Month: August 2014

3D museums: Next big thing for Asia tourism?

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

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Winnie Chan waited in line for three hours to enter one of Singapore`s latest attraction but it was worth it – she left with photos of herself riding Harry Potter`s broomstick and being trapped in a cage with a giant baby.

Such is the draw of 3D museums – where optical illusions bring two-dimensional paintings to life. Popularized in South Korea, industry players are launching 3D museums across Asia, confident they`ll become major regional attractions.

“It is a booming market with new openings in China and Thailand. Competition is building but it`s healthy,” Winston Lo, director of strategy and finance at HK 3D museum told CNBC. The gallery opened in the busy district of Tsim Sha Tsui last month and aims to attract 400,000 visitors in a year`s time.

In Singapore, visitor numbers exceeded expectations at the Trick Eye Museum and Alive Museum, both of which opened in June. The former estimates that it has chalked up over 100,000 arrivals in its first outlet outside South Korea. It plans to expand into Hong Kong by November.

Snap happy

Industry players believe the experience of interacting with art pieces will get visitors to fork around USD 20 for a visit. The opportunity to take playful photos has a particular appeal for snap-happy Asians.

“Photo-taking is the main activity for Asian tourists, [so] 3D museums are quite the perfect destination to take memorable photos in various fantasy scenarios,” said Mandy Foo, marketing manager of Trick Eye Museum.

“Concept is the key appeal. It`s fun, engaging and highly educational – the recipe for huge success,” said Patsy Ong-Hahl, managing director of Adval Brand Group, the licensee of Singapore`s Alive Museum.

3D museums are also positioned to benefit from social media, according to Winston Lo: “In Hong Kong, smartphones are a way of life so news spread quickly through social media which is how many people know about us. When their friends upload pictures they find hilarious, they want to come.”

Trending

In Singapore, the new galleries feature original installations that are not found in South Korea, as well as localized pieces that include the iconic Singapore “Merlion.” There are plans to refurbish the artwork as often as every quarter.

Singapore-based journalist Dion Tang, who has been to the Trick Eye Museum in South Korea as well as Singapore`s Alive Museum, is keen to visit the Hong Kong gallery which has been ranked on TripAdvisor`s local must-visit list.

“The experience in Jeju was an eye opener! Furthermore, it`s a good place for bonding with friends and family. Even my mum who is 60 year`s old and my niece who is nearly 4 year`s old enjoyed the visit,” he said.

Travel agencies also see 3D museums appearing on the wish-lists of Singapore-bound tourists.

“These museums are in-house activities and are thus not subjected to weather conditions. Especially nowadays with movies in 3D and 4D, this has attracted many people who want to experience illusion art,” Alicia Seah, director of marketing communications at Dynasty Travel wrote in an email to CNBC.

Besides tourists, locals like 27-year-old Miss Yeo also plan to visit one of the museums in Singapore following an enjoyable visit in South Korea.

“I had a really good time in Seoul. The art works will be different in Singapore so why not visit again?”

Copyright 2011 cnbc.com

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

Indian corporates go on borrowing binge

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

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Indian corporates have gone on a borrowing spree in international debt markets, a trend that`s set to continue owing to the country`s improving economic outlook and healthy investor appetite, according to analysts.

Foreign currency bond issuance by non-financial companies reached USD 11.2 billion for the January-July period, surpassing the USD 10.2 billion reached in 2013, according to Moody`s Investors Services. It`s expected to reach a record high of USD 13-14 billion this year, and could be higher in 2015 if the cost of hedging exchange-rate risk declines, Moody`s predicts.

“Clearly public sentiment around India is positive, and it makes sense for companies to take advantage of that to raise capital at a lower cost than what they were able to do earlier,” said Manpreet Gill, head of fixed income, currencies and commodities investment strategy at Standard Chartered Bank.

A year ago, investors were fretting over a potential credit ratings downgrade for India, now focus has shifted to the prospect of game-changing reforms under the new government.

What the rise in issuance by Indian corporates means for investors is that they will have more options to choose from in the Asian corporate credit space.

“Asian corporate credit is dominated by Chinese issuers at the moment, so for investors an increase in issuance by Indian corporates is a positive as it helps with geographical diversification,” said Gill.

Who`s issuing debt?

Three sectors – oil and gas, metals and mining, and telecommunications – are responsible for the bulk of borrowing.

Going forward, energy and mining firms are expected to continue driving the increase in issuance alongside pharmaceutical, IT and business process outsourcing companies. Such firms derive a large part of their revenues from exports, which are typically denominated in US dollars. This provides a natural hedge against currency fluctuations for their US dollar-denominated debt.

Interest rates on foreign currency bonds are lower than those on rupee denominated bonds, but the cost of hedging exchange-rate risk makes it more expensive for Indian entities to borrow in foreign currency. It therefore makes sense only for companies with natural hedges against currency fluctuations to issue bonds in foreign currency, Moody`s said.

Issuance by infrastructure companies is also set to rise given their large funding needs. Overhauling India`s dilapidated infrastructure is high on the agenda for the new government, which has vowed to spending billions on building roads and highways, high-speed rail networks, airports and ports.

Factors encouraging issuance

Continued tight monetary policy in India, as a result of persistently high inflation, means the cost of borrowing locally remains elevated and the availability of credit remains tight, Moody`s said.

These challenges contrast sharply with the international capital markets, which are currently liquid and offer extremely low interest rates.

“This imbalance will encourage more Indian institutions to tap the international markets to fund their growth and investments.”

In addition, recent regulatory changes have reduced barriers for Indian companies to tap the international markets to fund their growth and investments.

For example, the new government reduced the withholding tax on interest payments to international investors to 5 percent from 20 percent.

The high 20 percent tax had been a major barrier for Indian companies issuing foreign currency bonds because the debt issuer makes the tax payment over and above the coupon on the bonds, Moody`s said.

Copyright 2011 cnbc.com

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

Are the world’s cars on the cusp of going solar?

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

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Within a decade, declining prices of solar systems and batteries combined with the rise of electric vehicles may start sending internal combustion engines to the junk yard, analysts say.

“By 2020, shrinking battery and solar cost will make EVs (electric vehicles) in the mass segments the cheaper alternative over a car life cycle in most European markets,” UBS  analysts said in a note last week.

It expects Europe, particularly Germany, Italy and Spain, to lead the shift due to their high fuel and retail electricity costs, with a “conservative” estimate for around 10 percent of Europe`s new car registrations to be electric vehicles by 2025.

“A mass segment EV will have almost the same sticker price as a combustion engine car [by 2020]. But it will save up to 2,000 euros (USD 2,632) per year on fuel cost, hence, it will begin to pay off almost immediately,” UBS said.

So far, EV penetration is low at about 0.25 percent of the auto market, UBS noted, but it expects a more than 140 percent compound annual growth rate (CAGR) for sales. Around 113,000 EVs were sold globally in 2012, but that`s likely to rise to more than 5 million by 2025, UBS estimates.

In some markets, buying EVs is already cost-competitive, even if subsidies aren`t included, and the economics will only get better when combined with solar, UBS said.

The bank expects battery costs will fall by more than 50 percent by 2020, which when combined with the around 85 percent decline in solar panel prices since 2007, will make home-based battery storage attractive, especially when combined with the EV.

“True cost parity with ICE (internal combustion engines) from a buyer`s perspective will spur replacement demand especially as consumers see added benefit from self-generation of electricity as an additional cost reduction,” it said. “It is the combination of the three that makes solar fully competitive and that has the potential to bring disruptive changes.”

Others aren`t as convinced a sea change in auto technology will be as quick. “The next five years will both be uneventful and possibly game-changing,” Itay Michaeli, an analyst at Citigroup, said in a report in July.

“Uneventful in the sense that no one technology will likely take the crown,” he said. “Game-changing in the sense that nonconventional technology (EVs, fuel cells) could make sufficient strides to lay the ground work for an eventual disruption perhaps sometime next decade.”

He noted that a superior technology for autos doesn`t necessarily spur its takeup rate, citing “painfully slow” acceptance of diesel in the US despite traditional cost-benefit analysis suggesting it is compelling for that market due to greater highway driving.

But Michaeli expects EVs, as well as CNGs (clean natural gas) will disrupt the auto market over the longer term.

“From an operating cost perspective, electric vehicles (EVs) remain superior with a fuel cost-per-mile of only USD 0.04, even superior to CNG at USD 0.07 and of course far superior to conventional gasoline (USD 0.15),” he said.

To be sure, the fate of EVs isn`t likely to be left solely to market forces. “The Chinese government has set itself major targets to see over half a million new energy vehicles deployed by end-2015 and over 2 million by end-2020,” Namrita Chow, an analyst at IHS, said via email. “There has recently been an influx of regulations to encourage NEV (neighborhood electric vehicle) sales-particularly benefitting pure electric vehicles and plug in hybrid electric vehicles.”

Bloomberg reported Wednesday, citing sources, that China is considering providing funding of as much as 100 billion yuan (USD 16.27 billion) to build EV-charging stations.

“The introduction of the Formula E racing in Beijing and other premium EV events is part of an overall attempt to raise the awareness of EVs to Chinese consumers,” Chow noted, adding that while the EV sales volume in China is still relatively limited, the growth rate has been “quite spectacular.”

According to UBS data, around 12,800 EVs were sold in China in 2012, with around 64,000 expected to sell by the end of this year.

-By CNBC.Com`s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1

Copyright 2011 cnbc.com

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

Ice to… Rice? India’s twist to the bucket challenge

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

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First came the Ice Bucket Challenge, and now there`s the Rice Bucket Challenge – India`s twist on the fundraising campaign that has taken the internet by storm.

Unlike the Ice Bucket challenge, which involves pouring icy cold water on one`s head to raise awareness of amyotrophic lateral sclerosis (ALS), participants of the Rice Bucket Challenge do not dump rice over their heads. Instead, they are asked to buy or cook a bucket of rice and give it to someone in need.

Alternatively, participants can donate medicines worth 100 rupees (USD 1.65) to the nearest government hospital.

The project, launched over the weekend, is the brainchild of Indian journalist Manju Latha Kalanidhi, who was seeking “a local, practical and tangible” response to the Ice Bucket challenge.

The movement rapidly garnered support from netizens across the world, with its Facebook  page receiving more than 22,000 likes.

“It`s local, desi [pertains to Indian culture] and a practical solution to issues in the vicinity. Instead of wasting water on ice bucket challenge, save water and feed the hungry,” Krishna Raja, a participant of the Rice Bucket Challenge wrote on his Facebook wall.

“I thought the Ice bucket challenge was cool…but today when I read the Hindu about the rice bucket challenge…wow much cooler… Manju from Hyderabad has got this idea… good thinking and hats off,” Sam Paul, who donated to the cause, posted on Facebook.

On Monday, 2,000 students from Apoorva College, located in the South Indian state of Telangana, pledged to donate 2,200 kilograms of price to the poor.

Despite the India`s economic progress, the country suffers from “alarming” levels of hunger. The prevalence of underweight children under five is among the highest in the world, according to the International Food Policy Research Institute.

In the 2013 Global Hunger Index, the South Asian nation ranked 63 out of 120 countries, lagging behind neighboring Pakistan, Bangladesh and Sri Lanka.

Copyright 2011 cnbc.com

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

In India, the big salaries are back

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

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After a lull in recent years, India’s labor market is enjoying a burst of activity, as euphoria over a new government, a booming stock market and improved business sentiment are encouraging employers to hire in a big way.

Salaries in recent months have gone up by up to 60 percent compared to last year in some industries with perks like sign-on bonuses, stock options and even counter offers making a comeback, experts told CNBC.

“The negativity surrounding India’s political scene is gone,” said Dony Kuriakose, director, EDGE Executive Search. “Hiring seems to be part of a long-term plan for India.”

The sentiment is a sea change from just a year ago, when the Fed taper tantrum sparked an outflow of funds from emerging markets including India, causing local stock markets and the India rupee to plummet. This coupled with policy paralysis as the government prepared for polls created a negative business environment forcing employers to cut costs and axe jobs.

Read More: The man who would remake India: A 90-day scorecard

Hitesh Oberoi, CEO of Info Edge, the owner of job site Naukri.com, has seen a 20 percent year on year hike in hiring activity in July, after a tough five to six quarters. “Over the next few years India is going to have a good run,” he said.

At BITS Pilani University, one of India’s premier engineering colleges, there has been a 38 percent year on year increase in the number of employers visiting its three Indian campuses during the placement season that begins in August, including high profile names like Goldman Sachs to eBay and Shlumberger.

