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Fears grow for independence of local media in Poland

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When Krzysztof Zyzik first heard rumours that Poland’s state-controlled oil refiner PKN Orlen was poised to buy the local paper where he has worked for 27 years, he thought they were just an attempt to intimidate his staff.

“For the five years that Law and Justice have ruled, we have been quite consistently hated by the people in power . . . so we treated this initial information as an element of pressure aimed at sparking auto-censorship among our journalists,” the editor-in-chief of NTO, a regional news group from Opole in southern Poland, told the Financial Times.

When the transaction was actually announced, “the mood was terrible. It was obvious that an important chapter in our lives, which is simply called journalistic freedom, is ending.”

The sale of NTO is part of a bigger deal that has sparked concern for media freedom in the EU’s fifth-biggest state by population. Under the agreement struck last week, Orlen will buy the local media group Polska Press from its German owner, media group Verlagsgruppe Passau. When the deal is completed next year, Orlen, run by a close ally of Law and Justice, will control 20 of Poland’s 24 regional newspapers and more than 120 local magazines.

Orlen said the point of the deal was to “strengthen its retail sales, including non-fuel sales”, and that access to Polska Press’s 17.4m users would improve its big data tools and win new clients. However, journalists are deeply sceptical.

Daniel Obajtek, chief executive of PKN Orlen © Michal Fludra/NurPhoto via Getty

Law and Justice has never made any secret of its desire to “repolonise” Poland’s private media, in which they claim foreign owners have too much sway. Yet many journalists fear this will simply lead to private groups being reduced to government mouthpieces like state broadcaster TVP, which combines pro-government propaganda with relentless attacks on Law and Justice’s opponents.

“So far nothing has happened. It is a period of suspension. But everyone is worried about a repeat of the takeover of the public media, TVP, which in less than a year became a propaganda machine on a scale which had not be seen in Poland since communist times,” said Witold Glowacki, a journalist at Polska Times, a paper owned by Polska Press.

“This is the only model by which the ruling camp has showed its thinking about the media. There is no other point of reference or comparison.”

Orlen insists this is not the case and that there will be no interference in newsrooms. When the group announced the deal last week, it claimed that the transaction was part of a “global trend” in which companies created their own “communication platforms as a support for their business activities and for reaching new clients”, citing Amazon boss Jeff Bezos’s purchase of the Washington Post as one example.

Critics of the deal dismiss this comparison as ludicrous, pointing out that Mr Bezos is not a state-controlled company. “The comparison is not Amazon but Gazprom,” said Mr Zyzik, referring to Russia’s state-run gas giant, which bought up a string of media assets in the early 2000s. Others worry that Poland is following in the footsteps of Viktor Orban’s Hungary.

Journalists fear that the point of the deal is to give Law and Justice a tool that it can deploy in the next round of local elections, which take place in 2023, and which represent the level of government where the party’s influence is weakest.

“I think this is a political move,” said a journalist at one of the papers being bought by Orlen. “Because Law and Justice was never strong in the local elections . . . and in my opinion, they will try to take over those local governments with the help of local media.”

Government officials deny that the deal is politically motivated. “This is a decision of a particular firm, a state one, but it is aimed at business questions,” the government spokesman, Piotr Muller, told the portal wp.pl, adding that it was “absurd” to claim that “if [Polska Press] is a German company, that’s good, but when it has a Polish owner, that’s bad”.

Others point out that on a national level, Poland’s media is still pluralistic, with numerous independent newspapers, internet portals, and radio and television stations. But Mr Zyzik, a former investigative journalist who heads a team of around 20 reporters, said in places such as Opole, where his paper NTO is an important independent voice, the impact could be significant.

“From the perspective of local media markets, there will be scandalous imbalance. The risk is obvious: if they make the sort of changes they did at TVP and public radio, then in Opole, these three groups — TVP, Radio Opole and NTO after these political changes — will be able to create a sort of steamroller than will simply roll over any opposition politician,” he said.

