MACROECONOMICS
Japanese output accelerates
Japan’s factory output in April rose at its fastest pace in six years, government data released yesterday showed, in the latest sign the economy is gathering steam. Industrial production expanded 4 percent, rebounding from a decline in March and rising at its quickest rate since June 2011, when it grew 4.2 percent. The figures come a day after separate data showed consumer demand remains weak despite years of government efforts to boost spending. Still, the latest output numbers are good news for Japanese Prime Minister Shinzo Abe, who swept to power in late 2012 on a pledge to reignite Japan’s once-booming economy with a policy blitz comprising massive monetary easing, stimulus spending and structural reforms. The figures “show that production will be strong in the April to June quarter, underpinning the view that the economy is on a recovery path,” Dai-ichi Life Research Institute chief economist Yoshiki Shinke told reporters.
LUXURY GOODS
Handbag breaks price record
Christie’s says a luxury handbag has shattered the world auction record in Hong Kong. The auction house did not identify the buyer of the matte white crocodile skin Hermes Birkin bag with 18 karat gold and diamond hardware at yesterday’s sale. The item fetched HK$2.94 million (US$377,437), which Christie’s says is a record for any handbag sold at auction. The price surpasses the record set a year ago when Christie’s auctioned a similar Birkin bag for US$300,000. The highly coveted bag was created in 1984 by the French luxury label in honor of British singer and actress Jane Birkin. It is famous for a stratospheric price tag, celebrity owners and a years-long waiting list.
SHIPBUILDERS
Saudi Aramco to build wharf
Saudi Aramco is to build the biggest shipyard in its region in a US$5.2 billion joint venture with South Korea’s Hyundai Heavy Industries and others, the partners said yesterday. The yard, to be constructed on the Persian Gulf coast, will have the capacity to produce four offshore rigs and 40 vessels, including three supertankers, a year, the state-owned oil giant said in a statement. Lamprell, a United Arab Emirates-based provider of services to the energy industry, and Bahri, Saudi Arabia’ national shipping company, have also signed on to the venture. Located in the new industrial port city of Ras al-Khair, the yard will also provide maintenance services for rigs and vessels. In a separate statement, Lamprell PLC said the yard will cost an estimated US$5.2 billion to build, of which roughly US$3.5 billion will come from the Saudi government.
AVIATION
Air India could be privatized
Indian Prime Minister Narendra Modi is considering a proposal to privatize state-run Air India, possibly asking the buyer to absorb loans of about 200 billion rupees (US$3.1 billion) linked to aircraft purchases, a person with direct knowledge of the matter said. The deliberations follow recommendations by a government panel for the sale of the money-losing carrier that has nearly US$8 billion in debt, the person said. As for the rest of the flag carrier’s debt, the government has yet to decide whether to write off or reorganize it, the person said. The process may include disposing of Air India’s real estate and other non-core assets worth about US$3 billion before the sale or hiving them off, the person said. Unprofitable for a decade, with taxpayers bailing it out in the past six years, Air India’s appeal to any investor is contingent on the government’s ability to write off the debt not backed by assets. Many state-run lenders have been seeking capital injection from taxpayer funds amid mounting bad loans.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure