Tax hikes would affect Russian oil output

Subject The outlook for Russia's oil companies. Significance Following the breakdown of talks on an international price freeze, Energy Minister Alexander Novak said Russia had the capacity to raise oil production if others tried to win a larger market share. Output could rise to 13 million barrels per day, he said. The government has the capacity to exert a positive or negative influence on output and exports through its control of the hydrocarbons taxation regime. Impacts The energy ministry will resist finance ministry attempts to impose higher taxes. The argument will be fought out with proposals and counter-proposals on the detail. Given the long investment cycles in Russian oil projects, delays due to higher taxes or uncertainty will undermine future plans. The benefits of ruble depreciation will not be lasting, and future field development will require technology imports paid for in dollars.

Market reaction to the Karachi stock exchange floor imposition

Purpose – The purpose of this paper is to investigate the market reaction to the decision made by the management of the Karachi Stock Exchange (KSE) to impose a price floor that resulted in trading curbs in 2008. The paper analyzes if regulatory intervention helped in restoring investor confidence. Design/methodology/approach – The paper examines the effect of enforcement of a price floor and trading curbs by splitting the time period studied into two periods: pre-floor and post-floor period. The parametric t-statistics and non-parametric Mann-Whitney test are used to compare the abnormal returns (ARs), abnormal trading volume, bid-ask spread, Amihud illiquidity ratio, and price volatility between the two periods. Event study was conducted to observe the behavior of market returns surrounding market-wide price floor. Finally, multivariate regression analysis was also applied by controlling for factors that might influence valuation, liquidity, and volatility. The standard errors have been corrected for cross-sectional clustering due to market-wide restrictions. Findings – The study found an adverse impact of price freeze and trading curb in the KSE, following the relaxation of floor (resumption of active trading). First, the price of securities (or ARs) significantly declined following the relaxation of the price freeze. Second, the market liquidity deteriorated following the relaxation of the price floor. Third, the price volatility increased in the post-floor period. It seems that the decision made by the KSE’s board to implement lower cap on prices for an extended period was ineffective. Practical implications – Market intervention by regulators to bring calm in the financial markets have negative consequences across the globe. The results presented in this paper suggest that implementing price floor brought inefficiency in the market and prevented firms from raising capital to finance their future investments. The author believe this study will add to the knowledge base of regulatory intervention and its impact on the performance of financial markets. Originality/value – There is no empirical evidence on the impact of price limits on volatility in emerging markets. The author selected Pakistan as a case study, where we particularly focus upon impact of the enforcement of a price floor around the peak of Global Financial Crisis (or market intervention) in Pakistan. This study also documents the effect of trading curb on liquidity and volatility in an emerging market, given that a majority of research on trading halt/price limits is based on developed markets.

On the Review of Macro-Economic Conditions in the Case of a Price Freeze for Medicinal Products

Joined Cases C-471/07 and C-472/07 AGIM and Others [2010] ECR I-000001.The Member States determine, in compliance with the objective of transparency pursued by Council Directive 89/105/EEC and the requirements laid down by Article 4(1) of that Directive, the criteria on the basis of which the review of macro-economic conditions which is referred to in that provision is to be carried out, provided that those criteria are based on objective and verifiable factors (author's headnote).2.Article 4(1) of Directive 89/105, so far as its subject matter is concerned, is not sufficiently precise to have direct effect for the purposes of the national legal systems of the Member States (author's headnote).3.Article 4(1) of Directive 89/105 must be interpreted as meaning that a Member State may, 18 months after the end of a general price freeze in respect of refundable medicinal products which lasted eight years, adopt a new measure freezing the prices of medicinal products without carrying out the review of macro-economic conditions which is provided for in that provision (official headnote).