Faced with such concerns, some journalists working for Polska Press titles are thinking of leaving, even though the combination of the pandemic and existing pressures on the media means jobs will be hard to come by. Others are considering setting up new independent media groups.

Mr Zyzik is already preparing himself for a bumpy ride. “I will continue working as long as it is possible to do so independently at NTO. When the first political pressures, or attempts to influence the independent line of my newspaper appear, I will know how to behave,” he said.

“I will not endorse, with my name or with my face, any political interference at NTO.”



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Emerging Markets

Tech-heavy Taiwan stock index plunges on Covid outbreak

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Taiwan’s stock market, home to some of the world’s biggest tech companies, suffered one of the largest drops in its history as investors were rocked by a worsening Covid-19 outbreak.

The Taiex fell as much as 8.55 per cent on Wednesday, the index’s worst intraday fall since 1969, according to Bloomberg. It finished down 4.1 per cent.

Construction, rubber, automotive and financials — sectors retail investors had been shifting into from technology in recent months — were the worst hit in the sell-off.

The world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Company, which has a 30 per cent weighting in the index, fell as much as 9.3 before recovering ground to be down 1.9, while Apple supplier Hon Hai Precision Industry, also known as Foxconn, dropped 9.8 per cent before paring losses to be down 4.7 per cent.

While Taiwan’s sell-off was related to domestic Covid-19 problems, it followed recent declines in global markets as investors worried about possible inflationary pressures.

The falls came as Taiwan’s government was expected to partially close down public life to contain a worsening coronavirus outbreak — something the country had managed to avoid for more than a year.

“The reason that triggered the escalated sell-off during the trading session is the new [Covid-19] cases to be reported this afternoon, and probably the raising of the pandemic alert level,” said Patrick Chen, head of Taiwan research at CLSA. “On top of that, the market before today was already at a point where the index was at an inflection point.”

Taiwan’s strict border controls and quarantine system and meticulous contact tracing measures had helped it avoid community spread of Covid-19 until recently.

That success, which allowed Taipei to forego lockdowns, helped boost the local economy, which grew about 3 per cent last year and 8.2 per cent in the first quarter of 2021.

But health authorities announced 16 locally transmitted confirmed cases on Wednesday, for three of which the infection source was unclear — a sign of widening spread in the community. Authorities had confirmed seven untraced cases on Tuesday, and domestic media reported that the government might introduce partial lockdown measures.

President Tsai Ing-wen called on the public to be vigilant but avoid panicking.

Taiwan’s stock market rose almost 80 per cent over the past year, peaking at a historical high late last month. It is now down 8.5 per cent from that mark.

Retail investors have increasingly moved out of technology stocks in recent weeks, reducing the sector’s weight in trading volume from almost 80 per cent at its height to just over 50 per cent.

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China factory gate prices climb on global commodities boom

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The price of goods leaving factories in China rose at the fastest pace in more than three years, on the back of a rally in commodities supported by the country’s economic recovery.

The producer price index rose 6.8 per cent in April year-on-year, beating economists’ expectations and surpassing March’s increase of 4.4 per cent.

The rate was driven in part by comparison with a low base last year in the early stages of the pandemic. But it also reflects a global surge in the prices of raw materials that was first stoked by China and now incorporates expectations of recovering global demand.

While PPI prices in China have leapt, economists suggested there was limited spillover into consumer prices and that the central bank was unlikely to react. China’s consumer price index added just 0.9 per cent in April, the National Bureau of Statistics said on Tuesday, although it touched a seven-month high.

“It tells us that demand at this moment is super strong,” said Larry Hu, head of greater China economics at Macquarie, of the PPI data, although he suggested policymakers would see the increase as “transitory” and “look through it”.

“We’re going to see some reflation trends,” he added.

Signs of tightening in China’s credit conditions have drawn scrutiny from global investors eyeing the prospect of higher inflation as the global economy recovers from the pandemic, especially in the US, which releases consumer price data on Wednesday.

China’s PPI index remained mired in negative territory for most of 2020 following the outbreak of coronavirus, but has started to gather momentum this year. Gross domestic product growth in China returned to pre-pandemic levels in the final quarter of 2020.

An industrial frenzy in China has stoked demand for commodities such as oil, copper and iron ore that make up a significant portion of the index and have helped to push it higher. 

Policymakers in China have moved to tighten credit conditions, as well as attempted to rein in the steel sector. Ting Lu, chief China economist at Nomura, said the relevant question now was “whether the rapid rise of raw materials prices will dent real demand, given pre-determined credit growth”.

Retail sales in China have lagged behind the growth rate of industrial production, putting downward pressure on CPI, which has also been weakened by lower pork prices that rose sharply on the back of African swine fever. Core CPI, which strips out food and energy, rose 0.7 per cent in April 

Julian Pritchard-Evans, senior China economist at Capital Economics, said that producer prices were feeding through into the rebound in consumer prices, but also suggested that pressures on the former were “likely to be mostly transient”.

He added that output prices for durable consumer goods were rising at their fastest level on record.

China’s rapid recovery has been driven by its industrial sector, which has churned out record quantities of steel and fed into a construction boom that policymakers are now trying to constrain. On Monday, iron ore prices hit their highest level on record, while copper prices also surged.



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Iron ore hits record high as commodities continue to boom

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The price of iron ore hit a record high on Monday in the latest sign of booming commodity markets, which have gone into overdrive in recent weeks as large economies recover from the pandemic.

The steelmaking ingredient, an important source of income for the mining industry, rose 8.5 per cent to a record high of almost $230 a tonne fuelled by strong demand from China where mills have cranked up production.

Other commodities also rose sharply, including copper, which hit a record high of $10,747 a tonne before paring gains. The increases are part of a broad surge in the cost of raw materials that has lasted more than a year and which is fanning talk of another supercycle — a prolonged period where prices remain significantly above their long term trend.

The price of timber has also hit a record high as US sawmills struggle to keep pace with demand in the run-up to peak homebuilding season in the summer.

“Commodity demand signals are firing on all cylinders amid a synchronised recovery across the world’s economic powerhouses,” said Bart Melek, head of commodity strategy at TD Securities.

Strong demand from China, the world’s biggest consumer of commodities, international spending on post-pandemic recovery programmes, supply disruptions and big bets on the green energy transition explain the surge in commodity prices.

Commodities have also been boosted by a weaker US dollar and moves by investors to stock up on assets that can act as a hedge against inflation.

The S&P GSCI spot index, which tracks price movements for 24 raw materials, is up 26 per cent this year.

Strong investor demand pushed commodity assets held by fund managers to a new record of $648bn in April, according to Citigroup. All sectors saw monthly gains with agriculture and precious metals leading the way, the bank said.

Agricultural commodities have had an especially strong run owing to rising Chinese demand and concerns of a drought in Brazil. Dryness in the US, where planting for this year is under way, is also adding to the upward rise in prices. Corn, which is trading at $7.60 a bushel and soyabeans at $16.22, are at levels not seen since 2013.

“From a macro economic environment to strong demand and production concerns, the ingredients are all there for the supercycle,” said Dave Whitcomb of commodity specialist Peak Trading Research.

Rising copper and iron ore prices are a boon for big miners, which are on course to record earnings that will surpass records set during the China-driven commodity boom of the early 2000s.

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JPMorgan reckons Rio Tinto and BHP will be the largest corporate dividend payers in Europe this year, paying out almost $40bn to shareholders. Shares in Rio, the world’s biggest iron ore producer, hit a record high above £67 on Monday.

Brent crude, the international oil benchmark, has crept back up
towards $70 a barrel, which it surpassed in March for the first time in
more than a year, recovering ground lost as the pandemic
slashed demand for crude and roiled markets.

Supply cuts by leading oil producers have helped to bolster the market
as consumption has begun to recover around the world.

While some Wall Street banks have hailed the start of a new supercycle, with some traders talking of a return to $100 a barrel oil, others are less convinced. The International Energy Agency said oil supplies still remain plentiful meaning any talk of a supercycle is premature.



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