Month: March 2017

Asian markets drop, as dollar weakens in reaction to Trump health-care failure

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

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Asia markets were mostly lower after US President Donald Trump suffered a legislative defeat last Friday when Republican leaders pulled a bill to overhaul the US health care system with the dollar weaker and gold prices up.

Japanese benchmark Nikkei 225 dropped more than 1.5 percent and the safe-haven yen strengthened.

Shares of Toshiba tumbled 2.91 percent after local media reports that Toshiba’s US subsidiary Westinghouse may file bankruptcy on Tuesday and seek support from Korea Electric Power.

Australia’s ASX 200 fell 0.48 percent, weighed by its materials sub-index which fell 1.2 percent.

Australian miner South32 said Monday morning that it would buy back USD 500 million of its shares. Shares of the South32 sold off 1.47 percent.

BHP Billiton dropped 2.39 percent, after the Escondida copper mine strike in Chile left the Australian miner with a loss of about USD 1 billion and in a weaker negotiation position, Reuters reported.

In South Korea, the Kospi was off 0.55 percent.

Both the Shanghai composite and the Shenzhen composite were nearly flat at the open. Hong Kong’s Hang Seng index was down 0.33 percent.

On Sunday, a Beijing-backed civil servant Carrie Lam was chosen to be Hong Kong’s next chief executive, in what has been called a “small circle election.”

The majority of the special administration’s 7.3 million people did not have the chance to vote, as the leader was chosen among several candidates by a 1,194 person election committee.

Dow futures fell 116 points, S&P 500 futures were down 33 and Nasdaq futures were 41 points lower on Monday at 9:35 am HK/SIN.

US stocks had a choppy trading session last Friday, after media reports that the House pulled a key health care vote that was seen as crucial for President Donald Trump’s agenda.

The Dow Jones industrial average was down 0.29 percent to 20,596.72, the S&P 500 slipped 0.08 percent to close at 2,343.98 and the Nasdaq composite added 0.19 percent to 5,828.74.

“The failure of the US Republican party to pass legislation repealing the universal healthcare act may come back to bite markets,” said Michael McCarthy, chief market strategist at CMC Markets, in a Monday note.

“The failure of the Obamacare repeal is not economically significant, but a hostile parliament threatens the positive outlook,” he said.

The White House warned rebellious conservative lawmakers that they should support Trump’s agenda, or he may bypass them on future legislative fights, Reuters reported.

On the energy front, Brent crude futures slipped 0.12 percent to USD 50.74 a barrel while US crude dipped 0.29 percent at USD 47.83. A joint committee of ministers from OPEC and non-OPEC oil producers has agreed to review whether a global pact to limit supplies should be extended by six months, according to a statement on Sunday.

The dollar was weaker at 99.315 against a basket of currencies at a four-and-a-half month low. Against the greenback, the yen was weaker at 110.40, falling below the 111 levels seen last Friday, and the Australian dollar remained steady at USD 0.7617.

Investors are also focused on UK Prime Minister Theresa May’s plans to set out how her government plans to restore sovereignty over Britain’s laws in a speech scheduled for Thursday. The pound last traded at USD 1.2510 at 8:20 am HK/SIN.

Spot gold, viewed as a safe haven asset, was trading higher at USD 1,255.11 an ounce, a one-month high.

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

Donald Trump’s visa threat doesn’t scare leading Indian IT firm

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

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President Donald Trump’s talk of visa reform is a major thorn in the side of India’s software services firms, but one of the industry’s biggest players says it isn’t worried.

“We’re pretty strong in the U.S. — we have a large presence of U.S. nationals working for us, and we continue to invest,” Girish Ramachandran, Asia-Pacific president of Tata Consultancy Services, told CNBC on the sidelines of the Boao Forum in Hainan.

“We feel confident … but overall, we’re pretty optimistic about business across these markets.”

