Month: June 2015

Mainland equities falter after downbeat inflation data

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

Listen to the Article (6 Minutes)

Mainland shares nursed modest losses amid choppy trade after the country’s consumer prices rose slower than expected in May.

China’s closely-monitored consumer price index (CPI) rose 1.2 percent last month from the year-earlier period, a shade below Reuters’ expectations for a rise of 1.3 percent and nudging down from a 1.5 percent gain in April. Meanwhile, producer prices stayed stubbornly weak, with a bigger-than-expected fall of 4.6 percent.

Overnight, US major indexes handed over an unimpressive lead by finishing near session lows, as investors weighed multi-month highs in bond yields, while mulling the prospect of the Federal Reserve tightening monetary policy as early as September.

The Nasdaq Composite led losses with a 0.92 percent slump, while the blue-chip Dow and the S&P 500 dropped 0.46 and 0.65 percent, respectively.

Mainland indexes choppy

Shanghai shares flitted between gains and losses following the data release, with the benchmark Shanghai Composite index last seen in neutral territory. The blue-chip CSI300 index opened up 0.3 percent, while the Shenzhen Composite ticked down 0.1 percent following a 1.7 percent tumble on Monday.

Apart from key inflation data, investors were also on the lookout for index publisher MSCI’s decision on whether to include mainland-listed A-shares in its benchmark emerging market index.

“The consensus is 50-50 for A-shares to go into the MSCI emerging market index, but there are some evidence that this will happen down the track. It’s probably just a matter of time. However, it appears that the market may be a little too hot for MSCI to do anything right now,” Martin Lakos, division director at Macquarie Private Wealth, told CNBC’s “The Rundown” early Tuesday.

Shanghai-listed blue-chip stocks such as financials counters extended gains; Bank of China and Bank of Communications jumped 4.5 and 6.3 percent each after surging by the daily limit of 10 percent in the previous session.

In Hong Kong, the Hang Seng index tracked their mainland peers lower. British bank HSBC edged up 0.3 percent ahead of an update about how the British lender plans to improve profitability.

Nikkei drops 0.7 percent

Japan’s benchmark Nikkei 225 extended Monday’s modest declines to touch a two-week low, even as dollar-yen moved up a tad to trade around 124.6.

A weaker currency did little to help exporter plays, with blue-chip Toshiba, Toyota Motor and Sony sagging between 0.4 and 1.8 percent.

Insurers were also among the hardest-hit in early trade; Dai-ichi Life Insurance tumbled 3.2 percent, while T&D Holdings and Tokio Marine Holdings receded 2.1 and 1 percent, respectively.

ASX gains 0.5 percent

Australia’s S&P ASX 200 index emerged out of negative territory by mid-morning trade, as the banking sector turned positive. The Sydney bourse was trading for its first session of the week, following an extended weekend.

The downbeat inflation data from China —Australia’s key trading partner— seemed to have little impact on the stock market, but sparked a sudden move below the USD 0.7700 mark in the Australian dollar, from around USD 0.7712 prior to the data.

Meanwhile on the domestic data front, business confidence rebounded to a nine-month high last month as sales and profits improved, a survey by the National Australia Bank showed.

While Australia and New Zealand Banking, Commonwealth Bank of Australia and Westpac advanced more than 1 percent each, National Australia Bank rebounded 0.4 percent.

Underperforming the bourse, Nine Entertainment sank 17 percent after issuing a profit warning.

Kospi adds 0.4 percent

South Korea’s Kospi index reversed a lackluster open to edge up.

However, mixed trading among heavyweight components capped the bourse’s advances. Hyundai Motor elevated 1.12 percent on news that it is contemplating developing a larger premium sport utility vehicle (SUV) to meet booming demand for the automobile segment, while the index’s top weighted stock Samsung Electronics erased 1.5 percent from the get-go.

STI flat

Singapore shares tread water in early trade, with Singapore Exchange (SGX) in focus following the announcement of its new CEO.

Veteran investment banker Loh Boon Chye will take over the reins from Magnus Bocker on July 14, the bourse operator said in a regulatory filing on Monday.

SGX shares plummeted 2.3 percent through the 8 Singapore dollars mark for the first time in two months on Monday. However, analysts expect the announcement to induce buying demand in the stock, “although any rebound may lack momentum as the challenges confronting the bourse operator remains,” IG’s market strategist Bernard Aw wrote in a note.

In early trade, SGX bounced up 0.76 percent.

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

Greece and Ukraine crises drown out G7 agenda

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

Listen to the Article (6 Minutes)

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

Nobody is safe! Why US oil firms could get bought

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

Listen to the Article (6 Minutes)

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

Japan’s first-quarter GDP revised sharply higher

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

Listen to the Article (6 Minutes)

Japan’s gross domestic product (GDP) growth was revised sharply higher in the first quarter, data on Monday showed, adding to hopes that its economic recovery is gaining traction.

GDP rose an annualized 3.9 percent in the first quarter, higher than the preliminary reading of a 2.4 percent increase.

On a quarter-on-quarter basis, the economy grew 1 percent, higher than the initial reading of 0.6 percent.

Japanese stocks showed only a muted reaction, with the benchmark Nikkei 225 up 0.3 percent in early trade. The yen, meanwhile, slipped 0.1 percent against the dollar.

The data follows supportive comments over the weekend from government spokesman Yasuhisa Kawamura, who said the economy was “returning to a growth orbit” on the sidelines of the Group of Seven (G7) summit.

However, investors should contain their optimism as Monday’s data remains “rear-view mirror gazing,” warned Mizuho Bank in a note. Consumer confidence data and machinery orders due later this week will provide a more real-time feel of the economy, the bank said.

Other data on Monday showed April’s current account balance at 1.3 trillion yen (USD 10.55 billion), a tenth consecutive month of surplus but lower than a Reuters forecast for a 1.7 trillion yen surplus.

A weaker currency has been boosting income from overseas investment, with the yen touching a more than twelve-year low against the greenback last week.

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

Facebook Lite app launched to tap emerging markets

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

Listen to the Article (6 Minutes)

Facebook has launched a stripped-down version of its app aimed at the huge potential user base in emerging markets.

The social media giant confirmed to CNBC that it was testing the Android app in January, and was now rolling it out across countries in Asia, followed by parts of Latin America, Africa and Europe.

Facebook Lite takes less than 1 megabyte of storage space on a phone — substantially less than the standard app, which uses up around 25MB of storage.

The new app is designed to load quickly in areas with slow mobile internet connection.

“In many areas, networks can be slow and not able to support all the functionality found in Facebook for Android. Facebook Lite was built for these situations, giving people a reliable Facebook experience when bandwidth is at a minimum,” Vijay Shankar, product manager for Facebook Lite, wrote in a blog post.

Users will be able to do simple tasks such as post status updates and pictures, get notifications and scroll through their newsfeed. Viewing video will not be possible, however, as it requires too much data.

The move comes amid a continued push by Facebook into the emerging markets, highlighted by its Internet.org project, which gives users in certain countries access to some mobile services for free.

The mobile user base in emerging markets is growing fast, particularly in the smartphone space where a number of low-cost devices have been launched.

Almost 80 percent of smartphone subscriptions added between 2015 and 2020 will be from Asia Pacific, the Middle East and Africa, according to Ericsson.

Facebook already has a high user base in some emerging markets – Indonesia, for instance, is currently the third-largest market for mobile Facebook users worldwide.

Meanwhile, by the end of 2016 India is expected to surpass the US as having the largest population of mobile phone Facebook users, according to research by eMarketer.

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

Could OPEC be ready for a production hike?

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

Listen to the Article (6 Minutes)

The price of oil could be set for a surprise turn on Friday with two different oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) suggesting the cartel could raise its production target.

The organization currently accounts for around 40 percent of global crude production and has a goal of producing 30 million barrels a day. Analysts are widely expecting no change to this target at tomorrow’s OPEC meeting in Vienna but some ministers haven’t ruled out an alternative scenario.

“I don’t think it will make a disaster if we increase (by) 1 million (barrels per day),” Kuwaiti Oil Minister Ali al-Omair told CNBC Thursday on the sidelines of the meeting in Austria.

Speaking on a personal level, he said that world economic growth was improving and a glut in oil markets was being squeezed. He added that a hike to a production level of 31 million barrels per day would be “absorbed by economic growth.”

The dramatic fall in the price of the commodity has been due to weak demand, a strong dollar and booming U.S. oil production, according to the International Energy Agency (IEA). However, OPEC’s reluctance to cut output last November has also been seen as a key reason behind the fall with a steady oil supply weighing on the price.

Prices have rallied since hitting lows of around USD 45 a barrel earlier this year and the decision to hold production levels at Friday’s meeting had been seen as a foregone conclusion with some expecting a very quick decision.

Iraqi Oil Minister Adel Abdel Mahdi, spoke of the recent rally to around USD 65 a barrel as “something extraordinary” saying that it was hard for OPEC to judge the correct balances between supply and demand. He highlighted his bullishness on Iraqi production, stating that the country could easily produce more of the commodity.

