DERIVATIVES
Clearinghouses to be rated
The financial health of the firms that form the backbone of the US$630 trillion derivatives market are being assessed for the first time. Moody’s Investors Service last week announced a new methodology for assigning credit ratings to the clearinghouses that guarantee derivative and security trades. The agency previously only graded the clearinghouses’ parent companies. Clearinghouses are meant to lessen the damage when a bank or investor becomes unable to make good their trades because they have gone bankrupt. They collect margin to cushion any future loss, monitor positions daily and require losses to be made up so that risk does not build.
CHINA
Vehicle sales growth slows
Industrywide vehicle sales rose at the slowest pace in three years even after a fourth-quarter tax cut by the government, as businesses put off purchases with the slowing economy and turmoil in the stock market battered consumer confidence. Wholesale deliveries of passenger and commercial vehicles climbed 4.7 percent to 24.6 million units last year, the smallest rate of increase since 2012, according to the China Association of Automobile Manufacturers. By comparison, US sales of new cars and light trucks rose 5.7 percent to 17.5 million, according to Autodata Corp. Automakers appealed for government support after the slowest economic growth in a quarter century combined with registration curbs in major cities to slow vehicle sales. At one point, Ford Motor Co suggested that the industry might see a fall in deliveries for the year, before the government’s tax cut on Oct. 1 revived demand.
RETAIL
Metro expects profit boost
German retail and distribution giant Metro yesterday said that it expects to have achieved a “significant” increase in quarterly profits, thanks to “very good” Christmas business and gains from the sale of its cash-and-carry business in Vietnam. Metro, which runs its business year from October to September, said in a statement that “we can look back on a very good Christmas business, particularly in our domestic market, Germany… We remain confident for financial year 2015-16, despite the difficult environment, and expect positive development thanks to the range of measures introduced in our sales lines. We retain our original forecast,” chief executive Olaf Koch said. Metro said it had completed the sale of its Vietnam unit at the end of last month. The proceeds were expected to boost underlying or operating profit by “more than 400 million euros” (US$435 million), which would be included in the first-quarter accounts.
FAST FOOD
Critics slam McDonald’s
A group of McDonald’s Corp’s critics urged the EU to rein in alleged antitrust abuses by the world’s largest restaurant chain in a complaint just weeks after regulators added the company to a growing list of US firms facing a clampdown on tax loopholes. McDonald’s was accused by a coalition of Italian consumer groups and European and US trade unions of distorting competition and harming franchisees and consumers. McDonald’s “hurts everyone: franchisees, consumers, and workers,” said Scott Courtney, an official at the Service Employees International Union, which backs the antitrust complaint filed with the European Commission on Monday. The accusation adds to an EU probe opened last month into suspicions the company unfairly exploited a pact with Luxembourg to avoid tax for more than half a decade.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy