TheChek News Flow

Amos Hochstein sounded his warning during meetings Monday with a series of Israeli officials, including PM Netanyahu and his defense minister

U.S. special envoy Amos Hochstein will arrive in Beirut on Tuesday after a day-long visit to Israel as part of his efforts to prevent the situation from deteriorating into all-out war between Israel and Hezbollah in Lebanon.

Hochstein met in Israel with Prime Minister Benjamin Netanyahu, President Isaac Herzog, Defense Minister Yoav Gallant, Knesset opposition leader Yair Lapid and former minister Benny Gantz. In his meetings, he warned of the possibility that war with Hezbollah could lead to a wide-scale Iranian attack on Israel of a kind that would be difficult for Israel's defense systems to repel, in concert with possible wide-scale fire by Hezbollah from Lebanon.

Hochstein's visit coincides with the Muslim holiday Eid al-Adha, one of the most important in the Muslim world. Due to the holiday, no air-raid sirens sounded in northern Israel from Monday morning to evening. The U.S. envoy hopes to take advantage of the pause in the exchange of fire between Hezbollah and Israel to try to develop a framework for a future cease-fire agreement between the two sides, but he made it clear to everyone he met with in Israel that such an agreement could only be implemented after an official cease-fire is declared in Gaza. As long as the fighting in the Strip continues, it will not be possible to achieve a separate agreement between Israel and Hezbollah, he added. That has been Hezbollah's stance since Hamas' October 7 attack on Israel, and Biden administration officials don't believe that it is expected to change.

Hochstein is hoping that if the Israeli ground operation in Rafah is accomplished within two to three weeks, it would also make a lowering of the flames possible between Israel and Hezbollah in the north. Such a scenario wouldn't bring about an end to the fighting but it would prevent its spread into full war and make possible more significant progress it his efforts to outline a framework for a future agreement between the sides, including the demarcation of the an agreed upon land border between Israel and Lebanon.

Hochstein was also in Israel in March and in December. Both visits were also aimed at preventing a significant escalation in the fighting in the north and at examining the possibility of achieving an agreement that would restore quiet to the Israeli-Lebanese border. The senior Israelis who met with him on his previous visits heard similar assessments from him about the link between the war in Gaza and a possible end of the fighting in the north, but according to one of the Israelis, this time, Hochstein appears "more worried" about the possibility of a deterioration of the confrontation of the two sides into a full-scale war of a kind that would bring about huge destruction on both sides of the border.

The Wall Street Journal reported Monday that France "is working a diplomatic track to try to lower the temperature on the border" at the same time that United States works on the issue. A senior French official told the newspaper that a cease-fire in Gaza is necessary to create what the paper described as "a favorable climate" for negotiations.

At the beginning of the war, Hochstein tried to examine the possibility of advancing a separate agreement between the parties, but he came to the conclusion that it was not possible.

At Hochstein's latest meeting with Netanyahu, he was joined by Strategic Affairs Minister Ron Dermer and Israeli National Security Adviser Tzachi Hanegbi, who have become members of the smaller decision-making forum that replaced the war cabinet following the resignation from the government of Benny Gantz and Gadi Eisenkot. The smaller forum is aimed at preventing the involvement of National Security Minister Itamar Ben-Gvir in decisions relating to the war in Lebanon.

The leader of the opposition in the Knesset, Yair Lapid, issued a statement after meeting with Hochstein. "Residents of the north need to return to their homes," he wrote. "The international community cannot ignore an entire pat of the country that has been under attack for the past eight months. Israel needs to distance Hezbollah from the border either through a diplomatic arrangement or through military action. The abandonment of the north must stop," he wrote.

Rich countries’ central banks plan to follow the lead of emerging economies and increase holdings of bullion

Advanced economies’ central banks expect gold’s share of global reserves to rise at the expense of the US dollar, as these institutions look to follow the lead of emerging markets in buying bullion.

Almost 60 per cent of rich countries’ central banks believe that gold’s share of global reserves will rise in the next five years, up from 38 per cent of respondents last year, according to an annual survey conducted by the World Gold Council, an industry promotion group.

Around 13 per cent of advanced economies plan to increase their gold holdings in the next year, up from around 8 per cent last year and the highest level since the survey began. That follows the lead of emerging market central banks, which have been the main purchasers of gold since the 2008 global financial crisis.

Meanwhile, a rising proportion of advanced economies — 56 per cent, up from 46 per cent last year — also think the dollar’s share of global reserves will fall over the next 5 years. Among emerging market central banks, 64 per cent share this view.

The demand for gold, which comes despite a sharp rise in the price of the yellow metal this year, highlights how allocations to the dollar have been declining as central banks have sought to diversify their holdings through alternative currencies and assets, especially after the US weaponised its currency in sanctions against Russia.