Salaries offered have risen between 7 percent and 42 percent, according to G Balasubramanian, chief placement officer of BITS.

IT, e-Commerce: We are hiring!

Positioned a tech hub, it’s not surprising that the hiring frenzy in India is most pronounced in the e-commerce and IT related sectors. The country’s e-commerce industry has been on an expansion drive with investors pouring in close to $2 billion in this sector this year alone, while IT services, which hires an estimated 150,000 fresh graduates every year, has benefited from the depreciation of the rupee and improving demand in western countries.

Read More: India goes from fragile to fabulous

And often, salary is not a consideration in a bid to attract the best talent. One of India’s largest e-commerce companies recently paid a million dollars to hire a chief technology officer, industry sources told CNBC. The 38-year-old relocated to India after 10 years in the US, as such salaries are “not normal even in America.”

New Delhi-based online restaurant guide Zomato.com is struggling to fill positions at its rapidly-expanding firm. The six-year-old start-up is currently present in 13 countries and 100 cities and wants to expand to 10 new international markets within the next five years.

“We are scaling up…at the moment we are just 1 percent of where we want to be,” Zomato’s regional director Upasana Nath told CNBC, adding that the firm is adjusting salaries upwards by up to 60 percent for certain roles. “If we have more people we can expand more; we are hiring heavily.”

It’s a sentiment shared by India’s leading online marketplace Flipkart.com, which received a whopping USD 1 billion from investors in July. The firm is planning to increase its technology team three-fold by the middle of next year. “We have grown 100 times in the last three years and we don’t see any signs of slowing down,” chief placement officer Mekin Maheswari told CNBC.

Non-tech also benefitting

The job creation among Internet companies may be at a freneticpace, but hiring in traditional sectors like banking and telecommunications isalso picking up. According to the Naukri Job Speak Index, a monthly report onhiring activity in India, there has been a near 25 percent year on year uptickin hiring in the banking and telecom sectors in July.

Read More: Mozilla takes swipe at India market with $33 smartphone

Thirty-five-year-old Delhi-based banker Anubhav Gupta has been lookingto change jobs since 2008 and his search has just ended. The MBA-degree holderwith 12 years of work experience finally landed a new role recently withanother financial institution with a “minor” increase in salary.”Things are looking slightly better now, hopefully my next job shift won’ttake so long,” he said.

Hiring executives also point to areas like R&D and lifesciences where foreign investment is coming in after a lull period prior to thenew government taking over in May. “They [foreign companies] are alllooking for country managers and are offering salaries of close to USD 200,000 topeople in their 30s,” said Lakshmikanth of the Head Hunters.

Caution ahead

It’s worth noting that the battle for talent is taking place in the below-40s segment of the market, as the younger demographic have more relevant skills in the nouveau tech space. This is leaving the older unemployed population out in the cold.

Read More: Asbestos still pushed in India and business is booming

“It is still a bad market for them…unless traditional companies in the engineering and automobile spaces start hiring, many of them are still sitting at home,” said EDGE Executive’s Kuriakose.

Other recruitment experts warn that the current hiring buzz is owed largely to a few industries. “There is a lot of excitement around just 10 internet companies…how many can they alone hire? 500 management graduates?” said Oberoi of Naukri.com.

And should the economy suffer from external shocks much like the battering emerging markets took last year, these tech firms – many which are built on foreign investment – could see an exodus of funds, putting jobs on the line, experts warn.

Read More: Millennials are reshaping India’s travel industry

But for 24-year-old Ravneet Kaur, who left her job with an established Indian design label to join a digital fashion start-up, it’s a risk she is happy to have taken.

Armed with a Masters degree in international media business from the University of Westminster, Kaur says the excitement of being in a growth industry far outweighed the “substantial salary hike” she got when making the shift. Kaur, whose parents wanted her to stay on in London after her post graduation, chose to come back to India where she says the action is. “E-commerce is such a new thing in India, unexplored and I want to grow as the company grows,” she said.

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

India’s growth engine looks to be revving up

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

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After two consecutive years of sub-5 percent growth, India’s economy looks to have snapped out of its funk in the April-June quarter, as optimism surrounding the new government drove a pickup in economic activity.

