Month: February 2014

Cashin: What the market heard when Yellen spoke

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Art Cashin said Federal Reserve Chair Janet Yellen “did no harm” to the stock market during her testimony Thursday before a Senate committee.

Also Read: Fed’s Yellen: Congress should look at bitcoin regulation

After Yellen concluded her appearance, Cashin, UBS’ director of floor operations at the NYSE, told CNBC’s Bob Pisani, “She said, ‘Yes, certainly, the weather is evident but none of us know, yet, whether it’s having an impact.’ She said, ‘We will continue to taper,’ but left the door open very slightly saying that if the data continues to deteriorate that they might reconsider and taper the tapering, which gave the bond market a little sigh of relief.”

Cashin added that Yellen didn’t get too much grilling during her appearance, in part because “most of the Senators … are a little wary of looking like they are attacking a friendly, older woman. So she’s got that going for her.”

—By CNBC’s Alex Crippen. Follow him on Twitter @alexcrippen.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US sales of new homes leap 9.6% in January

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Sales of new single-family homes surged to a five and a half-year high in January, which could ease concerns of a sharp slowdown in the housing market.

The Commerce Department said Wednesday that sales jumped 9.6 percent to a seasonally adjusted annual rate of 468,000 units, the highest level since July 2008.

December’s sales were revised up to a 427,000-unit pace from the previously reported 414,000-unit rate. Economists polled by Reuters had forecast new home sales, which are measured when contracts are signed, falling to a 400,000-unit pace in January.

(Read more: Stocks hover around flatline despite upbeat housing report)

Sales in the Northeast soared 73.7 percent to a seven-month high, while the South recorded a 10.4 percent rise in transactions to a more than five-year high.

These regions have borne the brunt of the unseasonably cold weather that has been blamed for holding back economic activity. Sales, however, tumbled 17.2 percent in the Midwest last month, while rising 11 percent in the West.

Housing lost momentum in the second half of last year following a run-up in mortgage rates and a persistent shortage of properties on the market.

(Read more: Mortgage applications at lowest level in 2 decades)

Declines in residential construction and building permits and sales of previously owned homes last month had raised concerns that the sector, which is key to the economy’s recovery, was slowing down sharply.

New home sales rose 2.2 percent compared with January 2013.

Last month, the supply of new houses on the market was unchanged at 184,000 units. The median price of a new home last month rose 3.4 percent from January 2013. At January’s sales pace it would take 4.7 months to clear the supply of houses on the market. That was down from 5.2 months in December.

(Read more: Chart of the Day: The mortgage market’s plunge)

A supply of six months is normally considered a healthy balance between supply and demand.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Will gold see double digit declines this year?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Gold has been the best performing asset class this year, according to investment firm Coutts, rallying 10 percent year to date, but some analysts have warned investors not to get too comfortable.

Dominic Schnider, head of non-traditional asset classes at UBS, told CNBC Asia’s “Squawk Box” on Wednesday that the 2014 rally was set to end in tears, and gold and silver would see double-digit declines this year.

“Some of the buying we have seen recently is not really driven by fundamentals, but is more momentum driven. That should run out of steam – so we’ll see double digit declines on the precious metals this year,” said Schnider, who is a long-term gold bear.

(Read More: Gold eyes 4th week of gains on Ukraine default fears)

Gold traded near a four month high, hit the previous day, in Asian trade on Wednesday, opening at over USD1,340 an ounce. Worries over the strength of the US recovery and political turmoil in the Ukraine revived appetite for the safe haven trade.

Silver prices, meanwhile, which are strongly correlated to the gold price, has rallied over 14 percent since the start of February to USD21.79 an ounce.

The precious metals’ performance this year a far cry from the pain of last year, when the Federal Reserve induced tapering panic send the yellow metal plunging 34 percent from April to June. The Fed’s quantitative easing program and ultra-low interest rate policy has been one of the key drivers of gold strength in recent years.

But, despite the precious metal’s apparent turnaround this year, UBS’s Schnider told CNBC gold’s fortunes were set to turn ugly once again, as investors turn more positive on the global economy.

Schnider told CNBC he saw gold prices falling to USD1,050 per ounce on a 12 month view, while silver prices trading at around USD18 by year end.