“This year we’ve seen much stronger convergence. More advanced countries are saying that gold is going to occupy more of global reserves and the dollar will be less,” said Shaokai Fan, global head of central banks at the WGC.

“It wasn’t the emerging market countries evaluating these factors less but advanced markets catching up to how emerging markets feel about gold,” he added.

The survey — one of the few insights into the thinking of publicity-shy reserve managers — found that a record share of central banks since the survey began five years ago intend to increase their gold reserves over the next 12 months, at 29 per cent of respondents. Of the emerging market respondents, nearly 40 per cent plan to raise their holding.

The main reasons cited by central banks for holding gold are its long-term value, performance during a crisis and its role as an effective diversifier.

Central banks added more than 1,000 tonnes of gold to their reserves in both 2022 and 2023, according to the WGC. US sanctions on Russia’s dollar-denominated assets prompted a rush among non-western official financial institutions for bullion — the value of which does not rely on any government or bank, unlike fiat currencies.

The consecutive years of record buying, the pace of which has continued into this year, has been a driving factor behind gold’s rally to nearly $1,450 per troy ounce last month. It is up 42 per cent since the Israel-Hamas conflict began in October.

The dollar’s share of global foreign exchange reserves — excluding gold — has plummeted from more than 70 per cent in 2000 to around 55 per cent last year, stripping out the effect of US dollar appreciation, according to research from the IMF this month. Including gold, the dollar’s share has dropped below half, the WGC says.

Although the Chinese renminbi has made some gains as a reserve currency, the uncertainty hanging over the country’s economy has meant that the percentage of central banks expecting it to increase its share of global reserves fell from 79 per cent last year to 59 per cent this year.

Shares were temporarily halted from trading once again as the Hong Kong-based company hopes to win over undecided shareholders.

In an exchange filing published on June 17, the company updated its buyout offer, giving shareholders an option between the existing HK $34 ($4.35) per share in cash, or 10 shares in the new private company for every share held. Trading was halted in the morning in anticipation of the announcement, and resumed later the same day.

L’Occitane originally made an initial privatisation bid in April, with billionaire chairman Reinold Geiger partnering with Blackstone and Goldman Sachs to fund the $1.8 billion takeover. Geiger owns more than 70 percent of the company’s shares.

The conglomerate owns its namesake L’Occitane en Provence and skin care line Elemis, as well as the hugely popular Gen-Z body and fragrance line Sol de Janeiro.

The share offer may help to move the needle for shareholders who believe the current cash offer undervalues the firm. In Hong Kong, where the firm has been listed since 2010, the consent of at least 90 percent of minority shareholders is required. The cash offer values the company at $6.4 billion.

With the success of brands such as Sol de Janiero, which is expected to clear $1 billion in retail sales this financial year, some shareholders may not be ready to give up their stakes just yet.

Marie-Claire Daveu, chief sustainability officer, shared how Kering is navigating the sustainability imperative globally and locally during a talk at the WWD Global Fashion Summit in Riyadh.

As the luxury industry navigates its sustainability transformation, Kering is leading by example —nurturing disruptive innovation and fostering cross-industry collaboration. At the WWD Global Fashion Summit in Riyadh, Kering’s chief of sustainability and head of international institutional affairs Marie-Claire Daveu shared the company’s strategy to transform the industry during a conversation with Miles Socha, WWD’s international editor.

“At Kering we say it’s one and the same, sustainability and luxury,” she said. “Last year we took a big commitment to reduce by 40 percent our greenhouse gas emission by 2035.”

The key driver to meeting that target, she said, is innovation. “Sustainability and innovation go hand in hand. It’s about changing business models and the way you are thinking. We need disruptive innovation at every stage, from raw materials to end of life. And in the luxury sector, we need those to be the highest standard of quality.”

One of the first issues she addressed in the talk was overproduction. “In Kering, we have a strong policy to enhance value over volume. In the future, artificial intelligence will be a great support to say how much quantity we have to produce. In the future we will have less unsold products.”

Developing raw materials at scale will be a key pillar to reaching the group’s target. She shared that in 2013 Kering created a material innovation lab. “We now have more than 8,000 samples and 400 suppliers around the world, including 250 start-ups.”

Gucci is currently using a new material called Demetra, which is an animal-free, plant-based material. “You see that in our sneakers and in iconic bags as well,” Daveu said. “At Balenciaga two years ago, they were able to use material made from mushroom. The summer 2024 collection uses new material, which is a derivative of microorganisms, plastic free and animal free.”

The conversation has shifted a lot since she took up the role in 2012. “Millennials and Gen Z are asking more and more questions. They are interested in knowing what brands are doing in sustainability. And now the EU will have new regulations, so brands will have to have more transparency.”