“What we are producing now is still under the level we used to produce in the late (1970s) because of the wars in the region,” he told CNBC on the sidelines of the meeting.
“Iraq will always respect the unity of OPEC but also will respect its rights. It will defend its rights. Iraq has the third reserves in oil in the world so I think its portion, its quarter within OPEC or with others, will be higher than it is today.”

Read More: OPEC and oil prices: Sentiment is king

The security situation in Iraq has also improved, according to Abdel Mahdi, who said that major oil fields were well secured. He even suggested that the organization could add to its current membership of 12 nations and grow its share of global production.

Both delegates in Vienna stated that the price of around USD 75 to USD 80 a barrel would be a fair price for the commodity with many analysts predicting that oil could reach this level by the end of this year. “I think this is a just price,” Abdel Mahdi

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

Asian stocks open mostly lower following weak US lead

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

Listen to the Article (6 Minutes)

Asian stocks kicked off Friday with a mixed open, as a slump on Wall Street overnight tempered risk appetite.

Apart from the closely-watched US nonfarm payrolls report due later in the day, investors are also awaiting the meeting of the Organization of the Petroleum Exporting Countries (OPEC) taking place in Vienna. While markets expect the 12-nation cartel to stand pat on its output levels, traders will be on the lookout for clues on where crude oil prices may be headed.

Overnight, US stocks nursed a weaker finish as volatility in bonds and a lack of resolution on Greece kept investors on edge. The Dow Jones Industrial Average and the S&P 500 shaved off 0.9 percent each, while the tech-heavy Nasdaq closed down 0.8 percent.

Nikkei sags 0.4 percent

Japan’s Nikkei 225 index nudged down, as the dollar-yen made muted moves to trade around 124.47.

Export-oriented plays fell into the red, with the currency providing little upward momentum. Sony led losses among blue chips, with a slump of 1.2 percent. Toyota Motor and Mitsubishi Electric eased 0.6 percent each, while Toshiba inched down 0.2 percent.

Banking counters also came under selling pressure after Thursday’s upswing; Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group opened down more than 1 percent each, while Mizuho Financial Group lost 0.8 percent.

ASX adds 0.3 percent

Australia’s benchmark S&P ASX 200 index reversed course to edge up 0.2 percent, after a brief negative open.

Having eased 3.76 percent over the past four sessions, the Sydney bourse is on track for its worst week in 2 years. It has been a relatively data-heavy week for the Australian market, having received a better-than-expected growth report card for the first quarter, alongside dismal retail sales and trade data for April. Earlier in the week, the Reserve Bank of Australia (RBA) held interest rates steady at its monthly policy meeting.

Iron ore prices hitting a four-month high of USD 63.50 a tonne delivered a cheer to the mining sector. Fortescue Metals climbed 2.6 percent, while Rio Tinto and BHP Billiton opened up 0.8 and 0.3 percent, respectively.

Meanwhile, Recall Holdings is seeking to renegotiate a USD 2.2 billion deal to be acquired by Boston-based Iron Mountain, according to Australian media reports. Shares of the data protection services provider tanked 1.4 percent at the start of trade.

Kospi sheds 0.5 percent

South Korea’s Kospi index declined amid a broad-based selloff.

The bourse’s top weighted stock Samsung Electronics opened down 0.3 percent, a day after jumping 5 percent. The swift move in Samsung’s share price on Thursday was largely due to comments from US-based hedge fund Elliott, which opposed the all-stock takeover offer from Cheil Industries for affiliate Samsung C&T Corp. Cheil Industries is Samsung Group’s de facto holding company.

Meanwhile, Samsung C&T announced Thursday that it won a USD 682.3 million deal to build a road in Australia.

Shares of Cheil Industries and Samsung C&T extended robust gains in early Friday trade, up 1.8 and 5 percent, respectively.

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

Is $60 the new normal for oil?

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

Listen to the Article (6 Minutes)

Weak global economic growth momentum and a supply glut will cap oil prices at around USD 60 for the rest of 2015 and into 2016, analysts say.

“WTI oil futures will remain range bound at around USD 60 for the rest of 2015 and will only start trending up towards USD 70 a barrel heading into the end of 2016,” Mizuho Research Institute senior economist Jun Inoue told CNBC in a phone interview. “Global economic growth looks soft, but there are no signs that oil supplies will fall,” he said.

After falling to six-year lows earlier this year, oil prices have stabilized over the past two months. WTI futures have hovered in a USD 50-USD 60 a barrel range since early April.

Ahead of Friday`s Organization of Petroleum Exporting Countries (OPEC) meeting, ministers from oil-producing countries such as Iraq, Venezuela and Angola, have been touting a higher target of around USD 75-USD 80 range, Reuters reports.

But analysts don`t see much scope for upside to those levels.

“Oil prices appear to be settling in a range of USD 60 to USD 70 per barrel,” said Capital Economics in a note on Wednesday. “We think that prices are more likely to fall than to rise over the remainder of this year.” Capital Economics is forecasting Brent at USD 60 by the end of the year. Brent futures were trading at USD 63.38 a barrel at mid-day Asia Thursday.

Position talk

Whatever oil ministers from producer countries may be saying in Vienna, OPEC itself is unlikely to explicitly target a price, although it is expected to maintain production quotas that are helping to keep prices so low.

“OPEC must maintain the perception that the market is determining the price level,” Barclays commodities research team said in a Tuesday note.

As for those oil ministers mooting target prices, it may just be position talk, analysts said.

“The oil producers have an eye on the market and target a higher price, which are not necessarily a reflection of their production costs,” said Mizuho Research Institute`s Inoue.

Higher prices may not be the priority for OPEC anyway.

By maintaining production levels, oil prices will remain below the levels at which investments in US shale production can be recovered, analysts said. The break-even point for the earliest share investments is estimated at around USD 60 a barrel and higher for later projects, according to Mizuho`s Inoue.

Still, OPEC will be careful to avoid giving the impression that it is targeting US shale producers.

“The Saudis are taking pains to stress that US shale producers are not the target, rather all expensive producers,” Barclays said.

Floors and ceilings

Going forward, US shale production will cap oil prices for the next two years, analysts said.

“Due to the sharp cuts in upstream spending and drilling, US supply has finally stopped growing, hitting a plateau in the last three months, with declines expected soon. This has already supported prices, and helped to set a floor,”Societe Generale commodities analyst Michael Winter said in a note on Wednesday.

That may not last for long, however.

The backlog of drilled, but unfracked and uncompleted, wells is a “major wildcard,” according to Winter, who warns that expectations of more supply coming to market will keep a cap on oil process.

Societe Generale is forecasting WTI futures at USD 60 through to the end of 2016.

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

Entertainment is serious business: PVR MD Bijli

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

Listen to the Article (6 Minutes)

If there’s one thing that frustrates the affable Ajay Bijli, chairman and managing director of Indian cinema chain PVR, it is the fact that movie screening business is not taken seriously enough by policymakers in the country.

“Entertainment is seen as a bit of a frivolous business in the eyes of the government. They haven’t really looked at the overall potential of it. So when I looked at countries like China and the U.S., I feel shortchanged,” said Bijli who runs India’s largest cinema chain.

Bijli was referring to India’s entertainment tax and strict building bylaws that restrict the expansion of cinemas in the country.

The 48-year old Harvard graduate, who is widely regarded as the pioneer of multiplexes in India, has often described the country’s entertainment tax as prohibitive.

At present, there’s a 20 percent tax on the gross value of tickets in Delhi, and 45 percent in Mumbai.

“China opens about 3,000 to 4,000 screens a year. We barely manage about 300 screens. It is a staple form of entertainment for lots of Indian people, and I think if a little bit more attention is given to this industry, it can really go to a different height altogether,” he said.

Speaking to Oriel Morrison for CNBC’s Entrepreneur Asia: Power; Bijli said having the necessary discipline to cope with the high costs is key to survive in the business.

Read More:Indian industrialist: India to be top economy by 2050

“We don’t get overly optimistic about what the revenues are going to be. We keep them at realistic levels, at least when we’re signing a lease. The rest depends on how we maximize our revenues from the footfalls that we generate,” said Bijli.

That includes expanding to F&B, and other retail entertainment such as bowling. Nevertheless, the mainstay of PVR business remains very much on movie exhibition, and the company now has more than 460 screens in 44 cities across India.

“Indian films are vibrant and colorful. So I always felt like that transition from the world of make-believe to reality was too harsh. I believe it could become smoother, so even if you’re exiting or entering the auditorium, you should still feel a very vibrant, make believe space. That was the idea, and the response was just phenomenal,” he said.

It has been about two decades since Bijli embarked on his entrepreneurial journey to build quality cinemas for India, instead of taking over his family’s main trucking business.

Read More: Indian billionaire worries about disruptive technology

Despite the risks he had to grapple with in the early days, it was a journey that he looks back with no regret

His advice to entrepreneurs is to build their business with the same passionate approach. “Find your calling, find your vocation, then stick to it and give it all you’ve got.”

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