Gross domestic product (GDP) data due out on Friday is expected to show Asia’s third largest economy expanded 5.3 percent on year in the April-June quarter, according to Reuters poll, the fastest pace in two years and up from 4.6 percent in the previous three months.

“The recent upturn in PMIs [Purchasing Managers’ Index], business sentiment indices, strong capital markets, macro stability alongside a stable political climate signal that the slowdown in the growth cycle is behind us,” said Radhika Rao, economist at DBS.

Read More: India goes from fragile to fabulous

A particular bright spot for the economy has been industrial production as growing confidence among businesses leads to a pickup in demand.

Industrial production – which includes the output of factories, mines and utilities – rose 3.4 percent on year in June following a rise of 4.7 percent a month earlier.

“Confidence lifted with the May election result, and production of capital goods has surged in recent months,” said Glenn Levine, senior economist at Moody’s Analytics. Production of capital goods – such as heavy machinery – is seen as a leading indicator of investment activity.

The sweeping victory by the Bharatiya Janata Party (BJP), led by Narendra Modi, has brought about a surge of optimism for the business community that is hopeful the pro-business Prime Minister will push through the reforms needed to reinvigorate the sluggish economy.

Read More: This is Asia’s investment moment

The new government has also provided a positive boost to consumer sentiment, which has translated into increased consumption in some sectors. The auto industry, for example, has seen new car sales rising 15 percent on year in June, the fastest pace in 10 months.

To be sure, it’s not just domestic factors contributing to the pickup in growth. The export sector has also been a positive driver, thanks to an improvement in external demand led by higher growth in the advanced economies. Exports rose over 7 percent on year in July, after growing more than 10 percent for two straight months until June.

Read More: Millennials are reshaping India’s travel industry

While growth indicators have been perking up, economists caution that below-normal monsoons will drag down agriculture growth.

Regardless, there have been broadly more positive surprises in the economy than negative, say Nomura economists led by Sonal Varma.

“The pickup is broad based with consumer discretionary, exports, transportation, infrastructure and capital goods sectors surprising positively. We expect this momentum to be sustained as sentiment has improved and the government is resolving project constraints,” Nomura economists wrote in a report.

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

Mozilla takes swipe at India market with $ 33 smartphone

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

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Mozilla has launched its first smartphone in India running its Firefox operating system (OS) for Rs 1,999  (USD 33) as it takes a swipe at the highly-contested low-end device market.

The Cloud FX device manufactured by Indian smartphone maker Intex will be sold exclusively through Snapdeal, India’s largest online marketplace, tapping the country’s growing appetite for online shopping.

Read More: Microsoft unveils USD 25 Nokia phone in low-end push

Mozilla President Li Gong said the Cloud FX would “redefine the entry-level smartphone and create strong momentum in Asia”.

India’s smartphone potential

The push by Mozilla is the latest by a technology firm to tap the growing low-end smartphone space in emerging markets. In May, Motorola, which has been acquired by Chinese technology giant Lenovo, released an £89 (USD 150) smartphone.

Smartphone shipments in India surged 84 percent in the second quarter of 2014 compared with the same time last year hitting 18.42 million units, according to IDC. The sub-USD 200 smartphones accounted for 81 percent of second quarter shipments, highlighting the potential in the low-end market.

Analysts said the prospects for Mozilla’s device in the world’s third-largest economy are huge considering smartphones have only a 29 percent market share.

“The penetration of smartphones is very low, there is a lot of space for growth to cannibalize feature phones,” Karan Thakkar, senior mobile and tablet market analyst at IDC, told CNBC by phone.

Read More: Lenovo eyes smartphone domination with Motorola

But he said the low specifications of the Cloud FX could “eventually put people off”.

Local competition

The Cloud FX has a 1.0 GHz processor and expandable memory of up to 4GB. It also has Bluetooth and Wi-fi capabilities, a 2 megapixel camera and a 3.5 inch screen.

Samsung has the biggest smartphone market share in India, but like in China, local players are eating away at the Korean electronics company’s dominance. Nokia was once the leading vendor, but Indian companies such as Karbonn and Micromax have taken its place. The rising competition is likely to be felt by Firefox as some of the other brands move to use Google’s Android OS, analysts warned.

Read More: Xiaomi takes a crack at India, can it succeed?

“Nokia’s market share is slowly drying up and that is leaving a huge gap in the market that Samsung isn’t able to fill completely. Local brands are moving very fast to manufacture smartphones with Android,” Daniel Gleeson, mobile analyst at IHS, told CNBC by phone.

App ecosystem

Firefox OS has its own app store known as the Marketplace though it is not as extensive as Google’s or Apple’s offerings. While this is unlikely to be a major concern as Indian consumers purchase their first smartphones, eventually Firefox will need to up its game to stay competitive, according to analysts.

Read More: ‘China’s Apple’ knocks Samsung off top spot in China

“The lower end users want a basic ecosystem, so as long as Firefox does the basics well it should be fine,” Neil Mawston, mobile analyst at Strategy Analytics, told CNBC in a phone interview.

“In the longer term we will expect Firefox to improve and increase the apps ecosystem that they offer.”

– By CNBC’s Arjun Kharpal

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

Fewer economists believe US policy on right track

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

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The Federal Reserve’s monetary policy is headed in the right direction, but the US also needs to enact structural policies in order to stimulate stronger economic growth, according to a new survey released Monday.

The National Association for Business Economics’ economic policy survey found 53 percent believe US monetary policy is on the right track, that’s down slightly compared with 57 percent in February 2014. And 39 percent felt that the current economic policy was too stimulative.

When asked how policy makers should address deficit problems and their impact on gross domestic product, 36 percent of respondents said the US should enact structural policies to spur stronger GDP. Last year, only 20 percent supported this approach.

According to the survey, a majority of economists were less concerned about fiscal policy uncertainty in comparison to earlier polls.

“While there is no clear consensus on current fiscal policy, the share expressing approval has increased markedly to 42 percent compared to just 31 percent one year ago,” says NABE president Jack Kleinhenz. “Over this same period, the panel’s approval of Federal Reserve policy has edged downward.”

Read More: Fed’s Williams:Summer rate hike ‘reasonable’

The semiannual survey of 257 members was conducted between July 22 and August 4, around the same time as the Fed’s most recent policy meeting—which concluded on July 30.

The Federal Open Market Committee intends to end its monthly asset purchases by October, but the plan hinges on whether the economy improves as it expects. However, the Fed will continue to reinvest principal payments of Treasury debt and agency mortgage-backed securities.

Some 30 percent of panelists said the Fed should stop such reinvestment by the end of 2014, but only 7 percent expect it to do so by then.

Over half of the respondents, 54 percent, said they expect the Fed to stop in 2015, while nearly a quarter, 23 percent, expect it to stop in 2016 or later.

Similar to the results of the previous survey, nearly 70 percent consider the Fed’s quantitative easing a success.

Read More: Higher rates won’t hurt: Fed’s Bullard

Looking forward, the majority said they expect inflation to edge higher.

Sixty-two percent said they expect the personal consumption expenditures price index to be near the Fed’s goal of 2 percent within five years, while 30 percent believe PCE inflation will be significantly above the Fed’s goal by that time.

However, nearly 70 percent of the those surveyed said the Fed’s long-run inflation goal should stay at 2 percent.

Read More: Yellen’s approach soothes doves, encourages hawks

In terms of economic policy matters, 4 out of 5 respondents said immigration reform is in their top 10 policy priorities, with more than a quarter saying that immigration reform is a top-three policy priority.

There was also very strong support among respondents both for removing restrictions on oil exports and for accelerating approval for LNG exports.

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

Why Asia’s airlines aren’t delivering profits

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

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Asia may be seeing the strongest airline passenger growth, but its carriers are struggling to eke out profits, dented by overexpansion.

“We’re seeing an awful lot of capacity,” Timothy Ross, head of transportation research for Asia Pacific at Credit Suisse, told CNBC. “It’s highly competitive and that has seen Asian profits, both as a proportion of global totals and in absolute terms, probably trend down for the last three years,” Asian airlines’ struggle to keep profits aloft has come as their US counterparts are seeing some of their most profitable years since the mid-1990s and the European market’s pricing is becoming less competitive, he noted.

Read More: Malaysia Airlines to cut about 25% of jobs: Source

It’s not for a lack of passengers. The region’s passenger traffic is forecast to rise at a 5.7 percent compound annual growth rate (CAGR) over 2013-2017, compared with expectations for 2.2 percent CAGR in the US, according to data released in December by the International Air Transport Association (IATA). It expects traffic within the Asia-Pacific region will account for nearly 32 percent of all air-travel passengers by 2017, outpacing Europe and North America’s around 23-24 percent.

“There’s more natural demand growth. There’s more area for demand to grow as people get wealthier and want to travel,” Ross said. But he noted that Europe’s experience with budget carriers suggests Asia could face a protracted battle with overcapacity and low shareholder returns.

Watch: How will Asia’s airlines fare in earnings week

Others also noted that Asia’s airlines face a challenge balancing growth and profitability.
“Some of the challenges that they’re having are how do they expand and how do they expand in a financially sound way,” Jonathan Galaviz, partner at Global Market Advisors, told CNBC.

“The return of equity, which is really the measurement of how to build long-term stockholder value, is very low for many of these airlines because they’re focused on growing, they’re focused on getting distribution in Asia, but the question is, can they do so in a manner that’s financially sustainable and also able to deliver the returns to investors as they go along that path?”

Asia’s airline market is certainly competitive: 75 percent of its routes are flown by at least three carriers and 27 percent have at least five carriers, according to data from the Association of Asia Pacific Airlines. By comparison, in Europe, 45 percent of routes are served by only one or two airlines, AAPA said.

Read More: US airlines doubled profit margins in first half, trade group says

The European and US markets met the capacity challenge by consolidating, but that’s not as likely to happen in Asia, Ross said.

“It’s made difficult by national ownership rules and that’s always the stumbling block that’s made it easier in Europe and easier in the US,” Ross said.

But some believe capacity in the region may begin to ease.

“I see really strong light at the end of the tunnel,” Tony Fernandes, CEO of Malaysia-based budget carrier AirAsia, told CNBC last week.

For one, he expects Malaysian Airlines will rationalize its service. Reuters reported Tuesday, citing sources, that about 25 percent of Malaysia Airlines’ 20,000 staff will likely be retrenched as routes are cut under a fresh restructuring plan for the money-losing, disaster-stricken carrier.

Read More: Keeping score on airlines: More delays, mishandled luggage

In addition, “we’re seeing rational behavior in Indonesia for the first time, probably in my period as a CEO,” Fernandes said. “We’re now down to three airlines in Indonesia. I think some of the exuberance has been taken out and some realism is coming in, which bodes well for AirAsia.”

But at the same time, AirAsia itself is still adding capacity in fresh locations. AirAsia India began flying in June.

“The prize is huge because there are one billion people,” Fernandes said.

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

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Fed and ECB: Spot the difference

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

Listen to the Article (6 Minutes)

People expecting “market guidance” from the US Federal Reserve (Fed) proceedings last week at Jackson Hole, Wyoming, got nothing. That is as it should be. The Fed communicates its policy intent through open market operations.

Here is what the Fed is telling us.

The Fed’s policy interest rate – the federal funds rate (the only interest rate it directly controls) – traded at 0.08 percent last Friday, significantly below its 0.25 percent target and was roughly identical to the 0.10 percent observed a year earlier.

The monetary base – the only aggregate directly controlled by the Fed (because that is the liability side of its balance sheet) – last Wednesday (August 20) was 20 percent above its year-earlier level, marking an average monthly expansion of USD 44.8 billion since the beginning of the year.

Read More: Fed’s Charles Plosser on ‘risky’ policy, watching wages

And with all that monetary largesse, the Fed reported in the middle of last week that it kept a mind-boggling USD 2.7 trillion in banks’ excess reserve deposits – the funds banks can readily lend — a 27 percent increase from the year before.

These numbers show that the Fed is an open book. But that, apparently, is not enough. Some people want the Fed to tell them when it will turn the leaf.

They are, of course, asking the impossible, because the Fed itself does not know. And when the Fed says, as it did last week, that its next policy change will depend on employment and price inflation, the statement is branded as bland and useless. But how can it be anything else when the Fed – like all the short-term forecasters – is searching for evidence relevant to its policy decisions?

Fear wrong policies, not America’s secular stagnation

Curiously coinciding with the Fed’s annual conference is a revival of the declinist debate asserting that the US economy is structurally in an irretrievable stagnation.