(Read More: This will drop gold to USD1,000: Credit Suisse pro)

“Think about it, we are in a risk on environment probably going into the second quarter of this year, rates [on 10-year Treasurys] are going to rise faster than most people expect and the dollar’s going to strengthen [and] we are looking at an environment where equities continue to do well,” he said.

“So if you consider that there is a good chance that some of the buying which was mostly driven by futures will actually revert, and then you are going to see Exchange Traded Funds (ETF) outflows,” he added.

Last week, hedge funds plowed into gold and crude oil as prices rallied last week. Data released Friday showed the bullish money wagered by commodity speculators was driven to the highest level since 2011, Reuters reported. Gold accounted for USD2.9 billion, or 21 percent, of the weekly increase of USD13.5 billion in managed money net longs.

Gold bulls, however, say there is still a plethora of positive drivers that should help gold’s bullish run continue through the rest of the year.

One bullish factor is growing demand from China, which is set to surpass India as gold’s largest importer. The China Gold Association revealed last week a record level of Chinese gold consumption in 2013, which was estimated to have risen 41 percent to 1,176 metric tons from the previous year.

(Read More: Euro Pacific Capital’s Peter Schiff says gold will jump)

“We do believe the underlying physical market is making adjustments as there has been a moderation in primary production and a collapse in recycling,” said David Lennox, resources analyst at Sydney-based trading firm Fat Prophets, who sees gold ending the year between USD1,350 and USD1,400 an ounce.

“At the same time, there has been an uplift in jewelry demand and demand from sovereign governments, because of the uncertainty in paper assets. Furthermore, investors are more comfortable with the idea of Fed tapering, which will be good for gold,” he added.

According to Lennox, the US government will soon turn its attention back to addressing its budget deficit again, inevitably putting pressure on the US dollar and boosting gold as a result.

(Read More: Gold to tank in 2014:Goldman Sachs)

— By CNBC’s Katie Holliday: Follow her on Twitter @hollidaykatie

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Emerging markets now offer ‘fantastic value’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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After months of fund outflows, emerging markets shouldn’t be treated like pariahs as they offer solid value, analysts said.

“Emerging markets have really been beaten up a lot, probably a bit unfairly since most of last year and into this year,” said Julie Dickson, emerging market equity portfolio manager at Ashmore Investment Management, which has around USD75.3 million under group management. “It means fantastic value.”

(Read more: How fragile are emerging markets?)

Emerging markets have seen a brutal sell-off this year after sharp falls in the value of the Argentine peso, Turkish lira, South African rand and Brazilian real triggered panic selling across the asset class, with analysts largely blaming the turbulence on the Federal Reserve’s move to begin tapering its asset purchases.

Funds have flowed out of emerging market equity funds for 13 consecutive weeks, according to data from Jefferies, with a total USD18.76 billion exiting the segment so far this year.
But while concerns about tapering and the potential for higher interest rates have decked emerging market assets, not everyone is certain this will hurt economies.

“These markets and their central banks have so much firepower to deal with it and to step in where needed, that I think the risks are overstated and overdone,” Dickson told CNBC, noting some markets have rebounded since September of last year after stepping up efforts to deal with currency imbalances and fiscal issues.

(Read more: Emerging market opportunity in long term: Blankfein)

She isn’t the only one who isn’t terribly concerned about tapering’s effect on emerging markets.

“I don’t buy the theory that a lot of the money that came out of the US came into the emerging markets during quantitative easing,” said Kelvin Tay, regional chief investment officer at UBS Wealth Management. He believes the instead that the Fed’s easy money policy spurred a lot of borrowing by companies in Asia and Latin America.

(Read more: Are markets headed for a perfect storm?)

“If the rates go up gradually, if the 10-year US Treasury yields go up gradually, I don’t see a risk to the systems here or in Latin America. But if the rates go up very sharply then you have a problem,” he told CNBC.

But both Dickson and Tay are selective on which emerging markets to play, preferring the Asian region and tipping South Korea and China as value plays.

