African swine fever could drive up inflation in emerging markets as pork prices soar

African swine fever, which has already ravaged pig herds in China and pushed up food prices there, could also drive up inflation in the other emerging markets, according to research firm Capital Economics. “The most obvious channel through which this will impact (emerging markets) is via higher inflation,” James Swanston, assistant economist at Capital Economics, wrote in a note last week. That compares with less than 1% in most other emerging markets, and about 3.5% in China, Swanston wrote. Da


African swine fever, which has already ravaged pig herds in China and pushed up food prices there, could also drive up inflation in the other emerging markets, according to research firm Capital Economics. “The most obvious channel through which this will impact (emerging markets) is via higher inflation,” James Swanston, assistant economist at Capital Economics, wrote in a note last week. That compares with less than 1% in most other emerging markets, and about 3.5% in China, Swanston wrote. Da
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Company: cnbc, Activity: cnbc, Date: 2019-06-17  Authors: weizhen tan
Keywords: news, cnbc, companies, swanston, markets, african, wrote, prices, china, rise, capital, fever, soar, emerging, pork, inflation, drive, swine


African swine fever could drive up inflation in emerging markets as pork prices soar

A hired hand feeds a sow which recently gave birth to a new litter at the Grand Canal Pig Farm in Jiaxing, in China’s Zhejiang province.

African swine fever, which has already ravaged pig herds in China and pushed up food prices there, could also drive up inflation in the other emerging markets, according to research firm Capital Economics.

Outbreaks of the disease have been detected not just in China, but also in parts of Southeast Asia, Japan, Australia, Poland and Russia.

The Chinese government said in April it had culled more than a million pigs in a bid to control the outbreak, but some experts — such as Rabobank and TS Lombard — estimated that the number of hog culled could be more than 100 million.

“The most obvious channel through which this will impact (emerging markets) is via higher inflation,” James Swanston, assistant economist at Capital Economics, wrote in a note last week.

“If the disease spreads and increases in severity, it would probably make a notable contribution to inflation in parts of Asia … and Eastern Europe,” he said.

He singled out Taiwan, Cambodia, Vietnam, Russia, Poland and Romania, saying that pork is a relatively large part of the consumer price index basket in those countries — at around 2%. That compares with less than 1% in most other emerging markets, and about 3.5% in China, Swanston wrote.

Data from China’s National Bureau of Statistics on Wednesday showed that food prices in the country spiked 7.7% in May compared to a year ago, as pork prices surged 18.2% also in the same period.

The rise in inflation in China “probably has further to run,” while consumer prices in the other emerging markets would also be pushed up — by around 0.3 percentage points — if pork inflation were to rise to 15%, according to Capital Economics.

Recent spikes in prices have caused pork inflation in emerging economies to rise by as high as 15%, Swanston wrote.


Company: cnbc, Activity: cnbc, Date: 2019-06-17  Authors: weizhen tan
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‘Sporadic’ attacks from Iran’s increased presence is a risk to oil, says US think tank

Oil prices rose as much as 4% on Thursday following attacks on two tanker ships off the coast of Iran, which the Trump administration has blamed on Tehran. It occurred near the Strait of Hormuz which is one of the world’s most vital sea lanes for oil shipments. It can conduct sporadic, low-level attacks that do not necessarily provoke a major U.S. or Arab reaction, but create sudden risk premiums in petroleum prices. The UAE and Saudi Arabia have sought to find alternatives to bypass the strait.


Oil prices rose as much as 4% on Thursday following attacks on two tanker ships off the coast of Iran, which the Trump administration has blamed on Tehran. It occurred near the Strait of Hormuz which is one of the world’s most vital sea lanes for oil shipments. It can conduct sporadic, low-level attacks that do not necessarily provoke a major U.S. or Arab reaction, but create sudden risk premiums in petroleum prices. The UAE and Saudi Arabia have sought to find alternatives to bypass the strait.
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Company: cnbc, Activity: cnbc, Date: 2019-06-14  Authors: weizhen tan
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'Sporadic' attacks from Iran's increased presence is a risk to oil, says US think tank

Fire and smoke billow from the Norwegian owned Front Altair tanker, which was said to have been attacked in the Gulf of Oman. ISNA | AFP | Getty Images

Analysts have played down fears of a huge spike in oil prices this year, citing the economic slowdown and trade war — but rising tensions in the Middle East could be a threat to the energy markets, according to a U.S.-based think tank. Oil prices rose as much as 4% on Thursday following attacks on two tanker ships off the coast of Iran, which the Trump administration has blamed on Tehran. The attacks in the Gulf of Oman, which involved Japanese and Norwegian vessels, renewed fears of conflict in the Middle East after a series of strikes on oil tankers last month. It occurred near the Strait of Hormuz which is one of the world’s most vital sea lanes for oil shipments. Such incidents “can lead to immediate price rises” in oil, said Anthony Cordesman of the Center for Strategic and International Studies in a note.

Iran also does not have to launch a major war. It can conduct sporadic, low-level attacks that do not necessarily provoke a major U.S. or Arab reaction, but create sudden risk premiums in petroleum prices. Anthony Cordesman Center for Strategic and International Studies

Iran’s growing presence

Tensions between the U.S. and Iran are already high after the Trump administration withdrew from an international nuclear pact with Tehran in May last year. The Islamic Republic has repeatedly threatened to block traffic in the Strait of Hormuz in retaliation for U.S. sanctions on Iran. Iran can use its naval, air or missile forces to attack ships anywhere in the Gulf, or use proxies to do so, said Cordesman. “Iran also does not have to launch a major war. It can conduct sporadic, low-level attacks that do not necessarily provoke a major U.S. or Arab reaction, but create sudden risk premiums in petroleum prices,” he wrote. Those attacks can be carried out by ships without Iranian flags, or operators not wearing Iranian uniforms, “that cannot be directly tied to actions by the Iranian government,” Cordesman said. Furthermore, he pointed to the growing Iranian naval presence in the Gulf of Oman and the Gulf of Aden near Yemen, ostensibly to prevent smuggling and deal with Somali pirates.

Limited route options

In addition, there are “limited options” to bypass the Strait of Hormuz, which is the world’s most important choke point for oil shipments, Cordesman wrote. The U.S. Energy Information Administration estimated a record 18.5 million barrels per day of sea-borne oil passed through the waterway in 2016, and it accounted for a third of such sea-borne traded oil and other liquids in 2015. Most of the crude exported from Saudi Arabia, Iran, the United Arab Emirates (UAE), Kuwait and Iraq passes through the strait, which lies between the Persian Gulf and the Gulf of Oman. The UAE and Saudi Arabia have sought to find alternatives to bypass the strait. But existing alternatives are limited, said Cordesman. “The only options to this traffic by sea are a limited pipeline through Iraq to a port in Turkey that offers little real-world surplus capacity,” he said. There is another bigger pipeline through Saudi Arabia to a port at Yanbu on the Red Sea, but “even in a best case, this amounts to less than 20% of the petroleum that now flows daily out of the Gulf,” he wrote. Furthermore, such alternatives are also subjected to risk, Cordesman pointed out, citing that Saudi Arabia shut down the Yanbu pipeline after an attack by armed drones in May this year. Only Saudi Arabia and the UAE have pipelines that can ship crude outside the Persian Gulf and still have additional pipeline capacity to circumvent the Strait of Hormuz, he indicated. Even so, the total capacity from both countries was only 6.6 million barrels per day at the end of 2016. — Reuters contributed to this report.

WATCH: Two tankers on fire after attack in Gulf of Oman


Company: cnbc, Activity: cnbc, Date: 2019-06-14  Authors: weizhen tan
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The Chinese yuan is at its weakest level of the year

The Chinese onshore yuan weakened to a new level for 2019 on Monday, after comments from China’s central bank governor and unexpected trade data dragged on the currency. Of note for the currency: On Friday, People’s Bank of China Governor Yi Gang said there was no specific yuan level that was more important than another. A weaker yuan makes Chinese exports more attractive, giving them a competitive advantage in international markets, in addition to offsetting the costs of tariffs on Chinese good


The Chinese onshore yuan weakened to a new level for 2019 on Monday, after comments from China’s central bank governor and unexpected trade data dragged on the currency. Of note for the currency: On Friday, People’s Bank of China Governor Yi Gang said there was no specific yuan level that was more important than another. A weaker yuan makes Chinese exports more attractive, giving them a competitive advantage in international markets, in addition to offsetting the costs of tariffs on Chinese good
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Keywords: news, cnbc, companies, chinese, war, yuan, data, currency, china, trade, weakest, told, weak, level


The Chinese yuan is at its weakest level of the year

The Chinese onshore yuan weakened to a new level for 2019 on Monday, after comments from China’s central bank governor and unexpected trade data dragged on the currency.

The onshore yuan softened to 6.9352 to the dollar in the morning — the weakest point this year — from levels around 6.90 last week. The offshore yuan, meanwhile, was at 6.9538 against the dollar in the morning.

Although the offshore trade, which is subject to less control by Chinese authorities, was off its intra-day weak point of 6.9619 from last Friday, it was still substantially higher than its levels around 6.92 for much of last week.

Of note for the currency: On Friday, People’s Bank of China Governor Yi Gang said there was no specific yuan level that was more important than another. He had told Bloomberg News he doesn’t think “any number is more important than other numbers,” when asked if there was a red line for the yuan.

“There is obviously a link between the trade war and the movements of renminbi,” Yi told Bloomberg, adding that “a little flexibility” in the yuan was good for the economy.

A weaker yuan makes Chinese exports more attractive, giving them a competitive advantage in international markets, in addition to offsetting the costs of tariffs on Chinese goods.

Investors have been keeping a close watch on the Chinese yuan because it is seen as a key indicator amid the intensifying U.S.-China trade war. Many are focused on whether it will breach the historically significant 7-yuan-per-dollar level.

The yuan has been testing that level as the trade war between the world’s two largest economies deteriorated in recent weeks.

Since U.S. President Donald Trump raised tariffs on $200 billion worth of Chinese goods on May 6, both the offshore and onshore yuan have weakened more than 2%.

Jameel Ahmad, global head of currency strategy at FXTM, told CNBC: “The region between 6.90-7 in the Yuan has historically been seen as a sensitive level for the currency. However, some of the recent tone that has been presented to the market has suggested currency weakness is not seen as such a sensitive subject in China as we have been accustomed to in the past.”

With the yuan not rebounding from losses, he added that “speculation is increasing that the bias from Chinese authorities could change in the light of prolonged trade tensions.”

Meanwhile, China’s official trade data for May came in on Monday, showing that imports were worse than expected, but its trade surplus with the U.S. nevertheless widened from April.

China’s General Administration of Customs said that exports in May inched up 1.1% year-on-year, while imports fell 8.5% during the same period — potentially signaling weak domestic consumption.

China’s trade surplus with the U.S. rose further to $26.89 billion in May from $21.01 billion in April, Chinese customs data showed.

DBS currency strategist Philip Wee suggested that China’s trade data on Monday contributed to the yuan slide.

“Today’s weak trade data out of China was a stark reminder, not only to China but also to the rest of Asia, that Fed cut hopes could not eclipse Trump’s tariff threat, ” he told CNBC in an email.

— CNBC’s Yen Nee Lee contributed to this report.


Company: cnbc, Activity: cnbc, Date: 2019-06-10  Authors: weizhen tan
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Economists: The Fed ‘isn’t enough’ to offset damage of tariff skirmishes with China and Mexico

A dovish Federal Reserve can use tools such as rate cuts to lessen the damage of America’s tariff skirmishes with China and Mexico, but it is either limited in its effectiveness or in its motivations, two economists told CNBC on Thursday. “The Fed can mitigate some of the adverse effects, but I’m not sure the Fed is inclined to move fast enough or significantly enough to entirely offset the effects of this trade war. All these geopolitical, tariffs, sanctions, trade risks are really damaging to


A dovish Federal Reserve can use tools such as rate cuts to lessen the damage of America’s tariff skirmishes with China and Mexico, but it is either limited in its effectiveness or in its motivations, two economists told CNBC on Thursday. “The Fed can mitigate some of the adverse effects, but I’m not sure the Fed is inclined to move fast enough or significantly enough to entirely offset the effects of this trade war. All these geopolitical, tariffs, sanctions, trade risks are really damaging to
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Economists: The Fed 'isn't enough' to offset damage of tariff skirmishes with China and Mexico

A dovish Federal Reserve can use tools such as rate cuts to lessen the damage of America’s tariff skirmishes with China and Mexico, but it is either limited in its effectiveness or in its motivations, two economists told CNBC on Thursday.

Instead, the U.S. has to resolve those issues at the negotiating table, Nathan Sheets, chief economist at asset manager PGIM Fixed Income, told CNBC at the IIF Spring Membership Meeting in Tokyo.

“The Fed can mitigate some of the adverse effects, but I’m not sure the Fed is inclined to move fast enough or significantly enough to entirely offset the effects of this trade war. I think ultimately the solution or resolution of this has to come at the negotiating table between President (Donald) Trump and President Xi (Jinping), and between the United States and Mexico, ” he said.

“The Fed will do its best given where the economy is, but it would take a dramatic easing of monetary policy for them to fully offset these kinds of effects,” Sheets added.

U.S. Federal Reserve Chairman Jerome Powell had on Tuesday signaled that the central bank was open to easing monetary policy to support the economy, amid increasing expectations for multiple Fed rate cuts this year.

He said the central bank is watching current economic developments and will do what it must to keep the near-record expansion going.

Also speaking to CNBC at the IIF Spring Membership Meeting, Robin Brooks, chief economist at the Institute of International Finance, added: “There are some warning signs … we are worried about (emerging markets). All these geopolitical, tariffs, sanctions, trade risks are really damaging to emerging markets, and a dovish Fed isn’t enough to offset those.”

Markets have been spooked by trade tensions that spread to Mexico last week when Trump announced that the U.S. will impose tariffs on Mexican goods, with more duties to be added until the country takes action on immigration that’s deemed sufficient by the White House.

Meanwhile, U.S. trade tensions with China continue to be unresolved, with rhetoric turning more negative in the past two weeks.

Meanwhile, the International Monetary Fund warned on Wednesday that U.S.-China tariffs — both implemented and proposed — could cut global economic output by 0.5% in 2020. It also lowered its 2019 growth forecast for China to 6.2% from 6.3%.

The IMF has been revising down its projections for global growth in recent quarters as trade tensions and concerns surrounding China have fueled plunges in stock markets and dented corporate earnings.

— CNBC’s Matt Clinch contributed to this report.


Company: cnbc, Activity: cnbc, Date: 2019-06-07  Authors: weizhen tan
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China wants to pressure the US economy, but the finance sector is probably safe from Beijing

Technology, rare earth minerals and the education sector have been dragged into the scuffle between China and the U.S., but as Beijing considers more countermeasures, experts said America’s financial sector is unlikely to be a target. Speaking at the Institute of International Finance meeting in Tokyo, he said that any move to target financial services would be “unusual,” because the Chinese “need access to global financial markets.” Peterson said that the Chinese yuan, or the renminbi (RMB), wo


Technology, rare earth minerals and the education sector have been dragged into the scuffle between China and the U.S., but as Beijing considers more countermeasures, experts said America’s financial sector is unlikely to be a target. Speaking at the Institute of International Finance meeting in Tokyo, he said that any move to target financial services would be “unusual,” because the Chinese “need access to global financial markets.” Peterson said that the Chinese yuan, or the renminbi (RMB), wo
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Company: cnbc, Activity: cnbc, Date: 2019-06-07  Authors: weizhen tan
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China wants to pressure the US economy, but the finance sector is probably safe from Beijing

Technology, rare earth minerals and the education sector have been dragged into the scuffle between China and the U.S., but as Beijing considers more countermeasures, experts said America’s financial sector is unlikely to be a target.

There’s just too much at stake for China in that area, they told CNBC this week, pointing to an ongoing drive in the country to open up the Chinese financial sector to global investors.

“We believe that the financial regulators (in China) … are looking at ways to really reform, make it more liquid, bring more transparency. We haven’t seen any shift in that attitude yet,” Douglas Peterson, president and chief executive at financial services and ratings giant S&P Global, told CNBC on Friday.

Speaking at the Institute of International Finance meeting in Tokyo, he said that any move to target financial services would be “unusual,” because the Chinese “need access to global financial markets.”

On Thursday, Tim Adams, who is president and chief executive of the IIF, a trade association, also expressed that sentiment.

“The Chinese government wants U.S. and European financial institutions — they are opening up the market. What I heard from Chinese authorities is … ‘we want the financial community to be here,'” he told CNBC.

Peterson said that the Chinese yuan, or the renminbi (RMB), would likely be a casualty of any move to clamp down on the financial sector.

“Clearly, one of their long term goals is to make their currency a larger, more dominant position in trade. They would like to have things like oil or certain types of commodities or goods priced in RMB,” he said. “In order to do that, they have to have a more active financial market, (to be) more engaged in the global financial market.”

Increasing overseas participation in yuan-denominated assets would help Beijing toward its goal of boosting international acceptance and use of the Chinese currency.

Increasingly, China’s markets have been opened up to global investors. Last year, Chinese A-shares — yuan-denominated stocks traded on the mainland — were included in the MSCI Emerging Markets Index.

This year, Chinese bonds were included in the widely followed Bloomberg Barclays index.

Those inclusions also bring billions of dollars into China’s markets. Analysts estimate that the full inclusion in the Bloomberg Barclays index will attract around $150 billion of foreign inflows into China’s roughly $13 trillion bond market, while the MSCI inclusion will also attract billions worth of inflows.

“There’s also very high demand from foreign investors for Chinese assets,” Peterson said. “So shutting down access to financial markets — I really don’t think it’s one of the measures they’re probably looking at very seriously.”

So far, other sectors have been implicated in trade skirmishes between the world’s two largest economies.

The U.S. put Chinese tech giant Huawei on a list that essentially prevents it from conducting business with American companies, while Chinese media warned that Beijing could cut off industrially significant rare earth minerals as a retaliatory measure in the escalating economic battle.

On Tuesday, China issued a warning to its citizens about working, studying and traveling in America, noting that the U.S. has recently placed certain restrictions on some Chinese student visas.


Company: cnbc, Activity: cnbc, Date: 2019-06-07  Authors: weizhen tan
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The yuan is creeping toward 7 against the dollar, and that could be a problem for some Chinese firms

Investors have been keeping a close watch on the Chinese yuan, seen as a key indicator amid the intensifying U.S.-China trade war — and much concern has been centered on whether it will breach the 7 yuan per dollar key level. A weaker yuan makes Chinese exports more attractive, giving them a competitive advantage in international markets, some experts argue. While a weaker yuan would offset the costs of higher tariffs, there are also disadvantages, Goh told CNBC on Thursday. Ripple effectOther a


Investors have been keeping a close watch on the Chinese yuan, seen as a key indicator amid the intensifying U.S.-China trade war — and much concern has been centered on whether it will breach the 7 yuan per dollar key level. A weaker yuan makes Chinese exports more attractive, giving them a competitive advantage in international markets, some experts argue. While a weaker yuan would offset the costs of higher tariffs, there are also disadvantages, Goh told CNBC on Thursday. Ripple effectOther a
The yuan is creeping toward 7 against the dollar, and that could be a problem for some Chinese firms Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-31  Authors: weizhen tan
Keywords: news, cnbc, companies, chinese, problem, costs, key, firms, dollar, creeping, currency, weaker, weakening, large, yuan, china, markets


The yuan is creeping toward 7 against the dollar, and that could be a problem for some Chinese firms

Investors have been keeping a close watch on the Chinese yuan, seen as a key indicator amid the intensifying U.S.-China trade war — and much concern has been centered on whether it will breach the 7 yuan per dollar key level. While that’s been said to be simply a psychological level, markets may react if the yuan falls below 7, leading to real economic costs for China as well as its companies, experts said. The yuan has been testing those levels increasingly, as the trade war between the world’s two largest economies deteriorated in recent weeks.

What a weak yuan does

A weaker yuan has been a key source of contention between U.S. and the China, with President Donald Trump accusing Beijing of intentionally letting its currency slide lower. A weaker yuan makes Chinese exports more attractive, giving them a competitive advantage in international markets, some experts argue. However, a rapidly weakening currency could also lead investors to move their money out of China, analysts warned, although they said Beijing could respond by imposing tighter capital controls — or measures aimed at limiting the outflow of foreign capital. J.P. Morgan’s Chief China Economist Zhu Haibin cited a similar occurrence in 2015, where fears of a weakening yuan hit market sentiment and led to large capital outflows.

The currency slide would also hurt Chinese firms, as well as the country’s push for greater use of the yuan internationally, according to Khoon Goh, head of Asia research at ANZ Bank. While a weaker yuan would offset the costs of higher tariffs, there are also disadvantages, Goh told CNBC on Thursday. “Don’t forget, there are also economic costs in a weaker renminbi,” he said, referring to another name for the Chinese currency. “A lot of Chinese firms still have large U.S dollar-denominated debt, which is not hedged. That will get them in trouble. ”

Ripple effect

Other analysts have warned that a weakening yuan could also hurt other Asian economies. Arthur Lau, co-head of emerging markets fixed income at PineBridge Investments, said a weakened yuan could hit regional currencies and lead to higher costs for those who hold dollar-denominated bonds. “A weakening yuan could weigh on currencies in the region. Weaker local currencies imply higher debt servicing cost for US dollar bonds,” he said in a note. Lau added that some Chinese property developers, for instance, had a “relatively large” percentage of foreign currency debts as compared to other sectors.

Risks to yuan’s internationalization


Company: cnbc, Activity: cnbc, Date: 2019-05-31  Authors: weizhen tan
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Huawei has enough inventory to ‘weather’ US blacklist for months: Analyst

For now, Huawei’s smartphone business has five to six months’ worth of inventory, and its 5G networking equipment business has nine to 12 months’ worth of supplies, going by CLSA estimates, Sebastian Hou, investment analyst at CLSA, told CNBC on Friday. Amid elevated U.S.-China trade tensions, Washington last week added Huawei to a blacklist that curbs its ability to do business with American firms. “For the rest of the year, I think the company should be fine on smartphones and networking equip


For now, Huawei’s smartphone business has five to six months’ worth of inventory, and its 5G networking equipment business has nine to 12 months’ worth of supplies, going by CLSA estimates, Sebastian Hou, investment analyst at CLSA, told CNBC on Friday. Amid elevated U.S.-China trade tensions, Washington last week added Huawei to a blacklist that curbs its ability to do business with American firms. “For the rest of the year, I think the company should be fine on smartphones and networking equip
Huawei has enough inventory to ‘weather’ US blacklist for months: Analyst Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-24  Authors: weizhen tan
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Huawei has enough inventory to 'weather' US blacklist for months: Analyst

A worker packs up new smartphone devices at the end of the production line at Huawei’s production campus on April 11, 2019 in Dongguan, China.

For now, Huawei’s smartphone business has five to six months’ worth of inventory, and its 5G networking equipment business has nine to 12 months’ worth of supplies, going by CLSA estimates, Sebastian Hou, investment analyst at CLSA, told CNBC on Friday.

Amid elevated U.S.-China trade tensions, Washington last week added Huawei to a blacklist that curbs its ability to do business with American firms. That restriction was partially eased days later , in an effort to minimize disruption for the Chinese telecommunications giant’s partners, but most experts warn the company now faces significant uncertainty .

Chinese technology giant Huawei has enough inventory to sustain its smartphone and 5G networking equipment businesses for most of the rest of the year, according to brokerage and investment firm CLSA.

“For the rest of the year, I think the company should be fine on smartphones and networking equipment,” he said. “In the short term, they still have enough inventory to weather through this period, but the inventory will be used up eventually. So how these trade talks will progress in the next few months is still pretty critical to (its) future survival.”

Notably, Hou said that Huawei subsidiary HiSilicon, which designs chips for Huawei equipment, has been increasing its capability in the last few years and is able to supply 80% to 90% of Huawei’s needs.

In fact, HiSilicon’s capabilities are “stronger than most may know,” said a CLSA research report from Hou and others dated May 20.

Ultimately, Huawei’s survival is highly dependent on whether Taiwan Semiconductor Manufacturing Company — the world’s largest contract chipmaker — can keep doing business with it. In fact, TSMC is “crucial” to Huawei, that report said.

“No matter how great HiSilicon’s chip designs are, it cannot live without TSMC, as TSMC manufactures all HiSilicon’s advanced chips. This means TSMC is critical to Huawei’s survival and Trump’s plan to block Huawei and China.”

For now, TSMC has said that its shipments to Huawei are not affected by the U.S. action to curb the Chinese firm’s access to American technology.

In a bid to reduce its reliance on U.S. suppliers, Huawei has in recent years invested in its own chip technology, especially for smartphone processors and 5G chips.


Company: cnbc, Activity: cnbc, Date: 2019-05-24  Authors: weizhen tan
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Asia markets mixed as investors worry over US-China trade tensions

Asia Pacific markets traded mixed Friday, as worries over trade tensions between the United States and China weighed on investor sentiment. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.67% in the afternoon. Mainland Chinese markets were mixed: The Shanghai composite closed flat while the Shenzhen composite fell 0.48%. Hong Kong’s Hang Seng index added about 0.4% in late afternoon trade. In Japan, the benchmark Nikkei 225 fell 0.16% to 21,117.22 while the Topix index was


Asia Pacific markets traded mixed Friday, as worries over trade tensions between the United States and China weighed on investor sentiment. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.67% in the afternoon. Mainland Chinese markets were mixed: The Shanghai composite closed flat while the Shenzhen composite fell 0.48%. Hong Kong’s Hang Seng index added about 0.4% in late afternoon trade. In Japan, the benchmark Nikkei 225 fell 0.16% to 21,117.22 while the Topix index was
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Asia markets mixed as investors worry over US-China trade tensions

Asia Pacific markets traded mixed Friday, as worries over trade tensions between the United States and China weighed on investor sentiment.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.67% in the afternoon.

Mainland Chinese markets were mixed: The Shanghai composite closed flat while the Shenzhen composite fell 0.48%.

Hong Kong’s Hang Seng index added about 0.4% in late afternoon trade.

In Japan, the benchmark Nikkei 225 fell 0.16% to 21,117.22 while the Topix index was fractionally higher at 1,541.21. South Korea’s Kospi fell 0.69% to 2,045.31.

Australia’s ASX 200 declined 0.55% to 6,456, with the financial subindex down 0.45%.


Company: cnbc, Activity: cnbc, Date: 2019-05-24  Authors: weizhen tan saheli roy choudhury, weizhen tan, saheli roy choudhury
Keywords: news, cnbc, companies, tradein, index, weighed, fell, composite, worry, investors, trade, worries, mixed, markets, uschina, united, asia, japan, tensions


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Flipkart co-founder explains why foreign companies often struggle to succeed in India

Many foreign companies find it tough to succeed in India. Bansal, one of the co-founders of the Indian e-commerce giant, told CNBC that India is “definitely a very different market than Western markets.” Foreign direct investments would only be allowed into e-commerce companies that provide marketplaces for buyers and sellers, according to the new rules. The new rules took effect in February, and followed complaints from local Indian retailers and traders about anti-competitive practices from th


Many foreign companies find it tough to succeed in India. Bansal, one of the co-founders of the Indian e-commerce giant, told CNBC that India is “definitely a very different market than Western markets.” Foreign direct investments would only be allowed into e-commerce companies that provide marketplaces for buyers and sellers, according to the new rules. The new rules took effect in February, and followed complaints from local Indian retailers and traders about anti-competitive practices from th
Flipkart co-founder explains why foreign companies often struggle to succeed in India Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-07  Authors: weizhen tan
Keywords: news, cnbc, companies, explains, local, foreign, ecommerce, companies, bansal, struggle, pangarkar, hard, cofounder, succeed, policies, profits, india, flipkart, indian


Flipkart co-founder explains why foreign companies often struggle to succeed in India

Many foreign companies find it tough to succeed in India. One reason, according to Flipkart co-founder Binny Bansal, is their inability to deal with India’s unique environment, as well as the frequent policy changes by the government. Bansal, one of the co-founders of the Indian e-commerce giant, told CNBC that India is “definitely a very different market than Western markets.” Speaking to CNBC’s Christine Tan at the Credit Suisse Global Supertrends Conference in Singapore in April, he said: “For Flipkart, we had to start our logistics arm on our own, which is something you don’t see happening globally. So you have to do things in a different way because of how the market is structured.” That ability to learn to “do things on your own” and scale up “becomes an advantage for Indian startups, (which) can compete better,” said Bansal. That’s not the “strength of a lot of foreign companies,” he added.

Things take a lot of time and capital to really develop and mature, and if policies keep changing, then every second or third year, it becomes very hard for everyone. Binny Bansal co-founder of Flipkart

Flipkart’s logistics arm, called eKart, was founded in 2010. Its Western competitor, Amazon, started calling itself a transportation service provider for the first time in 2016. It was only in recent years that Amazon significantly expanded its logistics footprint, leasing dozens of aircraft and thousands of trucks to handle some of its massive shipments.

New e-commerce rules

Recent developments have made it difficult for foreign companies to compete in Asia’s third-largest economy. Last December, the Indian government effectively banned Amazon and Flipkart, which is owned by Walmart, from selling products of companies in which they have an equity stake. The government announced that e-commerce firms could no longer form exclusive selling arrangements with sellers or offer steep discounts to consumers based on those deals. Foreign direct investments would only be allowed into e-commerce companies that provide marketplaces for buyers and sellers, according to the new rules. The new rules took effect in February, and followed complaints from local Indian retailers and traders about anti-competitive practices from the likes of Amazon and Flipkart. That same month, the Indian government again outlined more regulations for the sector, focusing on data measures and improved privacy safeguards. That followed a move by the central bank in 2018 that forced payments providers — such as Mastercard and Visa — to store Indian users’ data locally.

Those changes in policies have made the environment even tougher to navigate, said Bansal. “Things take a lot of time and capital to really develop and mature, and if policies keep changing, then every second or third year, it becomes very hard for everyone. For large companies it becomes hard to navigate, for small companies it just becomes hard to start and survive,” he said, at the conference. “When we started, there were very few policies. But in 2018, 19, if you want to start an e-commerce company, you have to really go through what can you do, what can you not do,” Bansal continued.

Uncertainty looms

Amazon’s Chief Financial Officer Brian Olsavsky said in a call with analysts in January that there is “much uncertainty” regarding the impact of the rule changes on India’s e-commerce sector. “Our main issue and our main concern is trying to minimize the impact to our customers and sellers in India,” he had said. But one expert told CNBC that some sectors are more vulnerable than others, especially those that are “driven by politics.” “Generally, retail is politicized because it has a number of small businesses that can make money only if the pricing remains firm (less competition),” said Nitin Pangarkar, an associate professor at the National University of Singapore Business School. “Retail also employs lots of people. That is why politicians will protect local retailers whose profits (and possibly existence) may be challenged by multinationals,” he added. “Many other sectors may not face as much scrutiny or regulation.”

Regardless of industry, however, India has some inherent challenges that companies have to learn to navigate. Infrastructure is still bad, while work ethics and productivity in the country have not caught up with workers in other countries, according to Pangarkar. Still, some companies — particularly those in the consumer goods industry — have found success and even built profits in the Indian market, he said, pointing to multinational companies such as Unilever and Nestle as examples. But beyond looking at the traditional definition of success, Pangarkar said companies should use their India operations to benefit themselves in some way. “The key is to have a multi-dimensional view of success — not just local profits but how the Indian operation can contribute to the whole. For example, IBM employs lots of software developers in India and the low cost software coming from the Indian labs might enhance its overall competitiveness which is not reflected in local profits,” Pangarkar noted. — CNBC’s Saheli Roy Choudhury and Eugene Kim contributed to this report.


Company: cnbc, Activity: cnbc, Date: 2019-05-07  Authors: weizhen tan
Keywords: news, cnbc, companies, explains, local, foreign, ecommerce, companies, bansal, struggle, pangarkar, hard, cofounder, succeed, policies, profits, india, flipkart, indian


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Goldman Sachs: Here’s what could happen next with the US-China trade war

U.S. President Donald Trump’s threat of increased tariffs on Chinese goods is an indication that U.S.-China trade negotiations “might have reached a sticking point,” Goldman Sachs said on Sunday. Trump said in a Sunday afternoon Twitter post that the current 10% tariffs on $200 billion worth of Chinese goods will rise to 25% on Friday. He also threatened to impose 25% levies on an additional $325 billion of Chinese goods “shortly.” Chinese Vice Premier Liu He had planned to bring a large delegat


U.S. President Donald Trump’s threat of increased tariffs on Chinese goods is an indication that U.S.-China trade negotiations “might have reached a sticking point,” Goldman Sachs said on Sunday. Trump said in a Sunday afternoon Twitter post that the current 10% tariffs on $200 billion worth of Chinese goods will rise to 25% on Friday. He also threatened to impose 25% levies on an additional $325 billion of Chinese goods “shortly.” Chinese Vice Premier Liu He had planned to bring a large delegat
Goldman Sachs: Here’s what could happen next with the US-China trade war Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-06  Authors: weizhen tan
Keywords: news, cnbc, companies, sachs, goods, uschina, billion, deal, trade, chinese, tariffs, weeks, agreement, heres, war, goldman, week, happen


Goldman Sachs: Here's what could happen next with the US-China trade war

U.S. President Donald Trump’s threat of increased tariffs on Chinese goods is an indication that U.S.-China trade negotiations “might have reached a sticking point,” Goldman Sachs said on Sunday.

The bank said in a note that chances of a successful deal are now lower, but suggested that an increase in tariffs could still be avoided — especially if the Chinese delegation still attends its meeting with U.S. negotiators this week.

Referring to Trump’s latest gambit, Goldman economists said: “This represents a shift from the optimistic statements from US officials over the last few weeks and suggests that the probability of a near-term agreement is at least slightly lower than it seemed to be recently.”

U.S. officials had claimed in recent weeks that trade talks were going well, and sources had told CNBC that a deal was possible by this Friday. But major sticking points were said to remain, such as intellectual property theft and a disagreement as to whether tariffs should remain in place as a way to ensure Beijing sticks to its commitments.

Trump said in a Sunday afternoon Twitter post that the current 10% tariffs on $200 billion worth of Chinese goods will rise to 25% on Friday. He also threatened to impose 25% levies on an additional $325 billion of Chinese goods “shortly.”

Yet Goldman said it believes an agreement could still be reached, adding that it is still “slightly” more likely to happen than an increase in duties. It put the odds of a tariff escalation by the end of the week at 40% currently.

Investors will have a very clear signal to monitor, the bank added.

“The most important near-term indicator to watch will be whether the large delegation of Chinese officials comes to Washington on May 8, as scheduled. If they do, this would indicate that they believe a deal is still reasonably likely,” Goldman said.

If both sides end up meeting after all, the tariff rate would rise only if they are unable to reach an agreement by Thursday — before the hike takes effect on Friday, it added.

Chinese Vice Premier Liu He had planned to bring a large delegation to Washington on Wednesday to hash out a trade deal. But two sources briefed on the talks told CNBC the Chinese side may back out of this week’s negotiations.

Goldman warned that could be a sign of an extended trade war: “If the upcoming visit is canceled, an agreement in the coming week would then seem very unlikely. In such a scenario an increase in the tariff rate to 25% would become the base case.”

The U.S. imports goods from China totaling $539.5 billion and the trade deficit stood at $419.2 billion in 2018, according to the Office of the U.S. Trade Representative. If Trump follows through with his threats, virtually all goods imported from China to the U.S. would face some sort of tariff.

But there is still hope yet, as Trump has the power to “walk the policy back through an executive order if negotiations progress favorably throughout the week,” Goldman said.

— CNBC’s Spencer Kimball contributed to this report.


Company: cnbc, Activity: cnbc, Date: 2019-05-06  Authors: weizhen tan
Keywords: news, cnbc, companies, sachs, goods, uschina, billion, deal, trade, chinese, tariffs, weeks, agreement, heres, war, goldman, week, happen


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