Under these conditions, the declinists argue, the monetary policy cannot lift the economy and keep it on a steady and sustainable growth path. And there is worse, they warn: Instead of creating economic growth, the monetary stimulus then just creates all sorts of bubbles, leading to financial crises and further declines in the effectiveness of easy credit policies.

Read More: Yellen’s balanced approach, soothes doves, encourages hawks

But all is not lost. Some of the purveyors of the idea of America’s secular stagnation suggest that the government may be able to restore the ability of the monetary policy to help create more output and employment.

There is no policy blueprint here, but the reference to government policies clearly implies that taxes, public spending and regulatory changes can be used to increase the economy’s growth potential through better infrastructure, competitive markets and a more qualified and efficient labor force.

In other words, what is needed is a better balance and coordination between monetary and fiscal policies.

That is what has been missing in the U.S. for some time. Indeed, the expansionary monetary policy has been working against a sharply restrictive fiscal stance that saw budget deficits declining from 11 percent of gross domestic product (GDP) in 2009 to less than 3 percent this year.

Read More: Yellen: Getting closer to Fed objectives, but still hard to gauge labor market slack

As far as I could see, the Fed had nothing to say about that last week.

ECB wants growth-oriented fiscal policies

But the European Central Bank (ECB) did. In remarks at the Fed’s Jackson Hole symposium, the ECB’s President Mario Draghi reminded the euro area governments of what they could (and should) do individually, and as a group, to stimulate the economic growth and employment creation.

And that was not the usual exercise where the central bank passes the buck to the government.

With the euro area economy stagnating in the first half of this year, Mr. Draghi restated the ECB’s readiness to introduce further measures of monetary stimulation, but he also invited the governments to support their domestic demand through growth-oriented fiscal policies while remaining within the agreed budgetary limits. This politically coded message implies tax cuts with declining public spending; it also refers to structural reforms to create more efficient public services and more flexible labor and product markets.

Italy’s new government has tried this. The plan looked good on paper and even got a rare praise from Germany. Unfortunately, the declining growth seems to have invalidated the original budget calculations. Rome is now turning to Brussels and Berlin to ask for a euro area stimulus and for more time to meet budget commitments.

France is on the same policy path. And it is also on a clear collision course with Germany. France’s Economy Minister, Arnaud Montebourg, wants a radical departure from a policy of tax hikes and spending cuts in a recessionary economy. Ominously, he went a step further last week by saying that the French Socialists cannot align themselves on the “extremist” fiscal policies of “Germany’s right-wing parties.”

That does not sound good. But the ECB’s advocacy of growth-oriented fiscal policies may support the French and Italian quest for a cyclically appropriate policy mix in the euro area.

The ECB could also put Germany on the hook. The idea (discussed by Mr. Draghi in Jackson Hole) is that an acceptable euro area fiscal stance can be achieved through better coordination of national fiscal policies. That would imply more expansionary demand management policies in low deficit countries (such as Germany) and a shift toward restraint in countries experiencing high budget deficits.

Read More: Draghi says ECB stands ready to adjust policy further

Expect interesting times in the euro area. The ECB will be in the middle of it.

Investment thoughts

The Fed’s policy statement in Jackson Hole last week reflected the view that America’s economic output, labor market conditions, price inflation and a restrictive fiscal stance warranted a continuation of expansionary monetary policies. The extent and timing of the policy change were left open because the Fed needs evidence that new developments in any of these variables would require an appropriate policy response.

The ECB’s participation highlighted the fact that coordinated monetary and growth-oriented fiscal policies were needed to support a sustainable euro area economic recovery.

Absence of such policy coordination in the U.S. leaves the Fed to carry alone the burden of economic stabilization. That affects the speed and the intensity of monetary stimulation.

Investors, however, should not take seriously arguments that the U.S. is condemned to structural stagnation, and that the Fed’s easy credit conditions will merely result in financial bubbles.

The U.S. economy will be front and center in forthcoming Congressional and presidential elections. Domestic and geopolitical pressures will knock the heads together (i.e., the Congress and the White House) to clear the roadblocks to faster growth. Meanwhile, the Fed will hold the fort – alone.

Michael Ivanovitch is president of MSI Global, a New York-based economic research company. He also served as a senior economist at the OECD in Paris, international economist at the Federal Reserve Bank of New York and taught economics at Columbia.

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