Emerging Asia shares are trading at 10.4 times 12-month forward earnings, below the five-year average of 11.5 times, according to data from Credit Suisse. Emerging Europe is at 6.3 times earnings, compared with a five-year average of 7.0 times, while Latin America is at 11.2 times, compared with a historical average of 11.5 times, the data show.

Both South Korea and China are “deeply undervalued,” Tay said, noting the two markets offer plays on Asia’s tech sector. Tay is also positive on China’s bank and property sectors, despite concerns over a potential real-estate bubble and worries over non-performing loans (NPLs).

(Read more: Are China market dabblers throwing in the towel?)

“The market has overreacted,” he said. “We don’t think the NPLs are going to spike up very, very sharply. There might be a rise but, it’s not going to go to a level where it’s going to cause systemic risk to the Chinese economy,” Tay said.

“You’ve got to step backward and remind yourselves that China has USD3.8 trillion in reserves,” he said. “Then they have another 80 trillion yuan in investments that they can actually sell if they need to prop up the system.”

—By CNBC.Com’s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

LinkedIn makes major move into China

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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LinkedIn CEO Jeff Weiner has made it clear that the company sees huge potential in China. Now the business network is taking steps to profit from it, even if that means accepting government censorship.

Weiner announced a beta site in simplified Chinese to reach what LinkedIn says are the country’s more than 140 million professionals, one-fifth of whom Weiner calls “the world’s knowledge workers.”

This makes Chinese one of the site’s 22 languages worldwide.

 Weiner acknowledged major challenges.

“As a condition for operating in the country, the government of China imposes censorship requirements on Internet platforms. LinkedIn strongly supports freedom of expression and fundamentally disagrees with government censorship,” Weiner wrote in his blog announcing the news.

Watch: Social media stocks boost tech sector

“At the same time, we also believe that LinkedIn’s absence in China would deny Chinese professionals a means to connect with others on our global platform, thereby limiting the ability of individual Chinese citizens to pursue and realize the economic opportunities, rights and dreams most important to them,” he added.

Weiner said LinkedIn is committed to implementing government restrictions on content only when required, to be transparent and to take “extensive” measures to protect the rights and data of its members.

—By CNBC’s Julia Boorstin. Follow her on Twitter @JBoorstin.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sugar in coffee: Sweet spot for investors?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A punishing drought in Brazil has sent the prices of sugar and coffee soaring, and some analysts expect the cost of the popular morning stimulant to continue its climb.

May Arabica coffee futures traded on the Intercontinental Exchange (ICE) have risen 69 percent since hitting a four-year low in November, and on Monday rallied to USD 1.7635 per pound, its highest level since October 2012. Raw sugar contracts traded on the exchange, meanwhile, saw their biggest one day rally of 4.1 percent in nearly five months on Monday, jumping to 17.41 cents a pound.

Jonathan Barratt, chief investment officer at Ayers Alliance, told CNBC Asia’s “Squawk Box” on Monday that extreme weather conditions in Brazil and India have dramatically altered the supply/demand dynamic in the global coffee and sugar markets.

“Coffee and sugar – in fact all soft commodities – are looking good. We can expect surpluses to be sucked up and prices to go higher,” said Barratt.

(Read More: K-Cups protected from coffee price surges: Green Mountain CEO)

Brazil, the world’s leading exporter of coffee and sugar, along with soybeans, orange juice and beef, has faced its worst drought in history in recent months, wiping out farmers’ crops and leaving six million people with rationed water supplies across 11 Brazilian states. This January was the country’s driest in six decades.

Extreme weather in India, meanwhile, has also impinged on global sugar production, after five cyclones hit the eastern coast of the country last year shutting down several sugarcane factories. Last week the International Sugar Organization warned that global output could fall for the first time in five years in 2014.

(Read More: Nespresso takes a sip of US coffee market)

Ayers Alliance’s Barratt told CNBC that there was further upside to come.

“If we get no break in the weather, USD 2.20 per pound is the next level in coffee and for sugar, 19.50 cents a pound. I remember in 2011, coffee was trading at USD 3.00 and sugar was at 35 cents, so any major disturbance to supply we expect more gains to come,” added Barratt.

But Luke Chandler, global head of commodities research at Rabobank, told CNBC Asia’s “Cash Flow” on Monday that he believed much of the potential upside in coffee prices to have been largely priced in.

