Month: May 2017

Why foreign startups fail in China

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

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It’s a dream for nearly any international start-ups: Enter China.

The country’s massive population of more than 1.3 billion, of which 730 million are currently connected online, is attractive to almost any enterprise looking to expand and scale. But, China is a big enough market for any local player to redesign a solution that’s localized for its own demographic, making it hard for foreign start-ups to access.

“Ninety-nine percent of companies who want to access China as a foreign company, shouldn’t,” said Oscar Ramos, Program Director at Chinacelerator, an accelerator that helps connect startups across China’s borders. The 1 percent that Ramos said might have a chance, need to ask themselves what makes them better than any existing company in China.

“Start-ups that do good are very well funded and run and operate extremely fast,” Ramos said of China’s ecosystem. “For a long time Chinese companies have been copying things, they’re very good at doing that.”

The Chinese user is very different

“We’ve seen companies coming to China and adapting to the value proposition to a different type of demographic,” said Ramos. “But afterwards they realized they were more successful in Southeast Asia where they can leverage their acquisition channels that they’re more familiar with.”

Platforms like Google and Facebook are common forms of getting new users for many start-ups, both of which are blocked in China.

In fact, an estimated 96% of online traffic in China goes to Chinese servers, according to China Internet Network Information Center.

“Challenge all your assumptions,” Ramos said. “Everything that works in other markets, you need to be open to changing.”

There are opportunities, after all

When it comes to a competitive advantage, there’s several industries growing fast, in which there’s a lack of expertise in China, according to Ramos. This includes health care, education, fashion and food. Not only are they opportunities to enter and scale in China, but Ramos said, being a foreign brand is actually an asset in such industries.

He also adds both augmented and virtual reality are also in demand right now.

But it’s a two-way street.

Just as there’s limited cases of any big foreign company successfully getting into China, it’s not often you hear of a Chinese start-up making it big on a global scale. Although, currently, half of the top biggest unicorns are based in China, they may not even need to scale to continue to grow.

“It’s the same problem Chinese companies face when they want to expand internationally. they get used to their local consumer that has a very specific requirement and they’re very different than foreign customers and what they need.”

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

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

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

Moody’s downgrades China rating over slowing economy, growing debt

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

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Moody’s Investors Service on Wednesday downgraded China’s credit rating to A1 from Aa3, changing its outlook to stable from negative, citing concerns efforts to support growth will spur debt growth across the economy.

Foreign-exchange markets reacted to the news, with the Australian dollar dropping from levels around $0.7480 to as low as $0.7452 in the wake of the announcement. China is among Australia’s largest export markets.

But China’s yuan didn’t react much, with the dollar fetching 6.8940 yuan at 9:38 a.m. HK/SIN, compared with Tuesday’s close of 6.8890 yuan.

“Moody’s expects that economy-wide leverage will increase further over the coming years. The planned reform program is likely to slow, but not prevent, the rise in leverage,” Moody’s said in a statement. “The importance the authorities attach to maintaining robust growth will result in sustained policy stimulus, given the growing structural impediments to achieving current growth targets. Such stimulus will contribute to rising debt across the economy as a whole.”

It expected that while economic growth would remain relatively high, potential growth rates were likely to fall in the years ahead.

Moody’s estimated that while the government budget deficit in 2016 was “moderate” at around 3 percent of gross domestic product (GDP), it expected the government’s debt burden would rise toward 40 percent of GDP by 2018 and 45 percent by the end of the decade.

It also expected contingent and indirect liabilities would rise, pointing to policy bank loans, bonds issued by Local Government Financing Vehicles (LGFV) and other state-owned enterprises’ (SOE) investments.

Moody’s added that it expected economy-wide debt of the government, households and non-financial companies would rise, as economic activity tends to be financed with debt in the absence of a sizeable equity market.

It said that the recent focus on capital outflows has constrained the development of domestic capital markets by restricting the cross-border flows of capital.

It noted that the financial sector remained under-developed despite recent reforms.

“Pricing of risk remains incomplete, with the cost of debt still partly determined by assumptions of government support to public sector or other entities perceived to be strategic,” it said.

But Moody’s shifted to a stable outlook, from negative, citing balanced risks.

The government’s control of much of the economy, the financial system and cross-border capital flows offers the ability to maintain stability in the near term, Moody’s said.

