility-services provider, amid transformation in an industry where McKinsey & Co. estimates revenue from car data could reach $750 billion by 2030. Toyoda has called the cloud the biggest disruptor and largest opportunity for new automotive businesses, and has set a goal to have 70 percent of its new vehicles connected by 2020.
Most of the services Toyota is offering in the Corolla and Crown aren’t new, with some available for more than a decade. But billing the cars as Toyota’s first fully connected vehicles could create much-needed buzz for services that so far have failed to lure more buyers.
Customers will get T-Connect free for three years, as part of Toyota’s efforts to get them hooked on services like artificial intelligence-driven navigation assistance and a 24/7 live operator to assist with anything from finding a restaurant to calling for help if a driver suddenly feels ill.
Toyota aims to sell 2,300 of the Corolla Sport per month in Japan, rising from 1,000 targeted for the previous model known as the Auris. The new car has a starting price of about 2.1 million yen ($19,000), compared with a base price of around 1.8 million yen for the Auris. — Bloomberg
China on Tuesday confirmed it would cut tariffs on goods from five Asian nations, including soybeans, as a brewing trade war with the US could make American beans more costly. As part of the Asia-Pacific Trade Agreement with neighbours Bangladesh, India, Laos, South Korea and Sri Lanka, Beijing will drop tariffs to zero on several important farm imports while cutting tariff rates on dozens of other goods starting July 1. The date comes five days before Beijing is scheduled to impose new tariffs on the US, a major supplier of farm goods like the soybeans used widely in animal feed. China will drop its border tax to zero on soybeans, soybean oil, rapeseed, cow and sheep fat, among other products, the list published Tuesday by China’s state council shows. As the world’s largest importer of soybeans, with $14 billion in imports from the US last year, analysts are worried the planned tariffs could cause the price of animal feed to rise in the world’s second-largest economy. Beijing has ordered its farmers to grow more of the crop and has been increasing imports from Brazil and Argentina, while India has also exported the beans to China in the past. — AFP
North and South Korea held talks Tuesday on connecting the railways that run across their border, a physical link that would transform the relationship between the two sides of the divided peninsula. The discussions, the first on the issue for 10 years, took place in the truce village of Panmunjom in the Demilitarized Zone that divides the two countries. The two sides agreed to conduct a joint-study “at an early date” on modernizing the railways that run through their border, Yonhap reported the South’s Unification Ministry as saying. A rail line already exists from Seoul to Pyongyang and on to Sinuiju on the Chinese border, originally built by Japan in the early 20th century, long before the Korean War and decades of division. Linking the two systems — and modernizing the North’s ageing rail infrastructure — would give trade-dependent South Korea a land route to the markets of China, Russia and on to Europe. But doing so would represent a fundamental change on the peninsula: there has been no direct civilian communication between the two Koreas since their division was sealed by the 1953 armistice that ended the Korean War — not even post. Despite the diplomatic warming on the peninsula, with summits between the North’s leader Kim Jong Un and both the South’s President Moon Jae-in and Donald Trump of the US, Pyongyang remains under heavy sanctions over its nuclear and missile programs. Any practical steps would only become possible after such measures are eased, South Korea’s chief delegate Kim Jeong-ryeol acknowledged as he set off for the meeting. “But we can thoroughly research and study various projects we can pursue after the sanctions are lifted,” he added. During an earlier period of rapprochement, the South built a gleaming station at Dorasan, just south of the Demilitarized Zone, with platforms marked for non-existent services to the North’s capital. On the eastern side of the peninsula, railways could connect South Korea’s port city of Busan to Europe via the North and Russia. Kim and Moon agreed to “adopt practical steps towards the connection” of the railways at their first summit in April. Moon has also shared his vision of linking the inter-Korean lines to trans-Siberian railways, offering a route to Europe, saying it would bring “huge economic benefits” to Seoul and Pyongyang as well as Russia. But freedom of movement for North Korean civilians could threaten the grip on power of the ruling Workers’ Party, which imposes tight controls on the population. The rapprochement on the Korean peninsula was triggered earlier this year when Kim decided to send athletes, cheerleaders and his sister as an envoy to the Winter Olympics in the South. — AFP
Long relegated to the back seat, Saudi women celebrated taking the wheel for the first time this week in a much-awaited rite of passage, but one crucial hurdle remains — the attitude of men. Social media is awash with videos of women behind the wheel and men in the passenger seat, a role reversal that was unimaginable in the conservative petro-state until a royal decree last September ended a decades-long women driving ban. A woman driver is such a novelty across the gender-segregated Muslim kingdom that when the decree took effect on Sunday, it prompted jubilation, disbelief –- and reactions akin perhaps to those evoked by the first woman doctor in the 19th century. “Look, a woman driver!” appeared to be a common refrain among male onlookers in Riyadh as women embraced a freedom long denied to them. Now many are quietly bracing for a battle of the sexes on Saudi streets. The driving reform has been widely hailed by young Saudis and no overt incidents of harassment were publicly reported in the first two days since the ban was lifted, but many are wary of pervasive sexism and aggression from male drivers despite warnings from authorities. “I advise men to stay home to avoid being killed by women drivers!” said one Saudi Twitter user, echoing a torrent of similar comments predicting a surge of accidents because of female motorists. Often accompanying such comments are images of fiery car crashes and traffic pileups. And then there are the condescending mansplainers. Some social media users have advised women to “avoid putting on makeup” while driving. Others have predicted pink colored cars and parking lots for women. Fueling the sexist ridicule, as women drivers hit the roads for the first time on Sunday, Saudi media splashed images of the inauguration of a gleaming new holding cell for women traffic violators. Many women have responded with defiance. “Social media is flooded with messages ridiculing women and underestimating their ability to drive,” columnist Wafa al-Rasheed wrote this month in Okaz, a Saudi daily. “We will drive and we will drive better than you, men.” ‘Road Romeos’ For now, the women taking to the roads appear mainly to be those who have swapped foreign licences for Saudi ones. Some 120,000 women have applied for licences, according to an interior ministry spokesman, who declined to specify how many had been issued. But the fear of harassment is so widespread that many women are keeping away from the streets, testing reactions in a society torn between conservatism and social change engineered by Crown Prince Mohammed bin Salman. “Several men have shown concern that women relatives who drive will be harassed, followed, chased and videoed by male drivers,” Abdul al-Lily, author of the book “The Bro Code of Saudi Culture”, told AFP. A Saudi woman interviewed by AFP said she had deferred plans to drive, voicing a fear of “road Romeos” who might deliberately crash into her car just to find an excuse to talk. For many women, though, real opposition lies at home — after decades of preaching by arch-conservatives that allowing female motorists would promote gender mixing and promiscuity. “You will not drive my mother. You will not drive my sister. You will not drive my future wife,” said a Twitter user using the hashtag “She will not drive”. Rights groups say the driving reform is mere tokenism until the kingdom dismantles its much-criticized system of male “guardians” — fathers, husbands or other relatives, who can exercise arbitrary authority to make decisions for women. ‘New normal’ Authorities, however, have said that Saudi women will not need a guardian’s permission to apply for a driver’s licence. The government has also addressed concerns of abuse by outlawing sexual harassment, and authorities have sternly warned against stalking women drivers. Authorities this week said the first batch of women insurance inspectors are training to respond to accidents involving female drivers, but it remains unclear when they will start work. The new provisions come after Saudi authorities last October arrested a man who threatened a violent backlash against any female driver whose car breaks down. “Men ought to be scared that even joking about harassing women could land you in jail,” Hesham Alghannam, a Saudi researcher at Britain’s University of Exeter, told AFP. “Eventually even the most conservative will have to adapt and over time women drivers will become the new normal.” Among those pushing back against such attitudes are men themselves, many of whom have quietly expressed relief that their female relatives no longer have to rely on them or foreign chauffeurs, a major financial strain, to be driven around. “Women, do not let anyone distract you from this moment, whether men ridiculing your ability to drive or anyone else,” said Ahmad al-Shathri, who is based in Riyadh. “This moment is yours and no opinion matters except your own.” — Anuj Chopra, AFP