Last week speculators more than doubled their net long positions in Arabica coffee futures for the week ending February 18, the largest gain since May 2011. Meanwhile, investors in raw sugar cut their net short positions by 22 percent over the same period, Commodities Futures Trading Commission (CFTC) data showed.

(Read More: What a coffee bull market means for your latte)

“Our expectation is that the damage that’s done to the crop has already been factored in. We think in the short term there’s likely to be some easing in coffee prices. With this rally that we’ve seen 70 percent is a big run up [and] a lot of speculators have jumped on board [with] this weather scare, so we think it’s overdone,” he added.

Chandler was more positive on sugar prices in 2014, however, although he also expects them to ease in the short term, he said they would rally later in the year.

“Sugar is probably one of the markets we’re most bullish on over the course of 2014, we certainly see some upside moving into the second half of the year as prices get back closer to 19 cents a pound. As the global supply and demand comes back into balance, we draw down some of those global stocks and we see some upside for prices,” he added.

Scientists expect the drought in Brazil to worsen, leading to many coffee plantations being forced to close and reducing the country’s coffee crop by 10 percent by 2020, according to media reports.

(Read More: Hotel survey: guests prefer coffee to sex)

Another factor impacting coffee prices is rising demand. China, the world’s second-largest economy is developing a taste for coffee, leading coffee chains Costa and Starbucks to expand rapidly in the country.

— By CNBC’s Katie Holliday: Follow her on Twitter @hollidaykatie

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gold eyes 4th week of gains on Ukraine default fears

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Gold may post its fourth week of gains as concern of prolonged political unrest in Ukraine raises fears of a sovereign default, fueling demand for safe-haven assets including bullion.

A breakthrough peace deal for the former Soviet state halted days of violence that had turned the center of the capital into a war zone and killed 82 people. It brought sweeping political change that met many demands of the pro-European opposition, Reuters reported.

Still, many believe the country’s political and economic future is far from clear. “Political uncertainty has arguably increased—including the outcome of the presidential election set for May 25—bringing with it a potential increase in the probability of a sovereign default,” wrote Alastair Newton, Nomura International’s senior political analyst in commentary released on Sunday.

In a research report published on Saturday, Jens Nordvig, Nomura’s global head of G10 FX strategy, assigned a 29 percent probability of a default in Ukraine within one year. The country’s hryvnia has plunged almost 8 percent against the dollar this year.

(Read more: Gold logs third straight weekly gain)

Markets must now focus on possible contagion risk to European markets exposed to Ukraine, said David Kotok, chief investment officer at U.S. money managers Cumberland Advisors, with $2.3 billion in assets under management. “Investment implications for Central and Eastern Europe are at stake” as events continue to unfold, Kotok said. “The entire complex structural relationship between old Europe and Russia is again in play.”

The fast-evolving landscape in Ukraine echoes political strains elsewhere in the emerging world, namely Venezuela and Argentina—tail-risks that may help boost the case for gold.

“With the growing international concern over the situation in Ukraine, there could be some additional movement into gold in anticipation of continued flare-ups and unrest,” said Scott Carter, chief executive officer of Los Angeles-based Lear Capital.

Adding to gold’s appeal are fears that US data releases this week may miss expectations as the recent extreme winter weather stalls economic activity. “Economic fundamentals are weaker in the U.S. than many realize,” said Miguel Perez-Santalla, vice president at online precious metals market BullionVault.

Asian demand ‘sponge’

Further evidence of a deepening contraction in China’s economy may provide another boost.

A key indicator of Chinese manufacturing, which dropped to a seven-month low last week, “along with unexpected weakness in the U.S. housing market, and the unstable situation in Ukraine have put the luster back on gold’s safe-haven status for many investors,” said Edmund Moy, chief strategist at Morgan Gold and a former director of the U.S. Mint.

(Read more: Ukraine’s new rulers dismantle power structure)

Almost two-thirds of 16 people polled in a CNBC survey, 63 percent, said gold will gain this week. A quarter maintained gold will correct lower, while 12 percent said prices will be unchanged. The survey results correspond with data from IG Markets, which shows 71 percent of its more than 501 clients with open positions expect gold prices to rise.

In a further bullish signal, hedge funds plowed into gold and crude oil as prices rallied last week. Friday data showed the bullish money wagered by commodity speculators was driven to the highest level since 2011, Reuters reported.

Gold accounted for USD 2.9 billion, or 21 percent, of the weekly increase of USD 13.5 billion in managed money net longs. Open interest in US gold, a measure of market liquidity, rose nearly 7 percent.

Still, market professionals holding bearish views maintain that gold’s safe-haven bid and renewed Asian physical buying will offer limited impetus to prices, and won’t be strong enough to offset investor outflows from gold-backed exchange-traded funds (ETFs).

The world’s largest gold-backed ETF, SPDR Gold Shares, last week notched its first weekly outflow in almost a month, of 5.6 tons.

“We believe outflows in physically backed ETFs are likely to resume,” said UBS analysts Dominic Schnider and Giovanni Staunovo. “The focus remains on Asian demand as a sponge to absorb additional ETF selling in 2014. Although we believe Asia has the affinity and the ability to increase purchases, another round of lower prices is likely necessary to balance the market—prices reaching USD 1,050-USD 1,150/oz.”

(Read more: Dollar may suffer from weather-hit data)

Mark O’Byrne, founder and executive director of Dublin-based bullion dealer GoldCore, said gold is “vulnerable” after recent gains. Last Tuesday, the metal hit $1,332.10—its highest since October—lifted by follow-up demand after gold posted a more than 4 percent gain last week, Reuters reported on Friday.

Nevertheless, according to O’Byrne, “Worries about global economic growth are underpinning gold’s safe-haven appeal and the technicals suggest that after a pullback, the precious metal may continue to rise in dollar and other fiat currencies.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Volatile Ukraine may now face default risk

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ukraine now faces the risk of debt default as the country tries to get back on its feet following the ousting of President Viktor Yanukovych at the weekend, analysts say.

Its parliament on Saturday voted to remove Yanukovych after a week of bloodshed and set an early election for May 25. Ukraine plunged into a crisis in November after Yanukovych rejected a deal to deepen ties with the European Union (EU), triggering protests.

Read more: Ukraine on European course: US warns Putin against grab

“Although the ousting of Viktor Yanukovych is something of a watershed moment, it has not brought clarity and certainty to Ukraine,” Alastair Newton, a senior political analyst at Nomura said in note.

“Indeed, political uncertainty has arguably increased – including around the outcome of the presidential election set for 25 May – bringing with it a potential increase in the probability of a sovereign default,” he added.

Ukraine’s economic woes run deep and the country has been reliant on aid from Russia. A slump in demand for exports of steel and industrial machinery and poor economic policy has taken a toll, analysts say. And while Ukraine’s currency has been kept artificially high to help pay for imports and to keep the servicing of foreign debt down, the country’s exports have suffered as a result.

Credit ratings agency Standard & Poor’s on Friday lowered Ukraine’s long-term rating from ‘CCC ‘ to ‘CCC’ saying the political crisis has put the country’s ability to service its debt at risk and raised uncertainty over Russia providing promised aid.

Russia’s Finance Minister Anton Siluanov told CNBC at the weekend that his country was interested in seeing a ‘normalization’ of the situation in Ukraine and would provide support.

Read more: Russia: We will support Ukraine’s return to normality

 The EU has pledged support to Ukraine and EU foreign policy chief Catherine Ashton is expected to travel to Ukraine on Monday to discuss measures to support an ailing economy.

“The ouster of President Yanukovych in Ukraine raises uncertainties about near-term stability and strategic Russia-EU-US relations,” analysts at Mizuho Corporate Bank said in a note. “For now though, nerves about Ukraine’s possible default warned by the S&P on Friday may be overshadowed by the feel good factor about the UK and EU promising support.”

Read more: Gold eyes 4th week of gains on Ukraine default fears

Analysts said that while Ukraine’s economy is relatively small, with gross domestic product (GDP) below USD 200 billion, political developments remained a risk factor for world markets.

In particular, analysts said they would be watching for potential tension between the West and Russia over the future of Ukraine.

The EU has offered to revive a trade deal that Yanukovych spurned under Russian pressure in November, Reuters reported.

“Ukraine is a delicate situation. It is very important to Russia, which will not tolerate any regime that is hostile to them,” Hans Goetti, head of investment Asia at Banque Internationale a Luxembourg, told CNBC Asia’s “Cash Flow.”

“If you’re looking at a pre-Western government that is completely orientated to Europe, I don’t think that’s going to happen,” he added.

— Writing by CNBC’s Dhara Ranasinghe. Follow her on Twitter at @DharaCNBC

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

The hiring game †it’s a lot like dating really

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A gentle introduction from a friend, meeting up for an informal coffee, exchanges of text messages and birthday cards. What sounds a lot like dating in fact describes recruiting.

How workers perceive career progression together with the explosion of social media and new technology has transformed the recruitment process, making it more akin to dating, experts say.

(Read more: Don’t judge job seekers by their Facebook covers)

“The recession and lay-offs that followed the global financial crisis changed the psychology of job seekers. The thinking goes: I cannot trust the company I am with right now to be the one I will be with in three years’ time,” said Dan Finnigan, CEO of Jobvite, a recruiting platform that allows clients such as Starbucks and online retailer Zappos to make the best use of social networks in hiring.

“Because of the internet and mobile devices it’s much easier to look for a job, so people are always shopping and always applying. That’s a key aspect and social networks have made it more prevalent,” he said. “Job seeking now is kind of related to dating, in that people are being introduced to each other to see if they want to spend more time together.”

And in an environment where the competition for talent in sectors such as technology can be fierce, courting a potential candidate can pay off.

(Read more: Twitter pays engineer USD 10 mln as Silicon Valley tussles for talent)

George McFerran, the managing director for Asia-Pacific at recruiter eFinancialCareers, has this story: “I know one contact who was courted by two tech companies and he decided to work for one and rejected the offer from the other.”

“The company that he’d rejected said ok but let’s keep in touch and every year they sent him a birthday card or dropped him a phone call now and then. Two-and-a-half years on and he decided that the job he had with the tech firm wasn’t working out, so he contacted the company he had rejected and they said let’s have a chat and now he’s gone to work for them.”

In a survey by recruitment firm Kelly Services released late last year, 56 percent of 25,000 workers surveyed across Asia Pacific said they are now more inclined to search for jobs on social media than through traditional methods such as newspaper advertisements, online job boards or recruitment companies, up from 47 percent in the previous annual survey. 51 percent said they use their social media networks when making career or employment decisions.

Refer a friend

Against a backdrop where employees are constantly networking through portals such as LinkedIn and maintaining a social profile that might help their career path, recruiting through referrals has gained importance.

(Read more: ‘Coffices’ take off as the work place goes mobile)

In fact, recruiters say that those employees hired through a personal reference tend to understand a company’s culture better and therefore stay longer with a firm than those hired via more traditional routes.

“Recruiters, HR managers and hiring managers are reasonably good at identifying candidates with the right hard skills using traditional approaches, such as structured interviewing or assessment centers, but it’s a lot more difficult hiring for soft skills,” said Michael Wright, the head of talent acquisition for Asia-Pacific at GroupM, the media investment management arm of WPP – the world leader in marketing communications services.

“Our clients retain us for the high caliber thinking our talent can deliver so that makes us exceptionally particular in our hiring. Past performance remains a great predictor so we thoroughly investigate the opinions of former co-workers to validate the potential of a candidate,” he added “That also translates to referrals being an optimal route for us and many of our successful hires come through referrals.”

According to Jobvite’s Finnigan, about 40 percent of all hires on the jobvite platform are made through employee referrals.

Data from eFinancial careers shows that 42 percent of workers in Singapore say networking with their peers is the preferred way to build their career. This was followed by staying up to date with industry news and analysts, which was the preferred choice for 26 percent of those surveyed.

(Read more: The best and brightest are turning away from Wall Street)

“I am old fashioned, I like to recruit the traditional way, but I know the world is changing, it’s all about networking,” said one senior manager at a multi-national firm in Singapore, declining to give his name. “I think referrals are the best way to go, nobody is really going to recommend someone that will make them look bad.”