For years, IT firms in the world’s largest democracy, including Tata competitors Infosys and Wipro, have relied on the AmericanH-1B visa program to send employees to the U.S., which is the industry’s most important overseas market. TCS, for instance, gets roughly half of its revenue from the U.S.

The program was launched decades ago to allow companies to temporarily bring over skilled foreign employees if they couldn’t find Americans to fill the spots. But Trump has called for an overhaul of the program amid concerns that it was stealing jobs from Americans.

Earlier this month, the White House suspended expedited services of H-1B visas.

Changes to the policy could mean higher costs for the Indian IT industry, which has prompted firms like TCS to recruit more heavily at U.S. universities.

“We are recruiting a lot from the local talent, and we continue to invest directly in the campuses,” Ramachandran said. “We strongly believe that we will have a business model to sustain that.”

It’s a move that keeps him “confident” in the firm’s continued success, even in the face of potentially higher costs and lower margins.

He also called China’s financial technology sector “very, very vibrant,” identifying it as an area that TCS would like to continue engaging.

For China’s overall tech sector to keep growing, however, it must find a way to scale up and succeed in foreign markets, Ramachandran said. He also stressed that reforming the mainland’s state-owned enterprises would allow start-ups to flourish in the world’s second-largest economy.

“That would really grow a lot of opportunities for us.”

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

Oil could collapse into the $30s if OPEC doesn’t keep its act together

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

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When they meet in Kuwait Sunday, a handful of OPEC and other oil producers are expected to put a happy face on their production agreement, and they should point to the potential for extending the deal in May.

That should help support oil prices, after the recent 10 percent plunge since investors began to doubt the deal earlier this month. The international benchmark Brent crude temporarily fell below the psychological $50 level this week.

Representatives of the five monitoring countries this weekend are expected to review where producers stand on compliance with the six-month agreement to remove 1.8 million barrels a day from the market. As president of OPEC, Saudi Energy Minister Khalid Al-Falih is expected to attend, along with representatives from the five members of the monitoring committee — Kuwait, Algeria, Venezuela, and non-OPEC nations Russia and Oman.

“Without the production cut agreement, I think you could basically target the low-to-mid $30s. I’m of the mind they extend it,” said Gene Marcial, manager market research at Tradition Energy. “The Saudis need the revenues from higher oil prices. They know that prices at $30 to $35 is trouble for them.”

The December deal between the cartel and major producers, like Russia, helped stabilize prices in the $50s for weeks. As the agreement took hold in early January, Brent traded to a high of just over $58 per barrel, and West Texas Intermediate crude was at about $55 per barrel. Confidence in the agreement drove a throng of buyers into the market, resulting in a record amount of investors in U.S. crude futures betting oil prices would go higher.

But by early March, U.S. producers, lured by steadier prices, continued to increase their own production, bringing it within a half million barrels a day of its previous high. That glut weighed on sentiment, and doubts about the producer agreement arose when the Saudi energy minister reiterated that the kingdom would not shoulder the brunt of the cuts if other producers did not meet their commitments. Al-Falih’s remarks were made at the CERAWeek energy conference in Houston, and at the same meeting, Iraq’s oil minister revealed that his country was moving toward 5 million barrels of production by mid-year, representing an increase.

Despite the fact, Saudi Arabia, Russia and the other producers made an effort to show a unified front at the CERAWeek meeting, oil continued to weaken.

“The Saudis certainly sent a very strong message that they were not going to do this alone, and they were not going to be the swing producer and make room for other exporters. It was kind of a reiteration of what has been the Saudi position. They’ll play a stabilizing role but they’ll not play a swing-producing role,” said Daniel Yergin, vice chairman of IHS Markit, sponsor of the CERAWeek conference earlier this month.

As for this weekend’s meeting, “I expect them to come out with a reaffirmation and point to the high degree of compliance,” Yergin said.

Analysts say in OPEC’s favor is the fact that the compliance by OPEC members and others now appears to be much better than expected. The cartel is not exhibiting some of the blatant overproduction of the past.

“In sharp contrast to previous agreements, the degree of compliance now is very high, and that may not be so well recognized in the market. It was obviously what drove up the price” earlier in the year, said Yergin. “The shift in sentiment was quite stark, and it was to do with confidence, not the agreement, and the focus on inventories. It was also due to the new bullishness in U.S. shale.”

Helima Croft, global head of commodity strategy at RBC, agreed that compliance appears to be strong, after concerns about countries like Iraq, and even Russia not being fully engaged yet. According to Reuters, Saudi Arabia intends to keep supply in line with its quota at about 10 million barrels a day, regardless of what happens with production.

“It’s not like there are egregious cheaters in the first place,” said Croft. “The breakdown of who is doing what is a bit fuzzy, but some are doing more. Some are doing less.” She said if there was a spoiler in the group, it could end up being Iraq.

“I think Iraq will be a subject of discussions, and whether there’s any flexibility for Iraq. Can you really hold them to 210,000 barrels (cut)?” Croft said. But she expects at the end of the day, the compliance monitoring group will be supportive of the deal and there will be an extension at OPEC’s May meeting. Kuwait has already indicated it wants an extension.

“We went from having these very heated debates over whether OPEC would cheat and could they hold it together, to: ‘Look what OPEC’s done so far. It looks pretty good,'” she said.

Croft said she thinks a global supply rebalancing is underway, despite the fact that U.S. inventories have continued to rise. U.S. oil supplies rose to a record 533.1 million barrels last week last week, as a jump in imports from the Middle East helped boost inventories. The U.S. produced 9.1 million barrels a day.

“Everyone is focused on the U.S. … If you look outside the U.S., you look at places like Japan. We’re seeing the rebalancing. The U.S. is going to be the last,” she said.

Croft said she thinks leaders of producing nations will be motivated to agree to an extension of the production cuts because of their own domestic concerns. “Do they really want to flirt with the $30s? Is that something that’s going to enhance their ability to lead in one of these petrostates?”

She expects OPEC General Secretary Mohammad Sanusi Barkindo to stress the harmony and cooperation among producers, after this weekend’s meeting. “Barkindo is clearly aware of where the market is right now, and any appearances of cracks that appear in OPEC will have an effect on sentiment. He’s very aware of that. I think he’s going to want to generate the most positive headlines coming out of that meeting,” she said.

Some analysts are lowering price expectations due to high supplies. JPMorgan Thursday reduced its price forecast for the second half, taking its 2017 target to $55.75 per barrel for Brent from an earlier forecast of $58.75. It lowered Brent for 2018 to $55.60 per barrel, from $60 per barrel.

Yergin said the drop in oil prices could influence oil producers. “This is certainly going to lead to second thoughts about drilling programs for the second half of the year,” he 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

UK police make seven arrests in raids linked to investigation into attack on Parliament

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

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British police have searched six addresses and made seven arrests in raids as part of an investigation into Wednesday’s attack on the Houses of Parliament which left four people dead and 40 injured, London’s Metropolitan Police has announced.

News of the police action, including one address in Birmingham, follows on from Wednesday when a suspected terrorist plowed a car into pedestrians on London’s Westminster Bridge and then fatally stabbed a police officer before being shot.

Mark Rowley, assistant commissioner of the Metropolitan Police, said at a press conference Wednesday night that the dead attacker was believed to be the only suspect, but declined to comment on the assailant’s identity. The police’s working assumption is that the attacker was inspired by international Islamist terrorism.

Londoners can expect to see heavier police presence, both armed and unarmed, throughout the city for the next few days, Rowley said.

Speaking Thursday morning, U.K. Defense Secretary Michael Fallon said that Parliament is currently reviewing its already stringent security measures.
Police forensics team examine a car in Parliament Square on March 22, 2017 in London, England.

Wednesday’s attack unfolded around 2.40 p.m. local time when the assailant drove a grey Hyundai i40 along a pavement on Westminster Bridge, before running to Parliament. There he was confronted by a police, including unarmed PC Keith Palmer, who later died from stab wounds.

Tobias Ellwood, a member of Parliament who was at the scene at the time, was praised for his efforts to provide mouth-to-mouth resuscitation to Palmer. The other victims are yet to be named.

Addressing the country outside 10 Downing Street Wednesday evening, Prime Minister Theresa May condemned the attack and applauded the heroism demonstrated by the police.

“The terrorist chose to strike at the heart of our capital city, where people of all nationalities, religions and cultures come together to celebrate the values of liberty, democracy and freedom of speech,” she said.

“But let me make it clear today, as I have had cause to do before, any attempt to defeat those values through violence and terror is doomed to failure.”

Londoners and tourists will wake up on Thursday and go about their lives as normal, May said.

The city’s mayor, Sadiq Khan, echoed the prime ministers remarks, saying “Londoners will never be cowed by terrorism.”

The attack is the worst London has seen since 2005, when the capital was hit by a series of suicide bomb attacks on public transport during rush hour on July 7.

The city has been on “severe” alert since 2014, which indicates that an attack is “highly likely”, in response to conflicts in Iraq and Syria. This was an increase from a previous level of “substantial”, which implies a strong possibility of an attack.

Parliament is to hold a minute’s silence at 10 a.m. London time on Thursday to commemorate the victims of the attack.

Wednesday marked the one year anniversary of suicide attacks which took place in Brussels’ Zaventem Airport. Memorial services were held around the country to remember the 32 people killed and 320 injured by the attack.

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

A Donald Trump vs Janet Yellen clash is getting closer to happening

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

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A week ago, all looked well in the world of the Federal Reserve and Chair Janet Yellen: Economic hopes were high, the markets were performing well, and the central bank was well on its way to restoring some sense of normalcy after a decade of historically loose monetary policy.

Suddenly, things have gotten murkier.

The stock market just turned in its worst one-day performance of the year, worries are escalating in Washington and on Wall Street that President Donald Trump’s agenda has hit stall speed, and the notion that the Fed will have a free ride seems considerably less certain.

“There’s a real policy timing mismatch here.  Yellen is moving the ball down the court, while Trump still has failed to put the ball in play.”-Michael Arone, chief investment strategist, State Street Global Advisors

Should this keep up — and there’s a growing drumbeat on the Street that it will, at least in the near term — it could set up Trump and Yellen on a collision course.

“The different perspectives of Chairwoman Yellen and President Trump further underscore the potential for a future collision, rather than productive collaboration,” Michael Arone, chief investment strategist at State Street Global Advisors, said in a note.

Indeed, tightening monetary policy against fiscal gridlock does not paint a pretty picture.

The markets had been looking for real progress from Trump’s promises on tax reform and regulatory rollbacks. The uncertain fate of this week’s health-care vote has thrown into question the administration’s ability to get the rest of its agenda implemented in a timely fashion.

While the market shrugged off the March 15 Fed interest rate increase — in anticipation of Trump-spurred economic growth — it might not have quite as strong an appetite for the two more hikes central bank officials have indicated they will approve this year.

“There’s a real policy timing mismatch here,” Arone said. “Yellen is moving the ball down the court, while Trump still has failed to put the ball in play.”

A question of value Market action since the rate hike, coincidental or not, hasn’t been pleasant. Following a rally the day of the Fed’s move, stocks have been lower since. Tuesday’s washout contributed strongly to a week that had the S&P 500 lower by 1.75 percent as of Wednesday afternoon.

The decline has come as market watchers question whether the aggressive 10 percent post-election rally needs to catch its breath. Valuations looked stretched, with the index trading at more than 18 times forward earnings.

Enthusiasm over Trump had been able to forestall valuation concerns. A defeat on health care could reverse market sentiment in a hurry.

“The market has embraced the Trump agenda through thick and thin,” said Quincy Krosby, market strategist at Prudential Financial. “Anything that looks as if that may be delayed or watered-down or that he is not the great negotiator that he campaigned on has an extended, overbought market questioning whether or not valuations at this point are correct.”

That leaves the Fed in a potentially uncomfortable spot.

A week ago, investors believed and embraced the concept that the Fed could and would raise rates a total of three times this year. However, just a few market undulations have lowered that conviction, to the point where traders assigned just a 53 percent chance by Wednesday afternoon that a third increase could come by December. Earlier in the day, that probability actually fell below 50 percent.

“We are so used to a market that has been underpinned by accommodative monetary policy,” Krosby said. “We have gotten away from what markets are supposed to do. They are supposed to recalibrate, take time, burn out froth and wait for the next catalyst to push the market higher.”

In fact, David Rosenberg, senior economist and strategist at Gluskin Sheff, told clients that he’d feel more comfortable if the market did pull back to reflect the fundamentals of a 2 percent growth economy more closely.

“My recommendation is to stop wasting your time trying to explain something that is as simple as an asset class that is priced for perfection at some points realizes that the world is not a perfect place,” he said. “A president can certainly fly a drone whenever and wherever he wants, but he is never bigger than the business cycle and over time has little influence over investment returns as well.”

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

4G ‘dumb’ phones are set to grow 5,000% this year and it could be a ‘blessing in disguise’ for Apple

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

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With smartphone growth slowing, a boom in so-called ‘dumb,’ or feature, phones could be the next big thing in the sector, according to Counterpoint Research.

In a statement published Tuesday, Counterpoint forecast that more than half a billion 4G capable feature phones will be shipped globally over the course of the next five years, and that demand for such models will grow more than 5,300 percent this year. Counterpoint describes the trend as a “big short-term opportunity” for the mobile industry.

Counterpoint says that more than 400 million feature phones were sold globally in 2016, whereas smartphone growth slowed to 3 percent year on year.

According to Counterpoint, there are 1.3 billion feature phone users globally, mostly from emerging markets in Asia and Africa. The polarization of economies and technology available means that in mobile phone terms, 2G and 4G networks are growing. 3G represents the squeezed middle sector of the market.

Counterpoint suggests that cellphone operators want to drive this trend. Because 2G networks are considered old and inefficient, operators are looking to catapult people on to new 4G networks.

However, the majority of the 2G user base is not keen on upgrading to a 4G smartphone, largely due to pricing and the lack of literacy in the newer technology.

“Voice calls and texts remain the king,” Counterpoint says, which makes the case for 4G feature phones.

Apple is investing heavily in India as it views the country as a future growth market. But in an environment where people are still buying sub $200 phones, it is finding the environment tough. Upgrading people to the idea of 4G could help.

Neil Shah, research director of devices and ecosystems at Counterpoint Research, told CNBC via e-mail that, Apple’s main competitor “Samsung shipped some 50 million (non 4G) feature phones last year. They will have to also launch a 4G feature phone to arrest any churn of decline. They won’t be able to sustain with just 2G/3G feature phones this year.”

Shah added that, “for Apple in India, their cheapest phone starts from US$450 … (the trend) is a blessing in disguise for Apple as these laggard 2G feature phone users will rapidly get used to 4G networks and will itch for a better phone when they upgrade in next two years. Basically, this trend will help these users to cross the chasm – which is what Apple would actually like.”

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

PM Narendra Modi just undertook a major political shift

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

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Prime Minister Narendra Modi’s controversial decision to install a rabble-rouser as leader of India’s most populous state may signal a new direction in his policy platform and potentially sow seeds of religious tension.

Following an impressive victory in recent state elections, Modi’s ruling faction — the Bharatiya Janata Party (BJP) — named Yogi Adityanath as Uttar Pradesh chief minister on Sunday. A 44-year old priest, Adityanath is a well-known figure of Hindutva, a right-wing ideology that champions Hindu nationalism.

In the past, he’s made numerous remarks perceived as hateful towards minority religions in the Hindu-majority nation. He’s asked Indian Muslims to leave the country, recently praised President Donald Trump’s travel ban on certain Muslim-majority countries, and suggested that minorities were to blame for communal riots. Last year, he claimed Mother Teresa was part of a conspiracy to Christianize India. A youth group that he founded, Hindu Yuva Vahini, has also been linked to violent incidents.

Adityanath’s promotion in Uttar Pradesh, dubbed the political heart of India, signals a dramatic change in Modi’s political outlook, strategists said.

“There is no denying the signal this pick (of chief minister) sends: with a huge mandate, the BJP has decided to lead with the face of religious nationalism — not the forward-looking, twenty-first century face of the New India — in their most important state,” said Alyssa Ayres, senior South Asia fellow at the Council of Foreign Relations, in a recent note.

While the BJP itself is a Hindu nationalist party, populism and economic development has dominated Modi’s first three years in office. Up until now, the prime minister has largely concentrated on manufacturing, sanitation and infrastructure initiatives, such as ‘Make in India’ and the nation-wide construction of toilets.

But Adityanath’s rise to power could mean Modi has chosen to focus his governance on religion instead as he looks to cement his leadership before the 2019 general election.

“Adityanath’s selection may seem surprising because his support for Hindutva appears to contradict Modi’s campaign rhetoric of prioritizing economic development above Hindu-first policies,” said Eurasia analysts in a note.

But for the BJP, Adityanath represents a subservient leader who will continue Modi’s anti-corruption drive, shore up support within the Hindu base, and strong-arm the civil service to execute Modi’s agenda, the note continued.

Following his swearing-in on Sunday, Adityanath said he will look to implement measures aimed at curtailing special privileges for government ministers, including a declaration of assets. He’s also promised to improve law and order by eliminating thug rule, a critical issue for a gang-ridden state like Uttar Pradesh.

With a population equal to Brazil’s, Uttar Pradesh is of central importance to the rest of the nation.

“Since independence, the politics of Uttar Pradesh have reflected those of the country as a whole,” said Mark Fleming-Williams, global economics analyst at Stratfor, noting that the state has produced eight of India’s 15 prime ministers. “It is the country’s steering wheel; anyone who wishes to control India must control Uttar Pradesh.”

While local media are already discussing Adityanath’s chances of becoming prime minister one day, a more pressing issue accompanies his new role: Hindu-Muslim conflict.

It’s feared that his inflammatory remarks and practice of divisive politics will spark fresh tensions between the two groups, who have a long history of conflict in India. Islam is the nation’s second-largest religion behind Hinduism, and Uttar Pradesh is around 20 pecent Muslim.

“Until now, Modi’s BJP government has been relatively circumspect on sensitive communal issues, but the appointment of Adityanath signals a shift in its approach. From now on, Muslims are likely to be left with the understanding that they are in a Hindu country — and that their values and beliefs are of secondary importance,” said Fleming-Williams.

Religious unity has long been a perennial problem in the world’s largest democracy but it’s taken on renewed importance amid recent developments. Calls to construct a new Hindu temple in southern Uttar Pradesh and India’s ongoing hostilities with Pakistan in the disputed region of Kashmir have cast an intensified spotlight on Indian Muslims.

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

Apple’s next iPhone will lead to a big ‘paradigm shift,’ said VC

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

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Apple’s the next version of the iPhone will lead to a “paradigm shift,” with augmented reality as its foundation, said Gene Munster, managing partner at VC firm Loop Ventures.

Augmented reality — which differs from virtual reality in that it is not completely immersive — will be the key to not just Apple’s future but the future of tech. And while it may not impact the company’s sales in the short-term, Muster says it will “lay the foundation of the next computing paradigm.”

That shift will ultimately be good for Apple’s stock, he said. “You start to get more comfortable when you put together the services side of the business on top of the augmented reality side,” Munster said.

Apple is investing heavily in augmented reality, though both acquisitions and hiring new talent, according to a report in Bloomberg.

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

Do you live in the world’s cheapest city? Find out here

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

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Half of the world’s ten most expensive cities to live in are in Asia, with Singapore and Hong Kong firmly defending their top two spots from a year ago, according to a new survey from the Economist Intelligence Unit (EIU).

The findings were released Tuesday in a report titled “Worldwide Cost of Living 2017,” which ranked the world’s major cities by comparing more than 400 individual prices across 160 products and services including food, drink, clothing, household supplies and personal care items among others.

The Japanese cities of Tokyo and Osaka re-entered the top 10 rank, climbing seven and nine places respectively over the year to rank 4th and 5th, owing to a sustained recovery in the yen. The rest of the top ten comprised four cities in Western Europe and New York as the lone North American representative thanks to a relatively weak greenback last year.

Some of the cheapest cities to live in were also in Asia — particularly in South Asia — but the report noted many of these places had “well-documented economic, political, security and infrastructural challenges.”

The biggest movers up the ranking in the last 12 months were mostly from the emerging markets — Sao Paulo and Rio de Janeiro climbed up 29 and 27 places respectively to rank 78th and 86th thanks to a recovery in the local currency and double-digit inflation. As well, Antipodean cities such as Brisbane, Adelaide, and Auckland clocked in higher.

Conversely Manchester and London dropped 25 and 18 places respectively mostly due to last year’s plunge in the British pound following the Brexit vote.

Exchange rates a key driver of cost

With emerging markets dominating both ends of the rankings, Simon Baptist, regional director for Asia at the EIU, pointed to three key drivers of cost of living in these countries: the exchange rate, government policies and commodity prices.

“We’re expecting, over the course of this year, the rupee, the yen and the euro to all have a fairly good year,” he told CNBC. “That’s going to up the cost of living in those cities. On the other hand, currencies we think are going to struggle — including those in Brazil, South Africa, (South) Korea, Indonesia and China — those places we expect the cost of living is going to come down.”

With a lot of prices in emerging markets regulated by governments, policies such as taxes and social norms tend to have a bigger impact on prices, according to Baptist.

For example in India, inflation dropped sharply after the government decided to ban and replace large-denominated notes last November that saw a lot of planned spending get postponed owing to a cash crunch. As the effects of demonetization ebbs, Baptist expects overall inflation to pick up, but the government’s infrastructure spending could help keep food prices down.

“Something that could make a big difference in India actually is the improvement that seem not be happening in food chain management — so say better refrigeration, improvement in electricity supply and refrigerated transport mean food prices should, over the next few years, become a bit less sensitive to fluctuations in the weather,” he said, adding it could potentially reduce the level of food price spikes.

Baptist added low service sector wages make non-tradable goods in India really cheap compared to other places.

Commodity prices, the report pointed out, are expected to rebound from 2017 following consecutive years of decline — this includes oil prices that bottomed-out last year and is expected to climb.

The report notes higher commodity prices affect prices, particularly in markets where basic goods make up the bulk of shopping baskets. Moreover, in countries that rely on commodities, higher prices could potentially lead to austerity, economic controls and weak inflation, which could depress consumer sentiment and growth. Global uncertainties and rising protectionism

Globally, the report notes, this year could see fallout from various political and economic shocks take deeper effect.

In the UK, the British government recently set the date to begin Brexit negotiations with the European Union. Following last year’s referendum vote, the British pound tumbled sharply and Baptist expects the pound to decline further and remain volatile throughout the negotiations.

“There’ll be moments of ‘this seems like a good deal’ and there’ll be moments of ‘this looks like a bad deal.’ So I think the pound is going to be quite volatile so that’s going to have an impact on the cost of tradable goods in the UK,” he said.

Baptist added following the exit, EU goods will become more expensive in the UK and it will take time for the British government to sign trade agreements for cheaper supplies from elsewhere.

Trade will become less of a deflationary force in the global economy owing to rising protectionism, according to Baptist. Upheavals in trade agreements and international relations might push up prices for imports and exports, the report noted.

The Trump administration, for example, has put emphasis on having “fairer” trade deals with other countries and has vowed to renegotiate existing trade agreements.

But on the flip side, governments may have a tougher time to convince its citizens to pay higher prices for the same goods and services under renegotiated trade agreements, according to Baptist.

“People are now so used to having cheap goods from elsewhere that it’s difficult to see that politicians will actually reduce access to goods that are already there, with some exceptions like say Brexit.”

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Asian stocks mixed as investors mull G20 headlines

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

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Asian equities were mixed on Monday as investors mulled headlines out of the G-20 finance ministers meeting in Germany at the weekend and China Development Forum over the next two days.

Finance ministers from twenty of the world’s biggest economies held a two-day meeting, and warned against competitive devaluations and disorderly FX markets but failed to agree on keeping global trade free and open.

Down Under, the ASX 200 dipped 0.35 percent, seeing broad losses across all sub-indexes.

South Korea’s Kospi dropped 0.52 percent. Earlier, official data showed that South Korea’s February producer prices rose at its fastest pace in over five years, with the producer price index (PPI) up at 4.2 percent, compared to January’s 3.9 percent.

Chinese mainland shares were mixed on Monday morning, with the Shanghai composite up 0.13 percent and the Shenzhen composite flat. Hong Kong’s Hang Seng added 0.21 percent.

Over in Beijing, international business leaders, international organizations and Chinese policymakers gather for the 18th session of the China Development Forum.

Official data on Saturday showed that China’s property prices rose in February after having slowed in the past four months. New home prices were up 0.3 percent, compared to January’s 0.2 percent increase. Meanwhile, property sales jumped 25.1 percent in January and February, the strongest annual growth in seven years.

Markets in Japan are shut. On Friday, Japan’s benchmark index fell 0.35 percent to close at 19,521.59.

Japanese Prime Minister Shinzo Abe said on Sunday in Germany that the European Union and Japan should soon reach an economic deal, and stressed the importance of free trade to his country, Reuters reported.

US Secretary of State Rex Tillerson met with Chinese President Xi Jinping for 30 minutes on Sunday and said that President Donald Trump anticipated a meeting soon, Reuters reported.

IBM and a unit of China’s Dalian Wanda Group agreed on Sunday to team up to provide cloud services for Chinese firms through a newly formed venture, Wanda Cloud Company.

In Southeast Asia, oilfield services firm Ezra Holdings of Singapore filed for US Chapter 11 bankruptcy on Saturday. The company had been trying to restructure and said in February it faced a “going concern issue” if it did achieve a favorable outcome.

Oil prices were steady last Friday after dropping nearly 10 percent for the week on concerns of a continued global supply overhang.

During Asian time, Brent crude was down 0.35 percent at USD 51.58 a barrel, while US crude fell 0.59 percent to USD 48.50.

The dollar was trading at 100.3 against a basket of currencies early Asian time. The yen strengthened to 112.71, falling below the 113 handle, against the greenback. The Australian dollar was stronger at USD 0.7704 as of 6:55 am HK/SIN.

US stocks closed mixed Friday, dragged down by declines in financial and health care stocks.

The Dow Jones industrial average closed down 0.1 percent to 20,914.62, while the S&P 500 slipped 0.13 percent to 2,378.25.The Nasdaq composite closed flat at 5,901.

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