Jun 19, 2018

Malaysia could extend tax breaks for key foreign investors: Mahathir

Malaysia's Prime Minister Mahathir Mohamad works at his office in Putrajaya, Malaysia June 19, 2018. REUTERS/Lai Seng Sin

By A. Ananthalakshmi, Emily Chow and Kevin Krolicki

KUALA LUMPUR (Reuters) – Malaysia could extend new tax incentives for foreign investment in areas such as technology if companies promise to create better-paid jobs for Malaysians, Prime Minister Mahathir Mohamad said on Tuesday.

His comments could reassure investors in Southeast Asia’s third biggest economy after Mahathir started a review of major projects sanctioned by former premier Najib Razak, especially the ones involving Chinese firms, following an unexpected election victory last month.

Mahathir told Reuters in an interview that his government would welcome investment “from China or any other country” if companies were willing to commit to projects that would create jobs for skilled workers in areas like technology and research and development.

“Before we needed jobs, so people who had huge assembly lines employing manual labor, they were welcome. But now we want intellectual workers,” Mahathir said.

To attract investments, Mahathir said in some cases the government could extend tax breaks beyond 10 years, the outer limit of the tax incentives currently on offer.

Up until now, the Malaysian Investment Development Authority has allowed companies investing in the country to claim income tax breaks for between five and 10 years.

“Already we are willing to forego tax for 10 years and maybe more than that,” Mahathir said. “We can give them whatever incentive we can afford. Our main aim is to create jobs for our people.”

As an example of the kind of investment the new government wanted to see, Mahathir cited Alibaba (NYSE:BABA) Group’s move to open an office in Malaysia this week. China’s e-commerce giant is in the process of setting up a logistics hub in Malaysia.

Alibaba founder Jack Ma, who was in Kuala Lumpur for the opening, met with Mahathir on Monday and discussed the potential to use Malaysia as a manufacturing hub for export back to China, Mahathir said.

“He has good ideas about how to help Malaysia produce goods for export to China,” Mahathir said.

Since winning the election six weeks ago, Mahathir has called for review of several projects signed by the Najib administration.

He has said Malaysia will renegotiate a $14 billion deal for a domestic rail project that is being developed by Chinese companies, saying the terms are damaging for Malaysia. He has canceled a high speed rail link with Singapore for now.

Mahathir told Reuters Malaysia has had to review Chinese investments as Malaysian contractors did not get a fair share and Malaysians were not employed.

He said he was confident Japan, which he visited earlier this month in his first foreign trip as prime minister, would invest more in Malaysia.

“They will look into it. And they will invest more in Malaysia. We have spelt out to them what we want by way of investment.”

His trip to Japan was seen as a shift back to the 92-year-old’s ‘Look East’ policy to strengthen ties with east Asia, especially Japan.

It was also seen as a sign of a possible move away from China, which pumped billions of dollars into Malaysia, buying assets in deals that helped the Najib administration cover some of the losses incurred by scandal-ridden state fund 1Malaysia Development Bhd.

“The government now wants to bring back the Look East policy on a bigger scale,” Mahathir said.

Asian business sentiment edges up to hit seven-year high: Thomson Reuters/INSEAD

FILE PHOTO: People shop at a street market in Divisoria, Manila, Philippines, December 29, 2017. REUTERS/Erik De Castro/File Photo

By Byron Kaye

SYDNEY (Reuters) – Business confidence among Asian companies rose in the first quarter to the highest level in seven years, a Thomson Reuters/INSEAD survey showed, as a fresh surge by the Chinese economy offset concerns about rising trade barriers.

The Thomson Reuters/INSEAD Asian Business Sentiment Index <.TRIABS> , representing the six-month outlook of 67 firms, advanced one notch to 79 for the January-March quarter compared with three months before.

A reading above 50 indicates a positive outlook.

“The improvement is not dramatic but with a historical perspective this is a good reading,” said Antonio Fatas, a Singapore-based economics professor at global business school INSEAD.

Thailand, the Philippines and Malaysia saw robust jumps in sentiment, showing that many countries in Asia continue to benefit from accelerating global growth. In particular, China has seen exports soar, up 45 percent in February to mark their fastest growth in three years.

“China … has escaped the fear of a crisis that started back in 2016 and that’s why you see strong confidence. Imbalances persist but there is no real threat of a crisis over the short term,” said Fatas.

The subindex for Thailand surged to 100 from 85 and the Philippines saw a climb to 83 from 70 while sentiment in Malaysia improved five notches to 75.

“The tourism and export sector expansion will help drive growth (in Thailand) this year,” said Rattham Somboonchareon, a planning manager at survey respondent Thai Airways (BK:THAI), adding that government spending was also a key driver of growth.

Australia’s subindex dropped to 80 from 92, although the figure is relatively high when compared with its historical average of 69.

While the International Monetary Fund and the World Bank have raised their global growth forecasts for this year due to strong trade, consumer spending, and investment in many major economies, intensifying rhetoric in favour of protectionism has become a major concern.

U.S. President Donald Trump has announced import tariffs on steel and aluminium, and is expected to consider additional tariffs targeted specifically at China. He has also repeatedly said the U.S. free-trade deal with South Korea is “unfair” and has threatened to scrap it altogether on multiple occasions.

That has battered sentiment in South Korea, with the country’s subindex plunging to 50 from 83.

“There is a sense among Korean businesses that Trump will continue to be aggressive against their country,” said Fatas.

Singapore’s subindex declined to 75 from 79. The country’s exports took a surprise dip in February as tech product shipments continued to retreat from the hot pace of recent months.

Japan, where consumer spending numbers have been subdued, recorded its lowest reading in a year, at 67 compared to the fourth-quarter’s 70. India also experienced a decline in sentiment, falling to 72 from 79.

The index for sentiment in China increased to 88 from 83, but the number of respondents was low at four companies.

Increasing trade friction and higher interest rates were cited as the biggest concerns in the Thomson Reuters/INSEAD survey.

By industry, the technology, construction, energy and metals sectors expressed concern about trade friction, showed the survey, which was conducted March 2-16.

Sectors which identified rising interest rates as a risk included the energy, real estate, retail and technology sectors. The energy sector also showed concern about the potential for a sudden asset price correction.

The retail and leisure sector recorded its best ever reading. Healthcare had its highest score in two years.

To view a PDF of the survery click here

To view a graphic on the business sentiment index, click here

To view a graphic on the biggest perceived risks, click here

Renewed U.S.-China trade spat boosts safety demand for yen

FILE PHOTO: U.S. Dollar and Japan Yen notes are seen in this picture illustration June 2, 2017. REUTERS/Thomas White/Illustration/File Photo

By Tomo Uetake

TOKYO (Reuters) – The dollar fell against the yen in early Asian trade on Tuesday after U.S. President Donald Trump’s threats of more tariffs on China raised worries about an escalating trade war between the world’s two largest economies.

The Japanese yen strengthened to 110.02 against the dollar, up as much as 0.47 percent on the day, after President Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods, fuelling trade war worries with Beijing.

The ongoing trade dispute between the United States and China knocked the yuan to 6.4660 per dollar, its weakest in more than five months in the offshore market.

President Trump late on Monday threatened to impose a 10 percent tariff on $200 billion of Chinese goods, escalating a tit-for-tat trade war with Beijing.

In a statement, Trump said he had asked the U.S. trade representative to identify the Chinese products that would be subject to the new tariffs. He said the move would be in retaliation for China’s decision to raise tariffs on $50 billion in U.S. goods.

“The latest headlines from Trump are pushing investors to risk-off-mode,” said Shintaro Ikeshima, chief manager of forex and financial products trading division at Mitsubishi UFJ Trust and Banking Corp.

“Although many think this might be another bluff from Trump, markets are likely to stay nervous to trade-related headlines for now.”

The Australian dollar sank to a one-year low of A$ 0.7391 as the U.S.-China trade spat escalated and base metal prices slid.

The Canadian dollar weakened to a one-year low of C$ 1.3237 overnight, before paring some of its losses, as investors worried about Canada’s trade feud with the United States.

The euro remained under pressure due to a dispute in Germany’s governing coalition and expectations the European Central Bank will hold interest rates steady into 2019.

Chancellor Angela Merkel’s Bavarian allies may defy her by implementing a plan to limit immigration at the German border and risk destabilising her three-month-old coalition.

Still, trade was generally subdued with focus turning to a three-day ECB forum in Sintra, Portugal, through Wednesday. ECB President Mario Draghi, chief economist Peter Praet and others will speak at the forum later on Tuesday.

Google to invest $550 million in Chinese e-commerce giant JD.com

FILE PHOTO: A logo of JD.com is seen on a helmet of a delivery man in Beijing, China June 16, 2014. Picture taken June 16, 2014. REUTERS/Jason Lee/File Photo

Google (NASDAQ:GOOGL) will invest $550 million in Chinese e-commerce powerhouse JD.com, part of the U.S. internet giant’s efforts to expand its presence in fast-growing Asian markets and battle rivals including Amazon.com (NASDAQ:AMZN).

The two companies described the investment announced on Monday as one piece of a broader partnership that will include the promotion of JD.com products on Google’s shopping service. This could help JD.com expand beyond its base in China and Southeast Asia and establish a meaningful presence in U.S. and European markets.

JD.com’s U.S.-listed shares rose 1.2 percent to $44.10 on the Nasdaq on Monday.

Company officials said the agreement initially would not involve any major new Google initiatives in China, where the company’s main services are blocked over its refusal to censor search results in line with local laws.

JD.com’s investors include Chinese social media powerhouse Tencent Holdings Ltd, the arch-rival of Chinese e-commerce leader Alibaba (NYSE:BABA) Group Holding Ltd, and Walmart (NYSE:WMT) Inc.

“Given Walmart also has a close relationship with JD, I see (the investment) as further tightening of the Google/Walmart alliance, which seems focused on building a third force in ecommerce beyond Amazon and Alibaba,” said Atlantic Equities analyst James Cordwell.

Google is stepping up its investments across Asia, where a rapidly growing middle class and a lack of infrastructure in retail, finance and other areas have made it a battleground for U.S. and Chinese internet giants. Google recently took a stake in Indonesian ride-hailing firm Go-Jek, and sources have told Reuters that it may also invest in Indian e-commerce upstart Flipkart.

Google declined to comment on the rumored Flipkart deal. The JD.com investment is being made by the operating unit of Google rather than one of parent company Alphabet’s investment vehicles.

Google will get 27.1 million newly issued JD.com Class A ordinary shares as part of the deal. This will give them less than a 1 percent stake in JD, a spokesman for JD said.

For JD.com, the Google deal shows its determination to build a set of global alliances as it seeks to counter Alibaba, which has been more focused on forging domestic retail tie-ups. Japan’s SoftBank Group Corp, which is making big internet investments around the globe, is a major investor in Alibaba.

Morningstar analyst Chelsey Tam said that the investment will help JD.com expand into developed markets such as U.S. and Europe, where it has lesser exposure compared to Google.

“This partnership with Google opens up a broad range of possibilities to offer a superior retail experience to consumers throughout the world,” said Jianwen Liao, JD.com’s chief strategy officer, in a statement.

Company officials said the deal would marry Google’s market reach and strength in analytics with JD.com’s expertise in logistics and inventory management.

The investment may give Google access to more consumer data, which can be used to boost usage of Google Shopping, said Morningstar analyst Ali Mogharabi.

European shares slip on trade tensions; Nexans down, M&A in focus

FILE PHOTO: The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, March 20, 2018. REUTERS/Staff/Remote

MILAN (Reuters) – European shares dipped in early trading on Monday as worries over a trade war between the United States and China kept investors on the edge, while cable maker Nexans (PA:NEXS) plummeted after a profit warning.

By 0728 GMT the STOXX 600 (STOXX) was down 0.3 percent following losses in Asia after U.S. President Donald Trump cranked up trade tensions by going ahead with tariffs on Chinese imports, prompting Beijing to immediately respond in kind. [MKTS/GLOB]

Among other national benchmarks, the UK’s FTSE 100 (FTSE) was flat, while Germany’s DAX (GDAXI) declined 0.5 percent.

France’s Nexans fell 18.2 percent after the company warned that an “abrupt deterioration” of its high-voltage activities was likely to translate into lower profits for the full year.

The warning also weighed on Italian rival Prysmian (MI:PRY), which fell 2.2 percent.

French gas and power group Engie (PA:ENGIE) fell 2.2 percent after saying unscheduled outages at its Belgian nuclear reactors will have an impact of 250 million euros on its 2018 core and net profit.

Elsewhere, deal-making activity drove stock moves.

Norwegian Air Shuttle (OL:NWC) rose 9 percent after Lufthansa (DE:LHAG) said it was in contact with the Norwegian carrier over a possible combination.

Lufthansa gained 0.3 percent.

Mid-sized bank Virgin Money (L:VM) rose 1.6 percent after CYBG (L:CYBGC) agreed a 1.7 billion-pound, all-share deal to acquire its rival and create Britain’s sixth-largest bank.

Aerospace supplier Cobham (L:COB) soared 6.6 percent after an upgrade from Morgan Stanley (NYSE:MS).

China’s Huawei blasts Australian security concerns amid Sino-Canberra tensions

The Huawei logo is seen during the Mobile World Congress in Barcelona, Spain, February 26, 2018. REUTERS/Yves Herman

By Colin Packham

SYDNEY (Reuters) – Chinese telecoms equipment maker Huawei Technologies Co Ltd [HWT.UL] said Australian claims it poses a security risk are “ill-informed” as it published an open letter on Monday that threatens to inflame already heightened Sino-Canberra tensions.

Huawei is likely to be banned by Australia from participating in a 5G mobile telecommunications roll-out in the nation as it fears Huawei is de facto controlled by China and sensitive infrastructure will fall into the hands of Beijing, according to Australian media reports.

Huawei denies the allegations, and in a move that threatens to draw Australian politicians into a public spat that will further stains relations with China, dismissed Canberra’s security concerns.

“Recent public commentary around China has referenced Huawei and its role in Australia and prompted some observations around security concerns,” Huawei Australia Chairman John Lord and board directors John Brumby and Lance Hockridge wrote in the unprecedented letter.

“Many of these comments are ill-informed and not based on facts.”

Huawei said it operates in 170 countries, abiding by national laws and guidelines. The company said it has 5G investments in Britain, Canada and New Zealand where it said the respective governments had taken up its offer to evaluate the company’s technology to make sure it abided by cybersecurity protocols.

A spokesman for Australian Prime Minister Malcolm Turnbull did not immediately respond to a request for comment on Huawei’s letter.

Australia has longstanding concerns about Huawei. In 2012 it banned the company from supplying its massive National Broadband Network, and in May Canberra committed millions of dollars to ensure Huawei did not build an internet cable between Australia and the Solomon Islands.

A decision on 5G would come amid a low in Beijing-Canberra relations. Canberra is preparing to pass laws designed to limit Beijing’s influence in domestic affairs following criticism by Turnbull late last year that Beijing was meddling in its affairs.

“It won’t be great for the relationship if Australia bans Huawei but it won’t come as a huge surprise,” said Merriden Virrall, director at Australian think tank the Lowy Institute.

“What is important is how Australia articulates it. Australia can’t make sweeping statements about great foreign powers. That will determine the response from China.”

Alienating China could herald additional trade restrictions from Beijing, analysts said, as six Australian wines, including some produced by Treasury Wine Estates andPernod Ricard (PA:PERP), continue to suffer in shipping supplies to China.

Australia’s wine exports to China were worth A$848 million ($631.17 million) last year and are forecast to top A$1 billion in 2018, government figures show. Some analysts say those figures now look optimistic.

“The bilateral relationship isn’t in a great place, and the government’s announcement will be another major pothole,” said Danielle Cave, a former analyst at an Australian security intelligence agency, the Office of National Assessments.

Oil prices fall on expectation Russia, Saudi Arabia will raise output

FILE PHOTO: A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. REUTERS/Lucy Nicholson/File Photo
By Henning Gloystein

SINGAPORE (Reuters) – Oil prices fell further on Monday, pulled down by an expectation that producer club OPEC and its allies will increase supplies.

Brent crude futures (LCOc1), the international benchmark for oil prices, were at $73.05 per barrel at 0036 GMT, down 39 cents, or 0.5 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures (CLc1) were at $64.24 a barrel, down 82 cents, or 1.3 percent, from their last settlement.

The drops came after crude futures fell around 3 percent on Friday, hurt by concerns about rising output and a U.S.-China trade row.

“Oil prices tanked… after Russia and Saudi Arabia all but confirmed a production increase,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA.

The producer cartel of the Organization of the Petroleum Exporting Countries (OPEC), which is de-facto led by Saudi Arabia, and some allies including Russia have been withholding output with since the start of 2017. Producers will meet in Vienna on June 22 to decide forward production policy.

“Most industry observers are expecting a production rise,” said Innes, although he added that “the magnitude and timing of the boost remain uncertain.”

Also looming over markets was a threat by China to slap a duty on U.S. oil imports in response to announcements by Washington of new import sanctions on China, in what many analysts say could be a serious trade stand-off between the world’s biggest two economies.

Jun 16, 2018

Foxconn announces North American headquarters in Wisconsin

FILE PHOTO - Visitors are seen at a Foxconn booth at the World Intelligence Congress in Tianjin, China May 19, 2018. Picture taken May 19, 2018. REUTERS/Stringer

SHANGHAI (Reuters) – Taiwanese electronics manufacturer Foxconn said it would establish its North American corporate headquarters in Milwaukee, Wisconsin, following the purchase of a building in the city’s downtown area.

In a statement, Foxconn said more than 500 people would work at the seven-story building in downtown Milwaukee.

The announcement comes almost a year after the company disclosed plans to invest $10 billion over four years to build a 20 million-square-foot LCD panel plant in Wisconsin that could eventually employ up to 13,000 people.

Taiwan-based Foxconn, known formally as Hon Hai Precision Industry Co Ltd (TW:2317), is the world’s largest contract electronics manufacturer and employs more than a million people.

Defiant Merkel backs Europe migrant policy as Bavaria row simmers

FILE PHOTO: German Chancellor Angela Merkel talks to Interior Minister Horst Seehofer in Berlin, Germany, June 13, 2018. REUTERS/Michele Tantussi/File Photo

BERLIN (Reuters) – Migration is an issue that demands a European solution, German Chancellor Angela Merkel insisted on Saturday, giving no ground in a showdown with her Bavarian allies that threatens her three-month-old coalition.

The row is over Merkel’s rejection of plans by Interior Minister Horst Seehofer, from Bavaria, for Germany unilaterally to send back migrants who have registered in other European Union countries.

Such a reversal of her 2015 open-door migrant policy would be a huge blow to the authority of Merkel, in power for more than 12 years, and undermine the Schengen open-border system at a time when EU tensions over migration are running high.

In her weekly podcast, three days before talks between Merkel and French President Emmanuel Macron outside Berlin, the chancellor hammered home her stance:

“This is a European challenge that also needs a European solution. And I view this issue as decisive for keeping Europe together,” she said.

Merkel wants two weeks to try to strike bilateral deals with partners, such as Italy and Greece, on migrants and to make progress at an EU summit on June 28-29 on an EU-wide policy.

Seehofer’s Christian Social Union (CSU), facing a tough state vote in October, doesn’t want to wait. Members say the minister will defy Merkel on Monday if no compromise has been reached by then, and go ahead with the plans alone.

Such an affront to Merkel could force her to fire Seehofer, and there is even talk of the end of the 70-year conservative parliamentary alliance between Bavaria and Merkel’s Christian Democrats (CDU).

Without the CSU, the CDU and Social Democrats (SPD), the third party in her “grand coalition”, would lack a majority.

Last week, Merkel confronted the risk of losing the full support of her own CDU, many of whom support the CSU’s tougher line. But she won over a majority of her lawmakers on Thursday and most are now behind her.

Merkel’s refugee policy, which has led to more than 1.6 million migrants arriving in Germany in the last three years, is widely blamed for a surge in support for the far-right Alternative for Germany (AfD), which entered parliament after a September election and is the main opposition party.

In her podcast, Merkel also said Germany and France, the EU’s strongest axis despite some differences, would try to give new momentum to European cooperation on foreign, defense and security policy to contribute to a strong and unified Europe.

She also said the partners would work on further developing the economic and currency union and innovation.

Egypt raising fuel prices by up to 50 percent, energy ministry says

Consumers purchase fuel at a petrol station as a passenger plane makes its final landing approach to Cairo Airport in Egypt, February 19, 2018. REUTERS/Amr Abdallah Dalsh

CAIRO (Reuters) – Egypt announced on Saturday it was raising fuel prices by as much as 50 percent, under a reform plan backed by the International Monetary Fund that provides for cutting state subsidies on some consumer products.

The energy ministry said that 95 octane was increased to 7.75 Egyptian pounds ($0.4354) a liter from 6.6 pounds; 92 octane was increased to 6.75 pounds a liter from five pounds and 80 octane was raised to 5.5 pounds a liter from 3.65 pounds.

The price increases will save the country’s 2018-2019 budget 50 billion pounds, Oil Minister Tarek El Molla said.

Trump sets $50 billion in China tariffs with Beijing ready to strike back

FILE PHOTO: Flags of U.S. and China are placed for a meeting between Secretary of Agriculture Sonny Perdue and China's Minister of Agriculture Han Changfu at the Ministry of Agriculture in Beijing, China June 30, 2017. REUTERS/Jason Lee/File Photo

By David Lawder and Ben Blanchard

WASHINGTON/BEIJING (Reuters) – U.S. President Donald Trump announced hefty tariffs on $50 billion of Chinese imports on Friday as Beijing threatened to respond in kind, in a move that looks set to ignite a trade war between the world’s two largest economies.

Trump, whose hardline stance on trade has seen him wrangle with allies, said in a statement that a 25 percent tariff would be imposed on a list of strategically important imports from China. He also vowed further measures if Beijing struck back.

“The United States will pursue additional tariffs if China engages in retaliatory measures, such as imposing new tariffs on United States goods, services, or agricultural products; raising non-tariff barriers or taking punitive actions against American exporters or American companies operating in China,” Trump said in a statement.

Earlier on Friday, China vowed to do just that, saying it would strike back, just hours before Trump’s statement. Trump has already said the United States would hit another $100 billion of Chinese imports if Beijing retaliated.

Washington and Beijing appeared increasingly headed toward a trade war after several rounds of negotiations failed to resolve U.S. complaints over Chinese industrial policy, market access and a $375 billion trade gap.

“If the United States takes unilateral, protectionist measures, harming China’s interests, we will quickly react and take necessary steps to resolutely protect our fair, legitimate rights,” Chinese Foreign Ministry spokesman Geng Shuang told a regular daily news briefing.

Trump’s initial list included 818 products worth $34 billion in Chinese goods. The remainder of the $50 billion is still to be decided.

Trump has triggered a trade war with Canada, Mexico and the European Union over steel and aluminum and has threatened to impose duties on European cars.

Washington has completed a second list of possible tariffs on another $100 billion in Chinese goods, in the expectation that China will respond to the initial U.S. tariff list in kind, sources told Reuters.

China has published its own list of threatened tariffs on $50 billion in U.S. goods, including soybeans, aircraft, and autos, and has said it would hit back if Washington followed up with further measures.

Beijing and Washington have held three rounds of high-level talks since early May that have yet to yield a compromise. Trump has been unmoved by a Chinese offer to buy an additional $70 billion worth of U.S. farm and energy products and other goods, according to people familiar with the matter.

“The threshold to come to a consensus or a compromise seems high,” Tai Hui, chief market strategist for Asia-Pacific at J.P. Morgan Asset Management wrote in a note.

Renewed worries about an escalating trade conflict sent shares in Chinese telecoms gear maker ZTE Corp (HK:0763) tumbling on Friday. The company has lost 30 percent of its market value since resuming trade this week.

ZTE last week agreed to pay a $1 billion fine to the U.S. government to end a crippling supplier ban imposed after it broke an agreement to discipline executives who conspired to evade U.S. sanctions on Iran and North Korea.

Trump’s revised tariff list may exclude some consumer items from an earlier proposal to focus more on goods related to Beijing’s “Made in China 2025” program, according to a Eurasia Group report.


The “Made in China 2025” initiative is aimed at accelerating China’s prowess and narrowing its competitiveness gap with the United States and other industrial powers in key technologies such as robotics and semiconductors.

While China has in recent months made incremental market-opening reforms in industries for which critics in the foreign business community say they were already planned, it has shown no inclination to yield on its core industrial policies.

“U.S.-China trade tensions will be long-lasting,” Yifan Hu, regional chief investment officer and chief China economist at UBS Wealth Management, told a briefing in Beijing.

“The trade skirmish is not just about the trade deficit and exchange rates, but about the rules of the game, market openness and intellectual property. It is also about values, governance and geopolitical disagreements,” she said.

Jun 15, 2018

Wells Fargo settles retail sales lawsuit for $142 million

A Wells Fargo logo is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. Picture taken October 19, 2017. REUTERS/Chris Helgren

Wells Fargo (NYSE:WFC) & Co said a district court in California approved a $142 million class-action settlement to compensate customers who were affected by a sales scandal related to the opening of phony bank accounts.

Wells Fargo’s shares fell 0.88 percent to $54.26 in premarket trading.

Asset valuations justified if interest rates stay at current lows: RBA

FILE PHOTO: Two women walk next to the Reserve Bank of Australia headquarters in central Sydney, Australia February 6, 2018. REUTERS/Daniel Munoz

SYDNEY (Reuters) – Current asset valuations are justified only if interest rates and bond prices stay low, Reserve Bank of Australia Assistant Governor Luci Ellis said on Friday.

When asked if there is an asset bubble forming, Ellis said she did not know.

Ellis was speaking at an infrastructure industry event in Sydney.

Nikkei rises after ECB’s decision; chip-related shares tumble

FILE PHOTO: A man looks at a mobile phone next to an electronic board showing Japan's Nikkei average outside a brokerage in Tokyo, Japan, March 23, 2018. REUTERS/Toru Hanai

By Ayai Tomisawa

TOKYO (Reuters) – Japan’s Nikkei share average rose on Friday morning after the European Central Bank announced it would avoid raising rates until mid-2019, but chip-related stocks tumbled after a brokerage slashed the target price of Tokyo Electron.

The market was on mid-day break when the outcome of a Bank of Japan meeting was announced. As widely expected, the BOJ kept its short-term interest rate target at minus 0.1 percent and a pledge to guide 10-year government bond yields around zero percent.

The Nikkei (N225) gained 0.4 percent to 22,827.77 at the break.

The ECB announced it would end its bond-purchase program at year-end but signaled that any interest rate hike was still distant.

“Investors were relieved that there is no imminent tightening in Europe, the day after they were spooked by the U.S. Federal Reserve’s hawkish stance,” said Nobuhiko Kuramochi, a strategist at Mizuho Securities.

For the week, the benchmark index has risen 0.6 percent so far.

Drugmakers were steady, with Astellas Pharma (T:4503) rising 1.3 percent and Eisai Co (T:4523) soaring 2.5 percent.

Mining stocks were also bought, with Inpex Corp (T:1605) gaining 0.9 percent and Japan Petroleum Exploration (T:1662) adding 1.4 percent.

Semiconductor manufacturing equipment maker Tokyo Electron Ltd (T:8035) stumbled as much as 5.1 percent to 19,025 yen, the lowest point in four months, after Credit Suisse (SIX:CSGN) cut its target price to 17,600 yen from 19,700 yen.

The brokerage firm said it expects memory makers to scale back their capex plans, which will likely cause Tokyo Electron’s operating profit to miss its guidance in the year ending March 2019.

The downgrade dented sentiment among other chip-related companies, with Advantest Corp (T:6857) shedding 3.6 percent and Shin-Etsu Chemical (T:4063) declining 2.4 percent.

Credit Suisse hiked the rating of Murata Manufacturing (T:6981) to ‘outperform’ from ‘neutral’, saying that major Japanese MLCC (Multilayer Ceramic Capacitor) makers are pushing for price increases across all products of 20–30 percent for all clients. Murata soared 6.2 percent.

Taiyo Yuden (T:6976) jumped 9.7 percent after the brokerage raised its target price to 4,000 yen from 2,130 yen, citing the same factor.

The broader Topix (TOPX) rose 0.3 percent to 1,788.49.

Jun 14, 2018

Allergan appoints former Abbott executive to its board

FILE PHOTO: The Allergan logo is seen in this photo illustration in Singapore November 23, 2015. REUTERS/Thomas White/File Photo

Allergan Plc (N:AGN) said on Thursday former Abbott Laboratories(N:ABT) executive Thomas Freyman will join its board, a week after two of its shareholders criticized the drugmaker’s acquisition strategy and board composition.

Allergan, whose director Patrick O’Sullivan will retire from the board in July, said its board will continue to have 12 members of which 10 are independent, following the changes.

Freyman, who retired from Abbott in 2017, most recently served as executive vice president, finance and administration for the company since June 2015.

Last week, two of Allergan’s shareholders, hedge funds Appaloosa Management and Senator Investment Group, asked the drugmaker’s board to split the role of chief executive officer and chairman as well as reconsider its acquisition strategy.

Rolls-Royce to cut 4,600 jobs in latest CEO drive to generate cash

FILE PHOTO: A Rolls-Royce logo is seen at the company's aerospace engineering and development site in Bristol, Britain, December 17, 2015. REUTERS/Toby Melville/File Photo

By Sarah Young

LONDON (Reuters) – Britain’s Rolls-Royce (L:RR) said it would cut 4,600 jobs to save 400 million pounds a year in the latest attempt by CEO Warren East to simplify the business and generate more cash.

East has been overhauling Rolls during his three years in charge of the engine-maker but the job cuts announced on Thursday come at a tricky time for a company which has been hit by problems with some aero-engines that has angered clients.

Parts in some versions of the Trent 1000 engine which powers the Boeing (NYSE:BA) 787 Dreamliner jet are not lasting as long as expected, forcing the company to ground planes to carry out inspections.

East said the job cuts were needed to help the company achieve profitable growth.

They will enable the company to save 400 million pounds ($536 million) a year by the end of 2020, but will cost it 500 million pounds over 2018, 2019 and 2020. It will be reported as separate one-off costs, allowing it to stick to its targets for free cash flow.

“These changes will help us deliver over the mid and longer-term a level of free cash flow well beyond our near-term ambition of around 1 billion pounds by around 2020,” East said in a statement on Thursday.

Rolls-Royce has 55,000 employees worldwide of which 26,000 are in Britain. The latest cuts follow a previous removal of around 5,000 roles which followed a series of profit warnings in 2014.

The company said the job cuts would predominantly be in the UK where most of its corporate and support functions are based. It employs 15,700 at its headquarters in Derby, central England.

Jefferies analyst Sandy Morris said while the market would not be surprised by the job cuts as East had hinted there was more restructuring to come, the timing was not ideal.

“Against the backdrop of costly Trent 1000 in-service issues and rising civil engine deliveries, we can see how it might stir a debate about whether the timing of this fundamental restructuring increases near-term risk,” he said.

Rolls said that despite the cost of fixing the Trent 1000 issues it was continuing to stick to its forecast for free cash flow for 2018.

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