She also noted that sustainability is not a marketing approach to “sell more products,” but a pillar for future growth. “We are convinced if want to develop business in the future, we have to do this.”

At the summit, Daveu previewed plans to bring Kering’s start-up accelerator program, Kering Generations, to Saudi Arabia with the Saudi Fashion Commission. This initiative will provide mentorship and resources to local innovators developing sustainable solutions for the fashion ecosystem. “If we want to reach our targets we need innovations. And we think we can bring concrete support to the start-ups. If you are able to work with luxury brands, you can work with other companies.”

Burak Cakmak, chief executive officer of the Saudi Fashion Commission, joined Daveu on stage to discuss the potential for a program with Kering. “As a commission focused on building a sustainable fashion industry, we are exploring how we can do this together and support the industry’s future. Saudi Arabia could have a global materials center on science and engineering innovations. We are thinking about how the fashion ecosystem can apply to a new industry. We want to extend the reach of this sector to engineers and scientists.”

Daveu added that a cooperative approach is the way ahead for the industry. “All human activity has an impact. We have to change the entire industry, not just our own group. We really need a collective approach to have an impact.”

At WWD’s Global Fashion Summit in Riyadh, the longtime LVMH executive reflected on the transformation of the Kingdom and revealed plans for a partnership with IFM, the French fashion school.

Saudi Arabia is familiar territory for seasoned luxury executive Sidney Toledano. “I’m impressed by the Saudis,” said the former chief executive officer of LVMH Fashion Group and Dior and current adviser to chairman Bernard Arnault, in Riyadh.

He reflected on the market while speaking with Miles Socha, WWD’s international editor, at the Global Fashion Summit in the Kingdom. “I’ve been visiting for many, many years. We had a Dior in Riyadh 30 years ago, and it was very different times,” he said. “Back then women could not be working. But still you have a country that has always had very real experience in high fashion, more than most in the world.”

The current market dynamics, driven by the huge youth population as well as the government’s liberalization plan, is clear wherever one looks, he said. “One doesn’t need a database to understand the evolution of this country. Just walk into stores today and the transformation is clear.

“I never liked the word fashion ‘industry’. I like using fashion ‘community’. The Ministry of Culture here realizes the core of fashion, above business, is about culture.”

During his visit, Toledano toured the ministry-supported state of the art production facility being developed by the Saudi Fashion Commission. “Here they have state-of-the-art machines. I am so impressed. I could see designers from France coming to use these types of machines.

“I see the potential is huge and education is the key building blocks. In our business, creatively, the drawing is a start. Then creatives have to produce a prototype and set up production. Without this, you can never see the products on a shelf.”

In his role as chairman of the board of Institut Français de la Mode, the French fashion school, Toledano revealed plans to expand the agenda for fashion education in the region with a partnership with the Saudi Fashion Commission. “Yesterday we signed an agreement to define a roadmap for transfer of knowledge. We aim to develop bachelor’s and master’s degree programs here. The partnership would be a win-win for both of us.

“Now everyone realizes the clients are here, so everyone is opening stores,” Toledano continued. “The Saudization means everyone working is Saudi, from managers to sales people. The passion they have for luxury brands is great. But we have to talk about training for local boutiques, having the right sales people. This is where we can help with the IFM.

“We have seen Saudi clients shopping all around the world. One day I hope you will have as many local clients shopping here as they do abroad.”

Toledano shared his wisdom on how to successfully navigate a commercially successful business in a highly creative industry, having had successful working relationships with creative icons at LVMH ranging from John Galliano to Karl Lagerfeld.

In describing the CEO-designer relationship as a “dance,” Toledano emphasized that the designer’s creative vision should lead and set the direction. “You’re dealing with very smart and intuitive people. The vision of the designer is key. If I see a CEO telling me ‘this is my vision,’ I say, ‘but we are doing high fashion, we need someone disruptive to set a vision, that comes from creative.’”

He advised against CEOs trying to drive the creative process based solely on business analyses, as that could stifle the necessary disruption and innovation needed in high fashion. “The CEO can then organize the supply chain, the factory, the events to allow them to have impact with their vision.”

Toledano stressed that while numbers and data are important, true success lies in creating products that people desire. He cautioned against solely focusing on short-term metrics like gross margins, as they may overlook the long-term desirability of a brand or product. “I see the numbers every morning. It takes maybe 10 minutes. Numbers are important. Yes, if you have a bad P&L you have to change something.”

But the most important aspect to the growth of the luxury fashion industry is desirability, he said. “Who needs another bag, wallet or pair of shoes? Fashion, provided you have a middle class who can move upward, which means improving income and enjoying life, then luxury fashion will continue.

“We are training the next generation in luxury and the world is changing. There are new tools, new countries and markets. But it’s still always driven by the same thing: the desire. I’m very optimistic,” he said.