It also pointed to large household savings estimated at around 40 percent of income and the country’s “sizeable” foreign exchange reserves of around $3 trillion.

Analysts differed on the importance of Moody’s move.

Macquarie noted this was the first time a ratings agency downgraded China in 25 years and the first time in seven years that one of the Big Three agencies have changed their rating. It said the move brought Moody’s rating in line with Fitch.

“This news is a clear China negative in our view (even though the rationale for the downgrade contained nothing new),” Macquarie said in a note on Wednesday.

“The next question is whether S&P will follow Moody’s. S&P has had China on outlook negative since February 2016, indicating there is a potential downgrade brewing. But S&P currently rates China one notch above Moody’s and Fitch, so a cut would not break new ground.”

But one analyst noted that the downgrade wasn’t necessarily a surprise.

“I don’t think it’s going to be earth-shattering or shift investors’ sentiment toward China,” Song Seng Wun, an economist at CIMB private banking told CNBC.

“Everyone on the planet has flagged the risk of Chinese debt and the risk that is associated with the current policymakers’ strategy and attempt to deleverage.”

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

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

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

Asian markets open in the green; FOMC minutes, OPEC meeting in focus

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

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Major indexes in Asia opened higher on Wednesday as investors looked ahead to US Federal Reserve views on interest rate hike prospects and await an upcoming OPEC meeting widely expected to extend production cuts for nine months to March 2018.

Markets are awaiting the release of minutes from the Fed’s for its last meeting on Wednesday in the US for details on the probability of a rate hike in June. More information from the Fed on how it intends to unwind its balance sheet is also expected.

Another potentially market-moving upcoming event is the OPEC meeting on Thursday that will be led by Saudi Arabia. Oil prices have been rising on optimism over hopes that will be OPEC-led output cuts will be extended with non-OPEC key producer Russia also in the pact.

Oil prices held steady after ending the last session higher. Prices had dipped earlier in the last session on news that the White House planned to sell half of the US oil stockpile. Brent crude was mostly flat, trading 0.02 percent lower at USD 54.13 a barrel and US West Texas International crude edged down 0.04 percent to trade at USD 51.45.

The Nikkei 225 jumped 0.79 percent in early Wednesday trade while the Kospi rose a more modest 0.31 percent. Australia’s benchmark S&P/ASX 200 index edged higher by 0.1 percent.

Over in Japan, Toshiba’s US nuclear arm Westinghouse Electric announced it had negotiated a deal that would let the company borrow USD 800 million. Toshiba shares were up 0.47 percent in early trade.

Singapore-listed commodities trader Noble Group said it was aware of media reports that Sinochem had stopped pursuing a stake in the company, but was unable to confirm whether this was accurate. The company also said it was aware of its credit rating downgrade by S&P.

Noble has also requested for a lift of the halt in trade of its shares. Shares of the company had plunged more than 32 percent before trade was halted in the last session.

In currency news, the dollar strengthened against a basket of rival currencies to trade at 97.426, off the six-month low seen earlier in the week. Against the yen, the greenback edged higher for the second straight session to fetch 111.89.

“US Treasury yields had a small sell-off at the start of the New York session, with the move higher in yields helping the dollar perform across the board,” National Australia Bank Currency Strategist Rodrigo Catril said in a Wednesday note.

The euro was mostly flat against the dollar after surpassing six-month highs on reduced political risk. Euro/dollar last traded at USD 1.185.

“There is a growing possibility of the European Central Bank (ECB) rattling the financial markets in the pending ECB meeting as the recent political relief invites ECB hawks. With economic data from Europe following a positive trajectory, the ECB could start considering a stimulus exit at the next meeting, which may strengthen the euro further,” said Lukman Otunuga, an analyst at FXTM, in a note.

Equities stateside gained for the fourth straight session after last week’s sell-off, with the Dow Jones industrial average making the most gains and ending the session higher by 0.21 percent or 43.08 points at 20,937.91.

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

Manchester attack likely the work of lone-wolf than terror network

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

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Monday’s suspected suicide attack on Manchester Arena was likely yet another lone-wolf incident rather than the work of international terror networks, according to one strategist.

No details are known about the identities of parties involved in an explosion that has killed 19 people and injured at least 50. However, U.K. and U.S. officials said they may have tentatively identified the bomber, according to NBC News.

“It is highly unlikely that this is part of some coordinated attack from overseas,” Richard Fenning, global CEO at political consultancy Control Risks, told CNBC.

Recent attacks on European soil reveal the development of self-radicalized individuals, as reflected by the Westminster Bridge incident, he explained. These people have chosen to duck below society’s radar, got personal issues that lead them to self-alienation as well as a willingness to inflict serious violence, he continued.

“The nature of modern terror attacks in Europe is entirely sporadic in what motivates people to do it.”

Still, the extent of strategic planning behind the explosion at one of Europe’s largest indoor stadiums was impressive, pointed out another analyst.

“The actual placement of the suicide bomber or device was put there with a specific intent to kill so this was a well-thought out plan,” Fred Burton, chief security officer at Stratfor and former U.S. State Department counter-terrorism agent, told CNBC. “This was a certainly a very successful operation from the eyes of whoever carried this off.”

Supporters of the Islamic State on social media had erupted into celebration following the news, said SITE Intelligence Group, a non-governmental counter-terrorism organization.

What’s needed going forward

Law enforcement officials must now rely on forensic investigations to figure out the type of explosive device used and deduce the bomb-maker’s identity, Burton noted, adding that multiple parties may be involved.

Until officials locate the culprit, they won’t know whether there are other suicide vests are out there, he continued.

Confirming the bomb-maker’s gender could also be of critical help, Burton added. “Based on my experience, that will help nail down the last 24 hours of that person’s life and more importantly, that person’s networks.”

More broadly, lone-wolf attacks tend to be harder for authorities to predict and prevent, warned Fenning.

If this incident was part of a coordinated structure, intelligence services can gather data and eventually penetrate those networks, he explained. “But without that, it is almost impossible for them to stop everything.”

Going forward, the international community can certainly expect more terror attacks, warned Anne Speckhard, a Georgetown University psychiatry professor involved in counter-terrorism research projects.

As the Islamic State, or ISIS, loses territory and with Ramadan approaching, militants may want to show their strength, she said in e-mailed comments.

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

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

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

Additional 200 Cathay Pacific staff face the sack

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

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Cathay Pacific Airways is not done with its staff restructuring and will retrench 800 employees, 200 more than the number announced on Monday as it plots a path back to profitability, sources told the Post.

But anger rippled through the airline as the company said 600 of 3,000 head office jobs would be axed with no department spared except for frontline staff such as pilots and cabin crew.

The 200 extra jobs to be culled will be from junior ranks, sources say, before the conclusion of the restructuring exercise at the end of this year. A spokeswoman declined to comment on further job cuts.

Changing customer habits and a “challenging business environment” were cited as reasons for the largest job losses in 20 years.

Cathay Pacific’s new chief executive, Rupert Hogg, paid tribute to colleagues by praising their commitment and professionalism in an internal note to staff seen by the Post as he described the day’s events as an “unquestionably difficult day”, warning the “unsettling” changes would “continue to be so for a little while longer”.

Hogg said the transformation plan “was the right thing to do for the long-term future of our business and our customers”. In a public statement, Hogg described the changes as “tough but necessary”.

“Changes in people’s travel habits and what they expect from us, evolving competition and a challenging business outlook have created the need for significant change,” Hogg said.

Staff let go on Monday will receive 12 months’ salary in the form of severance pay and extended medical and travel benefits. They will also be offered counselling.

Despite the words of gratitude from Hogg, the announcement rankled with the head office union, which represents 800 staff.

Local Staff Union representative Hearty Baleros said: “People are not happy about this action by the company. “We will continue to have an open dialogue with the company to try and get better terms for those affected.”

The Labour Department said it was “highly concerned” about the job cuts and urged the airline to maintain “effective communications” over the terminations.

Asian rival Singapore Airlines is also facing significant challenges. Both airlines have been hurt by competition from Middle East and mainland Chinese airlines as well as budget carriers. They are bleeding cash from slumping ticket prices.

Singapore Airlines last week announced a comprehensive review of its business after reporting an unexpected loss of US$99 million in the first quarter of this year.

Cathay Pacific and Cathay Dragon lost HK$3 billion last year but the company as a whole lost HK$575 million because of better performances in other areas of the business, including catering and its shareholding in Air China. Cathay also struggled after two years of substantial fuel hedging losses amounting to HK$8.4 billion each year in 2015 and 2016. The losses were absorbed into the overall fuel cost.

The successful turnaround of Australia’s Qantas Airways could offer a blueprint. It saved HK$12.5 billion over three years by axing 5,000 out of 33,000 jobs, retiring old planes and trimming its flights and destinations. Frontline staff also agreed to wage cuts. Key to Qantas’ recovery was a partnership with Emirates and expansion of its pan-Asian budget airline Jetstar.

Staff cuts could deliver annual savings of HK$600 million for Cathay Pacific, according to FlightGlobal Asia finance editor Ellis Taylor. The airline is seeking HK$4 billion of cuts over three years, including HK$2 billion this year.

Taylor believed the staff cuts were “just the start” of wider workforce measures. “I expect that we will see more integration of Cathay [Pacific] and Cathay Dragon, possibly with the latter taking over more services into Southeast Asia,” he said.

“For Cathay to be really serious, it needs to consider reversing some of the capacity growth that it has made over the past few years to cope with lower demand and higher competition from mainland and Middle Eastern carriers,” Taylor added.

In Monday’s announcement, 190 management jobs will go immediately, representing 25 per cent of such posts. A further 400 non-management staff – or 18 per cent of the total – will be cut by mid-June.

Before the staff cuts, Cathay employed 19,000 people in Hong Kong, most being frontline staff, including pilots and cabin crew. Among other announced changes, the airline’s cargo unit will be restructured. Job losses in the cargo, finance and human resources departments will be unveiled later.

The airline said it would look for greater efficiencies and productivity improvements in the rest of the workforce.

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

Goldman warns of 2018 oil glut amid optimism over OPEC cut extension

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

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Expectations of an extension of an oil production cut agreement by the Organization of the Petroleum Exporting Countries and major producers led by Russia are supporting prices, but there are risks for a renewed surplus later next year, Goldman Sachs analysts wrote in a report published on Monday.

“A nine-month extension would normalize OECD inventories by early 2018, in our view, but we see risks for a renewed surplus later next year if OPEC and Russia’s production rises to their expanding capacity and shale grows at an unbridled rate,” the Goldman analysts said.

Crude oil prices have been gaining steadily in the last few weeks but are slightly lower in Asia on Tuesday with U.S. West Texas intermediate and European Brent futures down 0.4 percent lower around $51 and $53.60 a barrel respectively, as prices give up some recent gains after President Donald Trump proposed the sale of half the country’s strategic oil reserves in his budget plan, according to Reuters.

To avoid the boom-bust cycle, sustained backwardation in prices will help, the Goldman analysts added. This is as the low deferred prices will restrain access to credit for shale producers.

Backwardation happens when spot and near-month contracts are priced higher than contracts in the forward months.

“Costs will also play a role in setting shale’s growth path but we do not forecast sufficient inflation at this point to achieve the required slowdown next year,” the investment bank said.

“In the current environment, we believe that the largest imbalance is the potential for a large surplus in 2018, leaving low deferred prices to resolve this credible threat. Low-cost producers selling their output in the spot market should further be incentivized to reduce inventories, to generate the backwardation linking spot oil prices near current levels and low deferred oil prices,” they wrote.

But even with the cuts, OPEC will be able to reverse its policy as soon as 2018. Significant investments to increase Russian producing capacity and ongoing de-bottlenecking of infrastructure in Iraq can also lead to a rise in production.

“Such a ramp-up in OPEC and Russia production would occur in the face of still rising non-OPEC production outside of US shale, with legacy projects started through 2014 still coming online in Brazil, Canada and the North Sea in particular,” said the Goldman analysts.

To control prices, Goldman said OPEC and Russia should extend or increase the cuts until stocks have normalized, express the goal of growing future production, and gradually ramp up output to grow market share but keep stocks stable and backwardation in place.

“Achieving this will be difficult, but we see templates in both OPEC’s modus operandi of the 1990s of managed but flagged growth and the rationalization of shale growth in U.S. gas, both with backwardation,” they added.

OPEC will next meet on May 25 when they will likely extend the output cuts, said the investment bank.

Goldman is keeping its Brent spot price of $57 a barrel for the second half of 2017.

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

LeEco employees are being called to a Tuesday meeting, and massive layoffs are expected

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

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LeEco, a Chinese company that made a big splash in the U.S. last fall, is preparing for a round of layoffs that may happen as soon as Tuesday, according to sources.