— Writing by CNBC’s Dhara Ranasinghe. Follow her on Twitter at @DharaCNBC

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

What Facebook isn’t saying about its WhatsApp purchase

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Facebook’s USD16 billion (or USD19 billion by some measures) purchase of WhatsApp doesn’t mean it has won the mobile messaging wars just yet, industry experts say.

(Read more: Is Facebook’s acquisition of WhatsApp a desperate move?)

WhatsApp faces serious competition and is going to have to make some changes if Facebook is going to turn a profit from the deal, analysts said.

(Read more: An outrageous price for WhatsApp? Hang on …)

“There is a lot of competition in the space, not only in the US but around the world. This is a continual threat,” said Brian Blau, an analyst at Gartner.

From AOL’s AIM to Skype and Google’s Gtalk, the messaging space is nothing new and it will continue to be a tough place to compete, Blau said.

“Tech companies have been going after this for a long time. Competition is fierce because these users are highly valued and they are highly valued because they are engaged users,” Blau said.

WhatsApp certainly fits the bill when it comes to having engaged users. The company boasts 450 million users each month, with 70 percent of those users accessing the app each day.

(Read more: WhatsApp: Sequoia’s second big Facebook app deal )

But there are other big players in the space including Viber, Line and WeChat that could still threaten WhatsApp’s market share.

“Everyone is trying in this space,” said Julie Ask, an analyst at Forrester. “Google is trying, they use Google Plus and Google Chat and Facebook has been trying for awhile.”

While WhatsApp may be Facebook’s chance to finally establish its place in the messaging space, it’s going to bring changes to the platform that may cause users to abandon the app, experts said.

For starters, the WhatsApp platform is advertisement free and charges only a USD1 annual subscription fee. But the company’s current business model isn’t going to cut it now that it’s a part of Facebook’s empire, Ask said.

“Everybody seems to be just repeating what Zuckerberg said when he announced the acquisition, but there’s a lot he didn’t say,” Ask said.

One big thing Zuckerberg didn’t mention was that the company bought WhatsApp because it gives Facebook access to a wealth of user data, which opens up both data mining opportunities, and possible privacy concerns, analysts said.

“The data side of the story sounds creepy, it’s not PC to talk about, it’s not cool. People might start talking about privacy,” Ask said. “I don’t know what company would come out and say ‘we are collecting all your data.’ “

That’s what’s happening with this acquisition, analysts said. Even if Facebook doesn’t look at a person’s raw data, the company will find a way to make money off it.

“These are really platform plays. This is about how many minutes a week or a day a customer spends on your platform. It’s about collecting that data and monetizing that data and becoming a destination for consumers,” Ask said. “Someone would be crazy to have 450 million users and not collect data and generate insights from it.”

The fact that Facebook will have access to conversation data may lead some users to abandon WhatsApp, said Nico Sells, CEO of the messaging app Wickr and an organizer of Defcon, a hacking conference.

“I always look at it from the perspective as to what’s in the servers and they are sitting on a big set of data and Facebook will utilize that,” Sells said.

“WhatsApp’s privacy policy is not great, but it’s not nearly as aggressive as Facebook’s. So privacy issues will get worse.”

Besides cashing in on users’ data, Facebook may also try to force advertisements onto WhatsApp, which would run the risk of pushing users away.

On Wednesday, Zuckerberg said that Facebook didn’t see advertising as the way to go when it comes to making money from WhatsApp. Instead, he said that the company would focus on growing its users and figure out how to make money later.

But there’s a good chance that the same thing that happened to Instagram will happen to WhatsApp said, Ask said.

“I’m not in Zuckerberg’s head, but I’d say advertising is coming because not trying to make more money isn’t typically how businesses run,” Ask said.

Jan Koum, a co-founder of WhatsApp, reiterated this sentiment in a company blog post on Wednesday stating “you can still count on absolutely no ads interrupting your communication.”

But it’s unlikely he’ll be able to keep his word, Blau said.

“They can’t possibly be serious about that,” he said. “They are going to keep it that way for as long as they can, but its going to happen one way or another.”

—By CNBC’s Cadie Thompson. Follow her on Twitter @CadieThompson.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow