january

 
 

Japan leaves economy assessment unchanged in April

TOKYO, April 18 — Japan’s government left its assessment of the economy unchanged in April, after a rare downgrade in March, saying the US-China trade war remained a threat to exports and economic growth. The Cabinet Office, which helps…


Amazon to close domestic marketplace business in China: sources

SAN FRANCISCO/SHANGHAI: Amazon.com Inc plans to close its domestic marketplace in China by mid-July, people familiar with the matter told Reuters, focusing efforts on more lucrative businesses selling overseas goods and cloud services in the world’s most populous nation.

Amazon shoppers in China will no longer be able to buy goods from third-party merchants in the country, but they still will be able to order from the United States, Britain, Germany and Japan via the firm’s global store. Amazon expects to close fulfillment centers and wind down support for domestic-selling merchants in China in the next 90 days, one of the people said.

The move underscores how entrenched, home-grown e-commerce rivals have made it difficult for Amazon’s marketplace to gain a foothold. Consumer insights firm iResearch Global said Alibaba Group Holding Ltd’s Tmall marketplace and JD.com Inc controlled 81.9 percent of the Chinese market last year.

“They’re pulling out because it’s not profitable and not growing,” said analyst Michael Pachter at Wedbush Securities.

Ker Zheng, marketing specialist at Shenzhen-based e-commerce consultancy Azoya, said Amazon had no major competitive advantage in China over its domestic rivals.

Unless someone is searching for a very specific imported good that can’t be found elsewhere, “there’s no reason for a consumer to pick Amazon because they’re not going to be able to ship things as fast as Tmall or JD,” he said.

Amazon’s customers in China will still be able to purchase the firm’s Kindle e-readers and online content, and the company’s local website, amazon.cn, will continue to exist, said the sources, who spoke on condition of anonymity. Amazon Web Services, the company’s cloud computing unit that sells data storage and computing power to enterprises, will remain as well.

The U.S.-listed shares of Alibaba and JD.com rose 1 percent on Wednesday after Reuters first reported the move, before paring gains later in the day. Amazon’s shares closed flat.

The withdrawal of the world’s largest online retailer – founded by Jeff Bezos, who later became the world’s richest person – comes amid a broader e-commerce slowdown in China. Alibaba in January reported its lowest quarterly earnings growth since 2016, while JD.com is responding to the changing business environment with staff cuts.

It also follows the Chinese e-commerce retreat of other big-name Western retailers. Walmart Inc sold its Chinese online shopping platform to JD.com in 2016 in return for a stake in JD.com to focus on its bricks-and-mortar stores.

Similarly, the country appears to factor less in the global aspirations of fellow U.S. tech majors Netflix Inc, Facebook Inc and Alphabet Inc’s Google, Wedbush Securities’ Pachter said.

Amazon bought Chinese online shopping website Joyo.com in 2004 for $75 million, rebranding the business in 2011 as Amazon China. But in a sign of Tmall’s dominance, Amazon opened an online store on the Alibaba site in 2015.

Amazon is still expanding aggressively in other countries, notably India, where it is contending with local rival Flipkart.


Amazon to close domestic marketplace business in China, sources say

SAN FRANCISCO, April 18 ― Amazon.com Inc plans to close its domestic marketplace in China by mid-July, people familiar with the matter told Reuters, focusing efforts on more lucrative businesses selling overseas goods and cloud services in the…


Malaysia’s possible exclusion from global bond index spooks ringgit, stocks

PETALING JAYA: The ringgit weakened as much as 0.36% today to 4.1455 against the US dollar on fears over the possibility that Malaysia may be dropped from the FTSE World Government Bond Index (WGBI).

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As at 5pm, the local unit was trading 0.15% lower at 4.1365 against the greenback. Over the past two trading days, it has depreciated 0.66%.

Meanwhile, on Bursa Malaysia, the FBM KLCI fell 8.56 points or 0.53% to 1,620.90 points against Tuesday’s close of 1,629.46. Market breadth was negative with 661 losers and 208 gainers.

Top losers were led by heavyweights such as Tenaga Nasional, Malayan Banking and Petronas Dagangan, which slipped 24 sen, 21 sen and 16 sen to RM12.06, RM9 and RM24.94, respectively.

On Monday, FTSE Russell said it may drop Malaysian debt from the WGBI due to concern about market liquidity.

Malaysia is currently assigned a ‘2’ on the WGBI and is being considered for a potential downgrade to ‘1’ which will render Malaysia ineligible for inclusion in the WGBI.

The review is due in September, which includes potentially adding Chinese bonds into the index. It was reported that the review started in January to increase transparency in managing country inclusion to FTSE Russell global fixed-income indices. Malaysia’s weight in the WGBI is less than 0.4%.

FXTM’s newly appointed market analyst Tan Chung Han expects the weakness in the ringgit to be transitory, as Malaysia’s resilient economy is still awaiting the next chance to make its case before the markets.

“The projected 4.3-4.8% GDP growth for 2019 remains higher compared to what many other major economies are expecting this year. However, sentiment surrounding the Malaysian currency is currently swayed by other factors which have led to the ringgit’s recent weakness against the US dollar, including external risks such as US-China trade tensions and slowing global growth,” he told SunBiz.

He said headlines about Malaysia’s possible removal from the index may have lent itself to fund outflows, contributing to the ringgit’s recent weakness.

“Even if it actually transpires (Malaysia’s removal from WGBI), active funds may still focus on Malaysia’s accommodative monetary policy stance and robust domestic economic fundamentals when making their investment decisions,” Tan added.

However, Tan pointed out that according to central bank data, foreign holdings of Malaysian bonds rose during the first quarter of 2019, pointing to an increasing appetite for Malaysian notes.

Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the ringgit’s weakness is a valid concern considering that Malaysia Government Securities (MGS) yields have come down quite considerably when the US Federal Reserve is expected to keep interest rates unchanged in 2019.

“If exclusion materialises, theoretically we could expect some impact on bond yields, especially by managers who track the FTSE index as their benchmark,” he said.

Reuters quoted Morgan Stanley as saying that Malaysia could see outflows of almost US$8 billion (RM33 billion) if its bonds are downgraded by global index provider FTSE Russell.

Foreign investors have been reducing their Malaysian government bond holdings since late 2016 and, as of late March 2019, held US$37 billion, Morgan Stanley said.

Macquarie said as foreigners are already underweight on MGS in Malaysia, the outflows may be less.

“However, the implication would be larger for other index providers such as the JP GBI-EM and Bloomberg Barclays Aggregate. Just these two indexes alone could represent US$15 billion of outflows if Malaysia is excluded,” it said in its sales commentary.


China’s Q1 GDP growth steadies unexpectedly, but too early to call clear recovery

BEIJING: China’s economy grew at a steady 6.4% pace in the first quarter, defying expectations for a further slowdown, as industrial production jumped sharply and consumer demand showed signs of improvement.

The upbeat readings, which included faster growth in investment, will add to optimism that China’s economy may be starting to stabilise even as Beijing and Washington appear to be edging towards a trade deal.

Investors have ranked China’s slowdown and the trade war as the biggest risks facing the faltering global economy.

But analysts warn it is too early to call a sustainable turnaround, and further policy support is needed to maintain momentum in the world’s second-largest economy. Many had expected a recovery only in the second half of 2019.

Beijing has ramped up fiscal stimulus this year, announcing billions of dollars in additional tax cuts and infrastructure spending, while Chinese banks lent a record 5.8 trillion yuan (RM3.59 trillion) in the first quarter, more than the economy of Switzerland.

“We need more evidence to call a full-fledged recovery. Our view for the economy is still cautious,” said Jianwei Xu, senior economist, Greater China at Natixis in Hong Kong. “We think it (the stronger-than-expected data) is somewhat linked to the stimulus, but we can’t attribute it all to it.”

Analysts polled by Reuters had expected GDP growth to slow slightly to 6.3% in January-March from a year earlier.

Share markets and most currencies in Asia rose in relief, as China’s slowdown has increasingly weighed on its trading partners from Japan to Germany. The yuan currency rose 0.4% to a seven-week high.

Government support is gradually having an effect, though the economy still faces pressure, Mao Shengyong, spokesman at the National Bureau of Statistics, cautioned today.

Quarterly growth was supported by a sharp jump in industrial production, which surged 8.5% in March on-year, the fastest in over 4½ years. That handily beat estimates of 5.9% and 5.3% in the first two months of the year.

Output of building materials such as steel and cement, as well as machinery, showed strong gains. Prices of steel reinforcing bars used in construction hit 7½-year highs this week on firm demand.

Industrial output growth will likely remain steady, with exports expected to keep expanding, Mao said.

Exports rebounded more than expected in March, but analysts say the gains could have been due to seasonal factors rather than a rebound in tepid global demand. Long holidays in February likely pushed some production into the following month.

The jump in output was also somewhat at odds with trade data last week, which showed imports shrank for the fourth straight month, suggesting domestic demand is still sluggish.

“We don’t think the strength in industrial output is sustainable, said Nie Wen, an economist at Hwabao Trust.

“At home, the huge amount of social financing might ease as the central bank is wary of reigniting property market bubbles, while abroad the global economic recovery is expected to slow down,” Nie said, pencilling in more moderate output growth of 6.0-6.5% for the rest of the year.

The OECD on Tuesday sounded a warning about the dangers of prolonged stimulus, saying China’s support measures will shore up growth this year and next but may undermine its drive to control debt and worsen structural distortions over the medium term.

Analysts polled by Reuters expect China’s growth to slow to a near 30-year low of 6.2% this year, as sluggish demand at home and abroad and the trade war weigh on activity despite support measures.

The government is aiming for growth of 6.0-6.5%.

Today’s data also helped ease fears of weakening consumer confidence in China. Retail sales rose 8.7% in March, beating estimates of 8.4% and the previous 8.2%.

Sales were led by stronger demand for appliances, furniture and building materials, reflecting a resurgence in the residential property market, a key economic driver.

Real estate investment rose slightly to 11.8% in the first three months, while construction starts jumped in March. Data on Tuesday showed March new home prices rose at a quicker pace after months of cooling.

But auto sales extended their decline in March, falling 4.4% on-year.

Fixed-asset investment expanded 6.3% in January-to-March on-year, in line with estimates but picking up from the previous period as new road, rail and port projects gathered steam.

Local governments will be allowed to issue 2.15 trillion yuan of special purpose bonds in 2019 to fund infrastructure projects, a jump of 59% from last year.

On a quarterly basis, GDP in the first quarter grew 1.4%, as expected, but dipped from 1.5% in October-December.

However, many analysts do not expect a sharp rebound in China’s economy like its recoveries in the past, which produced a strong reflationary pulse worldwide. Most say its stimulus has been relatively more restrained this time around, given concerns about high levels of debt left over from past credit sprees.

Earlier support measures will take time to fully kick in, and corporate balance sheets are expected to remain under stress if profits are slow to recover from their worst slump in more than seven years.

Some analysts such as Nomura warn there is a risk of a “double dip”, where growth appears to improve only to falter soon after. In particular, it noted there was further heavy drop in land sales for future development, which could drag on construction and local government revenues later this year.

The central bank has already slashed banks’ reserve requirement ratios five times over the past year and is expected to ease policy further in coming quarters to spur lending and make borrowing costs more affordable.

However, some analysts said authorities could be more cautious about further stimulus if data remains solid.

China has rolled out many policies to support growth – the key is to implement them, Mao said.


Ringgit at nearly three-month low against US Dollar on FTSE Russell concerns

KUALA LUMPUR, April 17 — The ringgit closed at a nearly three-month low against the US dollar today, dampened by weak sentiment towards the local currency following the possible downgrade of Malaysian bonds by global index provider, FTSE Russell….


London slump drags UK house price growth to more than six-year low

LONDON, April 17 — British house prices rose in February at the weakest rate in six-and-a-half years, dragged down by the biggest slump in London for a decade as Brexit uncertainty sent chills through the market. Official data today also showed…


Russia's Deripaska ready to give up control of van maker GAZ as sanctions bite

NIZHNY NOVGOROD, April 17 — Germany's Daimler and some others have stopped dealing with sanctions-hit van maker GAZ, controlled by Russian businessman Oleg Deripaska, he told reporters, adding he was ready to give up control of the company….


Fernandes: Aircraft disposal allows AirAsia to focus on digital business

KUALA LUMPUR, April 17 — AirAsia Group Bhd’s decision to sell 25 of its aircraft to US-based global private investment firm Castlelake LP, is part of the group’s plan to focus on its digital business. Chief executive officer Tan Sri Tony…


Germany set to further slash 2019 growth forecast

BERLIN, April 17 — Berlin is set to further lower its economic growth forecast today as Europe's largest economy cools off, but ministers are unlikely to bend to foreign demands to boost activity with extra government spending. According to media…