Two people told CNBC the company is planning massive layoffs in the U.S., with one source saying that only 60 employees will be left after the cut. The company’s current headcount in the U.S. is over 500, according to this person.

CNBC obtained an email calling employees together for a Town Hall Meeting that will occur in three of the company’s U.S. locations, including San Diego, Santa Monica and San Jose, at 10 a.m. PST. The email asks employees to attend unless they’re off for the day, in which case they’re asked to call in.

It’s not clear what will be announced at the meeting, but a second source told CNBC that layoffs will be announced tomorrow.

Under the restructuring, LeEco will refocus on encouraging Chinese-American consumers to watch LeEco’s Chinese content library, one person said.

It may also continue to invest in Faraday Future, a company backed by LeEco that’s attempting to build an electric car, sources said.

Chinese news services have previously reported that LeEco was planning to lay off about one-third of its U.S. staff.

LeEco started out in China as a streaming media provider — it has been referred to as the “Netflix of China” — and looked to expand into the US by selling affordable hardware that linked consumers to media content from LeEco’s partners. Its first batch of products included two smartphones and several TVs, all of which offered flagship-level specs at affordable prices. The idea, it seemed, was that LeEco would make its money back when consumers tuned in to partner programming. When it made its debut in the US in October 2016, it also promised more, including VR headsets and an electric bicycle.

The layoffs would be the latest move to stain the company’s US brand. LeEco’s CEO, YT Jia, stepped down from his position leading its publicly traded arm on Sunday. Jia will remain on the board.

A spokesperson for the company declined to comment.
Todd Haselton

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 markets trade sideways following Wall Street gains

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

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Asian markets traded sideways on Tuesday, after major indexes on Wall Street closed in the green and on headlines out of the UK of a deadly explosion at a concert venue in Manchester.

Nineteen people were reported dead following a blast at the Manchester Arena in northern England where US singer Ariana Grande had been performing, Reuters said. The UK police are treating the blast as a terrorism incident.

The safe-haven yen climbed after news of the bombing. The dollar was fetching as little as 110.84 yen down from around 111.34 yen earlier. At 9:00 a.m. HK/SIN, the dollar was fetching 111.13 yen.

The British pound also slipped after the news, fetching as little as USD 1.2983, off a high of $1.3005 earlier. At 9:00 a.m. HK/SIN, the pound was at USD 1.2978.

Against the yen, the pound slipped to trade at 144.26 yen.

“Pound/yen fell to a two-session low following reports of the blast, although volatility surrounding the reaction does not yet suggest the downside will be of great magnitude. This may change if the story evolves, but at the time of writing, pound/yen is trading well within its typical range compared with its three-month average,” ThinkMarkets Senior Market Analyst Matt Simpson told CNBC.

The Nikkei 225 dipped 0.16 percent in Tuesday trade while the ASX 200 declined 0.05 percent. South Korea’s benchmark Kospi index was up by 0.14 percent.

Hong Kong’s Hang Seng Index was up 0.12 percent. Mainland China markets opened lower, with the Shanghai Composite down 0.27 percent and the Shenzhen Composite lower by 0.327 percent.

HNA Group is negotiating a stake in Hong Kong-listed Value Partners Group, an asset management company, according to reports.

Cathay Pacific will cut a total of 800 jobs, the South China Morning Post reported. This is an additional 200 jobs compared to the 600 jobs the airline said it would cut on Monday. Cathay shares were higher by 0.35 percent.

In Singapore, shares of Noble Group slid 18.8 percent after S&P Global Ratings downgraded the commodity trader’s credit rating to ‘CCC+.’ Reuters also reported that Sinochem had decided to stop pursuing a stake in the company due to Noble’s shaky outlook.

In other currency news, the dollar weakened further against a basket of currencies to trade at a six-month low. The dollar index last traded at 96.946, off the 97 handle seen in the last session.

Meanwhile, the common currency hit a six-month high in the previous session following comments from the German Chancellor Angela Merkel about euro weakness. The euro traded at USD 1.242 at 9:23 a.m. HK/SIN.

Oil prices were mostly steady after rising to a one-month high in the last session on hopes that OPEC-led output cuts could be further deepened. Benchmark Brent crude shed 0.11 percent to trade at $53.81 a barrel and US crude was off 0.06 percent to trade at USD 51.10.

In economic news, Singapore CPI data for the month of April is due at 1:00 pm HK/SIN. Hong Kong April CPI is due later in afternoon.

Stateside, equities gained across the board in the last session as tech and defence stocks made substantial gains.

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

Markets mostly higher in Asia, shrug off North Korea missile test; ASX up 0.7%

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

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Asian equities traded mostly higher on Monday, following the continued recovery on Wall Street last week and as investors digest yet another missile test out of North Korea at the weekend.

The hermit state said the missile test on Sunday involved an intermediate-range ballistic missile, according to Reuters. North Korean state media said leader Kim Jong Un had “approved the deployment” of the missile, Reuters said.

Markets are also likely watching the outcome of US President Donald Trump’s first foreign trip which began in Saudi Arabia during the weekend. An arms deal worth USD 350 billion was inked on Saturday between the two countries.

The Nikkei 225 was 0.34 percent higher. Australia’s ASX 200 added 0.66 percent, driven largely by its energy and materials sub-indexes which were up 1.85 percent and 1.43 percent respectively.

South Korea’s benchmark Kospi index shrugged off news of the North Korean missile test, gaining 0.36 percent.

The Hang Seng Index traded 0.37 percent higher, but markets on the mainland were in the red. The Shanghai Composite was down 0.18 percent and the Shenzhen Composite dipped 0.166 percent.

In Japan, Toshiba’s US nuclear arm Westinghouse Electric indicated that it would lockout 172 union members as contract negotiations had reached an impasse. Toshiba shares traded 0.04 percent higher.

Shares of automotive parts manufacturer Takata jumped 16.42 percent. Shares of the company had jumped more than 20 percent in the last session on news of that some automakers had agreed to a settlement over the use of defective Takata airbags.

Cathay Pacific will cut 600 jobs in its bid to turn around losses. The airline had posted its first annual loss in close to a decade in March this year.

In a statement, Cathay said those affected represent 25 percent of management and 18 percent of non-managerial staff. Cabin crew and pilots were not affected by the job cuts. Shares of the company were jumped 3 percent on the news.

The dollar rose slightly against a basket of rival currencies, last trading at 97.326, but off levels around the 98 handle seen early last week. Against the yen, the greenback gained slightly to fetch 111.48. Dollar/yen traded at the 113 level early last week.

While US equity markets appeared to have turned their focus to strength in corporate earnings and the economy, political news continued to weigh on the dollar last Friday, said National Australia Bank Currency Strategist Rodrigo Catril.

Oil prices extended gains on the back of output cut extension hopes. US West Texas International added 0.58 percent to trade at USD 50.62 a barrel while Brent crude gained 0.52 percent to trade at USD 53.89.

“It’s a big week for oil with the OPEC meeting in Vienna taking place on Thursday and the market having already digested news that both Russia and the Saudi’s have advocated a nine-month extension … (T)he key question here this week is with price rallying into the meeting, will the outcome live up to expectations or will traders sell the fact?” IG Chief Market Strategist Chris Weston wrote in a Monday note.

In economic news, Japan trade data for the month of April reflected that exports rose for the 7.5 percent on year, below analyst expectations of 7.8 percent. Imports, however, rose 15.1 percent, above the forecast of 14.8 percent.

On Wall Street, equities closed higher for a second straight session last Friday after the biggest sell-off in the year earlier last week, with the Dow Jones industrial average closing 0.69 percent higher at 20,804.84.

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 many US start-ups are trying to crack the Indian marketplace

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

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Online home renovation and design giant Houzz didn’t start out with a plan to enter the Indian market. Instead, the Indian market came to Houzz, which is based in Palo Alto, California. The site, which draws some 40 million visitors each month, became aware that a million customers and more than 50,000 service providers in India had signed up to use the site. Responding to the strong interest, Houzz launched a custom site for the Indian market in January of this year.

“These homeowners and professionals expressed strong interest in helping us localize Houzz for India, and we’re excited to work with them to further tailor the experience,” says Adi Tatarko, CEO and co-founder of Houzz, which made the CNBC Disruptor 50 list for the third straight year.

Houzz is one of several companies on this year’s Disruptor list focused on India, reflecting the growing importance of the South Asian country of 1.3 billion people as a strong consumer market in its own right. India has a fast-growing economy for a large country, reaching 7.1 percent GDP growth last year. Although a majority of Indians remains poor, a large middle class with disposable income has emerged. Estimates of the size of this new Indian middle class run as high as 300 million. That’s more than enough to draw the attention of the U.S. Internet giants as well as domestic start-ups.

A number of big players have tackled the Indian market. Currently, online retailer Amazon is engaged in an epic battle with Flipkart, an Indian start-up that raised $1.4 billion in its last venture round in April. Ride-hailing service Uber is chasing India’s Ola after giving up a solo bid in China and merging its assets there with rival Didi Chuxing.

“The Indian market is far more open than China,” says Arun Natarajan, CEO of Chennai-based Venture Intelligence, which tracks private equity and venture investment in the Indian market. “Companies from the U.S. and elsewhere don’t have to do joint ventures to come in here.”

The accessibility of the Indian market makes it both attractive and treacherous for foreign competitors. “Because India is a very open market, it’s cutthroat,” says Abhijit “Bobby” Bose, co-founder and CEO of Indian mobile payments provider Ezetap, which turns smartphones into point-of-sale devices. It is making a second consecutive appearance on the CNBC Disruptor 50 list. “There are a million reasons you may not succeed.” He says that venture capitalists expecting a quick return on investment in India will be disappointed. “It will take five to seven years.”

Ezetap benefited from the chaotic efforts by the Indian government last November to take the most popular denomination bank notes out of circulation to combat corruption. Delays in exchanging old 500- and 1000-rupee bills for new ones led to cash shortages and long queues at banks. The crisis drove many Indians, who had mostly depended on cash transactions, to electronic payment services like Ezetap. “In 30 days our numbers jumped 50 percent to 100 percent,” says Bose.

Ezetap distributed 300,000 point-of-sale devices in the fourth quarter of 2016. “What could take five years ended up taking five months.” Bose says Ezetap now handles payments at a run rate of $2 billion a year, more than double the volume when it made last year’s list.
Cultural nuances

Those who enter the Indian market agree that adjusting to the market is essential for success. Indian states can have wildly different regulations, various degrees of bureaucracy and different languages in addition to English. Web applications need to be optimized for slower internet speeds in some parts of India.

Udacity, an online learning company based in Mountain View, California, was founded by Stanford University artificial intelligence professor Sebastian Thrun, who created Google’s autonomous vehicle program. Udacity offers technical courses to 4 million students in 168 countries, including India, its second-largest English-language market after the United States. Offerings include the mobile operating systems Android and iOS, self-driving vehicles and artificial intelligence.

Udacity opened offices in New Delhi and Bangalore, India, to have a local presence and better support its students. The company says its advantage in a crowded online educational market is its close cooperation with industry leaders in developing courses. Graduates earn a “nanodegree” with the exact knowledge companies want their employees to have.

“Our Android program is co-created with Google,” says Ishan Gupta, managing director of Udacity India. The company didn’t change the content of its courses for India, he says, but it was important to understand the motivations of Indian students. “What is it people look for in education?” asked Gupta. “In the U.S. it might be learning, then jobs. In India it’s mostly jobs.” And while the Indian economy is growing fast, pricing had to be different in a market where incomes are far lower.

Houzz had to learn that when it comes to home decorating, words can mean different things. “Beach” style in the United States is “coastal” in India. “Traditional” furniture is in traditional Indian style — quite different from the American version. The company will soon add a service available to its U.S. customers: connecting Indian customers and contractors for home decorating projects. But the “general contractors” label in the United States will be “civil engineers and contractors” on the India site. It turns out many Indian contractors have engineering degrees and are hired based on their academic qualifications.

Both Houzz and Udacity have been attracted to India by the size of the consumer market and its potential. As companies with billion-dollar valuations, they have been able to raise all the money they want in the U.S. market. Udacity has raised $163 million in four venture capital rounds. Ezetap’s founders moved to India to launch their company after careers in the United States and have also raised their funding from U.S.-based VCs.

But India has its own expanding venture capital market. Venture Intelligence, which tracks VC investments in India of $20 million or less, reported that Indian VCs made 405 such deals involving $1.4 billion last year, still a small fraction of the $69 billion of VC invested in the United States in 2016.

But as Ezetap’s Bose points out, the market in India is relatively young. “Everything is maturing,” he says. “Everybody is in their teenage years.”

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